Pitney Bowes (PBI)

Overview

For the first quarter, revenue decreased 12% to $1.38 billion due to challenging global economic conditions and the negative impact of foreign currency translation, which negatively impacted revenue growth by 6%. Acquisitions positively impacted revenue growth by 1%.

Income from continuing operations attributable to Pitney Bowes Inc. common stockholders was $101.8 million or $0.49 per diluted share as compared with $0.58 earnings per diluted share in the first quarter of 2008. Income from continuing operations in the first quarter of 2009 included a 5 cent per diluted share non-cash tax charge associated with out-of-the-money stock options that expired during the quarter. Income from continuing operations in the first quarter of 2008 included restructuring charges and asset impairments of 5 cents per diluted share and a tax adjustment of 3 cents per diluted share related to additional tax accrued associated with lease refunds in the U.K. and Ireland.

Despite volatile and difficult global economic conditions which resulted in a decline in revenue growth for the quarter in the majority of our business segments, we were able to grow our net cash provided by operating activities by 9 percent to $276.5 million for the first quarter of 2009 and further reduce our debt.

We remain focused on cost controls and reduced our SG&A expense by over $50 million, despite significant headwinds from the negative impacts of both foreign currencies and increased pension costs when compared to the prior year.

See “Results of Operations – First Quarter of 2009 Compared to First Quarter of 2008” for a more detailed discussion of our results of operations.

Overview

Revenue grew 2% in 2008 to $6.3 billion, of which acquisitions contributed 3%.

Income from continuing operations was $447.5 million in 2008 compared with $361.2 million in 2007 and diluted earnings per share from continuing operations was $2.13 compared with $1.63 in 2007. Diluted earnings per share from continuing operations was reduced by restructuring charges and asset impairment charges of 69 cents and 87 cents, in 2008 and 2007, respectively. In 2008, diluted earnings per share from continuing operations also included positive tax adjustments of 4 cents related primarily to deferred tax assets associated with certain U.S. leasing transactions. In 2007, diluted earnings per share from continuing operations was also reduced by 5 cents for the purchase accounting alignment of MapInfo, and 16 cents for tax adjustments related principally to a valuation allowance for net operating losses outside the U.S.

Despite volatile economic conditions, particularly in the second half of 2008, certain of our business segments produced solid results, including both revenue and EBIT growth at International Mailing, Mail Services and Marketing Services. In addition, International Mailing, worldwide Production Mail, and Marketing Services improved their EBIT margins as well. These strong performances were offset by revenue declines at U.S. Mailing due to lower equipment sales due in part from the prior year stimulus from sales of shape-based kits, lower financing and rental revenues. Also, declines in worldwide Production Mail were due to the effects of a slowdown in U.S. sales as large enterprises curtailed large-ticket capital expenditures due to ongoing credit constraints and global economic uncertainty.

In late 2007, we announced a plan to lower our cost structure, accelerate efforts to improve operational efficiencies, enhance our customer experience, and to transition our product line. On completion of this program, which continued throughout 2008, we reduced our global workforce by roughly eight percent and improved margins in many of our business segments.

In addition, we generated $990 million in cash from operations during 2008.

See “Results of Operations” for 2008, 2007 and 2006 for a more detailed discussion of our results of operations.

Overview

For the third quarter, revenue grew 3% over the prior year to $1.5 billion. Excluding acquisitions and foreign currency translation which contributed 3% and 1%, respectively, revenue was down 1%. U.S. Mailing revenue declined primarily due to lower mailing equipment sales as large enterprise accounts and some government agencies elected to either defer upgrade decisions for new equipment or extend leases on existing equipment because of uncertainty about how the economy may impact their operations. As a result of lower equipment placements, rental and financing revenue also declined. Partially offsetting the decline was growth in Mail Services, International Mailing and Marketing Services.

Income from continuing operations for the third quarter of 2008 was $100.3 million or $0.48 per diluted share as compared with $0.59 earnings per diluted share in the third quarter of 2007. Income from continuing operations in the third quarter of 2008 included restructuring charges and asset impairments of 19 cents per diluted share. Income from continuing operations in the third quarter of 2007 was reduced approximately 2 cents per diluted share due to the purchase accounting alignment for MapInfo, 2 cents due to a non-cash tax charge, primarily related to a tax rate change in Germany, and 1 cent due to an impairment charge for intangible assets in our legal solutions business.

Performance for the quarter reflects the impact of our transition initiatives, which helped offset continued economic weakness, particularly in the financial services sector.

The Company generated $281 million in cash from operations during the third quarter and $742 million during the nine months ended September 30, 2008.

See “Results of Operations – Third Quarter of 2008 Compared to Third Quarter of 2007” for a more detailed discussion of our results of operations.

Overview

For the second quarter, revenue grew 3% over the prior year. Excluding acquisitions and foreign currency translation which contributed 4% and 3%, respectively, revenue was down 4%. Strong growth in Mail Services, International Mailing, and Marketing Services contributed to this growth. As anticipated, this growth was partially offset by lower revenue at U.S. Mailing due to the timing of revenue as a result of the postal rate case in the first half of 2007, the wind-down of meter migration, and challenging economic conditions.

Income from continuing operations for the second quarter of 2008 was $131.3 million or $0.63 per diluted share as compared with $0.69 earnings per diluted share in the second quarter of 2007. Income from continuing operations in the second quarter of 2008 included restructuring charges and asset impairments of 6 cents per diluted share. Income from continuing operations in the second quarter of 2007 was reduced approximately 2 cents per diluted share due to the purchase accounting alignment for MapInfo.

At the end of the quarter, we concluded our evaluation of the strategic alternatives for our U.S. Management Services business and decided to retain this business. During the review, we identified and began to execute actions to enhance the profitability and long-term performance of this business. We have already begun to see the benefits of these actions reflected in the operation’s improving profitability.

See “Results of Operations – Second Quarter of 2008 Compared to Second Quarter of 2007” for a more detailed discussion of our results of operations.

Overview

For the first quarter, revenue grew 11% driven by strong growth in software and mail services. Acquisitions and foreign currency translation contributed 5% and 3%, respectively, to this growth. As anticipated, this growth was partially offset by lower revenue at U.S. Mailing due to the wind-down of meter migration, timing of revenue due to the postal rate case in the first half of 2007, and difficult economic conditions.

Income from continuing operations for the first quarter of 2008 was $122.9 million or $0.58 per diluted share as compared with $0.66 earnings per diluted share in the first quarter of 2007. Income from continuing operations in the first quarter of 2008 included restructuring charges and asset impairments of 5 cents per diluted share and a tax adjustment of 3 cents per diluted share related to additional tax accrued associated with lease refunds in the U.K. and Ireland.

See “Results of Operations – First Quarter of 2008 Compared to First Quarter of 2007” for a more detailed discussion of our results of operations.

Overview

Revenue grew 7% in 2007 to $6.1 billion. Acquisitions and foreign currency translation contributed about 4% and 2%, respectively to this growth. Acquisitions for this year included MapInfo Corporation, Digital Cement, and Asterion SAS.

Income from continuing operations was $361 million in 2007 compared with $566 million in 2006 and diluted earnings per share from continuing operations was $1.63 in 2007 compared with $2.51 in 2006. In 2007, diluted earnings per share from continuing operations was reduced by restructuring and impairment charges of 87 cents, 5 cents for the purchase accounting alignment for MapInfo, and 16 cents for tax adjustments, related principally to a valuation allowance for net operating losses outside the U.S. In 2006, diluted earnings per share from continuing operations was reduced by restructuring charges of 10 cents and tax adjustments of 9 cents and increased by 1 cent from net legal settlements.

Our Software and Mail Services segments experienced strong results during 2007. These strong performances were offset by disappointing results in Europe, weaker performance in the legal solutions portion of our Management Services segment, and lower sales at U.S. Mailing due to the wind-down of meter migration. In addition, weakness in certain sectors of the economy, such as financial services, adversely affected our results during the second half of 2007.

On November 15, 2007, we announced a plan to lower our cost structure, accelerate efforts to improve operational efficiencies, and to transition our product line. As a result of this program, we expect a net reduction of about 1,500 positions across business lines and geographies, representing approximately 4 percent of the global employment base. Also, following a comprehensive review of our portfolio, we decided to explore strategic alternatives to determine the best course of action for our U.S. Management Services business.

See Results of Operations for 2007, 2006 and 2005 for a more detailed discussion of our results of operations.

Overview

Business conditions during the third quarter were much more challenging than we originally anticipated. Our Software and Mail Services segments continued to have very strong results, but their performance was offset by weaker performance in our U.S. and International Mailing segments as well as in our Management Services segment. In addition, weakness in certain sectors of the economy, such as financial services, adversely affected our results this quarter.

Revenue for the third quarter increased 5% to $1.5 billion. Revenue growth was positively affected by acquisitions and foreign currency translation, which contributed about 4% and 2%, respectively.

Earnings per diluted share from continuing operations for the quarter was $0.58 compared with $0.64 per diluted share in the prior year. Earnings per diluted share from continuing operations for the third quarter of 2007 was reduced by approximately 2 cents due to the purchase accounting alignment for MapInfo, 2 cents due to a non-cash tax charge, primarily related to a tax rate change in Germany, and 1 cent due to an impairment charge for intangible assets in our legal solutions business. Earnings per diluted share from continuing operations for the third quarter of 2006 included a 2 cent reduction related to restructuring charges.

Net income for the quarter was $127.7 million compared with net income of $148.6 million in the prior year.

See Results of Operations – Third Quarter of 2007 compared to Third Quarter of 2006 for a more detailed discussion of our results of operations.

Overview

This quarter’s results were led by the U.S. Mailing, Software, and Mail Services segments. The U.S. Mailing segment benefited from sales of equipment that help customers comply with the provisions of the recently-enacted U.S. postal rate case which requires that postage be based on shape as well as weight. Our expanding Software business and Mail Services operations also had excellent results in the quarter. Lower equipment sales in Europe, as well as weak performance in the legal solutions portion of our Management Services segment, partially offset these positive results.

Revenue for the second quarter increased 11%. Revenue growth was positively affected by acquisitions and foreign currency translation, which contributed about 4% and 1.5%, respectively. Earnings per diluted share from continuing operations for the quarter was $0.69 compared with $0.54 per diluted share in the prior year. Earnings per diluted share from continuing operations for the second quarter of 2007 was reduced by approximately 2 cents per diluted share due to the purchase accounting alignment for MapInfo. Earnings per diluted share from continuing operations for the second quarter of 2006 included a tax charge of 9 cents per diluted share related to the IRS settlement and a restructuring charge of 1 cent per diluted share. Net income for the quarter was $152.2 million compared with a loss of $356.1 million in the prior year. The loss in the prior year related to discontinued operations.

See Results of Operations – Second Quarter of 2007 compared to Second Quarter of 2006 for a more detailed discussion of our results of operations.

Overview

During the quarter, we announced a new executive leadership structure to position us for continued growth in a changing environment. Effective May 14^th, Murray D. Martin, our President and Chief Operating Officer, will become President and Chief Executive Officer. Michael J. Critelli, our Chairman and current Chief Executive Officer, will assume the newly created position of Executive Chairman. Mr. Martin also was appointed to our Board of Directors. As CEO, Mr. Martin will assume full strategic and operational responsibility, overseeing our overall performance with a focus on sustaining increased shareholder, customer and employee value. In his new role, Mr. Critelli will lead our focus on emerging opportunities in the external environment, including postal reform and transformation in the U.S. and globally, and market opportunities arising from our innovation and leadership.

During the quarter, we also expanded our presence in the mailstream by entering into a merger agreement to acquire MapInfo Corporation. We completed the acquisition of MapInfo on April 19, 2007 for approximately $408 million in cash, net of cash acquired. MapInfo is a leading provider of location intelligence software and solutions.

For the first quarter, revenue grew 4% driven by growth in payment solutions, supplies, mail services and marketing services. Revenue growth for the quarter was adversely affected by lower equipment sales and rentals. Revenue growth was positively affected by acquisitions and foreign currency translation, which each contributed 2%, respectively.

Income from continuing operations for the quarter was $146.6 million or $0.66 per diluted share as compared with $0.60 earnings per diluted share in the first quarter of 2006. Income from continuing operations in the first quarter of 2006 included restructuring charges of 2 cents per diluted share.

See Results of Operations – First Quarter of 2007 compared to First Quarter of 2006 for a more detailed discussion of our results of operations.

Overview

We had significant accomplishments in 2006, capped off by the passage of historic postal reform legislation. We achieved strong financial results throughout the year. We completed our restructuring program which has made us more efficient and competitive. With the sale of Capital Services and the tax settlement with the Internal Revenue Service earlier in the year, there is greater stability, transparency and visibility into our business.

Revenue grew 7% in 2006 driven by strong growth in supplies, financing, software, mail services, marketing services and continued demand for our digital mailing and production mail equipment. Strategic transactions for the year included the acquisitions of Print, Inc.; Advertising Audit Services and PMH Caramanning; Ibis Consulting, Inc.; and Emtex Ltd. Acquisitions contributed 2% to our revenue growth.

Income from continuing operations was $566 million in 2006 compared with $473 million in 2005 and diluted earnings per share from continuing operations was $2.51 in 2006 compared with $2.04 in 2005. In 2006, diluted earnings per share from continuing operations was reduced by restructuring charges of 10 cents. In 2005, diluted earnings per share from continuing operations was reduced by restructuring charges of 16 cents, increased by our tax reserves related to corporate owned life insurance (COLI) of 24 cents and reduced by foundation contributions of 3 cents.

See Results of Operations for 2006, 2005 and 2004 for a more detailed discussion of our results of operations.

Overview

          Our performance this quarter was driven by our expanded presence in the mailstream most notably in our U.S. Mailing, International Mailing, Production Mail, Mail Services and Marketing Services segments.

          For the third quarter, revenue increased 8% driven by financing, supplies, business services and ongoing demand for our digital mailing and production mail equipment. Of this increase, 2% was attributable to acquisitions. Revenue was positively affected by foreign currency translation, which increased revenue growth by 1%.

          Net income for the quarter was $149 million or $0.66 per diluted share as compared with $0.60 earnings per diluted share in the third quarter of 2005. Income from continuing operations for the quarter was $0.64 per diluted share compared with $0.57 in the prior year. Diluted earnings per share for the third quarter of 2006 included an after-tax charge of $4 million or $0.02 related to our restructuring initiatives. As a result of our revenue growth, we were able to grow our earnings despite increases in interest rates and higher tax rates.

          See Results of Operations – Third Quarter of 2006 compared to Third Quarter of 2005 for a more detailed discussion of our results of operations.