Pitney Bowes 2014 Annual Report Download

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A Bridge to
the Second
Century
Pitney Bowes Annual Report 2014

Table of contents

  • Page 1
    A Bridge to the Second Century Pitney Bowes Annual Report 2014

  • Page 2
    .... We are transforming Pitney Bowes for the next century by expanding into high-growth markets, including digital commerce and software, while continuing to innovate in our core shipping and mailing businesses. We are building a stronger, globally integrated company with new physical and digital...

  • Page 3
    ... mailing industry we lead today. For decades, business was a series of predominantly physical transactions until the Internet and e-commerce disrupted the business models most companies knew best and created a world of vast new possibilities - and new competitors. Pitney Bowes Annual Report 2014...

  • Page 4
    ...125 million by 2015. We did that, and we are Powering Physical and Digital Commerce of the Fortune 500 use our products and solutions 14B now committed to reducing our going-rate expense by another $100 -$125 million by 2017. pieces of mail presorted by Pitney Bowes in 2014 Our third strategic...

  • Page 5
    ...of their clients. "Pitney Bowes is the only company today that can help us fulfill our compliance requirements. The solution provides an unmatched level of security. For our private banking clients, accuracy must be 100%," said Rene Felder, CEO, B-Source Outline. Pitney Bowes Annual Report 2014 3

  • Page 6
    ... hardware integrated with our customer engagement software to create and distribute more than 1.5 billion documents per year. This allows Printlaser to deliver targeted reduction in SG&A since 2012 $100M debt paid down in 2014 reduction in inventory since 2012 4 Pitney Bowes Annual Report 2014

  • Page 7
    ...-owned financial institution, uses Pitney Bowes Portrait™ Software to help create real-time customer profiles that enable its associates to offer specific programs and promotions that are aligned with customer history and needs. This holistic view of the customer's banking history and previous...

  • Page 8
    ...Cash dividends declared per share of common stock Average common and potential common shares outstanding Total assets Total debt Stockholders' equity Total employees As adjusted EBIT ...$ 4,017,375 $ 127,404 27,353 203,961,446 $ 6,485,693 $ 3,252,006 $ 77,259 15,159 6 Pitney Bowes Annual Report 2014

  • 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 2014 7

  • Page 10
    ...M. Brand Vice President 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...

  • 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, 2014 Commission file number: 1-3579 PITNEY BOWES INC. Incorporated in Delaware 3001 Summer Street, Stamford, CT 06926...

  • Page 12
    ... Officers and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Certain Relationships, Related Transactions and Director Independence Principal Accountant Fees and Services PART IV Exhibits and Financial...

  • Page 13
    ... in information security requirements and privacy laws intellectual property infringement claims our success at managing customer credit risk significant changes in pension, health care and retiree medical costs macroeconomic factors, including global and regional business conditions that adversely...

  • Page 14
    ... Solutions (DCS). Small and Medium Business Solutions We are a global leader in providing a full range of mailing equipment, software, supplies and support services that enable our clients to efficiently create mail and evidence postage. We segment the SMB Solutions group between our North America...

  • Page 15
    ... Service We have a client care service organization that provides telephone, online and on-site support to diagnose and repair our increasingly complex mailing equipment, production printers and sophisticated software solutions. Most of our support services are provided under annual contracts. Sales...

  • Page 16
    ... payment solutions to clients to finance their equipment and product purchases, rental and lease payments, postage replenishment and supplies purchases. We establish credit approval limits and procedures based on the credit quality of the client and the type of product or service provided to control...

  • Page 17
    ...services, components, supplies and a large portion of our product manufacturing. In certain instances, we rely on single-sourced or limited-sourced suppliers around the world because the relationship is advantageous due to quality, price, or there are no alternative sources. We have not historically...

  • Page 18
    ...and Managing Partner, North America, for IBM Global Business Services. Mr. Goldstein re-joined the company in October 2010 as Executive Vice President and Chief Legal and Compliance Officer. From September 2008 until October 2010, Mr. Goldstein served as the Senior Vice President and General Counsel...

  • Page 19
    ... and long-term growth. These investments include, among other things, new and enhanced offerings in our global ecommerce, location intelligence and customer engagement solutions, and the specialization of sales channels. However, the process of developing new technologies, products and solutions can...

  • Page 20
    ...and adversely affect our revenue and profitability. Capital market disruptions and credit rating downgrades could adversely affect our ability to provide financing services to our clients and to fund various discretionary priorities, including business investments, acquisitions and dividend payments...

  • Page 21
    ... and legal, accounting and financial advisory fees; • difficulties in achieving anticipated benefits or synergies from acquisitions and divestitures; • difficulties in integrating newly acquired businesses and operations, including combining product and service offerings and entering new markets...

  • Page 22
    ...general offices, including our corporate headquarters located in Stamford, Connecticut, sales offices, service locations, data centers and call centers. We conduct research and development, manufacturing and assembly, product management, information technology and many other activities at our Global...

  • Page 23
    ... Exchange (NYSE). At January 31, 2015, we had 18,689 common stockholders of record. The following table sets forth the high and low sales prices, as reported on the NYSE, and the cash dividends paid per share of common stock, for the periods indicated. Stock Price High Low Dividend Per Share 2014...

  • Page 24
    Indexed Returns December 31, Company Name / Index 2009 2010 2011 2012 2013 2014 Pitney Bowes S&P 500 New Peer Group Old Peer Group $100 $100 $100 $100 $114 $115 $115 $121 $93 $117 $110 $110 $60 $136 $120 $125 $139 $180 $185 $191 $149 $205 $203 $205 14

  • Page 25
    ... to common stockholders (1): $ 1.47 Continuing operations 0.17 Discontinued operations $ 1.64 Net income - Pitney Bowes Inc. Cash dividends paid per share of common stock Balance sheet data: $ 0.75 $ $ 1.43 $ (0.72) 0.71 $ 1.89 0.33 2.22 $ $ 2.07 0.98 3.06 $ $ 1.19 0.23 1.42 $ $ $ 1.42...

  • Page 26
    ... the number of installed meters worldwide and financing revenue declined 4% because of lower equipment sales in prior periods. Looking at our operating segments, DCS revenue grew 21% primarily due to increased parcel volumes using our global ecommerce solutions and higher software licensing revenue...

  • Page 27
    ... our global ecommerce solutions. RESULTS OF OPERATIONS Revenue by source and the related cost of revenue are shown in the following tables: Revenue Year Ended December 31, 2014 2013 2012 2014 % change 2013 Equipment sales Supplies Software Rentals Financing Support services Business services Total...

  • Page 28
    ... 23% in 2014 compared to 2013. Of this amount, 17% was due to higher volumes in our global ecommerce solutions, 4% was due to higher volumes of first-class mail processed and improved operational efficiencies in our presort business and 2% was due to higher marketing services fees due to new clients...

  • Page 29
    ...mail and evidence postage in areas outside North America. Enterprise Business Solutions: Production Mail: Includes the worldwide revenue and related expenses from the sale of production mail inserting and sortation equipment, high-speed production print systems, supplies and related support services...

  • Page 30
    ...non-equipment-based mailing, customer information management, location intelligence and customer engagement solutions and related support services; (ii) shipping and global ecommerce solutions; and (iii) direct marketing services for targeted clients. Segment earnings before interest and taxes (EBIT...

  • Page 31
    ... Business Solutions Production Mail Production Mail revenue decreased 10% in 2014 compared to 2013 primarily due to a 19% decline in equipment sales due to significant installations of production mail inserters and high-speed printers to certain enterprise customers in 2013. Support services revenue...

  • Page 32
    ... capacity under our commercial paper program will be sufficient to support our current cash needs, including discretionary uses such as capital investments, dividends and share repurchases. Cash and cash equivalents and short-term investments were $1,111 million at December 31, 2014 and $939 million...

  • Page 33
    ... to issue debt securities, preferred stock, preference stock, common stock, purchase contracts, depositary shares, warrants and units in an expedited fashion. We have a commercial paper program that is an important source of liquidity for us and a committed credit facility of $1.0 billion to support...

  • Page 34
    ... Purchase obligations exclude agreements that are cancelable without penalty. (3) Represents the amount of contributions we anticipate making to our pension plans during 2015; however, we will assess our funding alternatives as the year progresses. (4) Our retiree health benefit plans are non-funded...

  • Page 35
    ...Revenue is allocated to the meter rental and equipment maintenance agreement elements using their respective selling prices charged in standalone and renewal transactions. For a sale transaction, revenue is allocated to the equipment based on a range of selling prices in standalone transactions. For...

  • Page 36
    ...our historical experience. We also consider forecasted supply and demand for our various products, product retirement and future product launch plans, end of lease customer behavior, regulatory changes, remanufacturing strategies, used equipment markets, if any, competition and technological changes...

  • Page 37
    ... on a straight-line basis over the requisite service period. The fair value of stock awards is estimated using a Black-Scholes valuation model or Monte Carlo simulation model. These models require assumptions be made regarding the expected stock price volatility, risk-free interest rate, life of the...

  • Page 38
    ... these updated estimates to our current restructuring reserves, and make adjustments if necessary. Loss contingencies In the ordinary course of business, we are routinely defendants in, or party to, a number of pending and threatened legal actions. On a quarterly basis, we review the status of...

  • Page 39
    ... on our 2014 pre-tax income. 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...

  • Page 40
    ...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, 2014. In making this assessment, management used the criteria set...

  • Page 41
    ... (BPG) that applies to all our officers and other employees. Our Board of Directors has also adopted a Code of Business Conduct and Ethics (the Code) that applies to our directors. The BPG and the Code are posted on our corporate governance website located at www.pb.com/us/our-company/leadership-and...

  • Page 42
    ...8-K 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 to Exhibit...

  • Page 43
    ... Financial Officer Pursuant to Rules 13a-14 (a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended. Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 XBRL Report Instance Document...

  • Page 44
    ... /s/ David B. Snow, Jr. David B. Snow, Jr. Director February 20, 2015 Title President and Chief Executive Officer - Director Date February 20, 2015 Executive Vice President, Chief Operating Officer and Chief Financial Officer (Principal Financial Officer) Vice President-Finance and Chief Accounting...

  • Page 45
    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, 2014, 2013 and 2012 ...

  • Page 46
    ..., 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 47
    PITNEY BOWES INC. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) Years Ended December 31, 2014 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 48
    ... Adjustments to pension and postretirement plans, net of tax of $(106,336), $64,316 and $(38,934), respectively Amortization of pension and postretirement costs, net of tax of $15,643, $19,228 and $21,876, respectively Other comprehensive (loss) income Comprehensive income - Pitney Bowes Inc. $ (93...

  • Page 49
    ...$19,108 and $24,340, respectively) Inventories Current income taxes Other current assets and prepayments 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 $9,002 and $12,609, respectively...

  • Page 50
    PITNEY BOWES INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Years Ended December 31, 2014 2013 2012 Cash flows from operating activities: Net income Restructuring payments Special pension plan contributions Tax and other payments on sale of businesses and leveraged lease assets Net tax ...

  • Page 51
    ...Pitney Bowes Inc. Other comprehensive loss Cash dividends Common Preference Issuances of common stock Conversions to common stock Stock-based compensation Repurchase of subsidiary shares from noncontrolling interest Repurchase of common stock Balance at December 31, 2014...,100 248 - (4,500,795) - - ...

  • Page 52
    ... 2014, Pitney Bowes of Canada Ltd., a wholly owned subsidiary, completed the sale of its Document Imaging Solutions (DIS) business, which consisted of hardware (copiers and printers) and document management software solutions to Konica Minolta Business Solutions (Canada) Ltd. and the related lease...

  • Page 53
    ... 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...

  • Page 54
    ...Revenue is allocated to the meter rental and equipment maintenance agreement elements using their respective selling prices charged in standalone and renewal transactions. For a sale transaction, revenue is allocated to the equipment based on a range of selling prices in standalone transactions. For...

  • Page 55
    ... the term of the lease contract. We recognize revenue from software requiring integration services at the point of customer acceptance. We recognize revenue related to off-the-shelf perpetual software licenses generally upon shipment. Rentals Revenue We rent equipment, primarily postage meters and...

  • Page 56
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) are acting as principal or agent such as whether we are the primary obligor to the customer, have control over the pricing and have credit risk. Shipping and Handling Shipping and ...

  • Page 57
    ... or disclosures. In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers. The new standard requires companies to recognize revenue for the transfer of goods and services to customers in amounts that reflect the...

  • Page 58
    ...mail and evidence postage in areas outside North America. Enterprise Business Solutions: Production Mail: Includes the worldwide revenue and related expenses from the sale of production mail inserting and sortation equipment, high-speed production print systems, supplies and related support services...

  • Page 59
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) EBIT Years Ended December 31, 2014 2013 2012 North America Mailing International Mailing Small & Medium Business Solutions Production Mail Presort Services Enterprise Business ...

  • Page 60
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) Capital expenditures Years Ended December 31, 2014 2013 2012 North America Mailing International Mailing Small & Medium Business Solutions Production Mail Presort Services ...

  • Page 61
    ... Services business that was sold in 2006. The following tables show selected financial information included in discontinued operations: Year Ended December 31, 2014 Nordic furniture business PBMS IMS DIS Total Revenue (Loss) income from operations Gain on sale Income before taxes Tax (benefit...

  • Page 62
    ... (in thousands): Weighted-average shares used in basic EPS Effect of dilutive shares: Preferred stock Preference stock Stock plans Weighted-average shares used in diluted EPS Basic earnings per share: Continuing operations Discontinued operations Net income attributable to Pitney Bowes Inc. Diluted...

  • Page 63
    ...primarily from financing services offered to our clients for postage and supplies. Loan receivables are generally due each month; however, customers may rollover outstanding balances. Interest is recognized on loan receivables using the effective interest method and related annual fees are initially...

  • Page 64
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) Loans receivables are due within one year. Maturities of gross sales-type lease finance receivables at December 31, 2014 were as follows: Sales-type Lease Receivables North America ...

  • Page 65
    ... the North America portfolio at December 31, 2014 and 2013 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...

  • Page 66
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) December 31, 2014 2013 Sales-type lease receivables Low Medium High Not Scored Total Loan receivables Low Medium High Not Scored Total $ 936,979 230,799 45,202 $ $ 73,644 1,286,624 ...

  • Page 67
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) 8. Intangible Assets and Goodwill Intangible assets Intangible assets at December 31, 2014 and 2013 consisted of the following: December 31, 2014 Gross Carrying Amount Accumulated ...

  • Page 68
    ... 31, 2013 Impairment Other (1) December 31, 2014 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 $ 326,664...

  • Page 69
    ...Money 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 Foreign exchange contracts Total assets Liabilities...

  • Page 70
    ... securities include investments held by the Bank whose primary business is to provide financing solutions to clients that rent postage meters and purchase supplies. The Bank's assets and liabilities consist primarily of cash, finance receivables, short and long-term investments and deposit accounts...

  • Page 71
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) The Bank's investment securities are classified as available-for-sale and recorded at fair value in the Consolidated Balance Sheets as cash and cash equivalents, short-term ...

  • Page 72
    ...and 2013 was as follows: December 31, Designation of Derivatives Balance Sheet Location 2014 2013 Derivatives designated as hedging instruments Foreign exchange contracts Other current assets and prepayments Accounts payable and accrued liabilities $ 762 - $ 546 (526) Derivatives not designated as...

  • Page 73
    ... in Earnings Derivatives Instrument Location of Derivative Gain (Loss) 2014 2013 Foreign exchange contracts Interest Rate Swaps Selling, general and administrative expense $ (4,701) $ (16,574) We had no interest rate swap agreements outstanding at December 31, 2014 or 2013. During 2013...

  • Page 74
    ... corporate headquarters building. At December 31, 2014, the fair value of the building, determined as the estimated selling price less the costs to sell, was $44 million. Assets held for sale at December 31, 2014 also includes the value of a lease portfolio that was subsequently sold in January 2015...

  • Page 75
    ... price less the costs to sell. The inputs used to determine the fair value were classified as Level 3. The impairment charge was included as restructuring charges and asset impairments, net in the Consolidated Statements of Income. 12. Debt December 31, Interest rate 2014 2013 Notes due March 2015...

  • Page 76
    ... of $62 million, consisting of the call premium, the write-off of unamortized costs and bank transaction fees. To fund the Tender Offer, also in the first quarter of 2014, we issued $500 million of 4.625% fixed rate 10-year notes. Interest is payable in March and September. The notes mature in March...

  • Page 77
    ...retiree medical benefits after reaching age 55 and with the completion of the required service period. The cost of these benefits is recognized over the period the employee provides credited service to the company. Retirement Plans The benefit obligations and funded status of defined benefit pension...

  • Page 78
    ... into net periodic benefit cost in 2015 are as follows: United States Foreign Net actuarial loss Prior service cost (credit) Transition asset Total The components of net periodic benefit cost for defined benefit pension plans were as follows: United States 2014 2013 2012 2014 $ $ 30,590 9 - 30...

  • Page 79
    ... rate is used to determine the present value of our future benefit obligations. The discount rate for our U.S. pension and postretirement medical benefit plans is determined by matching the expected cash flows associated with our benefit obligations to a pool of corporate long-term, high-quality...

  • Page 80
    ..., 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 81
    ... measurement requires judgment and may affect placement within the fair value hierarchy levels. There are no shares of our common stock included in the plan assets of our pension plans. United States Pension Plans December 31, 2014 Level 1 Level 2 Level 3 Total Money market funds Equity securities...

  • Page 82
    ... in government securities, certificates 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...

  • Page 83
    ...of credit card receivables, auto loan receivables, student loan receivables, and Small Business Administration loans. These securities are valued based on external pricing indices or external price/ spread data and are classified as Level 2. Private Equity: Investments are comprised of units in fund...

  • Page 84
    ... FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) Nonpension Postretirement Benefits The benefit obligation and funded status for nonpension postretirement benefit plans are as follows: 2014 2013 Benefit obligation Benefit obligation - beginning of year Service...

  • Page 85
    ... pension cost include: 2014 2013 2012 Discount rate used to determine benefit obligation U.S. Canada Discount rate used to determine net period benefit cost U.S. Canada 3.90% 3.80% 4.40% 4.65% 3.65% 3.90% 4.40% 4.65% 3.65% 3.90% 4.50% 4.15% The assumed health care cost trend rate used...

  • Page 86
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) Savings Plans We offer voluntary defined contribution plans to our U.S. employees designed to help them accumulate additional savings for retirement. We provide a core contribution ...

  • Page 87
    ... 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 88
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) The above amounts are classified as current or long-term in the Consolidated Balance Sheets in accordance with the asset or liability to which they relate or based on the expected ...

  • Page 89
    ...insurance or other contracts; intellectual property or patent rights; equipment, service, payment or other disputes with clients; or disputes with employees. Some of these actions may be brought as a purported class action on behalf of a purported class of employees, clients or others. In management...

  • Page 90
    ... per share amounts) 17. Leases We lease office facilities, sales and service offices, equipment and other properties under operating lease agreements with varying terms. Certain leases require us to pay property taxes, insurance and routine maintenance and include renewal options and escalation...

  • Page 91
    ... 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 asset Prior service (costs) credit Actuarial losses Total before tax Tax benefit Net of...

  • Page 92
    ... Ended December 31, 2014 2013 2012 Cost of equipment sales Cost of software 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...

  • Page 93
    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 94
    ... table summarizes information about stock option activity during 2014 and 2013: 2014 Per share weighted average exercise prices 2013 Per share weighted average exercise prices Shares Shares Options outstanding - beginning of the year Granted Exercised Canceled Expired Options outstanding - end of...

  • Page 95
    ...than the lowest price permitted under Section 423 of the Internal Revenue Code. Employees purchased 87,606 shares and 222,159 shares in 2014 and 2013, respectively. We have reserved 3,200,506 common shares for future purchase under the ESPP. Directors' Stock Plan The Directors Stock Plan was amended...

  • Page 96
    ...: Preferred stock dividends of subsidiaries attributable to noncontrolling interests Net income - Pitney Bowes Inc. Amounts attributable to common stockholders: Income from continuing operations Income from discontinued operations Net income - Pitney Bowes Inc. Basic earnings per share attributable...

  • Page 97
    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 2013 Revenue Cost of revenues Operating expenses Income from continuing operations before income taxes Provision for...

  • Page 98
    PITNEY BOWES INC. SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (Dollars in thousands) Description Balance at beginning of year Additions charged to expense Deductions Balance at end of year Allowance for doubtful accounts 2014 2013 2012 Valuation allowance for deferred tax ...

  • Page 99
    ...PITNEY BOWES INC. COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (Dollars in thousands) Years Ended December 31, 2014 2013 2012 2011 2010 Income from continuing operations before income taxes Add: Interest expense (1) Portion of rents... expense includes both financing interest expense and other...

  • Page 100
    ... Financing Inc. PB Professional Services Inc. PBDorm Ireland Limited Pitney Bowes (Asia Pacific) Pte. Ltd Country or state of incorporation UK UK Delaware Delaware Canada Canada Delaware Connecticut Canada UK Mexico Connecticut New York Hong Kong Delaware Delaware Delaware France New York UK UK...

  • Page 101
    ... Bowes Canada LP Pitney Bowes Credit Australia Limited Pitney Bowes Cross Border Services Inc. Pitney Bowes Danmark A/S Pitney Bowes de Mexico, S.A. de C.V. Pitney Bowes Deutschland GmbH Pitney Bowes Europe Limited Pitney Bowes Finance Ireland Limited Pitney Bowes Finance Limited Pitney Bowes Global...

  • Page 102
    ...The Pitney Bowes Bank, Inc. Volly LLC Wheeler Insurance, Ltd. Poland Delaware Connecticut Puerto Rico South Africa France Mexico Connecticut China Canada UK UK Germany UK Delaware India Japan Delaware UK Singapore Australia France Sweden UK Delaware Delaware Ohio Norway UK UK UK Washington Scotland...

  • Page 103
    ...) of Pitney Bowes Inc. of our report dated February 20, 2015 relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Form 10-K. /s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Stamford...

  • Page 104
    ... the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules...

  • Page 105
    ... 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 20, 2015 /s/ Michael Monahan Michael Monahan Executive Vice President, Chief Operating Officer and Chief Financial Officer

  • Page 106
    ... with the Annual Report of Pitney Bowes Inc. (the "Company") on Form 10-K for the year ended December 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Michael Monahan, Executive Vice President, Chief Operating Officer and Chief Financial Officer of...

  • Page 107
    ..., New York ©2015 Pitney Bowes Inc. All rights reserved AR2014 Pitney Bowes, the Corporate logo, Mailstream Evolution, Print+ Messenger, Portrait, and Connect+ are trademarks of Pitney Bowes Inc. or a subsidiary. All other trademarks are the property of their respective owners. The materials used...

  • Page 108
    3001 Summer Street, Stamford, CT 06926 203.356.5000 www.pitneybowes.com