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Pitney Bowes Annual Report 2013
The next
chapter

Table of contents

  • Page 1
    The next chapter Pitney Bowes Annual Report 2013

  • Page 2
    ...enable commerce has been an essential part of the Pitney Bowes story for over 93 years. In 2013, we began the next chapter of...are pulling together as a team, executing on our strategies, and enabling clients to use our technologies and know-how to compete in their markets. With the foundation that we...

  • Page 3
    .... We made a good start in 2013. We outlined a strategy to unlock the inherent value of Pitney Bowes for our clients, shareholders, and employees worldwide. That strategy entails focusing on execution in three areas: stabilizing our mail business, driving operational excellence, and accelerating...

  • Page 4
    ... Team (left to right) Bill Hughes, Lila Snyder, Christoph Stehmann, Abby Kohnstamm, Roger Pilc, and Mark Shearer (left to right) Deborah Pfeiffer, Mark Wright, Daniel Goldstein, Joseph Schmitt, and Johnna Torsone Since arriving last year at Pitney Bowes, I have been impressed by our capacity...

  • Page 5
    ...global e-commerce and shipping solutions to overcome obstacles and smooth the way. This, in turn, is making it easier for eBay to expand its global footprint by making cross-border commerce simpler, more transparent, and more satisfying to both buyers and sellers. Pitney Bowes Annual Report 2013 3

  • Page 6
    .... "Our initial goal was to expand our Web business and to fix an outdated shipping operation," said Monte Rostad, Principal. "With SendSuite Live, we ended up saving money, driving online sales, discovering new efficiencies and improving customer service. You can't do much better than that...

  • Page 7
    ... the location of your item while it's en route, and you want to receive the item in a reasonable amount of time. Enter our partnership with eBay on the Global Shipping Program, started in 2012. The program uses Pitney Bowes technology to provide a fully landed cost quote to international buyers at...

  • Page 8
    ... Cash dividends per share of common stock Average common and potential common shares outstanding Total assets Total debt Stockholders' equity (deficit) Total employees As adjusted...,631 27,353 202,765,947 $ 8,147,104 $ 4,233,909 $ (38,986) 28,683 $ 1,058,363 6 Pitney Bowes Annual Report 2013

  • Page 9
    ... financial information should not be construed as an alternative to our reported results determined in accordance with GAAP. Further, our definition of this adjusted financial information may differ from similarly titled measures used by other companies. Pitney Bowes Annual Report 2013 7

  • Page 10
    ... and President, Pitney Bowes Mailing, North America Amy C. Corn Vice President, Secretary and Chief Governance Officer Daniel J. Goldstein Executive Vice President and Chief Legal and Compliance Officer Steven J. Green Vice President - Finance and Chief Accounting Officer Abby F. Kohnstamm...

  • Page 11
    ... 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, 2013 Commission file number: 1-3579 PITNEY BOWES INC. Incorporated in Delaware 1 Elmcroft Road, Stamford, CT 06926...

  • Page 12

  • Page 13
    ... 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 14
    ... lease our mailing equipment and postage meters a variety of financing solutions. Through our wholly owned subsidiary, The Pitney Bowes Bank (the Bank), we offer a revolving credit solution that enables our clients to finance their postage costs and supply purchases. The Bank also provides a deposit...

  • Page 15
    ...of white paper, apply the appropriate postage to the envelope, and finally sort the envelopes by zip code and realize reduced postage costs. We have a strategic alliance with a major printing products company to offer our clients high-volume professional quality production printers. Presort Services...

  • Page 16
    ...of over 2,000 service technicians in North America and 900 service technicians internationally. Our technicians diagnose and repair our increasingly complex mailing equipment and sophisticated software solutions. Most of our support services are provided under annual maintenance contracts. Sales and...

  • Page 17
    ... to rent, lease or purchase products, supplies and services. The Bank also provides a deposit solution to those clients that prefer to prepay postage and earn interest on their deposits. The Bank is regulated by the Federal Deposit Insurance Corporation (FDIC) and the Utah Department of Financial...

  • Page 18
    ... Vice President and President, Pitney Bowes SMB Mailing Solutions in April 2013. Before joining Pitney Bowes, Mr. Shearer held numerous positions during his 30 year career at IBM, including general management, business and product strategy, and marketing. Before his retirement from IBM in 2010, Mr...

  • Page 19
    ... certain types of mailings, increase the difficulty of using information or materials in the mail, or impose higher taxes or fees on mailing or postal services. If we are not successful at implementing the strategies to stabilize our mailing business, or if physical mail volumes were to experience...

  • Page 20
    ...financing services to our clients for equipment, postage and supplies purchases to our clients is largely dependent upon our continued access to the U.S. capital markets. We are currently funding our financing activities with a combination of cash generated from operations, deposits held in the Bank...

  • Page 21
    ... will not materially adversely affect our financial condition, results of operations or cash flows. We may not realize the anticipated benefits from our planned implementation of a new Enterprise Resource Planning (ERP) system. We will begin implementing a new ERP system in 2014. The implementation...

  • Page 22
    ... facilities located in Noida, India and Pune, India. Our corporate headquarters is located in a building that we own in Stamford, Connecticut. In the third quarter of 2013, we entered into an agreement to sell this building. We will lease a smaller corporate headquarters in Stamford, Connecticut and...

  • Page 23
    ... AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded under the symbol "PBI" and is principally traded on the New York Stock Exchange (NYSE). At January 31, 2014, we had 19,566 common stockholders of record. The following table sets forth the high and low sales prices, as reported on...

  • Page 24
    Indexed Returns December 31, Company Name / Index 2008 2009 2010 2011 2012 2013 Pitney Bowes S&P 500 Peer Group $100 $100 $100 $95 $126 $129 $108 $146 $156 $89 $149 $142 $57 $172 $162 $132 $228 $247 13

  • Page 25
    ...Net income - Pitney Bowes Inc. Cash dividends paid per share of common stock Balance sheet data: $ $ 0.70 0.9375 $ $ 1.96 0.25 2.21 1.50 $ $ $ 2.16 0.89 3.05 1.48 $ $ $ 1.27 0.14 1.41 1.46 $ $ $ 1.65 0.39 2.04 1.44 December 31, 2013 2012 2011 2010 2009 Total assets Long-term debt Total debt...

  • Page 26
    ... in equipment sales, supplies sales and business services were offset by declines in rentals and financing revenue, software licensing revenue and support services. Rentals and financing revenue decreased 5% and 7%, respectively, due to a decline in the number of installed meters worldwide and lower...

  • Page 27
    ... our clients broader access to products and services through online and direct sales channels, broader solutions to serve the rapid growth in parcel shipments and a more agile workforce. In addition, postal agencies in North America recently announced discounts for postage meter users, which are...

  • Page 28
    ....9% 41.4% Equipment sales Equipment sales revenue increased 2% to $889 million in 2013 compared to 2012. Higher sales of production printers globally and sorting equipment in North America drove a 4% increase in equipment sales; however, lower mailing equipment sales in North America accounted for...

  • Page 29
    ....5% in 2011. Business Services Business services revenue increased 6% to $631 million in 2013 compared to 2012. Revenue from our cross-border parcel management solutions increased revenue by 10%, but lower marketing services fees resulting from certain contract renewals decreased revenue by 4%. Cost...

  • Page 30
    ..., and expect to reach this benefit run rate by 2015. These actions resulted in net restructuring charges of $60 million (including $2 million related to discontinued operations). Also during 2013, we entered into an agreement to sell our corporate headquarters building and recorded a noncash asset...

  • Page 31
    ...mail and evidence postage in areas outside North America. Enterprise Business Solutions: Production Mail: Includes the worldwide revenue and related expenses from the sale, support and other professional services of our high-speed, high-volume inserting and sortation equipment and production printer...

  • Page 32
    ..., comprised of supplies, rentals and financing revenue, declined 6% compared to last year and contributed to a 3% decline in North America Mailing revenue primarily due to fewer meters in service and lower equipment sales in prior periods. Equipment sales and support services revenue each declined...

  • Page 33
    ... in North America resulted in an 8% increase in Production Mail revenue, while higher supplies sales due to the growing base of production printers contributed to a 2% increase in Production Mail revenue. Lower support services revenue primarily due to fewer maintenance contracts on new equipment...

  • Page 34
    ... in customer deposits. Net cash used in financing activities was $868 million in 2013 compared to $519 million in 2012. The increase in cash used was due to higher net repayments of debt partially offset by lower dividend payments. During the year, we paid $1,079 million to redeem long-term debt and...

  • Page 35
    ... by period Total Less than 1 year 1-3 years 3-5 years More than 5 years Long-term debt Interest payments on debt (1) Non-cancelable operating lease obligations Purchase obligations (2) Pension plan contributions (3) Retiree medical payments (4) Total $ 3,311 1,883 201 170 40 195 $ - 176 56 131...

  • Page 36
    ... 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 table represent our estimate of future benefits payments. Critical Accounting Estimates The preparation of our financial statements...

  • Page 37
    ...and foreign pension plans will be frozen. Residual value of leased assets We provide lease financing for our products primarily through sales-type leases. Equipment residual values are determined at inception of the lease using estimates of equipment fair value at the end of the lease term. Residual...

  • Page 38
    ... 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 39
    ... regarding the expected stock price volatility, risk-free interest rate, 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...

  • Page 40
    ... as foreign exchange rates change, to protect the value of external and intercompany transactions. The principal currencies actively hedged are the British pound, Euro and Canadian dollar. We employ established policies and procedures governing the use of financial instruments to manage our exposure...

  • Page 41
    ... conditions, a 95% confidence level and a one-day holding period. The model includes all of our debt, interest rate derivative contracts and foreign exchange derivative contracts associated with forecasted transactions. The model excludes all anticipated transactions and firm commitments and account...

  • Page 42
    ... 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, 2013. In making this assessment, management used the criteria...

  • Page 43
    .... 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...

  • Page 44
    ...to Form 8-K as filed with The Bank of New York, and Citibank, N.A., to the Indenture, dated the Commission on October 24, 2007 (Commission file number as of February 14, 2005, by and between the Company and 1-3579) Citibank Retirement Plan for Directors of Pitney Bowes Inc. Incorporated by reference...

  • Page 45
    ...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 46
    ..., thereunto duly authorized. Date: February 21, 2014 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 47
    PITNEY BOWES INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA Page 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, 2013, 2012 and 2011 ...

  • Page 48
    ..., on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting...

  • Page 49
    PITNEY BOWES INC. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) Years Ended December 31, 2013 Revenue: Equipment sales Supplies Software Rentals Financing Support services Business services Total revenue Costs and expenses: Cost of equipment sales Cost of supplies Cost ...

  • Page 50
    ... and postretirement plans, net of tax of $64,316, $(38,934) and $(93,251), respectively Amortization of pension and postretirement costs, net of tax of $19,228, $21,876 and $19,652, respectively Other comprehensive income (loss) Comprehensive income - Pitney Bowes Inc. Preferred stock dividends of...

  • Page 51
    ... Assets held for sale Total current assets Property, plant and equipment, net Rental property and equipment, net Long-term finance receivables (net of allowance of $12,609 and $14,610, respectively) Investment in leveraged leases Goodwill Intangible assets, net Non-current income taxes Other assets...

  • Page 52
    ...-for-sale investment securities Short-term and other investments Capital expenditures Proceeds from sale of businesses Proceeds from sale of leveraged lease assets Net investment in external financing Reserve account deposits Proceeds from sale of facility Net cash provided by (used in) investing...

  • Page 53
    ... stock Total equity Balance at December 31, 2010 Net income - Pitney Bowes Inc. Other comprehensive loss Cash dividends Common Preference Issuances of common stock Conversions to common stock Stock-based compensation Repurchase of common stock Balance at December 31, 2011 Net income - Pitney Bowes...

  • Page 54
    ...we sold our International Management Services business (PBMSi), North America Management Services business (PBMS NA), Nordic furniture business and International Mailing Services business (IMS). Further, we made certain organizational changes and realigned our business units and segment reporting to...

  • Page 55
    ... purchased materials and services, payroll and personnel-related costs and interest costs. The cost of internally developed software is amortized on a straight-line basis over its estimated useful life, principally three to 10 years. Costs incurred for the development of software to be sold, leased...

  • Page 56
    ... the actual and expected return on plan assets are amortized to pension cost over a five-year period. We recognize the funded status of pension and other postretirement benefit plans in the Consolidated Balance Sheets. Gains and losses, prior service costs and credits and any remaining transition...

  • Page 57
    ... software licenses upon transfer of title, which is generally upon shipment. Rentals Revenue We rent equipment, primarily postage meters and mailing equipment, under short-term rental agreements. Rental revenue includes revenue from the subscription for digital meter services. We may invoice...

  • Page 58
    ... policies and procedures, including the use of derivatives. We use derivative instruments to manage the related cost of debt and to limit the effects of foreign exchange rate fluctuations on financial results. Derivative instruments typically consist of interest-rate swaps, forward contracts...

  • Page 59
    ...line items affected by the reclassification. The new standard is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. The adoption of this standard resulted in additional disclosures, but did not impact our financial condition...

  • Page 60
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) 2. Inventories December 31, 2013 2012 Raw materials and work in process Supplies and service parts Finished products Inventory at FIFO cost Excess of FIFO cost over LIFO cost Total...

  • Page 61
    ... 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, 2013 and 2012 consisted of the following: December 31, 2013 North America International...

  • Page 62
    ...credit losses for finance receivables for the years ended December 31, 2013, 2012 and 2011 was as follows: Sales-type Lease Receivables North America International Loan Receivables North America International Total Balance at December 31, 2010 Amounts charged to expense Accounts written off Balance...

  • Page 63
    ...978 38,970 The extension of credit and management of credit lines to new and existing clients uses a combination of an automated credit score, where available, and a detailed manual review of the client's financial condition and, when applicable, payment history. Once credit is granted, the payment...

  • Page 64
    ...) December 31, 2013 2012 Sales-type lease receivables Risk Level Low Medium High Not Scored Total Loan receivables Risk Level Low Medium High Not Scored Total Troubled Debt We maintain a program for U.S. clients in our North America loan portfolio who are experiencing financial difficulties, but...

  • Page 65
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) 5. Intangible Assets and Goodwill Intangible assets Intangible assets at December 31, 2013 and 2012 consisted of the following: December 31, 2013 Gross Carrying Amount Accumulated ...

  • Page 66
    ... 31, 2012 Impairment Other (1) December 31, 2013 North America Mailing International Mailing Small & Medium Business Solutions Production Mail Presort Services Enterprise Business Solutions Digital Commerce Solutions Total reportable segments Discontinued operations Total goodwill $ 355,874...

  • Page 67
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) 6. Accounts Payable and Accrued Liabilities Accounts payable and accrued liabilities consisted of the following: December 31, 2013 2012 Accounts payable Customer deposits Employee ...

  • Page 68
    ... of 2013, we issued $425 million of 6.7% fixed rate notes. Interest is payable quarterly. The notes mature in 2043, but may be redeemed, at our option, in whole or in part, at any time on or after March 7, 2018 at par plus accrued and unpaid interest. We used the net proceeds from the notes to fund...

  • Page 69
    ... from tax planning initiatives, $5 million from the adjustment of non-U.S. tax accounts from prior periods and $4 million from the retroactive effect of 2013 U.S. tax legislation. The effective tax rate for 2012 includes tax benefits of $32 million from the sale of non-U.S. leveraged lease assets...

  • Page 70
    ... on 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 Tax credit...

  • Page 71
    ... decision and ruled in favor of the IRS and adverse to the Historic Boardwalk Hall LLC, a partnership in which we had made an investment in the year 2000. In January 2014, the Tax Court entered an order to implement the rulings of the Third Circuit. Under the terms of the partnership agreement, 60

  • Page 72
    ... indemnification provisions of the partnership agreement, the amount of tax and interest due as a result of this matter could be as much as $100 million. 9. Noncontrolling Interests (Preferred Stockholders' Equity in Subsidiaries) Pitney Bowes International Holdings, Inc. (PBIH), a subsidiary, has...

  • Page 73
    ... Total before tax Tax benefit Net of tax Unrealized gains (losses) on available for sale securities Interest income Tax benefit (provision) Net of tax Pension and Postretirement Benefit Plans (b) Transition credit Prior service (costs) credit Actuarial losses Total before tax Tax benefit Net of...

  • Page 74
    ... Income: Years Ended December 31, 2013 2012 2011 Cost of equipment sales Cost of support services Cost of business services Selling, general and administrative Research and development Discontinued operations (1) Stock-based compensation expense Tax benefit Stock-based compensation expense, net of...

  • Page 75
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) Stock Plans We have a long-term incentive program whereby eligible employees may be granted restricted stock units, non-qualified stock options, other stock-based awards, cash or any...

  • Page 76
    ... stock price, a risk-free interest rate, the expected dividend yield of our stock and expected life of the award. Expected 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...

  • Page 77
    ...Internal Revenue Code. Employees purchased 222,159 shares and 291,859 shares in 2013 and 2012, respectively. We have reserved 4,594,776 common shares for future purchase under the ESPP. Directors' Stock Plan Each non-employee director is granted shares of restricted stock on an annual basis. In 2013...

  • Page 78
    ... Funds / Commercial Paper: Money market funds typically invest in government securities, certificates of deposit, commercial paper and other highly liquid, low risk securities. Money market funds are principally used for overnight deposits and are classified as Level 1 when unadjusted quoted prices...

  • Page 79
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) Available-For-Sale Securities At December 31, 2013 and 2012, available-for-sale securities consisted of the following: December 31, 2013 Gross unrealized gains Gross unrealized ...

  • Page 80
    ... 31, Designation of Derivatives Balance Sheet Location 2013 2012 Derivatives designated as hedging instruments Other current assets and prepayments: Foreign exchange contracts Other assets: Interest rate swaps Accounts payable and accrued liabilities: Foreign exchange contracts $ 546 - (526) $ 78...

  • Page 81
    ... 31, Derivative Gain (Loss) Recognized in Earnings Derivatives Instrument Location of Derivative Gain (Loss) 2013 2012 Foreign exchange contracts Selling, general and administrative expense $ (16,574) $ (4,254) Credit-Risk-Related Contingent Features Certain derivative instruments contain...

  • Page 82
    ... reserves for the years ended December 31, 2013, 2012 and 2011 and includes amounts for both continuing operations and discontinued operations. Severance and benefits costs Pension and Retiree Medical Asset impairments Other exit costs Total Balance at December 31, 2010 Expenses, net Gain on sale...

  • Page 83
    ... 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 escalation clauses. Rental...

  • Page 84
    ...Small & Medium Business Solutions: North America Mailing: Includes the revenue and related expenses from the sale, rental and financing of mailing equipment and supplies for small and medium size businesses to efficiently create mail and evidence postage in the U.S. and Canada. International Mailing...

  • Page 85
    ... Years Ended December 31, 2013 2012 2011 North America Mailing International Mailing Small & Medium Business Solutions Production Mail Presort Services Enterprise Business Solutions Digital Commerce Solutions Total EBIT Reconciling items: Interest, net (1) Corporate and other expenses Restructuring...

  • Page 86
    ...,095 155,980 December 31, 2013 2012 2011 Assets: North America Mailing International Mailing Small & Medium Business Solutions Production Mail Presort Services Enterprise Business Solutions Digital Commerce Solutions Total for reportable segments Reconciliation to consolidated amount: Discontinued...

  • Page 87
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) Geographic Data Years Ended December 31, 2013...781,692 1,343,649 4,125,341 December 31, 2013 2012 2011 Identifiable long-lived assets: United States Outside United States Total $ $ ...

  • Page 88
    ... 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 laws and regulations. We use...

  • Page 89
    ... service cost (credit) Transition asset Total The components of net periodic benefit cost for defined benefit pension plans were as follows: United States 2013 2012 2011 2013 $ $ 24,642 9 - 24,651 $ $ 8,249 (61) (9) 8,179 Foreign 2012 2011 Service cost Interest cost Expected return on plan...

  • Page 90
    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 2013 2012 2013 Foreign ...

  • Page 91
    ..., options, forwards and 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...

  • Page 92
    ..., and the expected long-term weighted average rate of return on these plan assets was 7.38% in 2013 and 7.25% in 2012. Fair Value Measurements of Plan Assets The following tables show, by level within the fair value hierarchy, the financial assets and liabilities that are accounted for at fair value...

  • Page 93
    ... lending payable amount. Foreign Plans December 31, 2013 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 Total plan assets at fair value Cash...

  • Page 94
    ... of deposit, commercial paper of companies and other highly liquid, low risk securities. Money market funds are principally used for overnight deposits. The money market funds are classified as Level 2 since they are not actively traded on an exchange. Equity Securities: Equity securities include...

  • Page 95
    ... in a short-term fixed income securities commingled fund. The commingled fund is not listed or traded on an exchange and is classified as Level 2. This amount invested in the fund is offset by a corresponding liability reflected in the U.S. pension plan's net assets available for benefits. Level...

  • Page 96
    ... 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 97
    ... actuarial loss Prior service cost Total $ $ 6,092 160 6,252 The weighted-average discount rates used to determine end of year benefit obligation and net periodic pension cost include: 2013 2012 2011 Discount rate used to determine benefit obligation U.S. Canada Discount rate used to determine net...

  • Page 98
    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 7.0% for 2013 and 7.5% for 2012. The assumed health ...

  • Page 99
    ... sold in 2006. The following tables show selected financial information included in discontinued operations: Year Ended December 31, 2013 Nordic furniture business Capital Services PBMS IMS Total Revenue Loss from operations Gain (loss) on sale (Loss) income before taxes Tax provision (benefit...

  • Page 100
    ...of our annual goodwill impairment review, management determined that PBMSi was impaired. The fair value of PBMSi was determined using a combination of techniques including the present value of future cash flows, derived from our long-term plans and historical experience, multiples of competitors and...

  • Page 101
    ... stock Stock plans Weighted-average shares used in diluted EPS Basic earnings per share: Continuing operations Discontinued operations Net income - Pitney Bowes Inc. Diluted earnings per share: Continuing operations Discontinued operations Net income - Pitney Bowes Inc. Anti-dilutive options...

  • Page 102
    ... Financial Data (unaudited) The following table sets forth selected unaudited quarterly data for the years ended December 31, 2013 and 2012. The amounts in the tables below have been revised from the amounts previously filed to reflect the results of PBMS, the Nordic furniture business and IMS...

  • Page 103
    ...before income taxes Provision for income taxes Income from continuing operations Income (loss) from discontinued operations Net income before attribution of noncontrolling interests Less: Preferred stock dividends of subsidiaries attributable to noncontrolling interests Net income - Pitney Bowes Inc...

  • 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 2013 2012 2011 Valuation allowance for deferred tax asset 2013 2012 2011 $...

  • Page 105
    Exhibit 12 PITNEY BOWES INC. COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (Dollars in thousands) Years Ended December 31, 2013 2012 2011 2010 2009 Income from continuing operations before income taxes Add: Interest expense (1) Portion of rents representative of the interest factor ...

  • Page 106
    ...Inc. Elmcroft Road Realty Corporation Emtex Software, Inc. Encom Europe Limited Factor Humano y Cadena de Personal FSL Holdings Inc. FSL Risk Managers Inc. Group 1 Software China Ltd. Harvey Company, L.L.C Historic Boardwalk Hall, L.L.C. Horizon Management AB Horizon Scandinavia AB Imagitas Security...

  • Page 107
    ... Inc. Pitney Bowes India Private Limited Pitney Bowes International Funding Pitney Bowes International Holdings, Inc. Pitney Bowes International Mail Services Limited Pitney Bowes Ireland Limited Pitney Bowes Italia S.r.l. Pitney Bowes Japan KK Delaware Delaware Delaware Ireland Singapore Singapore...

  • Page 108
    ... Canada Inc. Pitney Bowes Software GmbH Pitney Bowes Software Europe Limited Pitney Bowes Software Europe Holdco Limited Pitney Bowes Software Holdings Limited Pitney Bowes Software Inc. Pitney Bowes Software India Private Limited Pitney Bowes Software K. K. Pitney Bowes Software Latin America...

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    Portrait Software Limited Portrait Software UK Ltd Print, Inc. PrintValue Solutions, Inc. Quadstone Paramics Ltd Quadstone Trustee Company Ltd Technopli SARL The Pitney Bowes Bank, Inc. Volly LLC Wheeler Insurance, Ltd. UK UK Washington Arizona Scotland Scotland France Utah Delaware Vermont

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    ... Pitney Bowes Inc. of our report dated February 21, 2014 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
    ... information; and Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. b. Date: February 21, 2014 /s/ Marc B. Lautenbach Marc B. Lautenbach President and Chief Executive Officer

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    ...; and Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. b. Date: February 21, 2014 /s/ Michael Monahan Michael Monahan Executive Vice President and Chief Financial Officer

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    ... OF 2002 In connection with the Annual Report of Pitney Bowes Inc. (the "Company") on Form 10-K for the year ended December 31, 2013 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...

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    ...ACT OF 2002 In connection with the Annual Report of Pitney Bowes Inc. (the "Company") on Form 10-K for the year ended December 31, 2013 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...

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    ... Plan Owners of Pitney Bowes Inc. common stock may purchase common stock, $1 par value, with their dividends through the Dividend Reinvestment Plan. A prospectus and enrollment card may be obtained by calling (800) 648-8170 or by writing to the agent at the address above. Direct Deposit of Dividends...

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