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PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular dollars in thousands, except per share amounts)
88
19. Discontinued Operations
Discontinued operations include PBMS, our Nordic furniture business and IMS, which were sold during 2013 and our Capital Services
business, which was sold in 2006.
The following tables show selected financial information included in discontinued operations:
Year Ended December 31, 2013
PBMS IMS
Nordic
furniture
business
Capital
Services Total
Revenue $ 639,237 $ 23,036 $ 37,785 $ — $ 700,058
Loss from operations $(118,017)$ (3,057)$ (4,037) $ — $ (125,111)
Gain (loss) on sale 5,126 (2,717) 4,562 — 6,971
(Loss) income before taxes (112,891)(5,774) 525 — (118,140)
Tax provision (benefit) 41,384 (1,064) 149 289 40,758
(Loss) income from discontinued operations $(154,275)$ (4,710) $ 376 $ (289) $ (158,898)
Year Ended December 31, 2012
PBMS IMS
Nordic
furniture
business
Capital
Services Total
Revenue $ 920,958 $ 135,222 $ 67,994 $ — $ 1,124,174
Income (loss) before taxes $ 67,458 $ (40,084) $ 2,839 $ — $ 30,213
Tax provision (benefit) 29,255 (15,003) 794 (34,312) (19,266)
(Loss) income from discontinued operations $ 38,203 $ (25,081) $ 2,045 $ 34,312 $ 49,479
Year Ended December 31, 2011
PBMS IMS
Nordic
furniture
business
Capital
Services Total
Revenue $ 948,891 $ 155,378 $ 48,341 $ — $ 1,152,610
before taxes $ (10,279)$ (72,260) $ 5,334 $ 3,695 $ (73,510)
Tax provision (benefit) 30,599 (23,025) 1,493 (262,464) (253,397)
(Loss) income from discontinued operations $ (40,878)$ (49,235) $ 3,841 $ 266,159 $ 179,887
The loss from discontinued operations in 2013 includes aggregate goodwill impairment charges of $101 million and asset impairment
charges of $15 million. A goodwill impairment charge of $98 million was recorded for PBMS NA. As a result of lower than expected
operating performance during the first half of 2013 due to the loss of certain customer contracts, pricing pressure on contract renewals
and a longer than originally anticipated sales cycle for some of our new growth areas, future cash flows were estimated to be lower than
originally projected. Given these factors, an interim goodwill impairment test was performed. Based on our review, it was determined
that the carrying value of goodwill exceeded its implied fair value. Accordingly, a goodwill impairment charge of $98 million was
recognized to write-down the carrying value of goodwill to its estimated implied fair value. The fair value of PBMS NA was determined
based on a combination of techniques, including external valuation data, the present value of future cash flows and applicable multiples
of competitors. These inputs were classified as Level 3 in the fair value hierarchy. In 2013, we also recorded goodwill impairment charges
of $2 million in connection with the sale of PBMSi and $1 million in connection with the sale of the Nordic furniture business.
During 2012, in connection with our decision to exit our IMS operations, we conducted a goodwill impairment review. We determined
the fair value of IMS based on third-party written offers to purchase the business as well applying an income approach with revised cash
(Loss) income