Pitney Bowes 2013 Annual Report Download - page 54

PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular dollars in thousands, except per share amounts)
43
1. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying Consolidated Financial Statements include the accounts of Pitney Bowes Inc. (we, us, our, or the company) and its
wholly owned subsidiaries. The Consolidated Financial Statements have been prepared in conformity with accounting principles generally
accepted in the United States of America (GAAP). Intercompany transactions and balances have been eliminated. Certain prior year
amounts have been reclassified to conform to the current year presentation.
During the year, 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 reflect the clients we serve, the solutions we offer, and how we manage,
review, analyze and measure our operations. Our historical results have been recast to present the operating results of divested businesses
as discontinued operations and our segment results have been recast to conform to our new segment reporting. The cash flows from
discontinued operations are not separately stated or classified in the accompanying Consolidated Statements of Cash Flows.
Use of Estimates
The preparation of our financial statements in conformity with GAAP requires the use of estimates and assumptions that affect the reported
amounts of assets, liabilities, revenues, expenses and accompanying disclosures, including the disclosure of contingent assets and
liabilities. These estimates and assumptions are based on management's best knowledge of current events, historical experience and other
information available when the financial statements are prepared. These estimates include, but are not limited to, revenue recognition for
multiple element arrangements, goodwill and intangible 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
costs, income tax reserves, deferred tax asset valuation allowance and loss contingencies. Actual results could differ from those estimates
and assumptions.
Cash Equivalents and Short-Term Investments
Cash equivalents include short-term, liquid investments with maturities of three months or less at the date of purchase. Short-term
investments include investments with a maturity of greater than three months but less than one year from the reporting date.
Investment Securities
Investment securities that management has the positive intent and ability to hold to maturity are classified as held-to-maturity and are
carried at amortized cost. Investment securities not classified as held-to-maturity are classified as available-for-sale and recorded at fair
value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income (loss), net of tax. Purchase
premiums and discounts are recognized in interest income using the effective interest method over the terms of the securities. Gains and
losses on the sale of available-for-sale securities are recorded on the trade date and are determined using the specific identification method.
Investment securities are recorded on the Consolidated Balance Sheets as cash and cash equivalents, short-term investments and other
assets depending on the type of investment and maturity.
Accounts Receivable and Allowance for Doubtful Accounts
We estimate our accounts receivable risks and provide an allowance for doubtful accounts accordingly. We evaluate the adequacy of the
allowance based on historical loss experience, aging of receivables, adverse situations that may affect a customer's ability to pay and
prevailing economic conditions and make adjustments to the allowance as necessary. This evaluation is inherently subjective and actual
results may differ significantly from estimated reserves. Accounts receivable are generally due within 30 days after the invoice date.
Accounts deemed uncollectible are written off against the allowance after all collection efforts have been exhausted and management
deems the account to be uncollectible. We believe that our accounts receivable 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.
Finance Receivables and Allowance for Credit Losses
Finance receivables are composed of sales-type lease receivables and unsecured revolving loan receivables. We estimate our finance
receivable risks and provide an allowance for credit losses accordingly. We evaluate the adequacy of the allowance for credit losses based
on historical loss experience, the nature and volume of our portfolios, adverse situations that may affect a customer's ability to pay,
prevailing economic conditions and our ability to manage the collateral and make adjustments to the allowance as necessary. This
evaluation is inherently subjective and actual results may differ significantly from estimated reserves.
We establish credit approval limits based on the credit quality of the customer and the type of equipment financed. Our policy is to
discontinue revenue recognition for lease receivables that are more than 120 days past due and for unsecured loan receivables that are