STAMFORD, Conn. — (BUSINESS WIRE) — November 1, 2011 — Pitney Bowes Inc. (NYSE: PBI) today reported third quarter 2011 results.
Revenue for the quarter was $1.3 billion, which was a decline of 3 percent when compared to the prior year. Revenue benefited approximately 2 percent from currency translation. When compared to the third quarter of 2010, revenue was adversely impacted by declines in equipment sales and business services revenue, due in part to the heightened economic uncertainty worldwide, which was partially offset by 15 percent growth in software revenue.
Adjusted earnings per diluted share from continuing operations for the third quarter was $0.69 compared with $0.55 for the prior year. The quarter’s adjusted earnings per diluted share included, as anticipated, a net benefit of $0.05 per diluted share from insurance reimbursements. These reimbursements offset income lost in the first two quarters of the year due to the fire at the company’s Dallas presort facility. Adjusted earnings per diluted share also included a net benefit of $0.08 per diluted share related to the IRS tax settlement.
In July, the company and the IRS reached agreement on the tax treatment of a number of issues, as well as on revised tax calculations, related to the IRS’ examination of tax years 2001 through 2004. As a result, in the third quarter the company recorded a benefit of $0.08 per diluted share for amounts that pertained to continuing operations, and a benefit of $0.30 per diluted share for amounts that pertained to discontinued operations.
Earnings per diluted share for the quarter on a Generally Accepted Accounting Principles (GAAP) basis was $0.85 compared with $0.43 per diluted share for the prior year. GAAP earnings per diluted share for the quarter included an $0.11 charge for restructuring costs and asset impairments. In addition, there was a $0.15 per diluted share goodwill impairment charge related to the company’s International Mail Services business due to a change in expectations for future growth in this business. Benefits to GAAP earnings per diluted share during the quarter included $0.13 per diluted share from the sale of leveraged lease assets in Canada and an additional $0.30 per diluted share in discontinued operations related to the tax settlement with the IRS.
Free cash flow for the quarter was $260 million, while on a GAAP basis, the company generated $301 million in cash from operations. Free cash flow benefited from the timing of tax payments, including the IRS postponing the due date for third quarter payments, because of the disruption caused by Hurricane Irene. These tax payments will be made in the fourth quarter and will be reflected in cash flow at that time. Additionally, cash flow benefited from a refund of previously paid tax bonds associated with the company’s aforementioned tax settlement with the IRS. Cash flow also benefited from higher net income and lower finance receivables. During the quarter, the company used $75 million of cash for dividends and $50 million of cash to buyback 2.6 million of its common shares. Year-to-date, the company has generated $814 million in free cash flow and on a GAAP basis $750 million in cash from operations, which was used primarily to pay dividends, buyback shares, make restructuring payments, and reduce debt.
The company’s results for the quarter are summarized in the table below:
|Restructuring and Asset Impairments||($0.11)|
|Sale of Leveraged Lease||$0.13|
|GAAP EPS from Continuing Operations||$0.56|