STAMFORD, Conn.--(BUSINESS WIRE)--November 2, 2010--Pitney Bowes Inc. (NYSE:PBI) today reported third quarter 2010 results.

Revenue for the quarter was $1.3 billion, which was flat to the prior year excluding the impact of foreign currency and declined one percent including the effects of currency. When compared to the third quarter of 2009, revenue benefited from 10 percent increases in both equipment sales and software revenue but was also affected by lower financing, rental and supplies revenue due to lower equipment sales in prior periods. Adjusted earnings per diluted share from continuing operations for the third quarter was $0.55 compared with $0.55 for the prior year. Earnings per diluted share for the quarter on a Generally Accepted Accounting Principles (GAAP) basis was $0.43 compared with $0.50 per diluted share for the prior year. GAAP earnings per diluted share for the quarter included a $0.10 charge for restructuring costs associated with the company’s strategic transformation initiatives and a $0.01 loss associated with discontinued operations. Adjusted earnings per diluted share for the quarter included a three cent per share favorable adjustment related to a leveraged lease portfolio in Canada. This benefit helped offset higher international shipping costs in the mail services segment related to the company’s expansion in the e-commerce parcel space.

Free cash flow for the quarter was $221 million, while on a GAAP basis, the company generated $243 million in cash from operations. Free cash flow benefited from $32 million of cash proceeds from the monetization of an interest rate swap position during the quarter and lower finance receivables. During the quarter, the company used $77 million of cash for dividends and $100 million of cash to buyback 4.7 million of its common shares. Year-to-date, the company has generated $673 million in free cash flow and on a GAAP basis $667 million in cash from operations, which was used primarily to pay dividends, buyback shares, make restructuring payments, and reduce debt.

*The sum of the earnings per share does not equal the totals above due to rounding.

Commenting on the quarter, Chairman, President and CEO Murray D. Martin said, “We are encouraged by the improvement we saw in equipment sales this quarter in our global Mailing and U.S. Production Mail businesses and by the growth in software revenue. Our new Connect+™ web-based mailing system is being very well received by our customers and we expect it to be a key component in driving future mailing equipment sales. Positive equipment sales growth is an important early indicator of improvement in our businesses which serve the SMB market.

“While the economic recovery remains uncertain for some of our smaller customers, we are starting to see some signs of improved business confidence and spending in our customer base, especially among our larger enterprise customers in the U.S. This was evidenced by increased mail volumes processed by our Mail Services business and improved demand for our Software solutions and Production Mail equipment.”

The company aggregates its business segments into two groups based on the customers it primarily serves: Small and Medium Business (SMB) Solutions and Enterprise Business Solutions. The SMB Solutions group consists of the company’s global Mailing operations. The Enterprise Business Solutions group includes the company’s global Production Mail, Software, Management Services, Mail Services and Marketing Services operations.

During the quarter, U.S. Mailing experienced improved sales among its mid-and larger-sized customers, although small business customers remained cautious about spending. Improving conditions among mid and larger-sized customers, plus the availability of the new Connect+™ mailing system, resulted in a 5 percent year-over-year increase in equipment sales. This was the first increase in mailing equipment sales in seven quarters. The segment’s overall revenue was affected, as expected, by lower rental and financing revenue as a result of lower sales in prior periods. EBIT margin improved by 50 basis points versus the prior year, benefiting from past and ongoing productivity improvements related to the company’s strategic transformation program; lower credit losses; and recent lease extensions. Lease extensions are designed to enhance customer retention and result in improved profitability.

International Mailing revenue grew both on a reported basis and excluding the impact of foreign currency when compared with the prior year. The segment had double-digit growth for equipment sales during the quarter, driven by the sale of postal rate updates for scales in France. A similar postal rate update occurred in France in the first quarter of 2009. Excluding the impact of the rate change revenue, International Mailing still had high single-digit growth in equipment sales versus the prior year. As in the U.S., financing and rental revenue declined as a result of lower equipment sales in prior periods. EBIT improved versus the prior year in part due to past and ongoing productivity initiatives, as well as the favorable adjustment in a leveraged lease portfolio in Canada. These factors were offset in part by the negative margin impact from lower financing revenue.

During the quarter, increased demand for the company’s high-speed, high integrity inserting systems, especially in the United States, helped drive revenue growth and a higher backlog of customer orders when compared with the prior year. Revenue also benefited from the installation of the first Intellijet™ color production printing system from the company’s technology distribution partnership with HP. EBIT margin improved by 220 basis points propelled by current and ongoing productivity initiatives that increased margin leverage from revenue growth.

During the quarter, the Software business experienced increased demand for its software solutions, including data management, analytics and CRM. As a result, revenue increased versus the prior year as the company delivered more of these solutions to its customers. The company continued its transition to annuity-based pricing for selected software solutions and plans expansion of its SaaS offerings and recurring revenue streams from term licenses. The company also completed its planned acquisition of Portrait Software plc during the quarter, which will further enhance the company’s analytics and customer communications management capabilities. Excluding related acquisition costs, Software EBIT grew at a double-digit rate and the margin would have improved versus the prior year.

As expected, revenue for the quarter declined as a result of account contractions and terminations in the U.S. over the last 12 months. The company has exited a number of postal facilities management contracts in the U.S. as the postal service realigned its delivery infrastructure. Outside the U.S., where the company principally provides print and customer communication services to enterprise accounts in Europe, revenue declined on lower volumes. Despite lower revenue, EBIT margins continued to improve versus the prior year, in both Europe and the U.S. The margin improvements resulted from the company’s focus on more profitable contracts, ongoing productivity initiatives, and a continued transition to a more variable cost structure.

Mail Services continues to process increasing volumes of U.S. domestic presort mail and diversify its mix of mail as it grows its presence in Standard Class mail volumes. Overall volume of mail processed increased from both new and existing customers and was driven in part by the company’s unique nationwide capability to help mailers benefit from the discounts available when properly utilizing the Intelligent Mail Barcode. Presort-related revenue for the quarter grew and the EBIT margin improved.

EBIT for the segment was impacted by increased costs associated with the International Mail Services (IMS) portion of the business. As the company ramps up its participation in the international e-commerce parcel market, higher shipping rates by some of the international carriers are affecting margins. The company is taking action to mitigate these cost increases to improve the margins of the business as volumes grow.

Revenue improved versus the prior year primarily because of increased vendor advertising for the Movers’ Source kits, despite a decline in the number of household moves versus the prior year. EBIT margin improved year-over-year due to ongoing productivity initiatives.

This guidance discusses future results which are inherently subject to unforeseen risks and developments. As such, discussions about the business outlook should be read in the context of an uncertain future, as well as the risk factors identified in the safe harbor language at the end of this release.

The company is narrowing its earnings guidance range to reflect the results for the first three quarters of the year and its outlook for the remainder of the year. The global economy and business environment appears to be stabilizing in some areas but still remains uncertain in other areas, such as small business.

The company continues to expect revenue for the year, excluding the impact of foreign currency, will be in the range of flat to a three percent decline when compared with the prior year. The company now expects adjusted EPS from continuing operations for the year to be in the range of $2.15 to $2.22 and GAAP EPS in the range of $1.54 to $1.69. GAAP EPS includes tax charges of $.13 per diluted share related to out-of-the-money stock options; certain capital lease transactions outside the U.S. and the impact of health care legislation enacted in the beginning of the year. GAAP EPS also includes expected restructuring and asset impairment charges in the range of $.40 to $.48 related to the company’s previously announced strategic transformation program.

The company expects to generate free cash flow for 2010 at or above the high end of its stated range of $700 million to $800 million.

Mr. Martin concluded, “We are focused on implementing the actions that will help us navigate uncertain business and economic conditions in the near-term, while positioning us for long-term growth in the future. Our strategic transformation program is on track and providing the expected financial benefits as we saw this quarter when we had improving margins for four of our cost of revenue lines on our income statement and improving EBIT margins at five of our seven business segments. We remain focused on streamlining our business operations and creating more flexibility in our cost structure.

“Our investments for the future can be seen in actions during the quarter such as the continued phased launch of our innovative Connect+^TM mailing system, and the completion of the acquisition of Portrait plc. We are committed to driving innovation and identifying more opportunities for growth in the future.”

Management of Pitney Bowes will discuss the company’s results in a broadcast over the Internet today at 5:00 p.m. EST. Instructions for listening to the earnings results via the Web are available on the Investor Relations page of the company’s web site at www.pb.com/investorrelations.

Pitney Bowes is a $5.6 billion global leader whose products, services and solutions deliver value within the mailstream and beyond. For more information visit www.pitneybowes.com.

The company's financial results are reported in accordance with generally accepted accounting principles (GAAP). However, earnings per share, income from continuing operations, and free cash flow results are adjusted to exclude the impact of special items such as transformation initiatives, restructuring charges, tax adjustments, accounting adjustments and write downs of assets. Although these charges represent actual expenses to the company, these charges might mask the periodic income and financial and operating trends associated with our business. The use of free cash flow has limitations. GAAP cash flow has the advantage of including all cash available to the company after actual expenditures for all purposes. Free cash flow permits a shareholder insight into the amount of cash that management could have available for other discretionary uses. It adjusts for long-term commitments such as capital expenditures, as well as special items like cash used for restructuring charges, unusual tax payments and contributions to its pension funds. These items use cash that is not otherwise available to the company and are important expenditures. Management compensates for these limitations by using a combination of GAAP cash flow and free cash flow in doing its planning.

EBIT excludes interest payments and taxes, both cash expenses to the company, and as a result, has the effect of showing a greater amount of earnings than net income. The company uses EBIT for purposes of measuring the performance of its management team. The interest rates and tax rates applicable to the company generally are outside the control of management, and it can be useful to judge performance independent of those variables. Financial results on a constant currency basis exclude the impact of changes in foreign currency exchange rates since the prior period under comparison and are calculated using the average of the rates in effect during that period. Constant currency measures are intended to help investors better understand the underlying operational performance of the business excluding the impacts of shifts in currency exchange rates over the intervening period.

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 in the Investor Relations section.

This document contains “forward-looking statements” about our expected or potential future business and financial performance. For us forward-looking statements include, but are not limited to, statements about possible transformation initiatives; restructuring charges; our 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: the uncertain economic environment, fluctuations in customer demand; mail volumes; foreign currency exchange rates; the outcome of litigations; and changes in postal regulations, as more fully outlined in the company's 2009 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, 2010 and 2009, and consolidated balance sheets at September 30, 2010 and June 30, 2010 are attached.


Pitney Bowes Inc.
Consolidated Statements of Income
(Unaudited)

(Dollars in thousands, except per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2010			2009 (2)			2010			2009 (2)
Revenue:
Equipment sales	$	248,228		$	225,759		$	718,399		$	714,780
Supplies		77,304			83,464			239,635			253,466
Software		95,850			87,295			265,130			254,401
Rentals		151,399			163,711			456,977			487,992
Financing		157,333			171,228			476,712			528,534
Support services		175,844			177,607			531,176			531,200
Business services		439,784			447,756			1,303,183			1,344,493

Total revenue		1,345,742			1,356,820			3,991,212			4,114,866

Costs and expenses:
Cost of equipment sales		115,721			106,326			325,120			331,144
Cost of supplies		23,843			23,785			73,381			68,495
Cost of software		21,191			19,413			61,064			60,480
Cost of rentals		36,277			40,508			107,658			114,372
Financing interest expense		22,189			23,975			65,948			73,865
Cost of support services		111,521			119,034			337,822			356,620
Cost of business services		335,588			335,406			1,003,712			1,033,933
Selling, general and administrative		435,292			435,931			1,304,941			1,317,410
Research and development		38,454			45,052			117,487			138,623
Restructuring charges and asset impairments		33,805			12,845			103,039			12,845
Other interest expense		29,310			27,244			86,172			84,548
Interest income		(393	)		(668	)		(1,851	)		(3,153	)

Total costs and expenses		1,202,798			1,188,851			3,584,493			3,589,182

Income from continuing operations before income taxes		142,944			167,969			406,719			525,684

Provision for income taxes		46,880			57,691			155,302			192,375

Income from continuing operations		96,064			110,278			251,417			333,309

(Loss)/gain from discontinued operations, net of income tax		(2,536	)		(2,429	)		(8,332	)		5,296

Net income before attribution of noncontrolling interests		93,528			107,849			243,085			338,605

Less: Preferred stock dividends of subsidiaries
attributable to noncontrolling interests		4,593			4,622			13,730			13,714

Pitney Bowes Inc. net income	$	88,935		$	103,227		$	229,355		$	324,891



Amounts attributable to Pitney Bowes Inc.:
Income from continuing operations	$	91,471		$	105,656		$	237,687		$	319,595
(Loss)/gain from discontinued operations		(2,536	)		(2,429	)		(8,332	)		5,296

Pitney Bowes Inc. net income	$	88,935		$	103,227		$	229,355		$	324,891

Basic earnings per share of common stock attributable to
Pitney Bowes Inc. common stockholders (1):
Continuing operations	$	0.44		$	0.51		$	1.15		$	1.55
Discontinued operations		(0.01	)		(0.01	)		(0.04	)		0.03

Net income	$	0.43		$	0.50		$	1.11		$	1.57

Diluted earnings per share of common stock attributable to
Pitney Bowes Inc. common stockholders (1):
Continuing operations	$	0.44		$	0.51		$	1.15		$	1.54
Discontinued operations		(0.01	)		(0.01	)		(0.04	)		0.03

Net income	$	0.43		$	0.50		$	1.11		$	1.57

Average common and potential common
shares outstanding		206,282,026			207,643,504			207,291,482			207,198,120


(1) The sum of the earnings per share amounts may not equal the totals above due to rounding.

(2) Certain prior year amounts have been reclassified to conform to the current year presentation.


Pitney Bowes Inc.
Consolidated Balance Sheets
(Unaudited)

(Dollars in thousands, except per share data)

Assets	09/30/10			06/30/10
Current assets:
Cash and cash equivalents	$	386,046		$	459,451
Short-term investments		21,351			21,839
Accounts receivable, less allowances:
09/10 $34,865 06/10 $34,565		725,667			710,019
Finance receivables, less allowances:
09/10 $48,366 06/10 $46,195		1,308,821			1,329,000
Inventories		187,875			182,974
Current income taxes		112,719			146,859
Other current assets and prepayments		102,838			99,856

Total current assets		2,845,317			2,949,998

Property, plant and equipment, net		458,766			463,993
Rental property and equipment, net		315,489			322,110
Long-term finance receivables, less allowances:
09/10 $20,511 06/10 $22,921		1,245,798			1,226,406
Investment in leveraged leases		241,125			232,820
Goodwill		2,312,304			2,211,544
Intangible assets, net		304,186			280,829
Non-current income taxes		108,546			107,963
Other assets		484,376			481,404

Total assets	$	8,315,907		$	8,277,067

Liabilities, noncontrolling interests and stockholders' deficit
Current liabilities:
Accounts payable and accrued liabilities	$	1,694,745		$	1,661,401
Current income taxes		130,114			139,593
Notes payable and current portion of long-term obligations		135,674			149,082
Advance billings		461,573			465,972

Total current liabilities		2,422,106			2,416,048

Deferred taxes on income		304,765			320,100
Tax uncertainties and other income tax liabilities		546,314			541,332
Long-term debt		4,242,845			4,233,469
Other non-current liabilities		573,447			590,429

Total liabilities		8,089,477			8,101,378

Noncontrolling interests (Preferred stockholders' equity in subsidiaries)		296,370			296,370

Stockholders' deficit:
Cumulative preferred stock, $50 par value, 4% convertible		4			4
Cumulative preference stock, no par value, $2.12 convertible		804			824
Common stock, $1 par value		323,338			323,338
Additional paid-in capital		247,800			244,662
Retained earnings		4,293,549			4,280,409
Accumulated other comprehensive loss		(451,880	)		(583,181	)
Treasury stock, at cost		(4,483,555	)		(4,386,737	)

Total Pitney Bowes Inc. stockholders' deficit		(69,940	)		(120,681	)

Total liabilities, noncontrolling interests and stockholders' deficit	$	8,315,907		$	8,277,067


Pitney Bowes Inc.
Revenue and EBIT
Business Segments
September 30, 2010
(Unaudited)

(Dollars in thousands)		Three Months Ended September 30,
						%
		2010		2009		Change
	Revenue

	U.S. Mailing	$	461,787	$	491,036	(6%)
	International Mailing		227,844		224,681	1%
	Small & Medium Business Solutions		689,631		715,717	(4%)

	Production Mail		134,943		126,434	7%
	Software		91,544		82,361	11%
	Management Services		245,113		259,370	(5%)
	Mail Services		144,988		134,042	8%
	Marketing Services		39,523		38,896	2%
	Enterprise Business Solutions		656,111		641,103	2%

	Total revenue	$	1,345,742	$	1,356,820	(1%)

	EBIT (1)

	U.S. Mailing	$	169,871	$	178,066	(5%)
	International Mailing		38,931		29,193	33%
	Small & Medium Business Solutions		208,802		207,259	1%

	Production Mail		15,243		11,494	33%
	Software		7,996		8,241	(3%)
	Management Services		23,508		19,517	20%
	Mail Services		15,139		23,024	(34%)
	Marketing Services		8,571		7,448	15%
	Enterprise Business Solutions		70,457		69,724	1%

	Total EBIT	$	279,259	$	276,983	1%

	Unallocated amounts:
	Interest, net (2)		(51,106)		(50,551)
	Corporate expense		(51,404)		(45,618)
	Restructuring charges and asset impairments		(33,805)		(12,845)

	Income from continuing operations before income taxes	$	142,944	$	167,969


(1)	Earnings before interest and taxes (EBIT) excludes general corporate expenses and restructuring charges and 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, 2010
(Unaudited)

(Dollars in thousands)		Nine Months Ended September 30,
						%
		2010		2009		Change
	Revenue

	U.S. Mailing	$	1,406,464	$	1,517,377	(7%)
	International Mailing		678,961		679,893	(0%)
	Small & Medium Business Solutions		2,085,425		2,197,270	(5%)

	Production Mail		380,114		366,000	4%
	Software		251,877		240,559	5%
	Management Services		748,538		789,635	(5%)
	Mail Services (3)		416,245		413,891	1%
	Marketing Services		109,013		107,511	1%
	Enterprise Business Solutions		1,905,787		1,917,596	(1%)

	Total revenue	$	3,991,212	$	4,114,866	(3%)

	EBIT (1)

	U.S. Mailing	$	507,921	$	561,232	(9%)
	International Mailing		105,469		87,201	21%
	Small & Medium Business Solutions		613,390		648,433	(5%)

	Production Mail		35,111		26,974	30%
	Software		18,136		16,064	13%
	Management Services		65,781		49,294	33%
	Mail Services (3)		44,813		63,322	(29%)
	Marketing Services		20,430		17,323	18%
	Enterprise Business Solutions		184,271		172,977	7%

	Total EBIT	$	797,661	$	821,410	(3%)

	Unallocated amounts:
	Interest, net (2)		(150,269)		(155,260)
	Corporate expense		(137,634)		(127,621)
	Restructuring charges and asset impairments		(103,039)		(12,845)

	Income from continuing operations before income taxes	$	406,719	$	525,684


(1)	Earnings before interest and taxes (EBIT) excludes general corporate expenses and restructuring charges and asset impairments.
(2)	Interest, net includes financing interest expense, other interest expense and interest income.
(3)	The Mail Services segment for the nine month period ended September 30, 2010 includes a one-time out of period adjustment primarily to correct rates used to estimate earned but unbilled revenue for the periods 2007 through first quarter 2010. The adjustment reduced 2010 year-to-date revenue and EBIT by $21 million and $16 million, respectively. The impact of this adjustment was not material on any individual quarter or year during these periods and is not material to anticipated 2010 results.


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,
	2010			2009			2010			2009

GAAP income from continuing operations
after income taxes, as reported	$	91,471		$	105,656		$	237,687		$	319,595
Restructuring charges and asset impairments		21,630			8,300			67,027			8,300
Tax adjustments		568			216			22,058			12,204
Income from continuing operations
after income taxes, as adjusted	$	113,669		$	114,172		$	326,772		$	340,099


GAAP diluted earnings per share from
continuing operations, as reported	$	0.44		$	0.51		$	1.15		$	1.54
Restructuring charges and asset impairments		0.10			0.04			0.32			0.04
Tax adjustments		0.00			0.00			0.11			0.06
Diluted earnings per share from continuing
operations, as adjusted	$	0.55		$	0.55		$	1.58		$	1.64


GAAP net cash provided by operating activities,
as reported	$	243,085		$	249,038		$	666,887		$	732,424
Capital expenditures		(31,538	)		(36,319	)		(90,177	)		(126,509	)
Restructuring payments and discontinued operations		23,958			17,647			90,713			66,757
Reserve account deposits		(14,062	)		(7,768	)		5,405			(6,236	)

Free cash flow, as adjusted	$	221,443		$	222,598		$	672,828		$	666,436



Note: The sum of the earnings per share amounts may not equal the totals above due to rounding.

CONTACT:
Pitney Bowes Inc.
Editorial
Sheryl Y. Battles, 203-351-6808
VP, Corp. Communications
or
Financial
Charles F. McBride, 203351-6349
VP, Investor Relations
Website – www.pitneybowes.com

(c)	Exhibits

	99.1	Press release of Pitney Bowes Inc. dated November 2, 2010.

	Pitney Bowes Inc.

November 2, 2010


	/s/ S.J. Green
	S.J. Green
	Vice President – Finance and Chief Accounting Officer (Principal Accounting Officer)


	Third Quarter*
Adjusted EPS	$0.55
Restructuring and Asset Impairments	($0.10)
GAAP EPS from Continuing Operations	$0.44
Discontinued Operations	($0.01)
GAAP EPS	$0.43

SMB Solutions

		3Q 2010	Y-O-Y Change	Change ex Currency
	Revenue	$690 million	(4%)	(3%)
	EBIT	$209 million	1%

Within the SMB Solutions Group:
U.S. Mailing

		3Q 2010	Y-O-Y Change	Change ex Currency
	Revenue	$462 million	(6%)	(6%)
	EBIT	$170 million	(5%)


International Mailing

		3Q 2010	Y-O-Y Change	Change ex Currency
	Revenue	$228 million	1%	4%
	EBIT	$ 39 million	33%


Enterprise Business Solutions

		3Q 2010	Y-O-Y Change	Change ex Currency
	Revenue	$656 million	2%	3%
	EBIT	$ 70 million	1%

Within the Enterprise Business Solutions Group:
Worldwide Production Mail

		3Q 2010	Y-O-Y Change	Change ex Currency
	Revenue	$135 million	7%	8%
	EBIT	$15 million	33%

Software

		3Q 2010	Y-O-Y Change	Change ex Currency
	Revenue	$ 92 million	11%	12%
	EBIT	$ 8 million	(3%)

Management Services

		3Q 2010	Y-O-Y Change	Change ex Currency
	Revenue	$245 million	(5%)	(4%)
	EBIT	$ 24 million	20%


Mail Services

		3Q 2010	Y-O-Y Change	Change ex Currency
	Revenue	$145 million	8%	8%
	EBIT	$ 15 million	(34%)


Marketing Services

		3Q 2010	Y-O-Y Change	Change ex Currency
	Revenue	$ 40 million	2%	2%
	EBIT	$ 9 million	15%


			Full Year 2010
Adjusted EPS			$2.15 to $2.22
Restructuring and Asset Impairments			($0.40 to $0.48)
Tax Charges			($0.13)
GAAP EPS from Continuing Operations			$1.54 to $1.69