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Pitney Bowes Annual Report 2015
We’re
Pitney Bowes,
the Craftsmen
of Commerce.

Table of contents

  • Page 1
    We're Pitney Bowes, the Craftsmen of Commerce. Pitney Bowes Annual Report 2015

  • Page 2
    ... craftsman. That's us. Trusted craftsmen who help 1.5 million small businesses and 90% of the Fortune 500 power their commerce across the physical and digital landscape. We're one of the only companies who can help you do business in both these worlds. As craftsmen, we take great pride in what we do...

  • Page 3

  • Page 4
    ... for clients and shareholders. We've made steady progress in delivering new value in new ways by combining our strong foundation in physical commerce with our growing... with clients on their success. We're Pitney Bowes, the Craftsmen of Commerce. TM Lift the flap for more on why commerce needs ...

  • Page 5
    ...Executive Officer Michael Monahan Executive Vice President, Chief Operating Officer and Chief Financial Officer Fellow shareholders: Three years ago, we set a course to transform our business and to build a bridge for Pitney Bowes...unwavering focus on client needs. Pitney Bowes Annual Report 2015 1

  • Page 6
    ... More Personal and Secure A leading healthcare management services company, WESTMED Practice Partners, needed a better way to process growing volumes of transactional documents for physician networks and hospitals. The New York-based company turned to Pitney Bowes to automate patient bills and other...

  • Page 7
    ...This management team and this transformation are about building longterm value for all of our shareholders and creating a platform for our company to have a successful second century. We will be unwavering in our determination to be true to our company's legacy." Pitney Bowes Annual Report 2015 3

  • Page 8
    .... The Digital Commerce Solutions group led our company's revenue growth in 2015 with a 9 percent increase on a constant currency basis - fueled by a 30 percent year-over-year revenue gain in Global Ecommerce, including incremental revenue from the Borderfree acquisition, on a constant currency...

  • Page 9
    ... to move that technology into their core business to create more value. Likewise, very few emerging software companies have access to 1.5 million existing small business accounts, as well as the 90 percent of the Fortune 500 who have been our longtime clients. Pitney Bowes Annual Report 2015 5

  • Page 10
    ... billing statements, select healthcare providers, locate pharmacies and compare prescription drug prices. They can also ask for more information about topics of their choice, share information with dependents and set up autopay so that they never miss a payment. 6 Pitney Bowes Annual Report 2015

  • Page 11
    ...the end of 2012 $200M $1B+ in debt reduction 30% total shareholder return based on 3-year CAGR Updating Our Brand Of course, it's not enough to be more relevant than ever in the rapidly changing world of commerce. We also have to make sure that client perceptions Pitney Bowes Annual Report 2015...

  • Page 12
    ... possible before, from the performance of a single motor in a mail machine to productivity benchmarks from leading print and mail operations the world over. It's arguably the most significant innovation since the invention of automated sorting equipment itself." 8 Pitney Bowes Annual Report 2015

  • Page 13
    ... building longterm value for all of our shareholders and creating a platform for our company to have a successful second century. We will be unwavering in our determination to be true to our company's legacy. Marc B. Lautenbach President and Chief Executive Officer Pitney Bowes Annual Report 2015...

  • Page 14
    ...Financial Data For the year (Dollars in thousands, except per share amounts) 2015 2014 2013 As reported Revenue...stock Weighted average diluted shares outstanding Total assets Total debt Stockholders' equity Total employees...,924 $ 366,547 $ 1.81 $ 634,912 3.7 10 Pitney Bowes Annual Report 2015

  • Page 15
    ... operating activities, as reported Capital expenditures Restructuring payments Net tax and other payments (receipts) Reserve account deposits Acquisition-related compensation payment Tax payment related to sale of Imagitas Cash transaction fees related to acquisitions and dispositions Extinguishment...

  • Page 16
    ... and Chief Executive Officer Daniel J. Goldstein Executive Vice President, Chief Legal Officer and Corporate Secretary Steven J. Green Vice President Finance and Chief Accounting Officer Robert E. Guidotti Executive Vice President and President, Software Solutions Abby F. Kohnstamm Executive Vice...

  • Page 17
    ... 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, 2015 Commission file number: 1-3579 PITNEY BOWES INC. Incorporated in Delaware 3001 Summer Street, Stamford, CT 06926 (203) 356-5000...

  • Page 18
    ... PART III Directors, Executive 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...

  • Page 19
    ... Global Ecommerce segment integrating newly acquired businesses including operations and product and service offerings intellectual property infringement claims our success at managing customer credit risk significant changes in pension, health care and retiree medical costs income tax adjustments...

  • Page 20
    ...North America operations and over 300,000 meters installed elsewhere. This business is characterized by a high level of recurring revenue driven by rental, lease and loan arrangements, contract support services and supplies sales. Enterprise Business Solutions Our Enterprise Business Solutions group...

  • Page 21
    ... 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 22
    ...-stop full-service cross border ecommerce experience. Financing Solutions We offer a variety of finance and 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...

  • Page 23
    ... concerning data privacy and security for our businesses that use, process and store certain personal, confidential or proprietary data. Employees and Employee Relations At December 31, 2015, we have approximately 10,500 employees in North America and 4,300 employees internationally. We believe that...

  • Page 24
    ... Small and Medium Business from 2000-2005, General Manager of IBM North America from 2005-2010, and Managing Partner, North America, for IBM Global Business Services. Mr. Guidotti was appointed Executive Vice President and President, Software Solutions in January 2016. Before joining Pitney Bowes...

  • Page 25
    ... Growth Initiatives. Before joining Pitney Bowes, Mr. Wright served as Executive Vice President, Enterprise Solutions Group for Infor Global Solutions. ITEM 1A. RISK FACTORS Our operations face certain risks that should be considered in evaluating our business. We manage and mitigate these risks on...

  • Page 26
    ... ability to fund these activities is dependent, in part, upon our ability to borrow and the cost of borrowing in U.S. capital markets. This ability and the cost, in turn, is dependent upon our credit ratings and is subject to capital market volatility. A credit ratings downgrade, an increase in the...

  • Page 27
    .... We may not realize the anticipated benefits of strategic acquisitions and divestitures, which may harm our financial results. As we increase our focus towards providing more digital technology and software solutions while maintaining a leadership role in the mailing industry, we may make strategic...

  • Page 28
    ... in its progress, is integrated into the way we sell and service clients, and acquire new clients, including sales collateral and the digital experience of getting information, service performance and transacting on our website. These factors are important to maintaining acceptance of our products...

  • Page 29
    ...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 30
    ...a total return basis, $100 invested in Pitney Bowes, the S&P 500 Composite Index and our peer group on December 31, 2010 would have been worth $115, $181, $173, respectively, on December 31, 2015. All information is based upon data independently provided to us by Standard & Poor's Corporation and is...

  • Page 31
    15

  • Page 32
    ...Ended December 31, 2015 2014 2013 2012 2011 Total revenue Amounts attributable to common stockholders: Net income from continuing operations Income (loss) from discontinued operations Net income - Pitney Bowes...48 December 31, 2015 2014 2013 2012 2011 Total assets Long-term debt Total debt ...

  • Page 33
    ...to a dealer network in the third quarter of 2014 (Divested Businesses). Revenue benefited by 2% from the acquisition of Borderfree. On a reported basis, equipment sales declined 10%, support services declined 11%, software declined 10%, rentals revenue declined 9%, financing declined 5% and supplies...

  • Page 34
    ...million, received proceeds of $292 million from the sale of Imagitas and $52 million from the sale of our former corporate headquarters building and other assets, and issued $90 million of commercial paper. We used cash of $394 million to acquire businesses, $365 million to reduce debt, $166 million...

  • Page 35
    ... by source and the related cost of revenue are shown in the following tables: Revenue Years Ended December 31, 2015 2014 2013 2015 % change 2014 Equipment sales Supplies Software Rentals Financing Support services Business services Total revenue $ 695 288 386 442 410 555 802 3,578 $ 770 300...

  • Page 36
    ... fixed costs as a percentage of revenue. Financing Financing revenue decreased 5% in 2015 compared to 2014. Foreign currency translation accounted for 3% of the decrease and lower equipment sales in prior periods and a declining lease portfolio accounted for the remaining decrease. Financing revenue...

  • Page 37
    ... corporate headquarters building. See Note 12 to the Consolidated Financial Statements for further details. Other (income) expense, net Other income, net for 2015 includes the gain on the sale of Imagitas of $112 million, transaction costs of $10 million incurred in connection with the acquisitions...

  • Page 38
    ...Business Solutions: North America Mailing: Includes the revenue and related expenses from the sale, rental, financing and servicing of mailing equipment, software and supplies for small and medium businesses to efficiently create physical and digital mail and evidence postage for the sending of mail...

  • Page 39
    EBIT Years Ended December 31, 2015 2014 2013 2015 % change 2014 North America Mailing International Mailing Small & Medium Business Solutions Production Mail Presort Services Enterprise Business Solutions Software Solutions Global Ecommerce Digital Commerce Solutions Other Total Small & Medium ...

  • Page 40
    ... the software sales channel. EBIT increased 7% primarily due to the increase in revenue. Global Ecommerce Global Ecommerce revenue increased 29% in 2015 compared to 2014 primarily due to the acquisition of Borderfree and higher volumes of packages shipped from our U.K. outbound cross-border service...

  • Page 41
    ... million higher in 2015 compared to 2014. In 2015, we paid $394 million for acquisitions, purchased short term investments of $69 million, received proceeds of $292 million from the sale of Imagitas and $52 million from the sale of our former corporate headquarters building and other assets. During...

  • Page 42
    ... payments from December 2020 through maturity in November 2024. In 2015, we satisfied the conditions under the jobs-training grant. 2013 Activity We issued $425 million of 6.7% fixed-rate 30-year notes. The notes mature in March 2043, but may be redeemed, in whole or in part, at our option any time...

  • Page 43
    ... future periods: Payments due in Total 2016 2017-18 2019-20 After 2020 Commercial paper borrowings Debt maturities Interest payments on debt (1) Preferred stock (2) Non-cancelable operating lease obligations Purchase obligations (3) Pension plan contributions (4) Retiree medical payments (5) Total...

  • Page 44
    ..., rentals, financing and services. Certain transactions are consummated at the same time and can therefore generate revenue from multiple sources. The most common form of these transactions involves a sale or non-cancelable lease of equipment, a meter rental and an equipment maintenance agreement...

  • Page 45
    ... We provide financing for our equipment sales primarily through sales-type leases. Equipment residual values are determined at inception of the lease using estimates of fair value at the end of the lease term. Residual value estimates impact the determination of whether a lease is classified as an...

  • Page 46
    ... inability to acquire new clients, downward pressures on pricing and rising interest rates could have an adverse impact on our assumptions and result in non-cash impairment charges in future periods. Based on the results of the annual impairment test performed during the fourth quarter of 2015, we...

  • Page 47
    ...in which we operate impact our reported assets, liabilities, revenue and expenses. Exchange rate fluctuations can also impact the settlement of intercompany receivables and payables between our subsidiaries in different countries. For the years ended December 31, 2015, 2014 and 2013, the translation...

  • Page 48
    ... time enter into interest rate swap agreements that convert fixed rate interest payments to variable rates and vice versa. During 2015 and 2014, we did not enter into any interest rate swap agreements. We employ established policies and procedures governing the use of financial instruments to manage...

  • Page 49
    ..., summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and to reasonably assure that such information is accumulated and communicated to management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), to...

  • Page 50
    ...a Business Practices Guidelines (BPG) that applies to all our officers and other employees. Our Board of Directors also has 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...

  • Page 51
    ...to Form 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...

  • Page 52
    ...BrickBreaker Acquisition Corp and Borderfree 7, 2015 (Commission file number 1-3579) Inc. Pitney Bowes Director Equity Deferral plan dated November 8, Exhibit 10(o) 2013 (effective May 12, 2014) Form of Long Term Incentive Award Agreement 10(p)* 10(q)* 12 21 23 31.1 Pitney Bowes Executive Equity...

  • Page 53
    ..., thereunto duly authorized. Date: February 22, 2016 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 54
    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, 2015, 2014 and 2013 Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2015, ...

  • Page 55
    ... cash flows for each of the three years in the period ended December 31, 2015 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material...

  • Page 56
    PITNEY BOWES INC. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) Years Ended December 31, 2015 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 57
    ... STATEMENTS OF COMPREHENSIVE INCOME (In thousands) Years Ended December 31, 2015 Net income Less: Preferred stock dividends attributable to noncontrolling interests Net income - Pitney Bowes Inc. Other comprehensive (loss) income, net of tax: Foreign currency translations Net unrealized gain on...

  • Page 58
    PITNEY BOWES INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts) December 31, 2015 December 31, 2014 ASSETS Current assets: Cash and cash equivalents Short-term investments Accounts receivable (net of allowance of $9,262 and $10,742, respectively) Short-term finance receivables (...

  • Page 59
    ... Net cash used in financing activities Effect of exchange rate changes on cash and cash equivalents (Decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Cash interest paid Cash income tax payments, net of refunds...

  • Page 60
    ... 2014 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, 2015 $ - - 1 3) - - - 1 4 - - $ 4 - - Preference stock $ 648 - - Common...

  • Page 61
    ... Solutions or Enterprise Business Solutions; however, within DCS, our Software Solutions operations and Global Ecommerce operations are reported as reportable segments. The Other segment is comprised of Imagitas. Imagitas was previously reported in DCS. Use of Estimates The preparation of financial...

  • Page 62
    ... 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 more than 90 days past due. We resume revenue recognition when the client's payments reduce the account aging to less...

  • Page 63
    ..., rentals, financing and services. Certain transactions are consummated at the same time and can therefore generate revenue from multiple sources. The most common form of these transactions involves a sale or non-cancelable lease of equipment, a meter rental and an equipment maintenance agreement...

  • Page 64
    ... in advance for postage meter rentals according to the terms of the agreement. We initially defer these advanced billings and recognize rentals revenue on a straight-line basis over the invoice period. Revenues generated from financing clients for the continued use of equipment subsequent to the...

  • Page 65
    ... foreign currency exchange rates and interest rates. We limit these risks by following established risk management policies and procedures, including the use of derivatives. We use derivative instruments to limit the effects of currency exchange rate fluctuations on financial results and manage the...

  • Page 66
    ... periods therein. Early adoption is permitted. We do not believe this standard will have a significant impact on our consolidated financial statements or disclosures. In April 2015, the FASB issued ASU 2015-05, Intangibles - Goodwill and Other - Internal-Use Software, Customer's Accounting for Fees...

  • Page 67
    ...Business Solutions: North America Mailing: Includes the revenue and related expenses from the sale, rental, financing and servicing of mailing equipment, software and supplies for small and medium businesses to efficiently create physical and digital mail and evidence postage for the sending of mail...

  • Page 68
    ... about our reportable segments. Revenues Years Ended December 31, 2015 2014 2013 North America Mailing International Mailing Small & Medium Business Solutions Production Mail Presort Services Enterprise Business Solutions Software Solutions Global Ecommerce Digital Commerce Solutions Other Total...

  • Page 69
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) Depreciation and amortization Years Ended December 31, 2015 2014 2013 North America Mailing International Mailing Small & Medium Business Solutions Production Mail Presort Services ...

  • Page 70
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) Assets December 31, 2015 2014 2013 North America Mailing International Mailing Small & Medium Business Solutions Production Mail Presort Services Enterprise Business Solutions ...

  • Page 71
    ... communications to their customers. RTC is reported within our Software Solutions segment. In January 2016, we acquired Enroute Systems Corporation (Enroute) for $14 million in cash plus potential additional payments during the periods 2017-2019 based on the achievement of revenue targets during the...

  • Page 72
    ... of our Document Imaging Solutions (DIS) business sold in 2014 and our Management Services business (PBMS), Nordic furniture business and International Mailing business (IMS) sold in 2013. Discontinued operations also include certain tax benefits related to our Capital Services business that was...

  • Page 73
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) 5. Earnings per Share The calculations of basic and diluted earnings per share for the years ended December 31, 2015, 2014 and 2013 are presented below. The sum of earnings per ...

  • Page 74
    ...using the effective interest method and related annual fees are initially deferred and recognized ratably over the annual period covered. Customer acquisition costs are expensed as incurred. Finance receivables at December 31, 2015 and 2014 consisted of the following: December 31, 2015 North America...

  • Page 75
    ... for credit losses for the years ended December 31, 2015, 2014 and 2013 was as follows: Sales-type Lease Receivables North America International Loan Receivables North America International Total Balance at December 31, 2012 Amounts charged to expense Accounts written off Balance at December...

  • Page 76
    ... 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 performance of...

  • Page 77
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) 8. Fixed Assets Fixed assets at December 31, 2015 and 2014 consisted of the following: December 31, 2015 2014 Land Capitalized Software Buildings Machinery and equipment ...

  • Page 78
    ... December 31, 2014 Acquisition Other (1) December 31, 2015 North America Mailing International Mailing Small & Medium Business Solutions Production Mail Presort Services Enterprise Business Solutions Software Solutions Global Ecommerce Digital Commerce Solutions Other Total goodwill $ 309...

  • Page 79
    ...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 80
    ... held by The Pitney Bowes Bank (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. 64

  • Page 81
    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 82
    ...Gain (Loss) (Effective Portion) Foreign exchange contracts $ 887 $ 1,878 Revenue Cost of sales $ $ 1,082 558 1,640 $ $ 1,276 (140) 1,136 We also enter into foreign exchange contracts to minimize the impact of exchange rate fluctuations on short-term intercompany loans and related interest...

  • Page 83
    ... for the years ended December 31, 2015 and 2014: Year Ended December 31, Derivative Gain (Loss) Recognized in Earnings Derivatives Instrument Location of Derivative Gain (Loss) 2015 2014 Foreign exchange contracts Credit-Risk-Related Contingent Features Selling, general and administrative expense...

  • Page 84
    ... labor laws and long-term lease agreements, some payments will extend beyond 24 months. We expect to fund these payments from cash flows from operations. Asset impairment During 2015, we sold our world headquarters building for $39 million and recorded a loss on the sale of $5 million. The...

  • Page 85
    ... plans, including our two largest U.S. pension plans, our U.K. pension plans and Canadian pension plans, have been frozen. We also provide certain employer subsidized health care and employer provided life insurance benefits in the U.S. and Canada to eligible retirees and their dependents. Employees...

  • Page 86
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) Retirement Plans The benefit obligations and funded status of defined benefit pension plans are as follows: United States 2015 2014 2015 Foreign 2014 Accumulated benefit obligation ...

  • Page 87
    ... benefit pension plans were as follows: United States 2015 2014 2013 2015 Foreign 2014 2013 Service cost Interest cost Expected return on plan assets Amortization of net transition asset Amortization of prior service (credit) cost Amortization of net actuarial loss Special termination benefits...

  • Page 88
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) Weighted-average actuarial assumptions used to determine end of year benefit obligations and net periodic benefit cost for defined benefit pension plans include: 2015 2014 2013 ...

  • Page 89
    ... periodically rebalanced. Derivatives, such as swaps, options, forwards and futures contracts may be used for market exposure, to alter risk/return characteristics and to manage currency exposure. We do not have any significant concentrations of credit risk within the plan assets. The pension plans...

  • Page 90
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) United States Pension Plans December 31, 2015 Level 1 Level 2 Level 3 Total Money market funds Equity securities Commingled fixed income securities Debt securities - U.S. and ...

  • Page 91
    ...per unit as reported by the fund manager. NAV is based on the market value of the underlying investments owned by each fund, minus its liabilities, divided by the number of shares outstanding. Commingled fixed income securities are not listed on an active exchange and are classified as Level 2. Debt...

  • Page 92
    ... U.S. pension plan lends securities that are held within the plan to other banks and/or brokers, and receives collateral, typically cash. This collateral is invested in a short-term fixed income securities commingled fund. The commingled fund is not listed or traded on an exchange and is classified...

  • Page 93
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) Foreign Pension Plans Diversified growth funds Real estate Total Balance at December 31, 2014 Unrealized gains Net purchases, sales and settlements Balance at December 31, 2015 ...

  • Page 94
    ...297 5,735 The weighted-average discount rates used to determine end of year benefit obligation and net periodic pension cost include: 2015 2014 2013 Discount rate used to determine benefit obligation U.S. Canada Discount rate used to determine net period benefit cost U.S. Canada 4.20% 3.95% 3.90...

  • Page 95
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) Estimated Future Benefit Payments The following benefit payments, which reflect expected future service, are expected to be paid. Pension Benefits Nonpension Benefits Years ending ...

  • Page 96
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) 15. Income Taxes Income from continuing operations before taxes consisted of the following: Years Ended December 31, 2015 2014 2013 U.S. International Total $ $ 516,233 94,592 ...

  • Page 97
    ... to finance subsidiary Lease revenue and related depreciation Amortizable intangibles Other Gross 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 98
    ...: 2015 2014 2013 Balance at beginning of year Increases from prior period positions Decreases from prior period positions Increases from current period positions Decreases relating to settlements with tax authorities Reductions from lapse of applicable statute of limitations Balance at end of...

  • Page 99
    .... 18. 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 clauses. Rent expense...

  • Page 100
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) 19. Stockholders' Equity Preferred and Preference Stock We have two classes of preferred stock issued and outstanding: the 4% Preferred Stock (the Preferred Stock) and the $2.12 ...

  • Page 101
    ... (a) Years Ended December 31, 2015 2014 2013 Gains (losses) on cash flow hedges Revenue Cost of sales Interest expense Total before tax Tax benefit Net of tax Gains (losses) on available for sale securities Interest income Tax provision (benefit) Net of tax Pension and Postretirement Benefit Plans...

  • Page 102
    ... Income: Years Ended December 31, 2015 2014 2013 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...

  • Page 103
    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 104
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share amounts) Stock Options Stock options may be granted to certain officers and employees at an exercise price equal to or greater than the stock price of our common stock on the grant date. ...

  • Page 105
    ... At no time will the exercise price be less than the lowest price permitted under Section 423 of the Internal Revenue Code. Employees purchased 131,769 shares and 87,606 shares in 2015 and 2014, respectively. We have reserved 3,068,737 common shares for future purchase under the ESPP. 22. Quarterly...

  • Page 106
    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 2014 Revenue Cost of revenues Operating expenses Income from continuing operations before income taxes Provision for...

  • Page 107
    PITNEY BOWES INC. SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (Dollars in thousands) Balance at beginning of year Additions charged to expense Balance at end of year Description Deductions Allowance for doubtful accounts 2015 2014 2013 Valuation allowance for deferred tax asset ...

  • Page 108
    Exhibit 12 PITNEY BOWES INC. COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (Dollars in thousands) Years Ended December 31, 2015 2014 2013 2012 2011 Income from continuing operations before income taxes Add: Interest expense (1) Portion of rents representative of the interest factor ...

  • Page 109
    ... LP PB Professional Services Inc. PB Worldwide Inc, PBDorm Ireland Limited Country or state of incorporation United Kingdom Delaware Australia Canada China Ireland Israel United Kingdom Delaware Delaware Connecticut Mexico Connecticut New York Hong Kong Delaware France New York United Kingdom United...

  • Page 110
    ...Global LLC Pitney Bowes Holdco Limited Pitney Bowes Holding SNC Pitney Bowes Holdings Limited Pitney Bowes Hong Kong Limited Pitney Bowes India Private Limited Pitney Bowes International Finance Limited Pitney Bowes International Funding Pitney Bowes International Holdings, Inc. Pitney Bowes Ireland...

  • Page 111
    ... AS Portrait Software International Limited Portrait Software Limited Quadstone Paramics Ltd Real Time Content Ltd Schooner Acq. Corp. Technopli SARL The Pitney Bowes Bank, Inc. Volly LLC Wheeler Insurance, Ltd. United Kingdom Germany United Kingdom Delaware India Japan Singapore Australia France...

  • Page 112
    ...) of Pitney Bowes Inc. of our report dated February 22, 2016 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 113
    ... 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 114
    ... 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 115
    ... In connection with the Annual Report of Pitney Bowes Inc. (the "Company") on Form 10-K for the year ended December 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Marc B. Lautenbach, President and Chief Executive Officer of the Company, certify...

  • Page 116
    ... with the Annual Report of Pitney Bowes Inc. (the "Company") on Form 10-K for the year ended December 31, 2015 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 117
    ... the Annual Report should be sent to: Corporate Communications Pitney Bowes Inc. 3001 Summer Street, Stamford, CT 06926 Transfer Agent and Registrar (effective April 1, 2016) Regular Mail: Broadridge Corporate Issuer Solutions PO Box 1342 Brentwood, NY 11717 Overnight Mail: Broadridge Corporate...

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