Pitney Bowes 2014 Annual Report Download - page 29

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as a percentage of business services revenue increased to 71.3% in 2013 compared to 66.7% in 2012 primarily due to continuing investment
in our global ecommerce solutions and lower marketing services fees.
Selling, general and administrative (SG&A)
SG&A expense decreased 3% in 2014 compared to 2013. The decrease was primarily due to the benefits of our restructuring actions and
productivity initiatives and lower depreciation expense. These benefits were partially offset by expenses of $36 million incurred in
connection with expanded branding and marketing programs and the planned implementation of an ERP system.
SG&A expense decreased 5% in 2013 compared to 2012 primarily driven by lower employee-related costs resulting from ongoing
restructuring actions and productivity initiatives.
Restructuring charges and asset impairments, net
In 2013, we initiated actions designed to enhance our responsiveness to changing market conditions, further streamline our business
operations, reduce our cost structure and create long-term flexibility to invest in growth (Operational Excellence). This program was
completed as of December 31, 2014. Total restructuring charges recorded in 2013 and 2014 related to this program were $157 million.
We anticipate this program will provide annualized pre-tax benefits of $130 to $165 million, net of investments, by 2016. In addition, a
non-cash asset impairment charge of $26 million was recorded in 2013 to write-down the carrying value of our corporate headquarters
building to its fair value. See Note 11 to the Consolidated Financial Statements for further details.
Other expense, net
Other expense, net for 2014 includes costs of $62 million incurred in connection with the early redemption of debt offset by $16 million
recognized in connection with the divestiture of a partnership investment. See Liquidity and Capital Resources - Financings and
Capitalization and Note 14 to the Consolidated Financial Statements for further details.
Other expense, net for 2013 includes costs associated with the early redemption of debt. See Liquidity and Capital Resources - Financings
and Capitalization for further details.
Other expense, net in 2012 includes losses of $6 million on a forward rate swap agreement, $2 million on the early redemption of debt
and $4 million on the sale of leveraged lease assets offset by income of $11 million from insurance proceeds received in connection with
the 2011 presort facility fire.
Income taxes
See Note 14 to the Consolidated Financial Statements.
Discontinued operations
See Note 3 to the Consolidated Financial Statements.
Preferred stock dividends of subsidiaries attributable to noncontrolling interests
See Note 15 to the Consolidated Financial Statements.
Business Segments
The principal products and services of each of our reportable segments are as follows:
Small & Medium Business Solutions:
North America Mailing: Includes the revenue and related expenses from the sale, rental, financing and servicing of mailing equipment
and supplies for small and medium businesses to efficiently create mail and evidence postage in the U.S. and Canada.
International Mailing: Includes the revenue and related expenses from the sale, rental, financing and servicing of mailing equipment
and supplies for small and medium businesses to efficiently create 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 to large enterprise clients to process inbound
and outbound mail.
Presort Services: Includes revenue and related expenses from presort mail services for our large enterprise clients to qualify large
mail volumes for postal worksharing discounts.