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Annual Report 2011
She’s ready
for the right
relationship
Pitney Bowes Annual Report 2011

Table of contents

  • Page 1
    Annual Report 2011 She's ready for the right relationship Pitney Bowes Annual Report 2011

  • Page 2

  • Page 3
    ... mutual understanding and open, honest communication. Then, find the technology to make it happen, one customer at a time. Do this across an entire market, and you'll do more than build enduring relationships. You'll build a strong future for your business, with technology Pitney Bowes can deliver...

  • Page 4
    ... sense of Big Data - the unending torrent of digital information from and about customers. There are also growing concerns about privacy and compliance. Pitney Bowes is helping businesses around the world turn these challenges to their advantage, so they can achieve their strategic objectives and...

  • Page 5
    ... prospects, bring them on board as customers and sustain mutually rewarding relationships. Small businesses often have to navigate the complexities of the multichannel world on their own. Through services for managing direct mail, email and QR code-based campaigns, our new pbSmartâ„¢ suite of cloud...

  • Page 6
    ... marketing messages, logos and addresses on envelopes, while our new Mailstream Wrapperâ„¢ creates envelopes "on the ï¬,y" during mail production. For high-volume mailers, we also expanded our line of IntelliJet® printing systems in 2011. These digital color printers transform routine mailings into...

  • Page 7
    ...voice, even when the customer is a global enterprise with a multilayered relationship with Pitney Bowes. Our new Global Technology Center in Danbury, Connecticut, brings together our engineering, research and development, product management, and information technology services under one roof for our...

  • Page 8
    6 Pitney Bowes Annual Report 2011 How do you build a customer relationship that lasts? Get to know er and earn her trust Scan this code to learn more about building lifetime customer relationships

  • Page 9
    Pitney Bowes Annual Report 2011 7 You have a lot of information about her. But how well do you know her? Not well enough, if you've ever addressed her as "Dear Mr. Client." Or tried to sell her something new before resolving an existing complaint. In the age of Big Data, chaos can turn what should...

  • Page 10
    ... of customer engagement change, getting things exactly right is a challenge. Pitney Bowes can help. Our pioneering technology lets you create dynamic communications tailored to specific channels - Web, email, mail, mobile, call-center conversations. Marketing, client services and billing can all...

  • Page 11
    ... on her policies in colorful, concise messages right on her monthly statement, thanks to Pitney Bowes output enhancement software and four-color digital inkjet technology. Aï¬,ac sees the process as 100 percent variable-data printing. She sees it as a way to learn more about her benefits and other...

  • Page 12
    10 Pitney Bowes Annual Report 2011 Be as savvy about technology as she is

  • Page 13
    ...at Connecticut's Stamford Symphony, they're a hit with audience and orchestra alike, thanks to the marketing magic of pbSmart™ Codes. QR codes are everywhere these days. But it took Pitney Bowes to unleash their potential, with a terrific user experience and real-time metrics for marketers. Using...

  • Page 14
    ... service. Volly transforms that overwhelming pile of paper into a seamless digital stream, then delivers it to a single, secure online location where she can make quick work of it all and store what she needs. With Volly, she can see the status of bills at a glance and pay them instantly, using...

  • Page 15
    Pitney Bowes Annual Report 2011 13 Financial Highlights from Our CFO Michael Monahan Executive Vice President and Chief Financial Officer This year's annual report is all about building lasting customer relationships through relevant communications. We believe that is where our long-term growth ...

  • Page 16
    14 Pitney Bowes Annual Report 2011 We are pleased that in February our Board of Directors decided to increase our dividend to $0.375 per common share for the first quarter of 2012. This marks the 30th consecutive year that we have increased our quarterly dividend. This is an important part of our...

  • Page 17
    ... 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...

  • Page 18
    16 Pitney Bowes Annual Report 2011 Directors and Corporate Officers* Directors Rodney C. Adkins Senior Vice President Systems and Technology Group International Business Machines Corporation Linda G. Alvarado President and Chief Executive Officer Alvarado Construction, Inc. Anne M. Busquet ...

  • Page 19
    ...AND EXCHANGE 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, 2011 Commission file number: 1-3579 PITNEY BOWES INC. Incorporated in Delaware 1 Elmcroft Road, Stamford, Connecticut...

  • Page 20
    ... Data ...Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ...Controls and Procedures...Other Information...PART III Directors, Executive Officers and Corporate Governance ...Executive Compensation ...Security Ownership of Certain Beneficial Owners and Management...

  • Page 21
    ... the sale and support services of non-equipment-based mailing, customer relationship and communication and location intelligence software. Management Services: Includes worldwide revenue and related expenses from facilities management services; secure mail services; reprographic, document management...

  • Page 22
    ..., including from postage meter and mailing machine suppliers for new placements of mailing equipment and from companies that offer alternatives to our mailing products, services and software. As we expand our activities in managing and integrating physical and digital communications, we...

  • Page 23
    ... consists of deposits held in our wholly owned industrial loan corporation, The Pitney Bowes Bank (the Bank). A significant credit ratings downgrade, material capital market disruptions, significant withdrawals by depositors at the Bank, or adverse changes to our industrial loan charter could...

  • Page 24
    ...the government. Any of these events could not only affect us financially but also adversely affect our brand and reputation. ITEM 1B. - UNRESOLVED STAFF COMMENTS None. ITEM 2. - PROPERTIES Our world headquarters is located in Stamford, Connecticut. We have facilities worldwide that are either leased...

  • Page 25
    ... the Company and certain of its current and former officers were named as defendants in NECA-IBEW Health & Welfare Fund v. Pitney Bowes Inc. et al., a class action lawsuit filed in the U.S. District Court for the District of Connecticut. The complaint asserts claims under the Securities Exchange Act...

  • Page 26
    ... and low sales prices, as reported on the NYSE, and the cash dividends paid per share of common stock, for the periods indicated. Stock Price High For the year ended December 31, 2011 First Quarter Second Quarter Third Quarter Fourth Quarter For the year ended December 31, 2010 First Quarter Second...

  • Page 27
    ... of the following companies: Automatic Data Processing, Inc., Diebold, Inc., R.R. Donnelley & Sons Co., DST Systems, Inc., FedEx Corporation, Hewlett-Packard Company, Lexmark International, Inc., Pitney Bowes Inc., United Parcel Service, Inc., and Xerox Corporation. Total return for the S&P 500...

  • Page 28
    ... this Form 10-K. Summary of Selected Financial Data (Dollars in thousands, except per share amounts) 2011 5,277,974 2010 5,425,254 Years ended December 31, 2009 $ 5,569,171...income - Pitney Bowes Inc. $ $ 3.05 Cash dividends paid per share of common stock Balance sheet Total assets Long-term debt ...

  • Page 29
    ...in privacy laws significant increases in pension, health care and retiree medical costs changes in interest rates and foreign currency fluctuations regulatory approvals and satisfaction of other conditions to consummate and integrate any acquisitions income tax adjustments or other regulatory levies...

  • Page 30
    ... in SMB revenues will lag any recovery in equipment sales. We anticipate revenue growth from increased demand for multi-year software licensing agreements, increased placements of production print equipment and continued expansion in Mail Services operations will help offset the anticipated decline...

  • Page 31
    ... in the current period than new equipment sales. The lagging effects of lower equipment sales in prior periods, fewer meter placements and declining mail volumes contributed to declines in financing revenue (8%), rental revenue (7%), supplies revenue (8%) and service revenue (4%). The decrease...

  • Page 32
    ... and cost of revenue by source for the years ended December 31, 2011 and 2010: Revenue by source Equipment sales Supplies Software Rentals Financing Support services Business services Total revenue Cost of revenue by source 2011 449 97 99 125 88 453 1,304 $ 2,615 $ 2010 $ 469 97 93 141 88 452 1,337...

  • Page 33
    ... 2011 includes $90 million of tax benefits arising from the IRS tax settlements, a $34 million tax benefit from the aforementioned sale of non-U.S. leveraged lease assets and a $4 million charge from the write-off of deferred tax assets associated with the expiration of out-of-the-money vested stock...

  • Page 34
    options and the vesting of restricted stock units previously granted to our employees. In addition, the effective tax rate for 2011 was increased due to a reduced tax benefit associated with the goodwill impairment charges. The effective tax rate for 2010 includes $16 million of tax benefits ...

  • Page 35
    ...lower financing, rental, service and supplies revenues. The decrease in financing revenue is due to a decline in our leasing portfolio from reduced equipment sales in recent years. Rental, supplies and service revenues were lower than prior year due to fewer placements of new meters. Equipment sales...

  • Page 36
    ... show revenues and costs of revenues by source for the years ended December 31, 2010 and 2009: Revenue by source Equipment sales Supplies Software Rentals Financing Support services Business services Total revenue Cost of revenue by source 2010 $ 469 97 93 141 88 452 1,337 $ 2,678 2009 $ 450 94...

  • Page 37
    ... by companies that provide retiree prescription drug benefits equivalent to Medicare Part D coverage. The effective tax rate for 2009 included $13 million of tax charges related to the write-off of deferred tax assets associated with the expiration of out-of-the-money vested stock options and...

  • Page 38
    ... cash used in investing activities consisted of capital expenditures of $156 million for property, plant and equipment and rental equipment and related inventories and the net purchase of investment securities of $68 million partially offset by the proceeds from the sale of non-U.S. leveraged lease...

  • Page 39
    ...of new business and equipment sales have declined. Accounts receivables declined primarily due to strong cash collections in excess of new billings. Cash flow also benefited from the proceeds of $32 million from the unwinding of interest rate swaps and by $29 million due to the timing of payments of...

  • Page 40
    ..., 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 sale of non-cancelable lease of equipment, a meter rental and an equipment maintenance agreement...

  • Page 41
    ... to the meter rental and equipment maintenance agreement elements using their respective fair values, which are determined based on prices charged in standalone and renewal transactions. For a sale transaction, revenue is allocated to the equipment based on a range of selling prices in standalone...

  • Page 42
    ...estimates and assumptions regarding discount rates, growth rates, and our future long-term business plans. Changes in any of these estimates or assumptions could materially affect the determination of fair value and the associated goodwill impairment charge for each reporting unit. Due to continuing...

  • Page 43
    ... expected life of the award and dividend yield. The estimate of stock price volatility is based on historical price changes of our stock. The risk-free interest rate is based on U.S. treasuries with a term equal to the expected option term. The expected life, or holding period, of the award, and the...

  • Page 44
    ... our discount rate for the U.K. retirement benefit plan by using a model that discounts each year's estimated benefit payments by an applicable spot rate. These spot rates are derived from a yield curve created from a large number of high quality corporate bonds. The rate of compensation increase...

  • Page 45
    ...' deficit in the Consolidated Balance Sheets and do not affect earnings. Dividends It is a general practice of our Board of Directors to approve the payment of a cash dividend on our common stock each quarter. In setting dividend payments, our board considers the dividend rate in relation to our...

  • Page 46
    ... 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 47
    ... because of changes in conditions, or that the degree of compliance with internal control policies or procedures may deteriorate. Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2011. In making this assessment, management used the criteria...

  • Page 48
    ... Pivotal Corporation, a leader in CRM for mid-market enterprises. Ms. O'Meara joined the Company in June 2008 as Executive Vice President and Chief Legal and Compliance Officer. In July 2010, Ms. O'Meara became Executive Vice President and President, Pitney Bowes Management Services & Government and...

  • Page 49
    Code of Ethics We have adopted a Code of Ethics that applies to all of our directors, officers and employees, including our principal executive, financial and accounting officers, or persons performing similar functions. Our Code of Ethics is posted on our corporate governance website located at www...

  • Page 50
    PART IV ITEM 15. - EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) 1. Financial statements - see Item 8 on page 28 and "Index to Consolidated Financial Statements and Supplemental Data" on page 34 of this Form 10-K. 2. Financial statement schedules - see "Index to Consolidated Financial Statements ...

  • Page 51
    ..., thereunto duly authorized. Date: February 23, 2012 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 52
    ... BOWES INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA PAGE 35 36 37 38 39 40 41 88 Report of Independent Registered Public Accounting Firm ...Consolidated Financial Statements of Pitney Bowes Inc. Consolidated Statements of Income for the Years Ended December 31, 2011, 2010...

  • Page 53
    REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and Board of Directors of Pitney Bowes Inc. In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Pitney Bowes Inc. and its...

  • Page 54
    ... 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 Research and development Restructuring charges and asset impairments Goodwill impairment...

  • Page 55
    ... ended December 31, 2010 $ 292,379 $ 2011 Net income - Pitney Bowes Inc. Other comprehensive income, net of tax: Foreign currency translations Net unrealized gain on cash flow hedges, net of tax expense of $1,278, $837 and $4,865, respectively Net unrealized gain (loss) on investment securities...

  • Page 56
    PITNEY BOWES INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) December 31, 2011 ASSETS Current assets: Cash and cash equivalents Short-term investments Accounts receivables, gross Allowance for doubtful accounts receivables Accounts receivables, net Finance ...

  • Page 57
    ...by operating activities: Restructuring charges and asset impairments 148,151 Goodwill impairment 130,150 Gain on sale of leveraged lease asset, after tax (26,689) Depreciation and amortization 272,142 Stock-based compensation 18,692 Deferred tax provision (benefit) 34,358 Changes in operating assets...

  • Page 58
    ... stock Pre-tax stock-based compensation Tax benefits from stock compensation plans Repurchase of common stock Balance, December 31, 2009 Net income Other comprehensive income Cash dividends: Common Preference Issuances of common stock Conversions to common stock Pre-tax stock-based compensation...

  • Page 59
    ... of equipment financed. We believe that our concentration of credit risk is limited because of our large number of customers, small account balances for most of our customers and customer geographic and industry diversification. Our policy is to discontinue revenue recognition for lease receivables...

  • Page 60
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share data) for rental equipment and three to five years for computer equipment. Major improvements which add to productive capacity or extend the life of an asset are capitalized while repairs and...

  • Page 61
    ... sales, rentals, financing, and services. Certain of our transactions are consummated at the same time and generate revenue from multiple sources. The most common form of these transactions involves the sale or non-cancelable lease of equipment, a meter rental and an equipment maintenance agreement...

  • Page 62
    ... postage meters and mailing equipment, under short-term rental agreements, generally for periods of three months to five years. Rental revenue includes revenue from the subscription for digital meter services. We invoice in advance for postage meter rentals, at various lengths. We initially defer...

  • Page 63
    ...into contracts with only those financial institutions that meet stringent credit requirements. We regularly review our credit exposure balances as well as the creditworthiness of our counterparties. New Accounting Pronouncements On January 1, 2011, new accounting guidance became effective addressing...

  • Page 64
    ... settlement and $7 million related to the expiration of an indemnity agreement associated with the sale of a former subsidiary. 3. Acquisitions There were no acquisitions during 2011 or 2009. In July 2010, we acquired Portrait Software plc (Portrait) for $65 million in cash, net of cash acquired...

  • Page 65
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share data) 4. Inventories Inventories at December 31, 2011 and 2010 consisted of the following: December 31, Raw materials and work in process Supplies and service parts Finished products ...

  • Page 66
    ... Supplier relationships Mailing software and technology Trademarks and trade names Non-compete agreements $ $ $ $ $ $ In 2011, intangible asset impairment charges of $12 million associated with our International Mailing Services operations (IMS) within our Mail Services segment and...

  • Page 67
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share data) The changes in the carrying amount of goodwill, by reporting segment, for the years ended December 31, 2011 and 2010 are as follows: Balance at December 31, 2010 (1) $ 357,918 181,530 ...

  • Page 68
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share data) 8. Debt December 31, 2011 Notes payable Term loan due 2012 4.625% notes due 2012 (1) 3.875% notes due 2013 4.875% notes due 2014 (2) 5.000% notes due 2015 4.750% notes due 2016 5.750% ...

  • Page 69
    ...million of tax benefits from the IRS tax settlements (see Other Matters below), a $34 million tax benefit from the sale of non-U.S. leveraged lease assets and a $4 million charge from the write-off of deferred tax assets associated with the expiration of out-of-the-money vested stock options and the...

  • Page 70
    ...sale to finance subsidiary 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 71
    ... period positions Decreases relating to settlements with tax authorities Reductions from lapse of applicable statute of limitations Balance at end of year $ $ $ $ $ $ The amount of the unrecognized tax benefits at December 31, 2011, 2010 and 2009 that would affect the effective tax rate...

  • Page 72
    ... 75% of the combined voting power of all classes of capital stock, was owned directly or indirectly by the Company. Preferred Stock dividends were $18 million, $18 million and $21 million for the years ended December 31, 2011, 2010 and 2009, respectively. The dividend amount for 2009 includes an...

  • Page 73
    ... to non-vested stock options and restricted stock units is expected to be recognized over a weighted-average period of 0.7 years. Stock Plans Long-term incentive awards are provided to employees under the terms of our plans. The Executive Compensation Committee of the Board of Directors administers...

  • Page 74
    ... data) stock-based compensation awards require a minimum requisite service period of one year for retirement eligible employees to vest. At December 31, 2011, there were 16,903,013 shares available for future grants under our stock plans. Stock Options Under our stock option plan, certain officers...

  • Page 75
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share data) The fair value of stock options granted and related assumptions are as follows: Years ended December 31, 2010 6.1% 25.6% 3.2% 7.3 $2.82 Expected dividend yield Expected stock price ...

  • Page 76
    ... that are not active, quoted prices for similar assets and liabilities in active markets or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 - Unobservable inputs that are supported by little or no...

  • Page 77
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share data) December 31, 2011 Level 2 Level 3 Level 1 Assets: Investment securities Money market funds/commercial paper Equity securities Commingled fixed income securities Debt securities - U.S. ...

  • Page 78
    ... external price/spread data. These securities are classified as Level 2. • • • • • Investment securities include investments by The Pitney Bowes Bank (PBB). PBB is a wholly owned subsidiary and a Utah-chartered Industrial Loan Company (ILC). The bank's investments at December 31, 2011...

  • Page 79
    ... years ended December 31, 2011 and 2010: Derivative Gain Recognized in Earnings 2010 2011 $ 13,261 $ 11,583 Hedged Item Expense Recognized in Earnings 2010 2011 $ (26,667) $ (33,125) Derivative Instrument Interest rate swaps Location of Gain (Loss) Interest expense Foreign Exchange Contracts We...

  • Page 80
    ...instruments for the years ended December 31, 2011 and 2010: Derivative Gain (Loss) Recognized in Earnings 2010 2011 $ (22,158) (17,214) Derivative Instrument Foreign exchange contracts Location of Derivative Gain (Loss) Selling, general and administrative expense $ Credit-Risk-Related Contingent...

  • Page 81
    ... 2009 Program and asset impairments for the years ended December 31, 2011 and 2010 is as follows: Pension and Retiree Medical $ 23,620 (23,620) 8,178 (8,178) - Severance and benefits costs Balance at January 1, 2010 Expenses Gain on sale of facility Cash (payments) receipts Non-cash charges Balance...

  • Page 82
    ... the Company and certain of its current and former officers were named as defendants in NECA-IBEW Health & Welfare Fund v. Pitney Bowes Inc. et al., a class action lawsuit filed in the U.S. District Court for the District of Connecticut. The complaint asserts claims under the Securities Exchange Act...

  • Page 83
    ..., sales and service offices, equipment and other properties, generally under operating lease agreements extending from three to 25 years. Rental expense was $117 million, $118 million and $125 million in 2011, 2010 and 2009, respectively. Future minimum lease payments under non-cancelable operating...

  • Page 84
    ... from financing services offered to our customers for postage and related supplies. Loan receivables are generally due each month; however, customers may rollover outstanding balances. Finance receivables at December 31, 2011 and 2010 were as follows: North America Sales-type lease receivables...

  • Page 85
    ... for finance receivables for each of the three years ended December 31, 2011, 2010 and 2009 is as follows: Allowance for Credit Losses Sales-type Lease Receivables Loan Receivables North North International International America America Balance January 1, 2009 Amounts charged to expense Accounts...

  • Page 86
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share data) The aging of gross finance receivables at December 31, 2011 and 2010 was as follows: Sales-type Lease Receivables North International America December 31, 2011 < 31 days past due > 30 ...

  • Page 87
    ... 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 88
    ... the sale and support services of non-equipment-based mailing, customer relationship and communication and location intelligence software. Management Services: Includes worldwide revenue and related expenses from facilities management services; secure mail services; reprographic, document management...

  • Page 89
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share data) Financial information for our reportable segments is presented in the tables below: Years ended December 31, 2010 $ 2,100,677 674,759 2,775,436 561,447 374,750 999,288 572,795 141,538 ...

  • Page 90
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share data) 2011 Depreciation and amortization: North America Mailing International Mailing Small & Medium Business Solutions Production Mail Software Management Services Mail Services Marketing ...

  • Page 91
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share data) December 31, 2011 Identifiable assets: North America Mailing International Mailing Small & Medium Business Solutions Production Mail Software Management Services Mail Services Marketing...

  • Page 92
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share data) 19. Retirement Plans and Postretirement Medical Benefits We have several defined benefit retirement plans. Benefits are primarily based on employees' compensation and years of service....

  • Page 93
    .../ curtailment Net periodic benefit cost (1) $ $ (1) Includes $5 million and $17 million charged to restructuring reserves in 2011 and 2010, respectively. See Note 14 for further information. Other changes in plan assets and benefit obligations for defined benefit pension plans recognized in other...

  • Page 94
    ...assumptions used to determine end of year benefit obligations and net periodic pension costs include: 2011 United States Used to determine benefit obligations Discount rate Rate of compensation increase Used to determine net periodic benefit costs Discount rate Expected return on plan assets Rate of...

  • Page 95
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share data) The target allocation for 2012 and the asset allocation for the U.S. pension plan at December 31, 2011 and 2010, by asset category, are as follows: Target Percentage of Plan Assets at ...

  • Page 96
    ... 161,905 18,698 69,495 52,553 21 158,155 1,545,319 $ $ $ $ $ $ 51 51 $ $ - $ $ - $ $ 51 51 * Securities lending fund amount at December 31, 2011 and December 31, 2010 is offset by a corresponding liability recorded in the Pitney Bowes Pension Plan net assets available for benefits. 78

  • Page 97
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share data) Foreign Pension Plans - Fair Value Measurements at December 31, 2011 Level 1 Level 2 Level 3 Total Assets: Investment securities Money market funds Equity securities Commingled fixed ...

  • Page 98
    ...-term issues. Since the commingled fund is not listed or traded on an exchange, the investment is classified as Level 2. The investment is offset by a liability of an equal amount representing assets that participate in securities lending program, which is reflected in the Pitney Bowes Pension Plan...

  • Page 99
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share data) Level 3 Gains and Losses The following table shows a summary of the changes in the fair value of Level 3 assets of the U.S. pension plans for the year ended December 31, 2011: Private ...

  • Page 100
    ... of Pitney Bowes Management Services after reaching age 60 and with the completion of the required service period. U.S. employees hired after January 1, 2005, and Canadian employees hired after April 1, 2005, are not eligible for retiree health care benefits. The benefit obligation and funded status...

  • Page 101
    ... Prior service credit Total $ $ 9,456 (2,092) 7,364 The weighted-average discount rates used to determine end of year benefit obligations and net periodic pension costs include: 2011 Discount rate used to determine benefit obligation U.S. Canada Discount rate used to determine net periodic benefit...

  • Page 102
    ... BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share data) Estimated Future Benefit Payments Benefit payments, which reflect expected future service, as appropriate, estimated to be paid during the years ended December 31 are as follows: Pension...

  • Page 103
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share data) 20. Earnings per Share The calculation of basic and diluted earnings per share for the years ended December 31, 2011, 2010 and 2009 is presented below. Note that the sum of earnings ...

  • Page 104
    ...(0.01) Net Income - Pitney Bowes Inc. $ 0.42 $ $ 0.50 (0.00) 0.49 $ $ 0.56 0.30 0.85 $ $ 0.25 1.04 1.28 (1) Includes 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...

  • Page 105
    ...02) Net income - Pitney Bowes Inc. $ 0.38 $ $ 0.31 (0.01) 0.30 $ $ 0.44 (0.01) 0.43 $ $ 0.36 (0.05) 0.31 (1) Includes 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...

  • Page 106
    PITNEY BOWES INC. SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (Dollars in thousands) FOR THE YEARS ENDED DECEMBER 31, 2009 TO 2011 Description Balance at beginning of year Additions Deductions Balance at end of year Allowance for doubtful accounts 2011 $ 2010 $ 2009 $ 31,880 ...

  • Page 107
    ..., copies of instruments defining the rights of holders of such indebtedness are not included as exhibits. The Company agrees to furnish copies of such instruments to the SEC upon request. Executive Compensation Plans: (10)(a) Retirement Plan for Directors of Pitney Bowes Inc. Incorporated by...

  • Page 108
    ...Bowes Inc. Deferred Incentive Savings Plan as amended and restated 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...

  • Page 109
    ... the Securities Exchange Act of 1934, as amended. Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 XBRL Report Instance Document XBRL Taxonomy Extension Schema Document XBRL Taxonomy Calculation...

  • Page 110
    EXHIBIT (12) PITNEY BOWES INC. COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (1) (Dollars in thousands) Years ended December 31, 2010 2009 2007 $ 534,577 203,911 39,219 1,716 779,423 $ 693,176 208,855 41,499 1,716 945,246 $ 713,177 229,343 43,030 1,717 987,267 $ 2011 Income from continuing ...

  • Page 111
    ...Software China Ltd. Harvey Company, L.L.C Historic Boardwalk Hall, L.L.C. Horizon Management AB Horizon Scandinavia AB Ibis Consulting, Inc. Imagitas Security Corporation Imagitas, Inc. Mag Systèmes SAS MapInfo Realty LLC PB Australia Funding Pty. Limited PB Equipment Management Inc. PB European UK...

  • Page 112
    ... Europe Limited Pitney Bowes Finance Ireland Limited Pitney Bowes Finance Limited (formerly Pitney Bowes Finance plc) Pitney Bowes Global Financial Services LLC Pitney Bowes Global Limited Pitney Bowes Global LLC Pitney Bowes Government Solutions, Inc. Pitney Bowes Holding SNC Pitney Bowes Holdings...

  • Page 113
    Company name Pitney Bowes Software (Beijing) Ltd Pitney Bowes Software Canada Inc. Pitney Bowes Software Europe GmbH Pitney Bowes Software Europe Limited Pitney Bowes Software Holdings Limited (formerly Pitney Bowes MapInfo UK Limited) Pitney Bowes Software Inc. Pitney Bowes Software India Private ...

  • Page 114
    ...) of Pitney Bowes Inc. of our report dated February 23, 2012 relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Form 10-K. /s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Stamford...

  • Page 115
    ..., 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 Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in...

  • Page 116
    ..., 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 Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in...

  • Page 117
    ... 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, 2011 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...

  • Page 118
    ... 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, 2011 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...

  • Page 119
    ... 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 be sent to: MSC 00-63-03 Corporate Marketing Pitney Bowes...

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    Every connection is a new opportunity â„¢ 1 Elmcroft Road, Stamford, CT 06926-0700 203.356.5000 www.pb.com