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This excerpt taken from the PBI 10-Q filed Nov 7, 2008. Asset Backed Securities (“ABS”) and Mortgage-Backed Securities (“MBS”): These securities are valued based on external pricing indices. When external index pricing is not observable, ABS and MBS are valued based on external price/spread data. If neither pricing method is available, we then utilize broker
quotes. We verify that the unadjusted indices or broker quotes are reasonable and that the market is active by comparing prices across multiple (three or more) dealers. When inputs are observable and supported by an active market, asset backed
securities and mortgage-backed securities are classified as Level 2 of the fair value hierarchy.
Investment securities are primarily composed of investments by The Pitney Bowes Bank (PBB). PBB, our wholly-owned subsidiary, is a Utah-chartered Industrial Loan Company (ILC). Our investments are all classified as “available-for-sale securities”. The bank’s investments at September 30, 2008 were $198.5 million. We reported these investments in the Condensed Consolidated Balance Sheet as cash and cash equivalents of $130.9 million, short-term investments of $19.4 million and long-term investments of $48.2 million. We have no investments either directly or indirectly in the sub-prime mortgage market. We have not experienced any write-offs in our investment portfolio. The majority of our mortgage-backed securities are either guaranteed or supported by the U.S. government. The recent market events have not caused our money market funds to experience declines in their net asset value below $1.00 dollar per share or to incur imposed limits on redemptions. We have no investments in inactive markets which would warrant a possible change in our pricing methods or classification within the fair value hierarchy. Further, we have no investments in auction rate securities. This excerpt taken from the PBI 10-Q filed Aug 7, 2008. Asset Backed Securities (“ABS”) and Mortgage-Backed Securities (“MBS”): These securities are valued based on external price/spread data. When external price data is not observable, the valuations are based on prices of comparable bonds. Valuation levels of ABS and MBS indices are used as an additional data
point for benchmarking purposes. When external prices or inputs are observable, asset backed securities and mortgage-backed securities are classified as Level 2 of the fair value hierarchy.
Investment securities are primarily composed of investments by The Pitney Bowes Bank (PBB). PBB, our wholly-owned subsidiary, is a Utah-chartered Industrial Loan Company (ILC). The bank’s investments at June 30, 2008 were $202.3 million. We reported these investments in the Condensed Consolidated Balance Sheet as cash and cash equivalents of $138.1 million, short-term investments of $22.7 million and long-term investments of $41.5 million. We have no investments either directly or indirectly in the sub-prime mortgage market. All mortgage-backed securities in our portfolio are either Treasury or U.S. Agency guaranteed. 19
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