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Pitney Bowes Annual Report 2012
Where
innovation
begins

Table of contents

  • Page 1
    Pitney Bowes Annual Report 2012 Where innovation begins

  • Page 2

  • Page 3
    ... of global e-commerce and location intelligence Sue McKinney, Vice President, Worldwide Engineering Pushing to create best-in-class mailing and software solutions for clients worldwide On the inside cover, from left to right: Bob Cordery, Pitney Bowes Fellow, Strategic Technology and Innovation...

  • Page 4
    2 Pitney Bowes Annual Report 2012

  • Page 5
    ... margins and strong market share in the modern mailing industry that Pitney Bowes helped invent nearly a century ago. Most important, we have fantastic employees eager to contribute and full of good ideas. These are the ingredients for a very successful company. Pitney Bowes Annual Report 2012 3

  • Page 6
    ...eBay users, creating a significant and largely untapped market opportunity for our services. Our software instantly calculates each international buyer's end-to-end costs, including shipping charges, import fees, taxes and insurance. This reduces the hidden costs that 4 Pitney Bowes Annual Report...

  • Page 7
    ... of physical mail while making it easy to pay bills from a single, secure online location. For businesses, the service provides a secure digital channel that allows them to promote their own brand at a fraction of the cost of printing and delivering physical mail. Pitney Bowes Annual Report 2012 5

  • Page 8
    ... of our R&D team, who work closely with clients to gain the insights that will drive future innovations. We are already employing agile development practices to accelerate our time to market and reduce the risks inherent in entering new markets. We will do more. 6 Pitney Bowes Annual Report 2012

  • Page 9
    ... about Pitney Bowes and dedicated his professional life to our company. For that my colleagues and I are very grateful. I look forward to working with my new colleagues to build on our company's great legacy. Marc B. Lautenbach President and Chief Executive Officer Pitney Bowes Annual Report 2012...

  • Page 10
    ... relationships. Pitney Bowes is everywhere business gets done. Now I know how many flyers to send out-and where! DOMINO'S LOCATION #23 When a mobile phone order comes in, it's automatically routed to my store if I'm closest to the customer. DOMINO'S LOCATION #17 8 Pitney Bowes Annual Report 2012

  • Page 11
    ... in this highly competitive, fast-changing environment. Domino's is also using our technology to route customers to their closest store. No more border disputes among franchisees, no more wasted time on deliveries-nothing to interfere with customer satisfaction. Pitney Bowes Annual Report 2012 9

  • Page 12
    ... line of made-toorder messenger bags, backpacks and computer sleeves is produced by a company of just 20 people. You'd never know that from the world-class, worldwide service that Pitney Bowes makes possible for www.rickshawbags.com and other online retailers. 10 Pitney Bowes Annual Report 2012

  • Page 13
    ...-now done on half the equipment it used to take- to postage and shipping for nearly a million pieces a year. The benefits go beyond savings: A single project to digitize 1,500 boxes of documents not only avoided additional building costs but made the files electronically accessible with just a few...

  • Page 14
    ...ix and Pottery Barn. Developed by Imagitas, a Pitney Bowes company, My Move is backed by extensive research on the buying habits of people who move to maximize its value for households and advertisers. Last year more than six million consumers visited the site. 12 Pitney Bowes Annual Report 2012

  • Page 15
    ...mix of print and mail jobs for Florida Blue, the state's largest health insurer. To lower costs and improve its member communications, the company transitioned to a subsidiary, Incepture Print Solutions, to develop a best-in-class production operation. Incepture selected the Pitney Bowes White Paper...

  • Page 16
    ...Financial Data For the year (Dollars in thousands, except per share amounts) 2012 2011 2010 As reported Revenue...stock Average common and potential common shares outstanding Total assets Total debt Stockholders' equity (deficit) Total employees...661 $ 1,058,363 14 Pitney Bowes Annual Report 2012

  • Page 17
    ..., as adjusted GAAP net cash provided by operating activities, as reported Capital expenditures Free cash flow Payments related to restructuring charges Reserve account deposits Tax payments on sale of leveraged lease assets Pension plan contributions Free cash flow, as adjusted The sum of the...

  • Page 18
    ... Retired Chairman, IMS Health Incorporated Corporate Officers Marc B. Lautenbach President and Chief Executive Officer Leslie Abi-Karam Executive Vice President and President, Pitney Bowes Communications Solutions Patrick M. Brand Vice President and President, Pitney Bowes Mailing, North America...

  • Page 19
    ... STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES For the fiscal year ended December 31, 2012 Commission file number: 1-3579 PITNEY BOWES INC. Incorporated in Delaware 1 Elmcroft Road, Stamford, CT 06926...

  • Page 20
    ... Supplementary 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 and...

  • Page 21
    ... high-speed, production mail systems, sorting and production print equipment. Software: Includes the worldwide revenue and related expenses from the sale and support services of non-equipment-based mailing, client relationship and communication and location intelligence software. Management Services...

  • Page 22
    ..., including leasing companies, commercial finance companies and commercial banks, to small, specialized firms. We are a major provider of facilities management and document management services to the corporate, financial services, professional services and government markets and compete against...

  • Page 23
    ...' communication behavior; changes in communications technologies; expansion of mobile Internet access; the growing trend by businesses to incent or require their clients to use alternatives to mail for payments and statement presentment; government actions such as executive orders, legislation or...

  • Page 24
    ... equipment, postage and supplies purchases. Our ability to provide these services is largely dependent upon our continued access to the U.S. capital markets. An additional source of liquidity consists of deposits held in our wholly owned industrial loan corporation, The Pitney Bowes Bank. A credit...

  • Page 25
    ...of employees, clients or others. In October 2009, 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...

  • Page 26
    ... Hewlett-Packard Company, Lexmark International, Inc., Pitney Bowes Inc., United Parcel Service, Inc., and Xerox Corporation. All information is based upon data independently provided to us by Standard & Poor's Corporation and is derived from their official total return calculation. Total return for...

  • Page 27
    ... common stock, the S&P 500 Composite Index, the New Peer Group and the Old Peer Group on December 31, 2007 would have been worth $40, $109, $90 and $74, respectively, on December 31, 2012. Indexed Returns December 31, Company Name / Index 2007 2008 2009 2010 2011 2012 Pitney Bowes S&P 500 New Peer...

  • Page 28
    ...21 Net income - Pitney Bowes Inc. Cash dividends paid per share of common stock Balance sheet data: $ 1.50 $ $ $ 1.98 1.07 3.05 1.48 $ $ $ 1.57 $ (0.15) 1.41 1.46 $ $ 2.00 0.04 2.04 1.44 $ $ $ 2.08 (0.08) 2.00 1.40 December 31, 2012 2011 2010 2009 2008 Total assets Long-term debt Total debt...

  • Page 29
    ...5% compared to last year. Declining equipment sales in prior periods also impacts financing revenue, which declined 10% in 2012 compared to 2011. Rentals and supplies revenue both declined 8% due to a decline in mail volumes and our installed meter base. Software revenue declined 3% mainly due to an...

  • Page 30
    ...and supplies revenue in the second half of 2013. RESULTS OF OPERATIONS Revenue by source and the related cost of revenue are shown in the following tables: Revenue Year Ended December 31, 2012 2011 2010 2012 % change 2011 Equipment sales Supplies Software Rentals Financing Support services Business...

  • Page 31
    Cost of revenue Year Ended December 31, 2012 $ % of revenue $ 2011 % of revenue $ 2010 % of revenue Cost of equipment sales Cost of supplies Cost of software Cost of rentals Financing interest expense Cost of support services Cost of business services Total cost of revenue Equipment sales $ $ ...

  • Page 32
    ... integrated mailing systems. Business Services Business services revenue decreased 1% to $1,515 million in 2012 compared to 2011 primarily due to lower facilities management volumes, account contractions and pricing pressures on new business and contract renewals. Revenue in 2012 revenue benefited...

  • Page 33
    ..., net in 2011 includes income of $27 million from insurance proceeds received in connection with the fire at our Dallas presort facility and a pre-tax loss of $7 million on the sale of leveraged lease assets. Income taxes See Note 8 to the Consolidated Financial Statements. Discontinued operations...

  • Page 34
    ... before income taxes. Revenue 2012 Year Ended December 31, 2011 2010 2012 % change 2011 North America Mailing International Mailing Small & Medium Business Solutions Production Mail Software Management Services Mail Services Marketing Services Enterprise Business Solutions Total $ $ 1,819...

  • Page 35
    ..., our future secure digital mail delivery service offering. Software Software revenue decreased 3% in 2012 to $393 million compared to $407 million in 2011 primarily attributable to weak economic conditions and constrained public sector spending in Europe and lower sales in Asia Pacific. Foreign...

  • Page 36
    ... due to the full year impact of account contractions and terminations in the U.S. during 2010 and pricing pressure on new business and contract renewals. Mail Services Mail Services revenue increased 8% to $445 million in 2012 compared to $412 million in 2011; however, 5% of the increase was due to...

  • Page 37
    ...by operating activities of $952 million in 2010. Cash flow in 2011 benefited from lower tax payments of $187 million and higher net collections of finance and accounts receivables of $26 million but these benefits were offset by a special pension plan contribution of $123 million and higher payments...

  • Page 38
    ... anticipate making to our pension plans during 2013; however, we will assess our funding alternatives as the year progresses. (4) Our retiree health benefit plans are non-funded plans and cash contributions are made each year to cover medical claims costs incurred. The amounts reported in the above...

  • Page 39
    ..., 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 40
    ... 31, 2012 would have changed the 2012 provision by approximately $2 million. Accounting for income taxes We are subject to income taxes in the U.S. and numerous foreign jurisdictions. Our annual tax rate is based on our income, statutory tax rates, tax reserve changes and tax planning opportunities...

  • Page 41
    ... years for rental equipment and three to five years for computer equipment. Leasehold improvements are amortized over the shorter of the estimated useful life or the remaining lease term. We amortize capitalized costs related to internally developed software using the straight-line method over the...

  • Page 42
    ... the IMS business to their respective fair values. These charges are recorded in discontinued operations in the Consolidated Statements of Income. Also in 2011, based on the results of our annual goodwill impairment review process, we determined that the international operations of our Management...

  • Page 43
    ... our subsidiaries in different countries. For the years ended December 31, 2012, 2011 and 2010, currency rate movements increased/(decreased) revenue by (1.2)%, 1.6% and 0.4%, respectively. Based on the revenue contribution from our international operations in 2012, a 1% increase in the value of the...

  • Page 44
    ... 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 45
    ... registered public accounting firm, as stated in their report which appears in this Form 10-K. Changes in Internal Control over Financial Reporting There have been no changes in our internal control over financial reporting during the three months ended December 31, 2012, that have materially...

  • Page 46
    ... 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.pb.com/Our-Company/Leadership-and-Governance/Corporate-Governance. In...

  • Page 47
    ... Commission within 120 days of our fiscal year ended December 31, 2012 are incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS EQUITY COMPENSATION PLAN INFORMATION TABLE The following table provides information as...

  • Page 48
    ... 1, 2008) with the Commission on February 29, 2008 (Commission file number 1-3579) Pitney Bowes Inc. Deferred Incentive Savings Plan for the Board Incorporated by reference to Exhibit 10(g) to Form 10-K as filed of Directors, as amended and restated effective January 1, 2009 with the Commission on...

  • Page 49
    ...Description Status or incorporation by reference 10(j) * Pitney Bowes Inc. 1998 U.K. S.A.Y.E. Stock Option Plan Incorporated by reference to Annex II to the Definitive Proxy Statement for the 2006 Annual Meeting of Stockholders filed with the Commission on March 23, 2006 (Commission file number...

  • Page 50
    ..., thereunto duly authorized. Date: February 22, 2013 PITNEY BOWES INC. Registrant By: /s/ Marc B. Lautenbach Marc B. Lautenbach 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 on...

  • Page 51
    ... Number Report of Independent Registered Public Accounting Firm Consolidated Financial Statements of Pitney Bowes Inc. Consolidated Statements of Income for the Years Ended December 31, 2012, 2011 and 2010 Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2012, 2011...

  • Page 52
    ... 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 subsidiaries at December 31, 2012 and 2011, and the...

  • Page 53
    ... 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 Research and development Restructuring charges...

  • Page 54
    ... and postretirement plans, net of tax benefit of $(38,934), $(93,251) and $(17,183), respectively Amortization of pension and postretirement costs, net of tax of $28,701, $19,601 and $16,028, respectively Other comprehensive loss Comprehensive income - Pitney Bowes Inc. Preferred stock dividends of...

  • Page 55
    PITNEY BOWES INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts) December 31, 2012 December 31, 2011 ASSETS Current assets: Cash and cash equivalents Short-term investments Accounts receivable (net of allowance of $20,219 and $25,667, respectively) Short-term finance receivables (...

  • Page 56
    PITNEY BOWES INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Years Ended December 31, 2012 2011 2010 Cash flows from operating activities: Net income before attribution of noncontrolling interests Restructuring payments Special pension plan contributions Tax payments related to sale of ...

  • Page 57
    ... of common stock Balance at December 31, 2010 Net income - Pitney Bowes Inc. Other comprehensive loss Cash dividends Common ($1.48 per share) Preference Issuances of common stock Conversions to common stock Stock-based compensation Repurchase of common stock Balance at December 31, 2011 Net income...

  • Page 58
    ... asset impairment review, allowance for doubtful accounts and credit losses, residual values of leased assets, useful lives of long-lived and intangible assets, restructuring costs, pensions and other postretirement benefits, income tax reserves, deferred tax asset valuation allowance and loss...

  • Page 59
    ... equipment. Major improvements which add to productive capacity or extend the life of an asset are capitalized while repairs and maintenance are charged to expense as incurred. Leasehold improvements are amortized over the shorter of the estimated useful life or the remaining lease term. Fully...

  • Page 60
    ... timing of revenue recognition. Revenue is allocated 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...

  • Page 61
    ... of mailrooms, copy centers, print management or other document management functions. These service agreements are typically one to five year contracts that contain a monthly service fee and in many cases a "click" charge based on the number of copies made, documents processed, machines in...

  • Page 62
    ...and stock purchase plans. Statement of Cash Flows During the fourth quarter of 2012, we determined that beginning with the three month period ended December 31, 2011 and each subsequent three month period through September 30, 2012, changes in certain investment-related working capital accounts that...

  • Page 63
    ... years ended December 31, 2012, 2011 and 2010, respectively. In 2012, we recorded asset impairment charges of $7 million to write down the carrying value of certain assets of IMS (see Note 18). In 2011, we recorded asset impairment charges of $13 million associated with a restructuring program (see...

  • Page 64
    ... are generally due each month; however, customers may rollover outstanding balances. Finance receivables at December 31, 2012 and 2011 consisted of the following: December 31, 2012 North America International Total North America December 31, 2011 International Total Sales-type lease receivables...

  • Page 65
    ...credit losses for finance receivables for the years ended December 31, 2012, 2011 and 2010 was as follows: Sales-type Lease Receivables North America International Loan Receivables North America International Total Balance at December 31, 2009 Amounts charged to expense Accounts written off Balance...

  • Page 66
    ... 31, 2012 and 2011 by relative risk class (low, medium, high) based on the relative scores of the accounts within each class. The relative scores are determined based on a number of factors, including the company type, ownership structure, payment history and financial information. A fourth class is...

  • Page 67
    ...-tax gain of $27 million. Pitney Bowes Bank The Pitney Bowes Bank (the Bank) is an indirect wholly owned subsidiary whose primary business is to provide financing solutions to clients that rent or lease postage meters. The Bank's key product offering, Purchase Power, is a revolving credit solution...

  • Page 68
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) 2011, the Bank had assets of $738 million and liabilities of $680 million. The Bank is regulated by the Federal Deposit Insurance Corporation (FDIC) and the Utah Department of ...

  • Page 69
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) The changes in the carrying amount of goodwill, by reporting segment, for the years ended December 31, 2012 and 2011 were as follows: Gross value before accumulated impairment ...

  • Page 70
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) 7. Debt December 31, 2012 2011 Term loans 4.625% notes due 2012 3.875% notes due 2013 4.875% notes due 2014 (1) 5.00% 4.75% 5.75% 4.75% 5.60% 6.25% 5.25% 5.25% Other (4) Total debt...

  • Page 71
    ...407,060 149,129 556,189 The provision for income taxes from continuing operations consisted of the following: Years Ended December 31, 2012 2011 2010 U.S. Federal: Current Deferred U.S. State and Local: Current Deferred International: Current Deferred $ 174,705 16,136 190,841 3,187 (26,273) (23...

  • Page 72
    ... Years Ended December 31, 2012 2011 2010 Federal statutory provision State and local income taxes Impact of non-U.S. leveraged lease asset sales Other impact of foreign operations Tax exempt income/reimbursement Federal income tax credits/incentives Unrealized stock compensation benefits Resolution...

  • Page 73
    ...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 74
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) Uncertain Tax Positions A reconciliation of the amount of unrecognized tax benefits is as follows: 2012 2011 2010 Balance at beginning of year Increases from prior period positions ...

  • Page 75
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) 10. Stockholders' Equity Preferred Stock We have two classes of Preferred Stock issued and outstanding: the 4% Preferred Stock and the $2.12 Preference Stock. The 4% Preferred Stock...

  • Page 76
    ... Income: Years Ended December 31, 2012 2011 2010 Cost of equipment sales Cost of support services Cost of business services Selling, general and administrative Research and development Stock-based compensation expense Income tax Stock-based compensation expense, net of tax Stock Plans $ 1,212 522...

  • Page 77
    ... December 31, 2012, there was $1 million of unrecognized compensation cost related to market stock units that is expected to be recognized over a weighted-average period of 1.6 years. Stock Options Under our stock option plan, certain officers and employees are granted options at prices equal to the...

  • Page 78
    ... no time will the exercise price be less than the lowest price permitted under Section 423 of the Internal Revenue Code. Employees purchased 291,859 shares and 258,667 shares in 2012 and 2011, respectively. We have reserved 4,816,935 common shares for future purchase under the ESPP. Directors' Stock...

  • Page 79
    ... market funds / commercial paper Equity securities Commingled fixed income securities Debt securities - U.S. and foreign governments, agencies and municipalities Debt securities - corporate Mortgage-backed / asset-backed securities Derivatives Interest rate swaps Foreign exchange contracts Total...

  • Page 80
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) December 31, 2011 Level 1 Level 2 Level 3 Total Assets: Investment securities Money market funds / commercial paper Equity securities Commingled fixed income securities Debt ...

  • Page 81
    ... 31, 2012 and 2011, available-for-sale securities consisted of the following: December 31, 2012 Gross unrealized gains Gross unrealized losses Estimated fair value Amortized cost Money market funds / commercial paper U.S. and foreign governments, agencies and municipalities Corporate Mortgage-back...

  • Page 82
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) The fair value of our derivative instruments at December 31, 2012 and 2011 was as follows: December 31, Designation of Derivatives Balance Sheet Location 2012 2011 Derivatives ...

  • Page 83
    ... the years ended December 31, 2012 and 2011: Year Ended December 31, Derivative Gain (Loss) Recognized in Earnings Derivatives Instrument Location of Derivative Gain (Loss) 2012 2011 Foreign exchange contracts Selling, general and administrative expense $ (4,254) $ (17,214) Credit-Risk-Related...

  • Page 84
    ... years ended December 31, 2012, 2011 and 2010 was as follows: Severance and benefits costs Pension and Retiree Medical Asset impairments Other exit costs Total Balance at December 31, 2009 Expenses, net Gain on sale of facility Cash payments Non-cash charges Balance at December 31, 2010 Expenses...

  • Page 85
    ... share amounts) 15. Leases We lease office facilities, sales and service offices, equipment and other properties under operating lease agreements extending from three to eight years. Certain leases require us to pay property taxes, insurance and routine maintenance and include renewal options and...

  • Page 86
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) Financial information for our reportable segments for the years ended December 31, 2012, 2011 and 2010 was as follows: Years Ended December 31, 2012 2011 2010 Revenue: North America...

  • Page 87
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) Years Ended December 31, 2012 2011 2010 Depreciation and amortization: North America Mailing International Mailing Small & Medium Business Solutions Production Mail Software ...

  • Page 88
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) December 31, 2012 2011 2010 Assets: North America Mailing International Mailing Small & Medium Business Solutions Production Mail Software Management Services Mail Services ...

  • Page 89
    ...amounts) 17. Retirement Plans and Postretirement Medical Benefits We have several defined benefit retirement plans. Benefits are primarily based on employees' compensation and years of service. Our contributions are determined based on the funding requirements of U.S. federal and other governmental...

  • Page 90
    ...benefit cost for defined benefit pension plans were as follows: United States 2012 2011 2010 2012 $ $ 72,382 803 - 73,185 $ $ 13,191 99 (10) 13,280 Foreign 2011 2010 Service cost Interest cost Expected return on plan assets Amortization of transition credit Amortization of prior service cost...

  • Page 91
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) Other changes in plan assets and benefit obligations for defined benefit pension plans recognized in other comprehensive income were as follows: United States 2012 2011 2012 Foreign ...

  • Page 92
    ... futures contracts may be used for market exposure, to alter risk/return characteristics and to manage foreign currency exposure. Investments within the private equity and real estate portfolios are comprised of limited partnership units in primary and secondary fund of funds and units in open-ended...

  • Page 93
    ... Pension Plans December 31, 2012 Level 1 Level 2 Level 3 Total Money market funds Equity securities Commingled fixed income securities Debt securities - U.S. and foreign governments, agencies and municipalities Debt securities - corporate Mortgage-backed securities Asset-backed securities Private...

  • Page 94
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) December 31, 2011 Level 1 Level 2 Level 3 Total Money market funds Equity securities Commingled fixed income securities Debt securities - U.S. and foreign governments, agencies and ...

  • Page 95
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) December 31, 2011 Level 1 Level 2 Level 3 Total Money market funds Equity securities Commingled fixed income securities Debt securities - U.S. and foreign governments, agencies and ...

  • Page 96
    ...'s securities lending program. The U.S. pension plan lends securities that are held within the plan to other banks and/or brokers, and receives collateral, typically cash. This collateral is invested in a short-term fixed income securities commingled fund. The commingled fund is not listed or...

  • Page 97
    ... period the employee provides credited service to the company. Employees hired before January 1, 2005 in the U.S. and before April 1, 2005 in Canada become eligible for retiree health care benefits after reaching age 55 or in the case of employees of Pitney Bowes Management Services after reaching...

  • Page 98
    ... service cost Total $ $ 8,961 661 9,622 The weighted-average discount rates used to determine end of year benefit obligation and net periodic pension cost include: 2012 2011 2010 Discount rate used to determine benefit obligation U.S. Canada Discount rate used to determine net period benefit cost...

  • Page 99
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) The assumed health care cost trend rate used in measuring the accumulated postretirement benefit obligation for the U.S. plan was 7.50% for 2012 and 7.50% for 2011. The assumed ...

  • Page 100
    ...following table: Years Ended December 31, 2012 2011 2010 International Mail Services Revenue Cost of revenue SG&A Restructuring charges and asset impairments Goodwill impairment Impairment on assets held for sale Loss before taxes Tax benefit Net loss Capital Services, net of tax Income (loss) from...

  • Page 101
    ... FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) 19. Earnings per Share The calculations of basic and diluted earnings per share are presented below. The sum of earnings per share amounts may not equal the totals due to rounding. Years Ended December 31, 2012 2011 2010...

  • Page 102
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) 20. Quarterly Financial Data (unaudited) The following table sets forth selected unaudited quarterly data for the years ended December 31, 2012 and 2011. The amounts in the tables ...

  • Page 103
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) First Quarter Second Quarter Third Quarter Fourth Quarter Total 2011 Revenue Cost and expenses Income from continuing operations Provision (benefit) for income taxes Income from ...

  • Page 104
    PITNEY BOWES INC. SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (Dollars in thousands) Description Balance at beginning of year Additions Deductions Balance at end of year Allowance for doubtful accounts 2012 2011 2010 Valuation allowance for deferred tax asset 2012 2011 2010 $...

  • Page 105
    Exhibit (12) PITNEY BOWES INC. COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (Dollars in thousands) Years Ended December 31, 2012 2011 2010 2009 2008 Income from continuing operations before income taxes Add: Interest expense (1) Portion of rents representative of the interest factor ...

  • Page 106
    ... 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 LLC PB Forms, Inc. PB...

  • Page 107
    ... Services LLC Pitney Bowes Global Limited Pitney Bowes Global LLC Pitney Bowes Government Solutions, Inc. Pitney Bowes Holdco Limited Pitney Bowes Holding SNC Pitney Bowes Holdings B.V. Pitney Bowes Holdings Denmark ApS Pitney Bowes Holdings Limited Pitney Bowes Hong Kong Limited Pitney Bowes India...

  • Page 108
    ... Pitney Bowes Software India Private Limited Pitney Bowes Software K. K. Pitney Bowes Software Latin America Inc. Korea UK Luxembourg Luxembourg Luxembourg Shanghai Belgium Canada Denmark Germany Italy UK Netherlands Norway Sweden Delaware UK UK UK Dubai Netherlands New Zealand Norway Canada Canada...

  • Page 109
    ...Software plc) Portrait Software UK Ltd Print, Inc. PrintValue Solutions, Inc. Quadstone Paramics Ltd Quadstone Trustee Company Ltd Services Integrations Group, L.P. SIG-GP, L.L.C. Technopli SARL The Pitney Bowes Bank, Inc. Volly LLC Wheeler Insurance, Ltd. UK India Singapore Australia France Sweden...

  • Page 110
    ... Pitney Bowes Inc. of our report dated February 22, 2013 relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Form /s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Stamford, Connecticut...

  • Page 111
    ... end of the period covered by this report based on such evaluation; and Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual...

  • Page 112
    ... end of the period covered by this report based on such evaluation; and Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual...

  • Page 113
    ... In connection with the Annual Report of Pitney Bowes Inc. (the "Company") on Form 10-K for the year ended December 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Marc B. Lautenbach, Chief Executive Officer of the Company, certify, to the best...

  • Page 114
    ... 2002 In connection with the Annual Report of Pitney Bowes Inc. (the "Company") on Form 10-K for the year ended December 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Michael Monahan, Chief Financial Officer of the Company, certify, to the best...

  • Page 115
    ... 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 Inc. 1 Elmcroft Road, Stamford, CT 06926-0700 Transfer Agent...

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