Pitney Bowes (PBI)

Net interest expense

Interest expense for the three months ended March 31, 2009 and 2008:

(Dollars in thousands)

Net interest expense decreased by $8.1 million or 14% in the first quarter of 2009 compared to the prior year due to lower average borrowings of $125 million and a lower average interest rate of approximately 67 basis points.

Net interest expense

Net interest expense decreased $25 million or 11%, from prior year due to lower average interest rates during the year. Our variable and fixed rate debt mix, after adjusting for the effect of interest rate swaps, was 22% and 78%, respectively, at December 31, 2008.

We do not allocate interest costs to our business segments.

Net interest expense

Net interest expense increased 14% in 2007 due to higher average interest rates and higher average borrowings during the year. Also, in 2006 we had interest income on the cash balance that resulted from the Capital Services divestiture. Our variable and fixed rate debt mix, after adjusting for the effect of interest rate swaps, was 19% and 81%, respectively, at December 31, 2007.

We do not allocate interest costs to our business segments.

Net interest expense

Interest expense for the nine months ended September 30, 2008 and 2007:

Net interest expense decreased by $12.2 million or 7% in the nine months ended September 30, 2008 compared with the prior year. A 57 basis point change in our average interest rate, as a result of lower interest rates on our floating rate debt, was partially offset by an increase in average borrowings of $273 million.

Net interest expense

Interest expense for the six months ended June 30, 2008 and 2007:

Net interest expense decreased by $6.4 million or 5% in the six months ended June 30, 2008 compared with the prior year. Interest expense of $0.6 million was recognized as a result of unwinding an interest rate swap associated with mortgage debt assumed with the acquisition of MapInfo Corporation because the mortgage debt was paid off in the first quarter of 2008. Interest expense for 2008 was impacted by higher average borrowings of $395 million but was offset by a decrease in our average interest rate of 48 basis points, as a result of lower floating rates.

Net interest expense

Interest expense for the three months ended March 31, 2008 and 2007:

21

Net interest expense

Net interest expense increased by $25 million in 2006 due to higher average interest rates and higher average borrowings during the year partly offset by higher interest income from the investment of proceeds received upon the sale of Capital Services. Our variable and fixed rate debt mix, after adjusting for the effect of interest rate swaps, was 23% and 77%, respectively, at December 31, 2006.

Net interest expense

The following table shows net interest expense for the nine months ended September 30, 2007 and 2006:

Net interest expense increased by $19.1 million or 12% in the first nine months of 2007 compared with the prior year due primarily to higher average borrowings.

Net interest expense

The following table shows net interest expense for the six months ended June 30, 2007 and 2006:

Net interest expense increased by $10.6 million or 9.8% in the first six months of 2007 compared with the prior year due primarily to higher average interest borrowings.

Net interest expense

Interest expense for the three months ended March 31, 2007 and 2006:

Net interest expense increased by $3.2 million or 5.9% in the first quarter of 2007 compared with the prior year due to higher average interest rates and higher average borrowings during the quarter.

19

Net interest expense

Net interest expense increased in 2005 due to higher interest rates and higher borrowings during the year. Our variable and fixed rate debt mix, after adjusting for the effect of interest rate swaps, was 21% and 79%, respectively, at December 31, 2005. Based on our borrowings at December 31, 2005, a one-percentage point change in short-term interest rates would impact annual diluted earnings per share by approximately 1 cent.

Net interest expense

          The following table shows net interest expense for the nine months ended September 30, 2006 and 2005:

          Net interest expense increased by $24.1 million or 17.7% in the first nine months of 2006 compared with the prior year primarily due to higher average interest rates and average borrowings, offset by additional interest income as a result of higher short-term investments from funds received upon the sale of Capital Services.

Net interest expense

      Interest expense for the three months ended June 30, 2006 and 2005:

     Net interest expense increased by $9.9 million or 22% in the second quarter of 2006 compared with the prior year primarily due to higher average interest rates during the quarter.