Pitney Bowes has provided a quantitative reconciliation to GAAP in supplemental schedules. This information may also be found at the Company's web site www.pb.com/investorrelations.
This document contains “forward-looking statements” about its expected or potential future business and financial performance. For us forward-looking statements include, but are not limited to, statements about its future revenue and earnings guidance and other statements about future events or conditions. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that could cause actual results to differ materially from those projected. These risks and uncertainties include, but are not limited to: mail volumes; the uncertain economic environment; timely development, market acceptance and regulatory approvals, if needed, of new products; fluctuations in customer demand; changes in postal regulations; interrupted use of key information systems; management of outsourcing arrangements; the implementation of a new enterprise resource planning system; changes in business portfolio; foreign currency exchange rates; changes in our credit ratings; management of credit risk; changes in interest rates; the financial health of national posts; and other factors beyond its control as more fully outlined in the Company's 2013 Form 10-K Annual Report and other reports filed with the Securities and Exchange Commission. Pitney Bowes assumes no obligation to update any forward-looking statements contained in this document as a result of new information, events or developments.
Note: Consolidated statements of income; revenue and EBIT by business segment; and reconciliation of GAAP to non-GAAP measures for the three and nine months ended September 30, 2014 and 2013, and consolidated balance sheets at September 30, 2014 and December 31, 2013 are attached.
Pitney Bowes Inc. |
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Consolidated Statements of Income |
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(Unaudited) |
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(Dollars in thousands, except per share data) |
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Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Revenue: |
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Equipment sales | $ | 177,458 | $ | 197,044 | $ | 558,032 | $ | 619,035 | ||||||||
Supplies | 72,548 | 68,692 | 228,349 | 213,185 | ||||||||||||
Software | 112,271 | 98,164 | 312,891 | 285,658 | ||||||||||||
Rentals | 119,047 | 125,918 | 365,069 | 384,436 | ||||||||||||
Financing | 107,835 | 111,032 | 325,529 | 337,739 | ||||||||||||
Support services | 154,321 | 159,508 | 470,763 | 482,400 | ||||||||||||
Business services | 198,164 | 160,131 | 576,958 | 458,061 | ||||||||||||
Total revenue | 941,644 | 920,489 | 2,837,591 | 2,780,514 | ||||||||||||
Costs and expenses: |
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Cost of equipment sales | 90,984 | 88,945 | 262,336 | 295,567 | ||||||||||||
Cost of supplies | 22,470 | 21,444 | 70,129 | 66,536 | ||||||||||||
Cost of software | 29,775 | 29,698 | 93,423 | 80,093 | ||||||||||||
Cost of rentals | 23,636 | 24,434 | 74,273 | 75,946 | ||||||||||||
Financing interest expense | 19,667 | 19,468 | 59,733 | 57,438 | ||||||||||||
Cost of support services | 92,500 | 98,425 | 288,203 | 300,291 | ||||||||||||
Cost of business services | 142,512 | 112,447 | 406,472 | 322,970 | ||||||||||||
Selling, general and administrative | 341,738 | 352,299 | 1,031,497 | 1,057,876 | ||||||||||||
Research and development | 26,060 | 24,769 | 80,901 | 81,351 | ||||||||||||
Restructuring charges & asset impairments | 4,526 | 34,909 | 22,666 | 53,940 | ||||||||||||
Other interest expense | 23,370 | 27,508 | 71,001 | 89,594 | ||||||||||||
Interest income | (1,212 | ) | (1,457 | ) | (3,297 | ) | (4,507 | ) | ||||||||
Other (income) expense, net | (15,919 | ) | - | 45,738 | 25,121 | |||||||||||
Total costs and expenses | 800,107 | 832,889 | 2,503,075 | 2,502,216 | ||||||||||||
Income from continuing operations before income taxes |
141,537 | 87,600 | 334,516 | 278,298 | ||||||||||||
Provision for income taxes |
25,310 | 10,032 | 79,681 | 52,045 | ||||||||||||
Income from continuing operations |
116,227 | 77,568 | 254,835 | 226,253 | ||||||||||||
Income (loss) from discontinued operations, net of tax |
20,655 | (78,501 | ) | 30,173 | (159,725 | ) | ||||||||||
Net income (loss) before attribution of noncontrolling interests |
136,882 | (933 | ) | 285,008 | 66,528 | |||||||||||
Less: Preferred stock dividends of subsidiaries attributable |
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to noncontrolling interests |
4,593 | 4,594 | 13,781 | 13,782 | ||||||||||||
Net income (loss) - Pitney Bowes Inc. |
$ | 132,289 | $ | (5,527 | ) | $ | 271,227 | $ | 52,746 | |||||||
Amounts attributable to common stockholders: |
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Income from continuing operations | $ | 111,634 | $ | 72,974 | $ | 241,054 | $ | 212,471 | ||||||||
Income (loss) from discontinued operations | 20,655 | (78,501 | ) | 30,173 | (159,725 | ) | ||||||||||
Net income (loss) - Pitney Bowes Inc. | $ | 132,289 | $ | (5,527 | ) | $ | 271,227 | $ | 52,746 | |||||||
Basic earnings per share attributable to common stockholders (1) : |
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Continuing operations | 0.55 | 0.36 | 1.19 | 1.05 | ||||||||||||
Discontinued operations | 0.10 | (0.39 | ) | 0.15 | (0.79 | ) | ||||||||||
Net income (loss) - Pitney Bowes Inc. | $ | 0.65 | $ | (0.03 | ) | $ | 1.34 | $ | 0.26 | |||||||
Diluted earnings per share attributable to common stockholders (1) : |
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Continuing operations | 0.55 | 0.36 | 1.18 | 1.05 | ||||||||||||
Discontinued operations | 0.10 | (0.39 | ) | 0.15 | (0.79 | ) | ||||||||||
Net income (loss) - Pitney Bowes Inc. | $ | 0.65 | $ | (0.03 | ) | $ | 1.33 | $ | 0.26 | |||||||
(1) | The sum of the earnings per share amounts may not equal the totals above due to rounding. |
Pitney Bowes Inc. | ||||||||
Consolidated Balance Sheets | ||||||||
(Unaudited in thousands, except per share data) |
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Assets |
September 30,
|
December 31,
|
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Current assets: | ||||||||
Cash and cash equivalents | $ | 923,676 | $ | 907,806 | ||||
Short-term investments | 35,348 | 31,128 | ||||||
Accounts receivable, gross | 412,702 | 482,949 | ||||||
Allowance for doubtful accounts receivable | (13,651 | ) | (13,149 | ) | ||||
Accounts receivable, net | 399,051 | 469,800 | ||||||
Finance receivables | 1,040,156 | 1,127,261 | ||||||
Allowance for credit losses | (21,914 | ) | (24,340 | ) | ||||
Finance receivables, net | 1,018,242 | 1,102,921 | ||||||
Inventories | 94,879 | 103,580 | ||||||
Current income taxes | 29,815 | 28,934 | ||||||
Other current assets and prepayments | 135,973 | 147,067 | ||||||
Assets held for sale | 55,118 | 46,976 | ||||||
Total current assets | 2,692,102 | 2,838,212 | ||||||
Property, plant and equipment, net | 266,520 | 245,171 | ||||||
Rental property and equipment, net | 206,394 | 226,146 | ||||||
Finance receivables | 839,912 | 974,972 | ||||||
Allowance for credit losses | (9,323 | ) | (12,609 | ) | ||||
Finance receivables, net | 830,589 | 962,363 | ||||||
Investment in leveraged leases | 32,465 | 34,410 | ||||||
Goodwill | 1,694,987 | 1,734,871 | ||||||
Intangible assets, net | 91,797 | 120,387 | ||||||
Non-current income taxes | 65,092 | 73,751 | ||||||
Other assets | 544,091 | 537,397 | ||||||
Total assets | $ | 6,424,037 | $ | 6,772,708 | ||||
Liabilities, noncontrolling interests and stockholders' equity |
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Current liabilities: | ||||||||
Accounts payable and accrued liabilities | $ | 1,428,690 | $ | 1,644,582 | ||||
Current income taxes | 153,809 | 157,340 | ||||||
Notes payable and current portion of long-term obligations | 274,879 | - | ||||||
Advance billings | 399,016 | 425,833 | ||||||
Total current liabilities | 2,256,394 | 2,227,755 | ||||||
Deferred taxes on income | 57,830 | 39,701 | ||||||
Tax uncertainties and other income tax liabilities | 148,119 | 190,645 | ||||||
Long-term debt | 2,962,997 | 3,346,295 | ||||||
Other non-current liabilities | 423,981 | 466,766 | ||||||
Total liabilities | 5,849,321 | 6,271,162 | ||||||
Noncontrolling interests (Preferred stockholders' equity in subsidiaries) | 296,370 | 296,370 | ||||||
Stockholders' equity: | ||||||||
Cumulative preferred stock, $50 par value, 4% convertible | 1 | 4 | ||||||
Cumulative preference stock, no par value, $2.12 convertible | 559 | 591 | ||||||
Common stock, $1 par value | 323,338 | 323,338 | ||||||
Additional paid-in-capital | 174,783 | 196,977 | ||||||
Retained earnings | 4,872,875 | 4,715,564 | ||||||
Accumulated other comprehensive loss | (614,741 | ) | (574,556 | ) | ||||
Treasury stock, at cost | (4,478,469 | ) | (4,456,742 | ) | ||||
Total Pitney Bowes Inc. stockholders' equity | 278,346 | 205,176 | ||||||
Total liabilities, noncontrolling interests and stockholders' equity | $ | 6,424,037 | $ | 6,772,708 |
(1) | Certain prior year amounts have been revised. |
Pitney Bowes Inc. | ||||||||||||
Revenue and EBIT | ||||||||||||
Business Segments | ||||||||||||
September 30, 2014 | ||||||||||||
(Unaudited) |
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(Dollars in thousands) |
Three Months Ended September 30, | |||||||||||
% | ||||||||||||
2014 | 2013 | Change | ||||||||||
Revenue |
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North America Mailing | $ | 363,285 | $ | 381,685 | (5 | %) | ||||||
International Mailing | 132,291 | 141,332 | (6 | %) | ||||||||
Small & Medium Business Solutions | 495,576 | 523,017 | (5 | %) | ||||||||
Production Mail | 113,497 | 116,477 | (3 | %) | ||||||||
Presort Services | 111,434 | 105,093 | 6 | % | ||||||||
Enterprise Business Solutions | 224,931 | 221,570 | 2 | % | ||||||||
Digital Commerce Solutions | 221,137 | 175,902 | 26 | % | ||||||||
Total revenue | $ | 941,644 | $ | 920,489 | 2 | % | ||||||
EBIT (1) |
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North America Mailing | $ | 159,638 | $ | 158,692 | 1 | % | ||||||
International Mailing | 16,079 | 15,627 | 3 | % | ||||||||
Small & Medium Business Solutions | 175,717 | 174,319 | 1 | % | ||||||||
Production Mail | 9,570 | 10,620 | (10 | %) | ||||||||
Presort Services | 21,927 | 20,398 | 7 | % | ||||||||
Enterprise Business Solutions | 31,497 | 31,018 | 2 | % | ||||||||
Digital Commerce Solutions | 24,534 | 12,885 | 90 | % | ||||||||
Total EBIT | $ | 231,748 | $ | 218,222 | 6 | % | ||||||
Unallocated amounts: | ||||||||||||
Interest, net (2) | (41,825 | ) | (45,519 | ) | ||||||||
Corporate and other expenses | (59,779 | ) | (50,194 | ) | ||||||||
Restructuring charges & asset impairments | (4,526 | ) | (34,909 | ) | ||||||||
Other income, net | 15,919 | - | ||||||||||
Income from continuing operations before income taxes | $ | 141,537 | $ | 87,600 |
(1) | Earnings before interest and taxes (EBIT) excludes general corporate expenses and restructuring charges & asset impairments. | |
(2) | Interest, net includes financing interest expense, other interest expense and interest income. |
Pitney Bowes Inc. | ||||||||||||
Revenue and EBIT | ||||||||||||
Business Segments | ||||||||||||
September 30, 2014 | ||||||||||||
(Unaudited) | ||||||||||||
(Dollars in thousands) | Nine Months Ended September 30, | |||||||||||
% | ||||||||||||
2014 | 2013 | Change | ||||||||||
Revenue |
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North America Mailing | $ | 1,115,507 | $ | 1,162,718 | (4 | %) | ||||||
International Mailing | 438,819 | 444,665 | (1 | %) | ||||||||
Small & Medium Business Solutions | 1,554,326 | 1,607,383 | (3 | %) | ||||||||
Production Mail | 330,469 | 360,352 | (8 | %) | ||||||||
Presort Services | 339,205 | 322,954 | 5 | % | ||||||||
Enterprise Business Solutions | 669,674 | 683,306 | (2 | %) | ||||||||
Digital Commerce Solutions | 613,591 | 489,825 | 25 | % | ||||||||
Total revenue | $ | 2,837,591 | $ | 2,780,514 | 2 | % | ||||||
EBIT (1) |
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North America Mailing | $ | 476,757 | $ | 464,668 | 3 | % | ||||||
International Mailing | 67,347 | 53,092 | 27 | % | ||||||||
Small & Medium Business Solutions | 544,104 | 517,760 | 5 | % | ||||||||
Production Mail | 27,865 | 34,239 | (19 | %) | ||||||||
Presort Services | 68,235 | 65,132 | 5 | % | ||||||||
Enterprise Business Solutions | 96,100 | 99,371 | (3 | %) | ||||||||
Digital Commerce Solutions | 51,994 | 27,969 | 86 | % | ||||||||
Total EBIT | $ | 692,198 | $ | 645,100 | 7 | % | ||||||
Unallocated amounts: | ||||||||||||
Interest, net (2) | (127,437 | ) | (142,525 | ) | ||||||||
Corporate and other expenses | (161,841 | ) | (145,216 | ) | ||||||||
Restructuring charges & asset impairments | (22,666 | ) | (53,940 | ) | ||||||||
Other expense, net | (45,738 | ) | (25,121 | ) | ||||||||
Income from continuing operations before income taxes | $ | 334,516 | $ | 278,298 | ||||||||
(1) | Earnings before interest and taxes (EBIT) excludes general corporate expenses and restructuring charges & asset impairments. | |
(2) | Interest, net includes financing interest expense, other interest expense and interest income. |
Pitney Bowes Inc. | ||||||||||||||||
Reconciliation of Reported Consolidated Results to Adjusted Results | ||||||||||||||||
(Unaudited) | ||||||||||||||||
(Dollars in thousands, except per share data) | ||||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
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2014 | 2013 | 2014 | 2013 | |||||||||||||
GAAP income from continuing operations | ||||||||||||||||
after income taxes, as reported | $ | 111,634 | $ | 72,974 | $ | 241,054 | $ | 212,471 | ||||||||
Restructuring charges & asset impairments | 2,903 | 22,536 | 15,161 | 35,662 | ||||||||||||
Extinguishment of debt | - | - | 37,833 | 15,324 | ||||||||||||
Investment divestiture | (9,774 | ) | - | (9,774 | ) | - | ||||||||||
Income from continuing operations | ||||||||||||||||
after income taxes, as adjusted | $ | 104,763 | $ | 95,510 | $ | 284,274 | $ | 263,457 | ||||||||
GAAP diluted earnings per share from | ||||||||||||||||
continuing operations, as reported | $ | 0.55 | $ | 0.36 | $ | 1.18 | $ | 1.05 | ||||||||
Restructuring charges & asset impairments | 0.01 | 0.11 | 0.07 | 0.18 | ||||||||||||
Extinguishment of debt | - | - | 0.19 | 0.08 | ||||||||||||
Investment divestiture | (0.05 | ) | - | (0.05 | ) | - | ||||||||||
Diluted earnings per share from continuing | ||||||||||||||||
operations, as adjusted | $ | 0.51 | $ | 0.47 | $ | 1.39 | $ | 1.30 | ||||||||
GAAP net cash provided by operating activities, | ||||||||||||||||
as reported | $ | 116,985 | $ | 214,526 | $ | 397,432 | $ | 493,560 | ||||||||
Capital expenditures | (48,920 | ) | (29,951 | ) | (121,270 | ) | (103,392 | ) | ||||||||
Restructuring payments | 8,621 | 14,098 | 42,151 | 41,353 | ||||||||||||
Payments related to investment divestiture | 53,738 | - | 53,738 | - | ||||||||||||
Reserve account deposits | (12,563 | ) | 9,227 | (15,919 | ) | (16,962 | ) | |||||||||
Extinguishment of debt | - | - | 61,657 | 25,121 | ||||||||||||
Free cash flow, as adjusted | $ | 117,861 | $ | 207,900 | $ | 417,789 | $ | 439,680 | ||||||||