Pitney Bowes 2015 Annual Report Download - page 39

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23
EBIT
Years Ended December 31, % change
2015 2014 2013 2015 2014
North America Mailing $ 647 $ 642 $ 641 1% —%
International Mailing 51 89 72 (42)% 24 %
Small & Medium Business Solutions 698 731 712 (5)% 3%
Production Mail 48 48 55 1% (14)%
Presort Services 105 98 83 7% 18 %
Enterprise Business Solutions 153 146 138 5% 5%
Software Solutions 49 51 48 (5)% 7%
Global Ecommerce 19 17 1 16 % >100%
Digital Commerce Solutions 68 68 49 —% 39 %
Other 10 19 6 (45)% 229 %
Total $ 929 $ 964 $ 905 (4)% 6%
Small & Medium Business Solutions
North America Mailing
North America Mailing revenue decreased 4% in 2015 compared to 2014. Foreign currency translation had a 1% unfavorable impact on
revenue. Excluding the impact of foreign currency, rentals revenue and support services revenue decreased 5% and 7%, respectively, due
to the continuing decline in installed meters and shift by clients to lower cost, less fully featured machines. Equipment sales decreased
3% primarily due to the decline in the first half of the year caused by declining mail volumes and the continuing trend of clients to extend
existing leases rather than purchasing new equipment. Partially offsetting these declines was a 3% increase in supplies sales due to
productivity improvements and pricing actions. Despite the decline in revenue, EBIT increased 1% primarily due to the benefits of
productivity improvements and cost reduction initiatives and a favorable product mix.
North America Mailing revenue decreased 4% in 2014 compared to 2013. This decrease was due to lower rentals revenue and support
services revenue due to a decline in the number of installed meters in service and lower equipment sales primarily due to a temporary
distraction due to the transition to an inside sales organization and reassignment of accounts and resources. Financing revenue also
declined due to lower equipment sales in current and prior years, but was offset by higher supply sales due to sales efficiencies and
favorable pricing. Despite the decline in revenue, EBIT remained relatively flat due to cost savings from the transition to an inside sales
organization and other ongoing productivity initiatives and cost reductions.
International Mailing
International Mailing revenue decreased 22% in 2015 as compared to 2014. Revenue was unfavorably impacted by 12% from foreign
currency translation and 3% from Divested Businesses. Excluding the impacts of foreign currency and Divested Businesses, revenue
decreased 7%. International Mailing results have been adversely impacted throughout the year by difficult economic circumstances in
many of our international markets and productivity disruptions caused by the implementation of our go-to-market strategy in certain
European markets, particularly in France. EBIT decreased 42% in 2015 as compared to 2014, primarily due to the decline in revenue
and reduced margins due to productivity disruptions and incremental costs of transitioning the sales organization in France. Foreign
currency translation unfavorably impacted EBIT by 10% in 2015.
International Mailing revenue decreased 5% in 2014 compared to 2013 primarily due to the impact of Divested Businesses and lower
equipment sales and rentals in France. EBIT increased 24% in 2014 compared to 2013 primarily due to productivity and cost reduction
initiatives and savings from the transition to an inside sales organization in certain European markets.