Pitney Bowes 2012 Annual Report Download - page 35

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17
North America Mailing revenue in 2011 decreased 7% to $1,961 million compared to $2,101 million in 2010. Foreign currency translation
had a less than 1% favorable impact on revenue. Excluding the effects of foreign currency, equipment sales declined 7% as increased
concerns about economic conditions resulted in customers delaying purchases of new equipment and extending leases of existing
equipment. Lease extensions are profitable transactions but generate less revenue 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 (11%), rental revenue (6%), supplies revenue (8%) and service revenue (4%). EBIT decreased 4% to $728 million in
2011 compared to $755 million in 2010 primarily due to lower revenues; however, EBIT margin improved as a result of continued
productivity improvements and lower credit losses.
International Mailing
International Mailing revenue decreased 4% to $676 million in 2012 compared to $707 million in 2011; however, excluding the effects
of foreign currency translation, revenue was flat compared to last year. Excluding the effects of foreign currency, equipment sales
increased 3% due to higher sales in the Nordics and France, partially offset by lower sales in the U.K. Equipment sales in France increased
due to the launch of the Connect+TM mailing system in 2012 and a change in mix from rentals to equipment sales. The decline in the U.K.
was due to overall economic condition. Rental revenue declined 6% primarily due to the change in mix from rentals to equipment sales
in France and lower rentals in the U.K. EBIT decreased 20% to $79 million compared to $99 million in 2011 primarily due to an increase
in the mix of lower margin product sales, including the equipment sales in the Nordics. Foreign currency translation unfavorably impacted
EBIT by 5%.
International Mailing revenue increased 5% in 2011 to $707 million compared to $675 million in 2010, but included a favorable impact
of 6% from foreign currency translation. Excluding the effects of foreign currency, the underlying decrease was primarily due to lower
equipment sales in the U.K., Germany, Asia Pacific and Latin America due to increased concerns about economic conditions throughout
the regions. EBIT increased 25% to $99 million in 2011 compared to $79 million in 2010 primarily due to continued productivity
improvements. Foreign currency translation favorably impacted EBIT by 5%.
Enterprise Business Solutions
Enterprise Business Solutions revenue decreased 2% in 2012 to $2,409 million compared to $2,454 million in 2011. EBIT decreased
10% in 2012 to $248 million compared to $276 million in 2011. Enterprise Business Solutions revenue in 2011 decreased 1% to $2,454
million compared to $2,485 million in 2010 and EBIT decreased 9% to $276 million compared to $304 million in 2010. Within the
Enterprise Business Solutions group:
Production Mail
Production Mail revenue decreased 6% in 2012 to $512 million compared to $544 million in 2011 primarily due to global economic
uncertainty that existed throughout the year. Foreign currency translation had an unfavorable impact on revenue of 2%. EBIT decreased
21% to $26 million in 2012 compared to $33 million in 2011 primarily due to the decline in revenue and higher mix of lower margin
sales.
Production Mail revenue decreased 3% in 2011 to $544 million compared to $561 million in 2010. Foreign currency translation had a
favorable impact of 2% on revenue. Excluding the effects of foreign currency, equipment sales decreased 11% as many enterprise accounts
worldwide, especially in Europe, delayed capital investment commitments. EBIT decreased 47% to $33 million compared to $61 million
in 2010 due to lower revenue and the expenses incurred in the development of VollyTM, 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 currency translation had a 1%
unfavorable impact on revenue. EBIT for 2012 and 2011 was $38 million.
In 2011, Software revenue increased 9% to $407 million compared to $375 million in 2010. Foreign currency translation had a 3%
favorable impact on revenue and the full year impact of 2010 acquisitions accounted for 3% of the increase. The remaining increase was
primarily due to higher licensing revenue in most regions, particularly North America and Asia Pacific. EBIT decreased 5% in 2011 to
$38 million compared to $40 million in 2010 due to higher selling costs as a percentage of revenue. Foreign currency had a favorable
impact of 7% on EBIT.