UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023 Commission file number: 1-3579
PITNEY BOWES INC.
State of incorporation:
Delaware
Address:
Telephone Number:
3001 Summer Street,
(203)
356-5000
Stamford,
Connecticut
06926
Securities registered pursuant to Section 12(b) of the Act:
I.R.S. Employer Identification No.
06-0495050
Title of Each Class
Common Stock, $1 par value per share
6.7% Notes due 2043
Trading Symbol(s)
PBI
PBI.PRB
Name of Each Exchange on Which Registered
New York Stock Exchange
New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐No ☑
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑
No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files) Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth
company. See definition of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Smaller reporting company
☑
☐
Accelerated filer
Emerging growth company
☐
Non-accelerated filer
If an emerging growth company, indicate by check mark whether the registrant has elected not to use the extended transition period for complying with new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes ☑ No ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the
correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the
registrant's executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐
As of June 30, 2023, the aggregate market value of the registrant's common stock held by non-affiliates of the registrant was $622 million based on the closing sale price as
reported on the New York Stock Exchange. At January 31, 2024, there were 176,528,703 outstanding shares of common stock, $1 par value.
Portions of the registrant's proxy statement to be filed within 120 days after our fiscal year end in connection with the Annual Meeting of Stockholders, are incorporated by
reference in Part III of this Form 10-K.
DOCUMENTS INCORPORATED BY REFERENCE
1
PITNEY BOWES INC.
TABLE OF CONTENTS
PART I
Page Number
Item 1.
Item 1A.
Item 1B.
Item 1C.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Business
Risk Factors
Unresolved Staff Comments
Cybersecurity
Properties
Legal Proceedings
Mine Safety Disclosures
PART II
Market for the Company's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Reserved
Management's Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships, Related Transactions and Director Independence
Principal Accountant Fees and Services
PART IV
Item 15.
Item 16.
Exhibits and Financial Statement Schedules
Form 10-K Summary
Consolidated Financial Statements and Supplemental Data
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PART I
Forward-Looking Statements
This Annual Report on Form 10-K (Annual Report) contains statements that are forward-looking. We believe that these forward-looking statements are
reasonable based on our current expectations and assumptions. However, we caution readers that any forward-looking statement within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 are subject to risks and uncertainties and actual results
could differ materially. Words such as "estimate," "target," "project," "plan," "believe," "expect," "anticipate," "intend" and similar expressions may identify
such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new
information, future events or otherwise, except as required by law. Forward-looking statements in this Annual Report speak only as of the date hereof, and
forward-looking statements in documents attached that are incorporated by reference speak only as of the date of those documents.
While we believe that the expectations reflected in our forward-looking statements are reasonable, forward-looking statements are subject to inherent risks
and uncertainties and subject to change. Accordingly, actual results of operations, financial condition and cash flows could differ materially from those
projected or assumed in our forward-looking statements. Certain factors which could cause future financial performance to differ materially from
expectations include, without limitation:
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declining physical mail volumes
changes in postal regulations or the operations and financial health of posts in the U.S. or other major markets, or changes to the broader postal or
shipping markets
our ability to continue to grow volumes, gain additional economies of scale and improve profitability within our Global Ecommerce segment
the loss of some of our larger clients in our Global Ecommerce and Presort Services segments
the loss of, or significant changes to, United States Postal Service (USPS) commercial programs or our contractual relationships with the USPS or
USPS' performance under those contracts
the impacts of higher interest rates and the potential for future interest rate increases on our cost of debt
declines in demand for our ecommerce services resulting from supply chain delays or interruptions affecting our retail clients, or changes in retail
consumer behavior or spending patterns
changes in international trade policies, including the imposition or expansion of trade tariffs, and other geopolitical risks, including those related to
China
global supply chain issues adversely impacting our third-party suppliers' ability to provide us products and services
expenses and potential impacts resulting from a breach of security, including cyber-attacks or other comparable events
the impacts of inflation and rising prices, higher interest rates and a slow-down in economic activity, including a global recession, or a U.S.
government shutdown, to the company, our clients and retail consumers
competitive factors, including pricing pressures, technological developments and the introduction of new products and services by competitors
capital market disruptions or credit rating downgrades that adversely impact our ability to access capital markets at reasonable costs
changes in labor and transportation availability and costs
changes in foreign currency exchange rates, especially the impact a strengthening U.S. dollar could have on our global operations
our success at managing customer credit risk
changes in banking regulations, major bank failures or the loss of our Industrial Bank charter
changes in tax laws, rulings or regulations
our success in developing and marketing new products and services and obtaining regulatory approvals, if required
the continued availability and security of key information technology systems and the cost to comply with information security requirements and
privacy laws
our success at managing relationships and costs with outsource providers of certain functions and operations
increased environmental and climate change requirements or other developments in these areas
intellectual property infringement claims
the use of the postal system for transmitting harmful biological agents, illegal substances or other terrorist attacks
acts of nature and the impact of a pandemic on the Company and the services and solutions we offer
Further information about factors that could materially affect us, including our results of operations and financial condition, is contained in Item
1A. "Risk Factors" in this Annual Report.
3
ITEM 1. BUSINESS
General
Pitney Bowes Inc. (we, us, our, or the company) is a global shipping and mailing company that provides technology, logistics, and financial services to
small and medium sized businesses, large enterprises, including more than 90 percent of the Fortune 500, retailers and government clients around the
world. These clients rely on us to remove the complexity and increase the efficiency in their sending of mail and parcels. For additional information, visit
www.pitneybowes.com.
Business Segments
Global Ecommerce
Domestic parcel services offers retailers a parcel delivery and returns network for end consumers. We operate numerous domestic parcel sortation centers
connected by a nationwide transportation network, enabling us to pick up parcels from retailer distribution centers and move them through our physical
network. We also offer fulfillment services, providing pick, pack and ship services for clients through three fulfillment centers co-located within parcel
sortation centers to facilitate same-day entry into our parcel delivery network.
Cross-border services offers a range of services for our clients to manage their international shopping and shipping experience. Our proprietary technology
enables global tracking and logistics services; calculates duty, tax and shipping costs at checkout; enables multi-currency pricing, payment processing and
fraud management; ensures compliance with product restrictions and produces all documentation requirements to meet export complexities and customs
clearance.
Digital delivery services enables clients to reduce transportation and logistics costs, select the best carrier based on need and cost, improve delivery times
and track packages in real-time. Powered by our shipping APIs, clients can purchase postage, print shipping labels and access shipping and tracking
services from multiple carriers that can be easily integrated into any web application such as online shopping carts or ecommerce sites and provide
guaranteed delivery times and flexible payment options.
Presort Services
We are the largest workshare partner of the USPS and national outsource provider of mail sortation services that allow clients to qualify large volumes of
First-Class Mail, Marketing Mail and Marketing Mail Flats and Bound Printed Matter for postal workshare discounts. In 2023, we processed over 15
billion pieces of mail through our network of operating centers throughout the United States. Using our fully-customized proprietary technology, we
provide clients with end-to-end solutions from pick up to delivery into the postal system network, expedited mail delivery and optimal postage savings.
Sending Technology Solutions (SendTech Solutions)
We provide clients with physical and digital mailing and shipping technology solutions and other applications to help simplify and save on the sending,
tracking and receiving of letters, parcels and flats. We also offer supplies and maintenance services for these offerings. Our cloud enabled infrastructure
provides software-as-a-service (SaaS) offerings delivered online and via connected or mobile devices. Our latest offerings are designed on an open platform
architecture that have the capabilities to leverage partnerships with carriers, developers and other innovative companies to deliver value to our clients. We
offer financing alternatives that enable clients to finance equipment and product purchases.
Through our wholly owned subsidiary, The Pitney Bowes Bank (the Bank), we offer clients located in the United States a revolving credit solution for the
purchase of postage, services and supplies and an interest-bearing deposit solution to clients who prepay postage. Additionally, we offer financing
alternatives that enable clients to finance or lease other manufacturers’ equipment and provide working capital. We provide revolving credit solutions to
clients in Canada and the U.K. that enable them to make meter rental payments and purchase postage, services and supplies.
Seasonality
A larger percentage of our revenue is earned in the fourth quarter relative to the other quarters, driven primarily by higher shipping volumes during the
holiday season.
Sales and Services
We market our products, solutions and services through a direct and inside sales force, global and regional partner channels, direct mailings and digital
channels. We provide call-center, online and on-site support services for our products and solutions. Support services are primarily provided under
maintenance contracts.
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Competition
Our businesses face competition from large, multinational companies and smaller, more narrowly focused regional and local firms. We compete on the
basis of technology and innovation, breadth of product offerings, our ability to design and tailor targeted solutions to meet client needs, performance,
service and support, price, quality and brand.
We must continue to invest in our current technologies, products and solutions, and in the development of new technologies, products and solutions in order
to maintain and improve our competitive position. We frequently encounter new competitors as the markets in which we participate evolve and newer
businesses enter our existing markets.
A summary of the competitive environment for each of our segments is as follows:
Global Ecommerce
The domestic parcel services and cross-border solutions market includes competitors of various sizes, including companies and national posts with greater
financial resources than us. Some of these competitors specialize in point solutions or freight forwarding services, are full-service ecommerce business
process outsourcers and online marketplaces with international logistic support, or major global delivery services companies. We also face competition
from companies that can offer both domestic and cross-border solutions in a single package which creates pricing leverage. The principal competitive
factors include speed of delivery, price, ease of integration and use, innovative services, reliability, functionality and scalability. We compete based on the
accuracy, reliability and scalability of our platform and logistics services, our ability to provide clients and their customers a one-stop full-service
ecommerce experience and the ability to provide a more customized shipping solution than some of the larger competitors in the industry.
Our digital delivery services business competes with technology providers who help make shipping easier and more cost-effective. These technology
providers range from large, established companies to smaller companies offering negotiated carrier rates. The principal competitive factors include
technology stability and reliability, innovation, access to preferred shipping rates and ease of integration with existing systems.
Presort Services
We face competition from regional and local presort providers, cooperatives of multiple local presort providers, consolidators and service bureaus that offer
presort solutions as part of a larger bundle of outsourcing services. We also face competition from large mailers that have sufficient volumes and the
capability to sort their own mailings in-house and could use excess capacity to offer presort services to others. The principal competitive factors include
price, innovative service, delivery speed, tracking and reporting, industry expertise and economies of scale. Our competitive advantages include our
extensive network capable of processing significant volumes and our innovative proprietary technology that provides clients with reliable, secure and
precise services and maximum postage discounts.
SendTech Solutions
We face competition from other mail equipment and solutions providers and those that offer online shipping and mailing products and services solutions.
Additionally, the growth of alternative communication methods as compared to physical mail continue to grow, which creates competition to mail and to
our offerings that enable clients to use the mail efficiently. We differentiate ourselves from our competitors through our breadth of physical and digital
offerings, including cloud enabled SaaS and open platform architecture offerings; pricing; available financing and payment offerings; product reliability;
support services; and our extensive knowledge of the shipping and mailing industry.
Our financing operations face competition, in varying degrees, from large, diversified financial institutions, including leasing companies, commercial
finance companies and commercial banks, as well as small, specialized firms. We believe our competitive advantage that differentiates us from our
competitors is the breadth of our financing and payment solutions and our ability to seamlessly integrate these solutions into our clients' shipping and
mailing operations.
Also see Item 1A. Risk Factors for further details regarding the competition our businesses face.
Research, Development and Intellectual Property
We invest in research and development activities to develop new products and solutions, enhance the effectiveness and functionality of existing products
and solutions and deliver high value technology and differentiated services in high value segments of the market.
Third-Party Suppliers
Our SendTech Solutions segment depends on third-party suppliers and outsource providers for a variety of services and product components and the
hosting of our SaaS offerings. Our Global Ecommerce and Presort Services segments rely on third-party suppliers
5
to help equip our facilities, provide warehouse support and assist with our logistical operations. All of our businesses and corporate functions depend on
third-party providers for a variety of data analytics, sales, reporting and other functions. In certain instances, we rely on single-sourced or limited-sourced
suppliers and outsourcing vendors around the world because doing so is advantageous due to quality, price or lack of alternative sources. We have risk
mitigation programs to monitor conditions affecting our suppliers' ability to fulfill expected commitments. We believe that our available sources for
services, components, supplies, logistics and manufacturing are adequate.
Regulatory Matters
We are subject to the regulations of postal authorities worldwide related to product specifications of our postage meters. Our Presort Services operations are
also subject to USPS regulations. The Bank is chartered as an Industrial Bank under the laws of the State of Utah. The Bank and certain company affiliates
that provide services to the Bank are subject to the regulations of the Utah Department of Financial Institutions and the Federal Deposit Insurance
Corporation. We are also subject to transportation regulations for various parts of our business, worldwide customs and trade regulations related to our
cross-border shipping services and regulations concerning data privacy and security for our businesses that use, process and store certain personal,
confidential or proprietary data.
Climate Change
Although climate change has had no material impact on our operations to date, the risk of increasingly severe climate events or the risk that those events
happen more frequently could affect one or more of our facilities and our ability to conduct daily operations in the future. Increasing regulatory restrictions
in response to climate change could also materially affect our costs, especially with respect to transportation.
Human Capital
Employee Profile
We have approximately 10,500 employees, with 81% located in the United States. We also rely on a contingent hourly workforce to supplement our full-
time workforce to meet fluctuating demand.
We seek to create a high-performance culture that will drive and sustain enhanced long-term value for all our shareholders. To attract, retain and engage the
talent needed, we provide competitive compensation and strive to maintain a diverse, inclusive and safe workplace, with equitable opportunities for growth
and development. Our compensation programs are designed to reward performance and contribution. We regularly assess the business environments and
labor markets in the areas we operate to ensure our compensation programs reflect best practices and are market competitive. Depending on position and
level, elements of our compensation packages include base salary or wages, variable compensation based on individual and company objectives and equity.
We provide a competitive benefits package fostered on work/life balance, including medical, dental, life and disability insurance, and benefits that provide
additional support for our employees’ mental, physical, financial and social well-being.
Diversity and Inclusion
Maintaining a diverse workforce and an inclusive environment is critical to our success and we view diversity and inclusion as a competitive differentiator
that helps us attract, grow, engage and retain the best talent. We celebrate a rich mix of countries, cultures, ages, races, ethnicities, gender identities, sexual
orientation, abilities, and perspectives that showcase our humanity, differentiate us as individuals and enhance our businesses. Our global workforce is
comprised of over 43% women and 35% of our global managers are women. Our U.S. population is nearly 50% people of color and 36% of our U.S.
managers are people of color.
We continue to increase diversity and inclusion awareness throughout our company through enhancements and improvements to our talent acquisition
processes, cultural awareness training and the creation of allies and mentors to help advance diversity and inclusion in our workforce.
Employee Engagement and Development
We are committed to creating a culture where our employees feel supported and valued. We offer employees many opportunities to advance their skills,
learn new skills and achieve career goals through virtual and in-person development and training programs, professional development initiatives,
experiential learning, mentoring and coaching programs and inclusion networks.
Through multiple platforms, we offer employees and candidates varied opportunities to find development opportunities and stay informed about key
changes to our business. We conduct an independent annual employee engagement survey with demonstrated high levels of employee participation. We
benchmark our results against our previous year’s performance, as well as against other high-performing organizations. We consider the feedback from
employees and implement changes where possible and financially prudent.
6
Health and Safety
We are committed to providing a safe workplace that protects against and limits personal injury and environmental harm. Through regular evaluations of
site safety performance, sharing of successes, and creating projects to engage employees in safety improvements, we identify risks, provide guidance and
training, review and learn from accidents, and reduce injuries. We also report monthly to both local site management and senior leadership on safety
metrics, trends, risks and regulatory activity. Through these efforts and employee engagement, we have experienced significant improvements in our total
recordable cases and total recordable incident rates since 2019.
Available Information
Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments thereto filed with, or furnished
to, the SEC, are available, free of charge, through the Investor Relations section of our website at www.investorrelations.pitneybowes.com or from the
SEC's website at www.sec.gov, as soon as reasonably practicable after these reports are electronically filed with, or furnished to, the SEC. The other
information found on our website is not part of this or any other report we file with or furnish to the SEC.
Information About Our Executive Officers
Name
(1)
Jason C. Dies
Daniel J. Goldstein
Christoph Stehmann
Gregg Zegras
Ana Maria Chadwick
James Fairweather
(2)
Debbie Pfeiffer
Shemin Nurmohamed
(3)
Age
54
62
61
56
52
52
63
52
Title
Interim Chief Executive Officer
Executive Vice President and Chief Legal Officer and Corporate Secretary
Executive Vice President, International Sending Technology Solutions
Executive Vice President and President, Global Ecommerce
Executive Vice President and Chief Financial Officer
Executive Vice President, Chief Innovation Officer
Executive Vice President and President, Presort Services
Executive Vice President and President, Sending Technology Solutions
Executive
Officer Since
2017
2010
2016
2020
2021
2021
2024
2024
(1)
(2)
(3)
Effective April 1, 2024, Mr. Stehmann will be retiring.
Effective January 1, 2024, Ms. Pfeiffer was appointed Executive Vice President and President, Presort Services.
Effective January 1, 2024, Mrs. Nurmohamed was appointed Executive Vice President and President, Sending Technology Solutions.
There are no family relationships among the above officers. The above officers have served in various executive positions with the company for at least the
past five years except as follows:
Mr. Zegras was appointed Executive Vice President and President, Global Ecommerce in July 2020. He joined the company in 2013 as President, Imagitas.
Prior to joining the company, Mr. Zegras held several executive leadership positions, including at NBC Universal, Sharecare and Hearst Entertainment.
Ms. Chadwick joined the company as Executive Vice President and Chief Financial Officer in January 2021. Prior to joining the company, Ms. Chadwick
was employed at the financial services division of General Electric Company as President and CEO of GE Capital Global Legacy Solutions. Ms. Chadwick
spent over 20 years at GE Capital, where she held several executive positions, including Controller of GE Capital Americas and CFO at GE Capital Energy
Financial Services.
Mr. Fairweather was appointed Executive Vice President and Chief Innovation Officer in May 2021. Prior to this, he was Senior Vice President and Chief
Technology Officer, Commerce Services. He has been a leader in the company's strategic digital transformation and technology initiatives across Design,
SaaS, Data Science and Analytics, API Management, Security and Mobility.
Ms. Pfeiffer was appointed Executive Vice President and President, Presort Services in January 2024. Prior to this, she was President, Presort Services,
Vice President/General Manager of the Columbus and Cincinnati Ohio Operating Centers, Vice President of National Accounts and Vice President Sales &
Client Services,
Mrs. Nurmohamed was appointed Executive Vice President and President, Sending Technology Solutions in January 2024. She joined the company in 2016
as Vice President, Document Messaging Technologies France. Prior to joining the company, Mrs. Nurmohamed had a 16 year career at IBM as CFO and
Sales Director of various business units at the European and global levels.
7
ITEM 1A. RISK FACTORS
Our operations face certain risks that should be considered in evaluating our business. We manage and mitigate these risks on a proactive basis, using an
enterprise risk management program. Nevertheless, the following risk factors, some of which may be beyond our control, could materially affect our
business, financial condition, results of operations, brand and reputation, and may cause future results to be materially different than our current
expectations. These risk factors are not intended to be all inclusive.
Mailing and Shipping Industry Risks
The financial condition of the USPS, or the national posts in our other major markets, has affected, and could, in the future, affect the ability of those posts
to provide services to us or our clients, which could adversely affect client demand for our offerings and thus our financial performance.
We are dependent on financially viable national posts in the geographic markets where we operate, particularly in the United States. A significant portion
of our revenue depends upon the ability of these posts, especially the USPS, to provide competitive mail and package delivery services to our clients and
the quality of the services they provide. Their ability to provide high quality service at affordable rates in turn depends upon their ongoing financial
strength. Although Congress provided the USPS a measure of relief with the enactment of the Postal Service Reform Act of 2022, the USPS, and national
posts in our other major markets, still face financial challenges. If these challenges interfere with these posts’ ability to continue to provide the services they
currently provide, our financial performance may be adversely affected.
Our ability to compete in the package shipping market in the United States depends upon certain contractual relationships we have with the USPS and the
successful performance of those services.
The USPS is our primary provider for the “last mile” component of our parcel delivery services in the United States. This represents a significant
component of our cost in offering these services. If we are unable to receive competitive pricing from the USPS or take advantage of lower cost USPS
options, our ability to compete with private carriers and achieve profitable revenue growth may be adversely affected. Our digital delivery options also
depend upon certain contractual relationships with the USPS to enable us to offer these services profitably, and the USPS has adjusted the terms of those
contracts in the past. Should the USPS make additional changes to how it contracts with us for this service, our profitability could be adversely affected.
The quality of service we provide to our clients also depends upon the quality of delivery services received from the USPS. As the ecommerce market
continues to evolve, and as the USPS implements changes to its network, if the USPS’ service performance is materially worse than that of the private
carriers, we may lose clients to competition and our financial performance may be adversely affected.
We are subject to postal regulations and processes, which could adversely affect our financial performance.
A significant portion of our business is subject to regulation and oversight by the USPS, posts in other major markets, and the governmental bodies that
regulate the posts themselves. These postal authorities have the power to regulate some of our current products and services and to establish guidelines for
postage rates. They also must approve many of our new or future product and service offerings before we can bring them to market. If new or future
product and service offerings are not approved or there are significant conditions to approval, favorable postage rates are reversed, regulations on existing
products or services are changed, posts utilize their position in the market or their role as product regulator to limit competition in areas where the posts
themselves offer solutions, or if we fall out of compliance with the posts’ regulations, our financial performance could be adversely affected.
If we are not able to respond to the continuing decline in the volume of physical mail delivered via traditional postal services, our financial performance
could be adversely affected.
Continuing declines in traditional mail volumes impact our financial results, primarily within our SendTech Solutions and Presort Services segments. An
accelerated or sudden decline could result from one or more of the following factors: changes in communication technologies and their use; changes in
frequency and quality of mail delivery from national posts; legislation incentivizing alternative means of communication, burdening mail, or limiting how
the mail be used; significant rate increases; or other external events affecting physical mail delivery. If we are not successful at meeting the continuing
challenges faced in our mailing business, or if physical mail volumes experience an accelerated or sudden decline, our financial performance could be
adversely affected.
Significant changes to the laws regulating the USPS or other posts, or changes in their operating models could have an adverse effect on our financial
performance.
As a significant portion of our revenue and earnings is dependent on postal operations, changes in the laws and regulations that affect how posts operate
could have an adverse effect on our financial performance. As posts consider new strategies for their operations in
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an era of declining mail volumes and increasing package volumes, if we are unable to work with posts to support those strategies, our financial
performance could be adversely affected.
Business Operational Risks
We face intense competition in the industries in which we operate.
The markets for our products and services in each of our segments are highly competitive. In our Global Ecommerce segment, we face competition from
full-service ecommerce business process outsourcers, online marketplaces, freight forwarders, posts, and major global delivery services companies,
including those that can offer both domestic and cross-border solutions in a single package. If we cannot compete successfully in these markets with,
among other things, speed of delivery, price, reliability, functionality and scalability of our platform and logistic services and ease of integration and use,
we may lose clients, incur additional costs and suffer from reduced margins, and the financial results of the segment may be adversely affected. Our Presort
Services segment faces competition from regional and local presort providers, cooperatives of multiple local presort providers, consolidators and service
bureaus that offer presort solutions as part of a larger bundle of outsourcing services and large volume mailers that have sufficient volumes and the
capability to presort their own mailings in-house and could use excess capacity to offer presort services to others. If we are not able to effectively compete
on price, innovative service, delivery speed, tracking and reporting, we may lose clients and the financial results of the segment may be adversely affected.
Our Sending Technology Solutions segment faces competition from other mail equipment and solutions providers, companies that offer products and
services as alternative means of message communications and those that offer online shipping and mailing products and services solutions. Our digital
delivery business competes with technology providers ranging from large, established companies and national posts to smaller companies offering
negotiated carrier rates. In addition, our financing operations face competition, in varying degrees, from large, diversified financial institutions, including
leasing companies, commercial finance companies and commercial banks, as well as small, specialized firms. If we are not able to differentiate ourselves
from our competitors or effectively compete with them, the financial results of the segment may be adversely affected.
The evolution of our businesses to more digital and shipping-related services has resulted in a decline in our overall profit margins. If we cannot increase
our volumes while at the same time reduce our costs, our overall profitability could be adversely affected.
As our businesses shift to more digital and shipping-related services, the relative revenue contribution from our shipping-related offerings now exceeds that
of the revenue from our mailing-related offerings. We expect the revenue contribution from shipping-related services to continue to grow; however, profit
margins on these services are lower than those for our mailing-related offerings. As a result, we need to achieve higher dollars of revenue to generate the
same dollars of profit that we generate in our mailing businesses. Accordingly, if we cannot continue to grow package volumes and gain additional
economies of scale, and in turn, improve margins and profitability, our short and long-term financial performance may be adversely affected.
Seasonality of the Global Ecommerce segment, unexpected declines in consumer demand or the performance of our retail customers, or unexpected spikes
in the costs of labor or transportation, especially during the fourth quarter, could adversely affect our overall performance.
Our Global Ecommerce segment derives the majority of its revenue from retail clients. The retail industry is subject to cyclical trends in consumer
sentiment and spending habits that are affected by many factors, including prevailing economic conditions, recession or fears of recession, inflation,
exchange rates, unemployment levels, pandemics, or geopolitical events. Our retail clients are also dependent on third-party suppliers to provide them with
either raw materials or finished goods to meet the demands of their clients. This segment also relies upon the availability of labor and transportation at a
reasonable cost and unexpected increases in these costs due to higher demand or other macroeconomic factors (which have occurred in the past) could also
impact the financial results of Global Ecommerce. Further, the financial results for Global Ecommerce are highly dependent on its performance in the
fourth quarter, so if any of these risk factors come to pass in that quarter, the impact on the segment's performance could be more significant than other
times in the year.
The loss of any of our largest clients in our Global Ecommerce segment could adversely affect the financial performance of that segment.
The Global Ecommerce segment receives a large portion of its revenue from a relatively small number of clients and business partners. If any of these
larger clients or business partners leave our network or reduce their use of our services, which has occurred in the past, and we are unable to replace that
lost volume, it could have a material adverse effect on the revenue and profitability of the segment.
9
There can be no assurance that our larger clients and business partners will continue to utilize our products or services at current levels, or that we would be
able to replace any of these clients or business partners with others who can generate revenue at current levels.
If we fail to effectively manage our third-party suppliers, or if their ability to perform were negatively impacted, our business, financial performance and
reputation could be adversely affected.
Our SendTech Solutions segment relies on third-party suppliers for services and components for our mailing equipment, spare parts, supplies and services
and for the hosting of our SaaS offerings. We also rely on third-party suppliers to help us equip our Presort and Ecommerce facilities and to provide us with
services related to some of our operations and productivity initiatives. In certain instances, we rely on single-sourced or limited-sourced suppliers around
the world because of advantages in quality, price or lack of alternative sources. Like many other companies, we and our suppliers have experienced
interruptions and increased supply costs in the past, due to, among other things, volatility in the semiconductor industry, threats of strikes, rising inflation
and geopolitical instability. Although our 2023 financial results were not significantly impacted, these factors, at times, caused us to experience longer wait
times for supplies or increased costs. If these supply chain constraints were to worsen or, if other unknown events cause our suppliers to not be able to
provide their services, components or equipment to us in a timely manner, or, if the quality of the goods or services received were to deteriorate, our
relationship with certain suppliers were to be terminated, or if the costs of using these third parties were to continue to increase and we were not able to find
alternate suppliers, we could lose clients, incur significant disruptions in manufacturing and operations and increased costs (including higher freight and re-
engineering costs) and delay automation and productivity initiatives in our warehouses.
Fluctuations in transportation costs or disruptions to transportation services in our Global Ecommerce or Presort Services segments could adversely affect
client satisfaction or our financial performance.
In addition to our reliance on the USPS, our Global Ecommerce and Presort Services segments rely upon third-party transportation service providers to
transport a significant portion of our parcel and mail volumes. Some of these providers may also be competitors. The use of these providers is subject to
risks, including our ability to negotiate acceptable terms, increased competition during peak periods, capacity issues, increased fuel costs, labor shortages,
performance problems, extreme weather, natural or man-made disasters, pandemics, or other unforeseen difficulties. Given our continued reliance upon
these providers, any disruption to the timely supply of these services, any future unforeseen disruptions affecting these providers, any dramatic increase in
the cost of these services or any deterioration of the performance of these services (each of which we have experienced, at times), have adversely affected
or could adversely affect client satisfaction and our financial performance.
Our business depends on our ability to attract, retain, and engage with, employees at a reasonable cost to meet the needs of our business and to
consistently deliver highly differentiated, competitive offerings.
The rapid growth of the ecommerce industry has resulted in ongoing competition for employees in the shipping, transportation, and logistics industry,
including drivers and warehouse employees. At times, both our Global Ecommerce and Presort Services segments have experienced increased demand and
competition for labor, especially for our warehouses, driving up costs. We supplement our workforce with contingent hourly workers from staffing agencies
on an as-needed basis; however, if we experience labor shortages, do not effectively manage our ability to attract and utilize contingent workers, or if our
staffing agencies terminate their relationship with us and we cannot find alternative providers, it could result in increased costs and adversely affect our
operations. Moreover, given the nature of our Global Ecommerce and Presort Services employee base, if we cannot continue to maintain good
relationships, we could experience increased employee dissatisfaction and turnover, which could result in increased operating costs and reduced operational
flexibility.
In May 2023, we approved a worldwide restructuring plan (the 2023 Plan), which involved the elimination of 850-950 positions worldwide. Such actions
may cause us to experience a loss of continuity, loss of accumulated knowledge and/or inefficiency, loss of key employees and/or other retention issues
during transitional periods. Such actions may also make hiring qualified employees more difficult.
There is also significant competition for the talent needed for research and development of new products and services and talent needed to sell and service
our other products and services within all our business units. Increased competition for employees has resulted in higher costs for wages and other benefits
necessary to attract and retain employees with the right skill sets. Additional labor costs which may also impact our business include those triggered by
federal, state and local laws and regulatory actions; increased health care and workers’ compensation insurance expenses; and costs associated with the
health and safety of our employees.
10
Difficulty in obtaining and protecting our intellectual property, and the risk of infringement claims by others may negatively impact our financial
performance.
Our businesses are not materially dependent on any one patent or license or group of related patents and licenses; however, our business success depends in
part upon protecting our intellectual property rights, including proprietary technology developed or obtained through acquisitions. We rely on copyrights,
patents, trademarks, trade secrets and other intellectual property laws to establish and protect our proprietary rights. If we are unable to protect our
intellectual property rights, our competitive position may suffer, which could adversely affect our revenue and profitability. The continued evolution of
patent law and the nature of our innovation work may affect the number of patents we are able to receive for our development efforts. As we continue to
transition our business to more software and service-based offerings, patent protection of these innovations will be more difficult to obtain. In addition,
from time to time, third parties may claim that we, our clients, or our suppliers, have infringed their intellectual property rights. These claims, if successful,
may require us to redesign affected products, enter into costly settlement or license agreements, pay damage awards, or face a temporary or permanent
injunction prohibiting us from marketing or selling certain products.
If we fail to comply with government contracting regulations, our financial performance, brand name and reputation could suffer.
We have a significant number of contracts with governmental entities. Government contracts are subject to extensive and complex procurement laws and
regulations, along with regular audits and investigations by government agencies. If one or more government agency discovers contractual noncompliance
by us or one of our subcontractors, we may be subject to various civil or criminal penalties and administrative sanctions, which could include the
termination of the contract, reimbursement of payments received, fines and debarment from doing business with other government agencies. Any of these
events could not only affect our financial performance, but also adversely affect our brand and reputation.
We may not fully realize the anticipated benefits of strategic acquisitions and divestitures which may harm our financial performance.
Strategic acquisitions and business divestitures involve significant risks and uncertainties, which could have an adverse effect on our financial performance,
including:
•
•
difficulties in achieving anticipated benefits or synergies;
difficulties in integrating newly acquired businesses and operations, including combining product and service offerings and integrating financial
reporting and other IT systems;
the loss of key employees or clients of businesses acquired or divested;
significant charges for employee severance and other restructuring costs, legal, accounting and financial advisory fees and goodwill and asset
impairment charges; and
reducing fixed costs previously associated with divested businesses
•
•
•
Our capital investments to develop new products and offerings may not yield the anticipated benefits.
We made and are continuing to make significant capital investments in new products and services. If we are not successful in these new product or service
introductions, or if our past investments in facilities do not yield the expected productivity improvements, at the levels anticipated when making the
investments, there may be an adverse effect on our financial performance.
Cybersecurity and Technology Risks
Our financial performance and our reputation could be adversely affected, and we could be subject to legal liability or regulatory enforcement actions, if
we or our suppliers are unable to protect against, or effectively respond to, cyberattacks or other cyber incidents.
We depend on the security of our and our suppliers' information technology systems to support numerous business processes and activities, to service our
clients, and to enable consumer transactions and postal services. There are numerous cybersecurity risks to these systems, including individual and group
criminal hackers, industrial espionage, denial of service attacks, ransomware and malware attacks, attacks on the software supply chain, and employee
errors and/or malfeasance. These cyber threats are constantly evolving, especially given the advances in, and the rise of the use of, artificial intelligence,
thereby increasing the difficulty of preventing, detecting, and successfully defending against them. Successful breaches could, among other things, disrupt
our operations or result in the unauthorized disclosure, theft and misuse of company, client, consumer and employee sensitive and confidential information,
all of which could adversely affect our financial performance. Cybersecurity breaches could result in financial liability to other parties, governmental
investigations, regulatory enforcement actions and penalties, and damage to our brand and reputation. Although we maintain insurance coverage relating to
cybersecurity incidents, we may incur costs or financial losses that are either not insured against or not fully covered through our insurance. Despite the fact
that we continually implement and update measures to enhance our cybersecurity protections and minimize the impact of any potential attack, none of these
measures are fool proof and like all companies, intrusions will occur, and have occurred in the past (e.g. the previously disclosed ransomware attacks we
experienced
11
in 2019 and 2020). Our goal is to prevent meaningful incursions and minimize the overall impact of those that occur. For more information on how the
Company handles cybersecurity, see Item 1C. Cybersecurity.
Failure to comply with data privacy and protection laws and regulations could subject us to legal liability and adversely affect our reputation and our
financial performance.
Our businesses use, process, and store proprietary information and personal, sensitive, or confidential data relating to our business, clients, and employees.
Privacy laws and similar regulations in many jurisdictions where we do business require that we take significant steps to safeguard that information, and
these laws and regulations continue to evolve. The scope of the laws that may be applicable to us is often uncertain and may be conflicting. In addition,
new laws may add a broad array of requirements on how we handle or use information and increase our compliance obligations. For example, the European
Union greatly increased the jurisdictional reach of European Law by enacting the General Data Protection Regulation (GDPR), which, among other things,
enhanced an individual’s rights with respect to their information. However, ongoing litigation in the European Union on how to comply with GDPR
requirements continues to create uncertainty in how to demonstrate compliance, and the outcome of these cases could impact how companies do business
in the European Union. In the United States, a growing number of states have enacted different laws regarding personal information and privacy that
impose significant new requirements on consumer personal information. In some instances (e.g., California), these laws also expand the definition of
consumer personal information to include information related to employees and business contacts. Some of these state laws have established independent
agencies with rule making and enforcement authority, whose initial guidance, actions, and regulations remain to be determined and tested, adding
additional layers of uncertainty with respect to compliance. Other countries or states have enacted and will continue to enact and amend laws or regulations
in the future that have similar or additional requirements. Although we continually monitor and assess the impact of these laws and regulations, and
continually update our systems to protect our data and comply with these laws, their interpretation and enforcement are uncertain, subject to change, and
may require substantial costs to monitor and implement. Failure to comply with data privacy and protection laws and regulations could also result in
government enforcement actions (which could include substantial civil and/or criminal penalties) and private litigation, which could adversely affect our
reputation and financial performance.
If we or our suppliers encounter unforeseen interruptions or difficulties in the operation of our cloud-based applications, our business could be disrupted,
our reputation and relationships may be harmed, and our financial performance could be adversely affected.
Our business relies upon the continuous and uninterrupted performance of our and our suppliers' cloud-based applications and systems to support numerous
business processes, to service our clients and to support their transactions with their customers and postal services. Our applications and systems, and those
of our partners, may be subject to interruptions due to technological errors, system capacity constraints, software errors or defects, human errors, computer
or communications failures, power loss, adverse acts of nature and other unexpected events. We have business continuity and disaster recovery plans in
place to protect our business operations in case of such events and we also require our suppliers to have the same. Nonetheless, there can be no guarantee
that these plans will function as designed. If we are unable to limit interruptions or successfully correct them in a timely manner or at all, it could result in
lost revenue, loss of critical data, significant expenditures of capital, a delay or loss in market acceptance of our services and damage to our reputation,
brand and relationships, any of which could have an adverse effect on our business and our financial performance.
Macroeconomic and General Regulatory Risks
Periods of difficult economic conditions, other macroeconomic events, or a public health crisis could adversely affect our business.
Our operations and financial performance are impacted by the economic conditions in the United States and the other countries where we and our clients do
business. Any significant or perceived weakening of these economies, reduction in business confidence or change in business or consumer spending habits,
concerns of a domestic or global recession, rising inflation or interest rates, limited availability of credit, or other macroeconomic events (including public
health crises), not within our control, may reduce our client’s demand for shipping and mailing products and services (especially in our Global Ecommerce
business, which is subject to cyclical trends in consumer sentiment and spending habits) and thus, negatively affect our financial performance. These
economic conditions, at times, have arisen and can arise suddenly, and the duration and full impact of such conditions can be difficult to predict, which
could adversely impact our business, financial condition, and results of operations.
Future credit rating downgrades, capital market disruptions, significant decline in cash flows, noncompliance with any of our debt covenants, or
significant withdrawals by depositors at the Bank, could adversely affect our ability to maintain adequate liquidity, provide competitive financing services
and to fund various discretionary priorities.
We provide competitive finance offerings and fund discretionary priorities, such as business investments, strategic acquisitions, dividend payments and
share repurchases through a combination of cash generated from operations, deposits held at the Bank and access to capital markets. Our ability to access
U.S. capital markets and the associated cost of borrowing is dependent upon our credit ratings and is subject to capital market volatility. Given our current
credit rating, we may experience reduced financial or strategic
12
flexibility and higher costs when we do access the U.S. capital markets. We maintain a $500 million revolving credit facility that requires we maintain
certain financial and nonfinancial covenants.
A significant decline in cash flows, noncompliance with any of the covenants under the revolving credit facility, further credit rating downgrades, material
capital market disruptions, significant withdrawals by depositors at the Bank, adverse changes to our industrial loan charter or an increase in our credit
default swap spread could impact our ability to maintain adequate liquidity, which could impact our ability to provide competitive finance offerings, repay
or refinance maturing debt, and fund other strategic or discretionary activities, which could adversely affect our operational and financial performance.
Changes in tax rates, laws or regulations could adversely impact our financial results.
We are subject to taxes in the U.S. and in the foreign jurisdictions where we do business. Due to continuing global fiscal challenges and political
conditions, tax laws and enforcement approaches have been and may continue to be subject to significant change. Changes in tax laws may be on a
prospective or retroactive basis and could have a material impact of our tax expense and cash flows. The Organization for Economic Co-operation and
Development (OECD) have set forth a Two-Pillar Solution fundamentally overhauling the international tax rules. Pillar One focuses on reallocation of
profits while Pillar Two applies a global minimum corporate tax. The OECD has set forth Model Rules and an ambitious timeline to ensure the effective
implementation of the Two-Pillar Solution. Although some jurisdictions have issued guidance or passed tax laws based on the OECD Model Rules, the
final nature, timing and extent of any such tax reforms or other legislative or regulatory actions is unpredictable, and it is difficult to assess their overall
effect. However, these changes could result in double tax, increase our effective tax rate and adversely impact our financial results and cash flows.
We are subject to tax audits in the various jurisdictions in which we operate. Given the complexity of the current and changing tax laws and regulations, tax
authorities may disagree with certain positions we have taken and assess additional taxes. We regularly review the strength of our positions based on
current law, court cases, rulings and proposed legislative changes to determine the appropriateness of our tax provision, however, there can be no assurance
that we will accurately predict the outcomes of these audits, which could have a material impact on our effective tax rate and adversely impact our financial
results and cash flows.
Our Global Ecommerce segment is exposed to increased foreign exchange rate fluctuations.
The sales generated from many of our clients who use our cross-border services are exposed to foreign exchange rate fluctuations. Currently, merchants
using our cross-border services are located primarily in the U.S. and the U.K. and a majority of consumers making purchases through these platforms are in
a limited number of foreign countries. The current strength of the U.S. Dollar relative to currencies in the countries where we do the most business
continues to impact our client’s ability to compete internationally as the cost of similar international products improved relative to the cost of U.S. retailer’s
products. This in turn, adversely affected Global Ecommerce’s revenue and profitability during the past two years. If the strength of the U.S. dollar
continues, or if the British Pound were to strengthen relative to other currencies, our retailers may continue to experience a decrease in international sales
volumes, which, in turn would adversely affect this segment’s revenue and profitability.
Our operations and financial performance may be negatively affected by changes in trade policies, tariffs and regulations.
Our Global Ecommerce segment is subject to significant trade regulations, taxes, and duties throughout the world. Any changes to these regulations could
potentially impose increased documentation and delivery requirements, delay delivery times and subject us to increased costs and additional liabilities,
which could adversely affect our financial performance. Within the last four years, the United States increased tariffs for certain goods, which triggered
other nations to also increase tariffs on certain of their goods. For our Global Ecommerce segment, tariff increases, or even an environment of uncertainty
surrounding trade issues, could reduce demand and adversely affect its financial performance. For our SendTech Solutions segment, increased tariffs
resulted in additional costs on certain components used in some of our products.
If we do not keep pace with evolving expectations and regulations in the areas of Environmental, Social and Governance (ESG) and address the potential
impact of climate change on our costs and operations, our reputation and results of operations may be adversely affected.
The set of topics incorporated within the term ESG in general, and climate change in particular, cover a range of issues that pose potential risks to our
operations. From an environmental perspective, the impact of climate change and a potential increase in extreme weather events may pose risk to the
operation of our sortation facilities and the ability to transport mail and packages. The increased focus on alternative energy sources and the need to reduce
our carbon footprint over time, could result in higher investments in capital spending and increased operational costs. There are also a series of laws related
to product stewardship and waste disposal to which we need to comply. From a “social” perspective, a failure to meet employee expectations around safety
and diversity, equity and inclusion could impact our ability to recruit new employees and retain talent. Finally, from a “governance” perspective, if we do
not
13
maintain good governance processes in general or do not satisfy investor stakeholder expectations on ESG, our reputation and attractiveness to portions of
the investment community could be adversely affected.
Shareholder Activism Risks
Our business could be negatively affected as a result of shareholder activism.
We value constructive input from investors and regularly engage with our stockholders regarding strategy and performance. Although our Board of
Directors and management team are committed to acting in the best interests of all our stockholders, there is no assurance that the results of actions taken
by our Board of Directors and management team will be successful.
In 2023, Hestia Capital Partners, LP (collectively with its affiliates, “Hestia”) ran a proxy contest seeking the election of five of its nominees to our Board
of Directors at the 2023 annual meeting of stockholders (the “2023 Annual Meeting”). At the 2023 Annual Meeting held on May 9, 2023, our stockholders
voted to elect four directors nominated by Hestia to serve on our Board of Directors. Any qualifying stockholder may conduct a proxy contest in the future.
Responding to proxy contests, including related litigation, can be costly, time-consuming, disrupt our operations and divert the attention of management,
Board of Directors and employees. All of this could adversely affect our results of operations and financial condition, as well as the market performance of
our securities.
Additionally, perceived uncertainties as to our future direction or changes to the composition of our Board of Directors as a result of activist stockholders,
may lead to the perception of an adverse change in the direction of our business, instability or lack of management or oversight continuity. These
uncertainties may be more acute or heightened if an activist stockholder seeks to change a majority of our Board of Directors. Actions by activist
stockholders may be exploited by our competitors and/or other activist stockholders, cause concern to customers, employees, investors, rating agencies,
strategic partners and other constituencies, which could result in lost sales and business opportunities, make it more difficult to attract and retain qualified
personnel and business partners and adversely impact our ability to access capital markets at reasonable costs. Further, actions of activist stockholders may
cause significant fluctuations in our stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the
underlying fundamentals and prospects of our business.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
A comprehensive cybersecurity program is critical to achieving our business goals. Like all companies in today’s world, we face a multitude of
cybersecurity threats that range from ransomware and denial-of-service, to attacks from more advanced nation state actors, and even insider threats.
Likewise, our customers, suppliers, subcontractors and partners face similar cybersecurity threats, and a cybersecurity incident impacting us or any of these
entities could materially adversely affect our business operations and financial performance. These cybersecurity threats and related risks make it
imperative that we expend considerable resources to safeguard our organization’s assets and to prevent service disruptions or minimize the impact should
an incident occur.
The Audit Committee of the Board of Directors oversees the technology functions, including management’s processes for identifying and mitigating risks,
including cybersecurity risks, to help align our risk exposure with our strategic objectives. Senior technology leadership, including our Chief Information
Security Officer (CISO), briefs the Audit Committee of the Board of Directors on our cybersecurity and information security posture semi-annually and on
an as needed basis and the full Board of Directors is apprised on an annual basis. In the event of an incident, we strive to follow our detailed incident
response playbook, which outlines the steps to be taken from incident detection to mitigation, recovery and notification, including notifying functional
areas (e.g. legal), customers, as well as senior leadership and the Board, in each case, as appropriate.
Our information security organization is led by the CISO, who is responsible for our overall information security strategy, policy, security engineering,
operations and cyber threat detection and response. The Vice President of Product Security (VP of Product Security) provides additional expertise and
focus attempting to ensure the integrity and resiliency of the products and services we provide to our customers. Combined, the CISO and VP of Product
Security possess over 50 years of deep information technology, cyber security, program management, and risk experience. The information security
organization manages and continually enhances a robust enterprise security structure with the goal of preventing cybersecurity incidents to the extent
feasible, while simultaneously increasing our system resilience in an effort to minimize the business impact should an incident occur. Our cybersecurity
program attempts to follow the National Institute of Standards and Technology (NIST) Cybersecurity Framework principles. We have adopted a risk-based
management process used to define, manage, and prioritize controls required to maintain the integrity and availability of our digital assets. Employees
outside of our corporate information security organization also have a role in our cybersecurity defenses
14
and they are immersed in a corporate culture and periodic training, supportive of security, which we believe improves our overall cybersecurity posture.
We have also extended our cybersecurity governance to our operational business executives. Mission critical information assets, those that would cause
significant business, customer, or employee impact, are periodically presented by technical leadership to the appropriate senior management executive.
This is a formal assessment which describes the underlying cyber posture, mitigation plan, and commitments. In addition, the Company’s Privacy and
Cybersecurity Steering committee, which is co-led by the CISO and the VP of Product Security and comprised of leaders from the Company’s information
technology, innovation, legal and internal audit organizations, meets periodically to ensure the overall Cybersecurity Program is progressing against its
goals and new risks are operationally prioritized.
We rely heavily on third parties to support our products, business operations and technology services, and a cybersecurity incident at a supplier,
subcontractor or partner could materially adversely impact us. Where possible, we endeavor to include information security provisions, audit rights and
insurance requirements, in contracts with our suppliers and third-parties based on their level of access to our systems and data. For our most critical
suppliers, where possible, we attempt to pursue an annual attestation of ongoing compliance to our standard policies and practices. For select suppliers, we
engage third-party cybersecurity monitoring and alerting services, and seek to work directly with those suppliers to address potential deficiencies identified.
Given the constantly evolving cyber-threat landscape, as well as the previously disclosed ransomware attacks we experienced in 2019 and 2020, we
continuously test and evolve our cybersecurity program. We engage internal security team experts who perform ‘ethical hacks’ against our information
assets to uncover risks. As part of its risk based annual audit plan, our internal audit team reviews a number of components of our information technology
operations, which taken together, comprise our cybersecurity defenses. A report of its findings is distributed to certain members of management and
completion of the auditor's comments is tracked and reported up to the Audit Committee of the Board. We also engage third-party service providers to
conduct evaluations of our security controls, whether through penetration testing, independent audits or consulting on best practices to address new
challenges. These evaluations include testing both the design and operational effectiveness of security controls.
Assessing, identifying, and managing cybersecurity related risks are integrated into our overall enterprise risk management (ERM) process. Cybersecurity
related risks are included in the risk universe that our ERM process evaluates to assess top risks to the enterprise on an annual basis. To the extent the ERM
process identifies a heightened cybersecurity related risk, risk owners are assigned to develop risk mitigation plans, which are then tracked to completion.
The ERM process annual risk assessment is presented to the Audit Committee of the Board of Directors.
Notwithstanding the cybersecurity protections we have in place, we may not be successful in preventing or mitigating a cybersecurity incident that could
have a material adverse effect on us. See Item 1A. “Risk Factors” for a discussion of cybersecurity risks.
ITEM 2. PROPERTIES
We lease numerous facilities worldwide, including administrative offices, fulfillment centers, parcel operations and mail sortation facilities, service
locations, data centers and call centers. Our corporate headquarters is located in Stamford, Connecticut.
Our Global Ecommerce segment leases three fulfillment centers that comprise the majority of our fulfillment operations. Our Global Ecommerce and
Presort Services segments conduct parcel operations and mail sortation operations through a network of approximately 45 operating centers throughout the
United States. Our SendTech Solutions segment leases a manufacturing and distribution facility in Indianapolis. This facility is significant as it stores a
majority of the SendTech Solutions products, supplies and inventories.
Should any facility be unable to function as intended for an extended period of time, our ability to service our clients and operating results could be
impacted.
We conduct our research and development activities in facilities located in Noida and Pune, India, Bielsko-Biala, Poland, Austin, Texas and Shelton,
Connecticut. Management believes that our facilities are in good operating condition, materially utilized and adequate for our current business needs.
ITEM 3. LEGAL PROCEEDINGS
See Note 15 Commitments and Contingencies to the Consolidated Financial Statements for additional information.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
15
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
Our common stock is principally traded on the New York Stock Exchange (NYSE) under the symbol "PBI". At January 31, 2024, we had 11,860 common
stockholders of record.
Dividends and Share Repurchases
We have historically paid a quarterly dividend to our shareholders. Each quarter, our Board of Directors considers our recent and projected earnings and
other capital needs and priorities in deciding whether to approve a dividend. We expect to continue to pay a quarterly dividend of $0.05 per share; however,
our Board of Directors may decide to increase or decrease this amount or to not approve the payment of a dividend at any time. We may repurchase shares
of our common stock to manage the dilution created by shares issued under employee stock plans and for other purposes. We did not repurchase any
additional shares of our common stock in 2023.
Stock Performance Graph
The accompanying graph shows the annual change in the value of a $100 investment in Pitney Bowes Inc., the Standard and Poor's (S&P) SmallCap 600
Composite Index and a peer group over a five-year period assuming the reinvestment of dividends. Our peer group consists of publicly traded companies
similar in size and/or complexity that best align with our current businesses. The composition of our peer group is the result of the Compensation
Committee's independent compensation consultant's recommendations. As such, the composition of our peer group could change year-over year.
Our 2023 peer group was updated from 2022 to include one additional company. The inclusion of this company did not impact the total shareholder return
of our peer group.
Our peer group for 2023 is comprised of: ACCO Brands Corporation, Avery Dennison Corporation, Cimpress plc, Bread Financial Holdings, Inc., Deluxe
Corporation, Diebold Nixdorf, Incorporated, Etsy, Inc., Fidelity National Information Services, Inc., Fiserv, Inc., GXO Logistics, Inc., Hub Group, Inc.,
NCR Corporation, Overstock.com, Inc., Rockwell Automation, Inc., Ryder System, Inc., Schneider National, Inc., The Western Union Company, W.W.
Grainger, Inc. and Xerox Holdings Corporation.
On a total return basis, a $100 investment on December 31, 2018, in Pitney Bowes Inc., the S&P SmallCap 600 Composite Index, and our peer group
would have been worth $93, $169 and $144 respectively, on December 31, 2023.
All information is based upon data independently provided to us by Standard & Poor's Corporation and is derived from their official total return calculation.
Total return for the S&P SmallCap 600 Composite Index and our peer group is based on market capitalization, weighted for each year. The stock price
performance is not necessarily indicative of future stock price performance.
ITEM 6. [RESERVED]
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
The following discussion of our financial condition and operating results should be read in conjunction with our risk factors, consolidated financial
statements and related notes. This discussion includes forward-looking statements based on management's current expectations, estimates and projections
and involves risks and uncertainties. Actual results may differ significantly from those currently expressed. A detailed discussion of risks and uncertainties
that could cause actual results to differ materially from such forward-looking statements is outlined under "Forward-Looking Statements" and "Item 1A.
Risk Factors" in this Form 10-K. All table amounts are presented in thousands of dollars.
A discussion of our financial condition and results of operations for the year ended December 31, 2021, can be found under Item 7 “Management's
Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31,
2022, filed with the SEC on February 17, 2023.
OUTLOOK
We expect consolidated revenue to be flat to a low single-digit decline and EBIT margins to be relatively flat in 2024 compared to 2023. Within SendTech
Solutions, we expect revenue and EBIT declines due in part to lower equipment sales as initial lease terms of prior equipment sales expire and customers
are expected to renew these leases for a fixed term rather than purchase new equipment. We also expect revenue to decline due to lower meter populations
due to the migration to cloud-based solutions. These declines will be partially offset by higher shipping revenues.
Within Presort Services, we anticipate total volumes to be relatively flat in 2024 compared to 2023, but revenue to benefit slightly from increased
workshare discounts. We expect margin and profit to remain relatively flat to slightly higher compared to the prior year.
Within Global Ecommerce, we expect revenue growth in domestic parcel services driven by increased volumes, partially offset by lower revenue from
cross-border services. We anticipate margin and profit improvements compared to 2023.
We continue to make progress on our worldwide restructuring program and expect to realize annualized cost savings of $75-$85 million by the end of
2024, a portion of which was realized in 2023. However, we also expect higher interest costs and the restoration of variable compensation costs in 2024 to
significantly offset these savings.
See our Forward-Looking Statements under Part I on page 3 and Risk Factors under Item 1A for certain factors, some beyond our control, which could
adversely impact our 2024 results.
OVERVIEW OF CONSOLIDATED RESULTS
Factors Affecting Comparability
Certain transactions and changes occurred in 2022 that impact the comparability to our 2023 financial results. These transactions and changes include:
•
•
the sale of our Borderfree cross-border ecommerce solutions business (Borderfree) in July 2022. Accordingly, reported revenue and costs for the
twelve months ended December 31, 2022 include six months of revenue and costs for Borderfree. Net income of Borderfree for these periods was
not significant.
a change in the presentation of revenue for digital delivery services effective October 1, 2022, from a gross basis to a net basis. Accordingly, in
2023, revenue and costs of revenue for certain digital delivery services are reported on a net basis as business services revenue; whereas in 2022,
revenue and cost of revenue for these services through September 30 were reported as business services revenue and cost of business services,
respectively. The change primarily impacts our Global Ecommerce segment.
Constant Currency
In the tables below, we report the change in revenue on a reported basis and a constant currency basis. Constant currency measures exclude the impact of
changes in currency exchange rates from the prior period under comparison. We believe that excluding the impacts of currency exchange rates provides
investors with a better understanding of the underlying revenue performance. Constant
17
currency change is calculated by converting the current period non-U.S. dollar denominated revenue using the prior year’s exchange rate.
Financial Results Summary:
Total revenue
Total costs and expenses
(Loss) income before taxes
(Benefit) provision for income taxes
Net (loss) income
Years Ended December 31,
Favorable/(Unfavorable)
2023
2022
Actual % Change
$
$
3,266,348
3,672,850
(406,502)
(20,875)
(385,627)
$
$
3,538,042
3,498,162
39,880
2,940
36,940
(8)%
(5)%
>(100%)
>100%
>(100%)
Constant
Currency %
change
(8)%
Revenue decreased $272 million in 2023 compared to the prior year primarily due to a decrease in business services revenue of $205 million (see Factors
Affecting Comparability above), lower equipment sales of $31 million and lower support services revenue of $27 million.
Total costs and expenses increased $175 million compared to the prior year primarily due to:
•
•
Costs of revenue (excluding financing interest expense) decreased $225 million primarily due to lower cost of business services of $178 million
(see Factors Affecting Comparability above) and lower cost of equipment sales of $30 million.
SG&A expense declined $8 million compared to the prior year. This decrease was primarily driven by lower professional fees of $10 million,
salaries of $8 million, credit cards fees of $8 million, amortization expense of $8 million and stock based compensation expense of $7 million,
partially offset by proxy solicitation fees of $11 million, higher variable compensation expense of $9 million, higher credit loss provision of $8
million and non-cash foreign currency revaluation losses on intercompany loans of $6 million.
•
Restructuring charges increased $43 million compared to the prior year driven by actions taken under the 2023 Plan.
• Aggregate non-cash goodwill impairment charges totaling $339 million associated with our Global Ecommerce reporting unit. See Note 8 to the
Consolidated Financial Statements for more information.
•
Interest expense, net, including financing interest expense, increased $22 million in 2023 compared to the prior year primarily due to higher
interest rates. We allocate a portion of gross interest expense to financing interest expense based on our effective interest rate and average finance
receivables for the period.
• Other (income) expense declined $19 million compared to the prior year primarily driven by prior year gains of $27 million from the sale of assets
and businesses, partially offset by a favorable year-over-year impact of $8 million associated with the redemption of debt.
The effective tax rate for the year ended December 31, 2023 was 5.1%, primarily due to the nondeductibility of the aggregate goodwill impairment charge.
See Note 14 to the Consolidated Financial Statements for more information.
Net loss for 2023 was $386 million compared to net income of $37 million in the prior year.
18
SEGMENT RESULTS
Management measures segment profitability and performance by deducting from segment revenue the related costs and expenses attributable to the
segment. Segment results exclude interest, taxes, unallocated corporate expenses, restructuring charges, and other items not allocated to a business
segment.
Global Ecommerce
Global Ecommerce includes the revenue and related expenses from business to consumer logistics services for domestic and cross-border delivery, returns
and fulfillment. Our domestic parcel services provide retailers domestic parcel delivery and returns services for its end consumers through our nationwide
parcel sortation centers and transportation network. Our cross-border services offers our clients a range of services to manage their international shopping
and parcel shipping experience. Using our digital delivery services, clients can purchase postage, print shipping labels and access shipping and tracking
services from multiple carriers. Delivery and return parcels using our digital delivery services are not physically processed through our network.
Financial performance for the Global Ecommerce segment was as follows:
Business Services Revenue
Cost of Business Services
Gross Margin
Gross Margin %
Selling, general and administrative
Research and development
Adjusted segment EBIT
Years Ended December 31,
Favorable/(Unfavorable)
Constant
Currency %
change
(14)%
2023
1,355,326
1,293,285
62,041
4.6 %
184,923
10,851
(133,733)
$
$
$
$
2022
Actual % Change
1,576,348
1,440,807
135,541
8.6 %
225,514
10,335
(100,308)
(14)%
10 %
(54)%
18 %
(5)%
(33)%
Global Ecommerce revenue decreased $221 million in 2023 compared to the prior year. The change in revenue presentation for digital delivery services
and the sale of Borderfree accounted for $139 million of the decrease. Cross-border revenue declined $190 million due to lower volumes, primarily driven
by changes in how two of our largest clients access our services, digital delivery services revenue declined $26 million due to a decrease in the number of
shipping labels printed and fulfillment services revenue declined $23 million due to lower volumes. These declines were partially offset by domestic parcel
delivery revenue growth of $158 million, driven by an increase in domestic parcel volumes.
Gross margin decreased $74 million and gross margin percentage decreased to 4.6% from 8.6% compared to the prior year. Cross-border services gross
margin declined $52 million, primarily due to the decline in volumes. Digital delivery services gross margin declined $9 million primarily due to the
decline in the number of shipping labels printed. The sale of Borderfree contributed a decline in gross margin of $8 million. Domestic parcel delivery
services gross margin increased $3 million compared to the prior year primarily due to higher domestic parcel volumes, which was partially offset by $4
million of one-time costs in the third quarter related to facility consolidation.
SG&A expenses declined $41 million compared to the prior year period, primarily due to lower employee-related expenses of $16 million, lower
amortization expense of $9 million and lower credit card fees of $8 million.
Adjusted segment EBIT was a loss of $134 million in 2023 compared to a loss of $100 million in the prior year.
19
Presort Services
We are the largest workshare partner of the USPS and national outsource provider of mail sortation services that allow clients to qualify large volumes of
First Class Mail, Marketing Mail, and Marketing Mail Flats and Bound Printed Matter for postal worksharing discounts.
Financial performance for the Presort Services segment was as follows:
Business Services Revenue
Cost of Business Services
Gross Margin
Gross Margin %
Selling, general and administrative
Other components of net pension and postretirement costs
Adjusted segment EBIT
Years Ended December 31,
Favorable/(Unfavorable)
Constant
Currency %
change
3 %
2023
617,599
432,229
185,370
30.0 %
74,230
228
110,912
$
$
$
$
2022
Actual % Change
602,016
454,923
147,093
24.4 %
64,517
146
82,430
3 %
5 %
26 %
(15)%
(56)%
35 %
Revenue increased $16 million in 2023 compared to the prior year as pricing actions to mitigate inflationary pressures on costs offset the revenue decline
driven by a 6% decrease in total mail volumes. The processing of Marketing Mail Flats and Bound Printed Matter and First Class Mail contributed revenue
increases of $18 million and $5 million, respectively, while the processing of Marketing Mail contributed to a revenue decrease of $7 million.
Gross margin increased $38 million and gross margin percentage increased from 24.4% to 30.0% compared to the prior year primarily due to the increase
in revenue, lower transportation costs of $15 million, driven by improvements in network management, and the benefits from investments made in
automation and higher-throughput sortation equipment.
SG&A expenses increased $10 million primarily due to higher employee-related expenses.
Adjusted segment EBIT was $111 million in 2023 compared to $82 million in the prior year.
20
SendTech Solutions
SendTech Solutions provides clients with physical and digital mailing and shipping technology solutions and other applications to help simplify and save
on the sending, tracking and receiving of letters, parcels and flats, as well as supplies and maintenance services for these offerings. We offer financing
alternatives that enable clients to finance equipment and product purchases, a revolving credit solution that enables clients to make meter rental payments
and purchase postage, services and supplies, and an interest-bearing deposit solution to clients who prefer to prepay postage. We also offer financing
alternatives that enable clients to finance or lease other manufacturers’ equipment and provide working capital.
Financial performance for the SendTech Solutions segment was as follows:
Years Ended December 31,
Favorable/(Unfavorable)
Business services
Support services
Financing
Equipment sales
Supplies
Rentals
Total revenue
Cost of business services
Cost of support services
Cost of equipment sales
Cost of supplies
Cost of rentals
Total costs of revenue
Gross margin
Gross margin %
Selling, general and administrative
Research and development
Other components of pension and post retirement costs
Adjusted Segment EBIT
Constant
Currency %
change
1 %
(6)%
(1)%
(8)%
(4)%
2 %
(5)%
2023
2022
Actual % change
$
72,144
410,734
271,197
323,739
147,709
67,900
71,578
438,191
274,508
354,960
154,186
66,256
1,293,423
1,359,679
29,860
136,821
222,220
43,140
19,407
451,448
37,272
147,653
251,916
43,537
24,864
505,242
841,975
65.1 %
854,437
62.8 %
1 %
(6)%
(1)%
(9)%
(4)%
2 %
(5)%
20 %
7 %
12 %
1 %
22 %
11 %
(1)%
418,213
20,660
(2,245)
405,347
$
431,213
22,646
(331)
400,909
3 %
9 %
>(100%)
1 %
$
$
SendTech Solutions revenue decreased $66 million in 2023 compared to the prior year. Equipment sales declined $31 million primarily due to customers
opting to extend leases of their existing advanced-technology equipment rather than purchase new equipment. Support services revenue declined $27
million primarily due to the declining meter population and continuing shift to cloud-enabled products. Supplies revenue declined $6 million primarily
driven by a declining meter population. Financing revenue declined $3 million primarily due to $6 million of lower lease extensions and lower late fees of
$1 million, partially offset by higher investment income of $7 million. Business services revenue increased $14 million primarily driven by growth in
enterprise shipping subscriptions, which was partially offset by a $13 million reduction in revenue due to the change in revenue presentation for digital
delivery services.
Gross margin decreased $12 million primarily due to the decline in revenue. However, gross margin percentage increased to 65.1% from 62.8% compared
to the prior year driven by improvements in business services gross margin due to growth in enterprise shipping subscriptions, rentals gross margin due in
part to a $2 million prior year unfavorable scrap adjustment and a current year favorable adjustment and equipment sales gross margin due to cost
management.
SG&A expenses declined $13 million primarily driven by lower outsourcing and professional fees of $5 million, lower rent expense of $3 million and
lower marketing expenses of $1 million.
Adjusted segment EBIT was $405 million in 2023 compared to $401 million for the prior year.
21
UNALLOCATED CORPORATE EXPENSES
The majority of operating expenses are recorded directly or allocated to our reportable segments. Operating expenses not recorded directly or allocated to
our reportable segments are reported as unallocated corporate expenses. Unallocated corporate expenses primarily represents corporate administrative
functions such as finance, marketing, human resources, legal, information technology, and research and development.
Unallocated corporate expenses
Years Ended December 31,
Favorable/(Unfavorable)
2023
2022
Actual % change
$
210,931 $
204,251
(3)%
Unallocated corporate expenses for 2023 increased $7 million compared to the prior year primarily due to higher variable compensation expense of $4
million and higher depreciation expense of $2 million.
22
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 2023 we had cash, cash equivalents and short-term investments of $623 million, which includes $136 million held at our foreign
subsidiaries used to support the liquidity needs of those subsidiaries. Our ability to maintain adequate liquidity for our operations is dependent upon a
number of factors, including revenue and earnings, our ability to manage costs and improve productivity, our clients' ability to pay their balances on a
timely basis and the impacts of changing macroeconomic and geopolitical conditions. We believe that existing cash and investments, cash generated from
operations and borrowing capacity under our $500 million revolving credit facility will be sufficient to fund our cash needs for the next 12 months.
Cash Flow Summary
The change in cash and cash equivalents is as follows:
Net cash from operating activities
Net cash from investing activities
Net cash from financing activities
Effect of exchange rate changes on cash and cash equivalents
Change in cash and cash equivalents
Operating activities
2023
79,468 $
(122,832)
(31,266)
5,702
(68,928) $
2022
175,983 $
(24,269)
(198,083)
(16,130)
(62,499) $
Increase/(decrease)
(96,515)
(98,563)
166,817
21,832
(6,429)
$
$
Cash flows from operating activities in 2023 declined $97 million compared to the prior year. This decline was driven by lower earnings, higher interest
payments of $30 million, higher restructuring payments of $19 million and higher pension contributions of $7 million, partially offset by higher collections
of accounts receivables and finance receivables of $33 million, lower inventory purchases of $19 million and changes in other working capital items.
Investing activities
Cash flows from investing activities for 2023 declined $99 million compared to the prior year primarily due to prior year proceeds of $162 million from the
sale of businesses and our Shelton, Connecticut office building, partially offset by lower payments of $28 million to settle foreign exchange derivative
contracts, lower capital expenditures of $22 million and lower net investment activity of $10 million.
Financing activities
Cash flows from financing activities for 2023 improved $167 million compared to the prior year primarily due to lower net cash outflows from debt
activity of $68 million, an increase in customer account deposits at the Bank of $90 million and $13 million of common stock repurchases in the prior year.
Debt Activity
During 2023, we issued an aggregate $275 million of senior secured notes. The notes mature in March 2028 and bear interest at the Secured Overnight
Financing Rate (SOFR) plus 6.9%, payable quarterly. The net proceeds (net of original issue discount of 3%) were used to redeem the March 2024 notes
and repay $30 million of the term loan due March 2026. Also, during 2023, we purchased an aggregate $39 million of the March 2024 notes and March
2027 notes, recognizing a gain of $3 million, and made scheduled principal repayments of $42 million on our term loans.
The credit agreement that governs our $500 million secured revolving credit facility and the term loan due March 2026 contains certain financial
covenants. These covenants require us to maintain, on a quarterly basis, a maximum leverage ratio and a minimum interest coverage ratio, both of which
are defined and calculated in accordance with the credit agreement. The maximum leverage ratio decreases from 4.25x to 4.0x as of June 30, 2024 and the
minimum interest coverage ratio increases from 1.75x to 2.0x as of March 31, 2025. At December 31, 2023, we were in compliance with these financial
covenants. Additionally, management expects that we will remain in compliance with these financial covenants over the next twelve months. However,
events and circumstances could occur, some beyond our control, that could adversely impact our compliance with these covenants and require us to seek to
obtain a waiver from our lenders, modify our existing covenants or refinance certain debt to cure the noncompliance. If we are unable to cure the
noncompliance, amounts due under our revolving credit facility and term loan due March 2026 could be called by our lenders. At December 31, 2023, there
were no outstanding borrowings under the revolving credit facility. Borrowings under our secured debt are secured by assets of the company.
23
The PB Bank (the Bank), a wholly owned subsidiary, is a member of the Federal Home Loan Bank (FHLB) of Des Moines and has access to certain credit
products as a funding source known as "advances." As of December 31, 2023, the Bank had yet to apply for any advances.
Future Cash Requirements
The following table summarizes our known and contractually committed cash requirements at December 31, 2023 (in millions):
Debt maturities
Lease obligations
Purchase obligations
Retiree medical payments
Total
Debt
Payments due in
Total
2024
2025
2026
2027
2028
Thereafter
$
$
2,189
431
145
84
2,849
$
$
59
88
140
11
298
$
$
53
83
2
10
148
$
$
196
72
1
10
279
$
$
387
63
1
9
460
$
$
683
54
1
9
747
$
$
811
71
—
35
917
At December 31, 2023, we have outstanding principal debt of $2.2 billion. Approximately 64% of this debt is at fixed rates, including the effect of interest
rate swaps, and the remaining 36% is at variable rates. The weighted average interest rate of our variable rate debt at December 31, 2023 was 9.7%. We
estimate that cash interest payments for the next 12 months will be $190 - $200 million. Required debt repayments over the next 12 months are $59
million, which we anticipate satisfying through available cash on hand and cash generated from operations. See Note 12 to the Consolidated Financial
Statements for information regarding our debt.
Lease obligations
We lease real estate and equipment under operating and capital lease arrangements. These leases have terms of up to 15 years and include renewal options.
Lease obligations in the table above do not include $17 million of payments for leases signed but not yet commenced at December 31, 2023. See Note 6
and Note 16 to the Consolidated Financial Statements for further information.
Purchase obligations
Purchase obligations include unrecorded open purchase orders for goods and services.
In addition to the above known and contractually committed cash payments, we anticipate using cash for the following items:
Capital Expenditures
Capital expenditures are evaluated and approved by senior leadership based on several factors, including expected impacts on revenue growth, productivity
enhancements, service improvements and cost savings. Capital expenditures totaled $103 million and $125 million for the years ended December 31, 2023
and 2022, respectively.
Dividends
Assuming the current $0.05 per quarter dividend payment, we estimate that dividend payments will be approximately $35 million in 2024. Under the terms
of the March 2028 note purchase agreement, the annual amount of permitted dividend payments is capped at the lesser of $36 million or a maximum
dividend yield of 6.25%. In addition, share repurchases would further limit this amount.
Share Repurchases
We may repurchase shares of our common stock to manage the dilution created by shares issued under employee stock plans and for other purposes. We
did not repurchase any additional shares of our common stock in 2023.
Off Balance Sheet Arrangements
At December 31, 2023, we had approximately $28 million outstanding letters of credit guarantees with financial institutions that are primarily issued as
security for insurance, leases, customs and other performance obligations. In general, we would only be liable for the amount of these guarantees in the
event of default in the performance of our obligations, the probability of which we believe is remote.
24
Critical Accounting Estimates
The preparation of our financial statements in conformity with GAAP requires management to make estimates and assumptions about certain items that
affect the reported amounts of assets, liabilities, revenues, expenses and accompanying disclosures, including the disclosure of contingent assets and
liabilities. The accounting policies below have been identified by management as those policies that are most critical to our financial statements due to the
estimates and assumptions required. Management believes that the estimates and assumptions used are reasonable and appropriate based on the information
available at the time the financial statements were prepared; however, actual results could differ from those estimates and assumptions. See Note 1 to the
Consolidated Financial Statements for a summary of our accounting policies.
Revenue recognition
We derive revenue from multiple sources including the sale and lease of equipment, equipment rentals, financing, support services and business services.
Certain transactions are consummated at the same time and can therefore generate revenue from multiple sources. The most common form of these
arrangements involves a sale or noncancelable lease of equipment, meter services and an equipment maintenance agreement. We are required to determine
whether each product and service within the contract should be treated as a separate performance obligation (unit of accounting) for revenue recognition
purposes. We recognize revenue for performance obligations when control is transferred to the customer. Transfer of control may occur at a point in time or
over time, depending on the nature of the contract and the performance obligation.
Revenue is allocated among performance obligations based on relative standalone selling prices (SSP), which are a range of selling prices that we would
sell the good or service to a customer on a separate basis. SSP are established for each performance obligation at the inception of the contract and can be
observable prices or estimated. Revenue is allocated to the meter service and equipment maintenance agreement elements using their respective observable
selling prices charged in standalone and renewal transactions. For sale and lease transactions, the SSP of the equipment is based on a range of observable
selling prices in standalone transactions. We recognize revenue on non-lease transactions when control of the equipment transfers to the customer, which is
upon delivery for customer installable models and upon installation or customer acceptance for other models. We recognize revenue on equipment for lease
transactions upon shipment for customer installable models and upon installation or customer acceptance for other models.
Impairment review
Goodwill is tested annually for impairment at the reporting unit level at the beginning of the fourth quarter or sooner if circumstances indicate an
impairment may exist. The impairment test for goodwill determines the fair value of each reporting unit and compares it to the reporting unit's carrying
value, including goodwill. If the fair value of a reporting unit exceeds the carrying value of the net assets assigned to that reporting unit, goodwill is not
impaired, If the fair value of the reporting unit is less than the carrying value of the net assets assigned to the reporting unit, a goodwill impairment loss is
calculated as the difference between these amounts, limited to the amount of goodwill allocated to the reporting unit.
Testing goodwill for impairment requires us to identify our reporting units and assign assets and liabilities, including goodwill, to each reporting unit. The
fair value of a reporting unit is based on one or a combination of techniques, including a discounted cash flow model, multiples of competitors, and/or
multiples from sales of like businesses.
The performance of our Global Ecommerce reporting unit, continuing changes in macroeconomic conditions and our long-term outlook for this business
were triggering events that caused us to evaluate the Global Ecommerce goodwill for impairment during the second and fourth quarters. To assess Global
Ecommerce goodwill for impairment, we determined the fair value of the reporting unit and compared it to the unit's carrying value, including goodwill.
We engaged a third party to assist in the determination of the fair value of the reporting unit. The fair value was estimated using a discounted cash flow
model based on management developed cash flow projections, which included judgements and assumptions related to revenue growth rates, operating
margins, operating income, and a discount rate. The estimates and assumptions are considered Level 3 inputs under the fair value hierarchy. We assessed
Global Ecommerce goodwill for impairment in the second and fourth quarters, and based on the results of our assessments, recorded non-cash, pre-tax
goodwill impairment charges of $119 million and $220 million, respectively.
The results of our annual impairment test as of the beginning of the fourth quarter for our other reporting units indicated that the fair value of these
reporting units exceeded their carrying values and no impairment existed.
Long-lived and finite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount
may not be fully recoverable. The estimated future undiscounted cash flows expected to result from the use and eventual disposition of the assets is
compared to the carrying value. If the sum of the undiscounted cash flows is less than the asset's carrying value, an impairment charge is recorded for an
amount by which the carrying value exceeds its fair value. The fair value of the impaired asset is determined using probability weighted expected cash flow
estimates, quoted market prices when available and appraisals, as appropriate. We derive the cash flow estimates from our long-term business plans and
historical experience. Changes in
25
the estimates and assumptions incorporated in our impairment assessment could materially affect the determination of fair value and the associated
impairment charge.
Allowances for credit losses
Finance receivables are comprised of sales-type leases, secured loans and unsecured revolving loans. We provide an allowance for probable credit losses
based on historical loss experience, the nature of our portfolios, adverse situations that may affect a client's ability to pay and current economic conditions
and outlook based on reasonable and supportable forecasts. Total allowance for credit losses as a percentage of finance receivables was 2% at both
December 31, 2023 and 2022. Holding all other assumptions constant, a 0.25% increase in the allowance rate at December 31, 2023 would have reduced
pre-tax income by $3 million.
Trade accounts receivable are generally due within 30 days after the invoice date. We provide an allowance for credit losses based on historical loss
experience, the age of the receivables, specific troubled accounts and other currently available information. Accounts deemed uncollectible are written off
against the allowance after all collection efforts have been exhausted and management deems the account to be uncollectible, or when they are 365 days
past due, if sooner. The allowance for credit losses as a percentage of trade accounts receivables was 2% at both December 31, 2023 and 2022. Holding all
other assumptions constant, a 0.25% increase in the allowance rate at December 31, 2023 would have reduced pre-tax income by $1 million.
Income taxes and valuation allowance
We are subject to income taxes in the U.S. and numerous foreign jurisdictions. Our annual tax rate is based on income, statutory tax rates, tax reserve
changes and tax planning opportunities available to us in the various jurisdictions in which we operate. Significant judgment is required in determining the
annual tax rate and in evaluating our tax positions. We regularly assess the likelihood of tax adjustments in each of the tax jurisdictions in which we have
operations and account for the related financial statement implications. We have established tax reserves that we believe are appropriate given the
possibility of tax adjustments. Determining the appropriate level of tax reserves requires judgment regarding the uncertain application of tax laws. Reserves
are adjusted when information becomes available or when an event occurs indicating a change in the reserve is appropriate. Changes in tax reserves could
have a material impact on our financial condition or results of operations.
Significant judgment is also required in determining the amount of deferred tax assets that will ultimately be realized and corresponding deferred tax asset
valuation allowance. When estimating the necessary valuation allowance, we consider all available evidence for each jurisdiction including historical
operating results, estimates of future taxable income and the feasibility of ongoing tax planning strategies. If new information becomes available that would
alter our estimate of the amount of deferred tax assets that will ultimately be realized, we adjust the valuation allowance through income tax expense.
Changes in the deferred tax asset valuation allowance could have a material impact on our financial condition or results of operations.
Pension benefits
The calculation of net periodic pension expense and determination of net pension obligations are dependent on assumptions and estimates relating to,
among other things, the discount rate (interest rate used to discount the future estimated liability) and the expected rate of return on plan assets. These
assumptions are evaluated and updated annually.
The discount rate for our largest plan, the U.S. Qualified Pension Plan (the U.S. Plan) and our largest foreign plan, the U.K. Qualified Pension Plan (the
U.K. Plan) used to determine net periodic pension expense for 2023 was 5.55% and 4.80%, respectively. The discount rate used to determine 2024 net
periodic pension expense for the U.S. Plan and the U.K. Plan was 5.15% and 4.5%, respectively. A 0.25% change in the discount rate would not materially
impact annual pension expense for the U.S. Plan or the U.K. Plan. A 0.25% change in the discount rate would impact the projected benefit obligation of the
U.S. Plan and U.K. Plan by $24 million and $13 million, respectively.
The expected rate of return on plan assets used to determine net periodic pension expense for 2023 was 6.5% for the U.S. Plan and 5.26% for the U.K.
Plan. The expected rate of return on plan assets used to determine 2024 net periodic pension expense was 6.7% and 5.5% for the U.S. Plan and the U.K.
Plan, respectively. A 0.25% change in the expected rate of return on plan assets would impact annual pension expense for the U.S. Plan by $3 million and
the U.K. Plan by $1 million.
Actual pension plan results that differ from our assumptions and estimates are accumulated and amortized primarily over the life expectancy of plan
participants and affect future pension expense. Net pension expense is also based on a market-related valuation of plan assets where differences between
the actual and expected return on plan assets are recognized over a five-year period. Plan benefits for participants in a majority of our U.S. and foreign
pension plans are frozen.
26
Residual value of leased assets
Equipment residual values are determined at the inception of the lease using estimates of the equipment's fair value at the end of the lease term. Residual
value estimates impact the determination of whether a lease is classified as an operating lease or a sales-type lease. Fair value estimates of equipment at the
end of the lease term are based on historical renewal experience, used equipment markets, competition and technological changes.
We evaluate residual values on an annual basis or sooner if circumstances warrant. Declines in estimated residual values considered "other-than-temporary"
are recognized immediately. Increases in estimated future residual values are not recognized until the equipment is remarketed. If the actual residual value
of leased assets were 10% lower than management's current estimates and considered "other-than-temporary", pre-tax income would be $5 million lower.
Legal and Regulatory Matters
See Regulatory Matters in Item 1 and Other Tax Matters in Note 14 to the Consolidated Financial Statements for regulatory matters regarding our tax
returns and Note 15 to the Consolidated Financial Statements for information regarding our legal proceedings.
Foreign Currency Exchange
The functional currency for most of our foreign operations is the local currency. Changes in the value of the U.S. dollar relative to the currencies of
countries in which we operate impact our reported assets, liabilities, revenue and expenses. Exchange rate fluctuations can also impact the settlement of
intercompany receivables and payables between our subsidiaries in different countries. During 2023, 11% of our consolidated revenue was from operations
outside the United States and the translation of foreign currencies to the U.S. dollar did not have a material impact on revenues or operating results for the
year ended December 31, 2023.
27
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risks primarily from changes in foreign currency exchange rates and interest rates. To manage these market risks, we may
employ derivatives according to established policies and procedures. We do not use derivatives for speculative purposes. We are also exposed to credit risk
on our accounts receivable and finance receivable portfolio.
Foreign Exchange Risk
We have a number of short-term intercompany loans denominated in a foreign currency, predominantly the British Pound, Canadian Dollar and Euro. Our
foreign currency risk primarily includes the periodic revaluation of these intercompany loans and related interest, which is recorded in earnings.
Historically, we entered into foreign exchange contracts to minimize the impact of the revaluation of these intercompany loans and related interest on
earnings. Changes in fair value of these foreign exchange contracts were also recorded in earnings and designed to generally offset the impact to earnings
from the revaluation of the underlying intercompany loans. While there was typically minimal impact to earnings, the settlement of these derivative
contracts resulted in cash outflows or inflows, which could be significant.
In the fourth quarter of 2023, management decided to no longer use foreign exchange contracts to hedge the revaluation of intercompany loans and related
interest. While this decision reduces volatility in cash flows, the periodic revaluation of these intercompany loans could result in significant non-cash
charges or income in earnings. Assuming foreign currency exchange rates at December 31, 2023, a 1% change in the British Pound, Canadian Dollar or
Euro would impact earnings by $5 million, $3 million and $2 million, respectively.
We are also exposed to foreign currency risks associated with transactions denominated in currencies other than a location’s functional currency and
forecasted inventory purchases between affiliates and third parties. However, these risks are not deemed to be significant.
Interest Rate Risk
We are exposed to interest rate risk on our variable-rate debt borrowings. The weighted average interest rate of our variable rate debt at December 31, 2023
and 2022 was 9.7% and 7.5%, respectively. A 100 basis point change in the weighted average interest rate of our variable rate debt in 2023 would have
increased interest expense approximately $8 million.
We also maintain a significant investment portfolio comprised of fixed-rate investment in government and municipal securities, corporate securities,
mortgage-backed securities and asset-backed securities. Changes in interest rates impact the fair value of these investments. We have designated these
securities as available-for-sale, and changes in fair value due to changes in interest rates are recognized in accumulated other comprehensive income, a
component of equity, and not earnings. We do not expect to recognize impairment losses on investment securities in an unrealized loss position as we have
the intent and ability to hold these securities until recovery of unrealized losses or maturity.
Credit Risk
We are exposed to credit risk on our accounts receivable and finance receivable balances. This risk is mitigated due to our large, diverse client base,
dispersed over various geographic regions and industrial sectors. No single client comprised more than 10% of our consolidated net sales in 2023 or 2022.
We maintain provisions for potential credit losses based on historical experience, age of receivable, current economic conditions and future outlook and
other relevant factors that may impact our customers’ ability to pay. We continually evaluate the adequacy of our allowance for credit losses and adjust as
necessary.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See "Index to Consolidated Financial Statements and Schedules" in this Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
28
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended
(the Exchange Act)), that are designed to reasonably assure that information required to be disclosed in reports filed or submitted under the Exchange Act
is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and to
reasonably assure that such information is accumulated and communicated to management, including our Chief Executive Officer (CEO) and Chief
Financial Officer (CFO), to allow timely decisions regarding required disclosure.
Any system of controls and procedures, no matter how well designed and operated, can provide only reasonable (and not absolute) assurance of achieving
the desired control objectives. Under the direction of our CEO and CFO, management evaluated the effectiveness of the design and operation of our
disclosure controls and procedures as required by Rule 13a-15 or Rule 15d-15 under the Exchange Act. Notwithstanding this caution, the CEO and CFO
have reasonable assurance that the disclosure controls and procedures were effective as of December 31, 2023.
Management's Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act. Management assessed the effectiveness of the internal control over financial reporting as of December 31, 2023 under the criteria
set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework (2013) and
concluded that the internal control over financial reporting was effective.
The effectiveness of our internal control over financial reporting as of December 31, 2023 has been audited by PricewaterhouseCoopers LLP, an
independent registered public accounting firm, as stated in their report in this Form 10-K.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during the three months ended December 31, 2023, that have materially
affected, or are reasonably likely to materially affect, such internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None.
29
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Other than information regarding our executive officers disclosed in Part I of this Annual Report and information regarding our directors as shown below,
the information required by this Item is incorporated by reference to our Proxy Statement to be filed in connection with the 2024 Annual Meeting of
Stockholders.
Director
Title
Mary J. Steele Guilfoile
Chair, MG Advisors, Inc.
Steven D. Brill
Todd Everett
Katie May
Milena Alberti-Perez
Sheila A. Stamps
Darrell Thomas
Kurt Wolf
William S. Simon
Jill Sutton
Code of Ethics
Retired President of Corporate Strategy at United Parcel Service, Inc
Independent advisor to several ecommerce companies, including Doddle Parcel Services Limited, Verishop,
Inc., and Fetch Package, Inc
Former Chief Executive Officer, ShippingEasy
Former Chief Financial Officer of Getty Images, Inc
Former Financial Services Executive & Former Commissioner and Audit Committee Chair, New York State
Insurance Fund
Retired Vice President and Treasurer for Harley-Davison, Inc.
Managing Member and Chief Investment Officer of Hestia Capital Management
President of WSS Venture Holdings, LLC
Former Chief Legal Officer, General Counsel and Corporate Secretary of United Natural Foods, Inc.
We have Business Practices Guidelines (BPG) that apply to all our officers and other employees and a Code of Business Conduct and Ethics (the Code) that
applies to our Board of Directors. The BPG and the Code are posted on our corporate governance website located at www.pb.com/us/our-
company/leadership-and-governance/corporate-governance.html. Amendments to either the BPG or the Code and any waiver from a provision of the BPG
or the Code requiring disclosure will be disclosed on our corporate governance website.
Audit Committee - Audit Committee Financial Expert
The information regarding the Audit Committee, its members and the Audit Committee financial experts is incorporated by reference to our Proxy
Statement to be filed in connection with the 2024 Annual Meeting of Stockholders.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference to our Proxy Statement to be filed in connection with the 2024 Annual Meeting of
Stockholders.
30
PART III
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
EQUITY COMPENSATION PLAN INFORMATION TABLE
The following table provides information as of December 31, 2023 regarding the number of shares of common stock that may be issued under our equity
compensation plans.
Plan Category
Equity compensation plans approved by security
holders
Equity compensation plans not approved by
security holders
Total
(a)
Number of securities to be
issued upon exercise of
outstanding options, warrants
and rights (1)
(b)
Weighted-average exercise
price of outstanding options,
warrants and rights (2)
(c)
Number of securities
remaining available for future
issuance under equity
compensation plans excluding
securities reflected in column
(a)
15,488,458
—
15,488,458
$9.50
—
$9.50
15,950,013
—
15,950,013
(1) Includes outstanding restricted stock units, stock options and performance stock units.
(2) Weighted average exercise price of stock options only.
Other than information regarding securities authorized for issuance under equity compensation plans, the information required by this Item is incorporated
by reference to our Proxy Statement to be filed in connection with the 2024 Annual Meeting of Stockholders.
ITEM 13. CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
The information required by this Item is incorporated by reference to our Proxy Statement to be filed in connection with the 2024 Annual Meeting of
Stockholders.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this Item is incorporated by reference to our Proxy Statement to be filed in connection with the 2024 Annual Meeting of
Stockholders.
31
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)(1) Index to Consolidated Financial Statements and Schedules
Consolidated Statements of Operations for the years ended December 31, 2023, 2022 and 2021
Consolidated Statements of Comprehensive (Loss) Income for the years ended December 31, 2023, 2022 and 2021
Consolidated Balance Sheets at December 31, 2023 and 2022
Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021
Consolidated Statements of Stockholders' (Deficit) Equity for the years ended December 31, 2023, 2022 and 2021
Notes to Consolidated Financial Statements
Schedule II - Valuation and Qualifying Accounts and Reserves for the years ended December 31, 2023, 2022 and 2021
Page Number
in Form 10-K
39
40
41
42
43
44
88
(a)(2) Exhibits
Reg. S-K
exhibits
Description
Status or incorporation by reference
3(a)
Amended and Restated Certificate of Incorporation of Pitney Bowes Inc.
3(b)
Pitney Bowes Inc. Amended and Restated By-laws (effective May 10, 2013)
4
4(a)
4(b)
4(c)
Description of Registered Securities
Senior Debt Indenture, dated as of February 14, 2005, by and between the Company and
Citibank N.A., as trustee
First Supplemental Indenture, dated as of October 23, 2007, by and among Pitney Bowes
Inc., The Bank of New York, as successor trustee, and Citibank, N.A., as resigning
trustee
Supplemental Indenture No. 2 dated as of February 26, 2020, by and between Pitney
Bowes Inc. and The Bank of New York Mellon, as successor trustee to Citibank N.A.
4(d)
Form of 5.25% Global Medium-Term Note due 2037
4(e)
4(f)
4(g)
4(h)
4(i)
Officer's Certificate establishing the terms of the Notes, dated March 7, 2013, and
Specimen of 6.70% Notes due 2043
Officer's Certificate establishing the terms of the 4.625% Notes due 2024, dated March
13, 2014, and Specimen of 4.625% Notes due 2024.
Indenture, dated March 19, 2021, among Pitney Bowes Inc., the guarantors party thereto
and Truist Bank, as trustee, with respect to Pitney Bowes Inc.'s 6.875% Senior Notes due
2027.
Indenture, dated March 19, 2021, among Pitney Bowes Inc., the guarantors party thereto
and Truist Bank, as trustee, with respect to Pitney Bowes Inc.'s 7.250% Senior Notes due
2029.
Note Purchase Agreement, dated as of July 31, 2023, by and among Pitney Bowes Inc.,
the noteholders party thereto and Alter Domus (US) LLC, as noteholder representative
10(a) * Retirement Plan for Directors of Pitney Bowes Inc.
10(b) *
Pitney Bowes Inc. Directors' Stock Plan (as amended and restated September 11, 2023)
10(c) *
Pitney Bowes Inc. 2007 Stock Plan (as amended November 7, 2009)
Incorporated by reference to Exhibit 3(i)(a) to Form 8-K filed with
the Commission on September 30, 2019 (Commission file number
1-3579)
Incorporated by reference to Exhibit 3(d) to Form 8-K filed with
the Commission on May 13, 2013 (Commission file number 1-
3579)
Exhibit 4
Incorporated by reference to Exhibit 4(a) to Registration Statement
on Form S-3 filed with the Commission on June 18, 2008
(Commission file number 1-3579)
Incorporated by reference to Exhibit 4.1 to Form 8-K filed with the
Commission on October 24, 2007 (Commission file number 1-
3579)
Incorporated by reference to Exhibit 4.1 to Form 8-K filed with the
Commission on February 26, 2020 (Commission file number 1-
3579)
Incorporated by reference to Exhibit 4(d)(1) to Form 8-K filed with
the Commission on November 16, 2006 (Commission file number
1-3579)
Incorporated by reference to Exhibits 4.1 and 4.2 to Form 8-K filed
with the Commission on March 7, 2013 (Commission file number
1-3579)
Incorporated by reference to Exhibits 4.1 and 4.2 to Form 8-K filed
with the Commission on March 13, 2014 (Commission file number
1-3579)
Incorporated by reference to Exhibit 4.1 to the Form 8-K filed with
the Commission on March 23, 2021 (Commission file number 1-
3579).
Incorporated by reference to Exhibit 4.2 to the Form 8-K filed with
the Commission on March 23, 2021 (Commission file number 1-
3579).
Incorporated by reference to Exhibit 10.1 to the Form 8-K filed
with the Commission on July 31, 2023 (Commission file number
1-3579)
Incorporated by reference to Exhibit 10(a) to Form 10-K filed with
the Commission on March 30, 1993 (Commission file number 1-
3579)
Incorporated by reference to Exhibit 10.10 to Form 10-Q filed with
the Commission on November 2, 2023 (Commission file number
1-3579)
Incorporated by reference to Exhibit (v) to Form 10-K filed with
the Commission on February 26, 2010 (Commission file number 1-
3579)
32
PART IV
Description
Status or incorporation by reference
Reg. S-K
exhibits
10(d) *
Pitney Bowes Inc. Key Employees' Incentive Plan (as amended and restated September
11, 2023)
10(e) *
10(f) *
Pitney Bowes Severance Plan (as amended and restated as of October 1, 2023)
Pitney Bowes Senior Executive Severance Policy (as amended and restated as of
September 11, 2023)
10(g) *
Pitney Bowes Inc. Deferred Incentive Savings Plan for the Board of Directors (as
amended and restated September 11, 2023)
10(h) *
Pitney Bowes Inc. Deferred Incentive Savings Plan (as amended and restated effective
September 11, 2023)
10(i) *
Form of Long Term Incentive Award Agreement
10(j)*
Pitney Bowes Director Equity Deferral plan dated November 8, 2013 (effective May 12,
2014)
10(k)*
Pitney Bowes Executive Equity Deferral Plan (as amended and restated September 11,
2023)
10(l)*
Pitney Bowes Inc. 2013 Stock Plan
10(m)* Amended and Restated Pitney Bowes Inc. 2018 Stock Plan (as amended and restated
September 11, 2023)
10(n)
10(o)
10(p)
10(q)
10(r)
10(s)
10(t)
10(u)
10(v)
Credit Agreement, dated as of November 1, 2019 (the "Credit Agreement"), among the
company, the lenders and issuing banks party thereto and JPMorgan Chase Bank, N.A.,
as administrative agent.
First Incremental Facility Amendment, dated as of February 19, 2020, to the Credit
Agreement, among the company, the lenders and issuing banks party thereto and
JPMorgan Chase Bank, N.A., administrative agent.
First Amendment, dated as of March 19, 2021, among Pitney Bowes Inc., the
subsidiaries of Pitney Bowes Inc. party thereto, the lenders and issuing banks party
thereto, and JPMorgan Chase Bank, N.A., as administrative agent
First Refinancing Agreement, dated as of March 19, 2021, among Pitney Bowes Inc., the
subsidiaries of Pitney Bowes Inc. party thereto and JPMorgan Chase Bank, N.A., as
administrative agent and refinancing tranche B term lender.
Second Amendment, dated as of May 11, 2022, to the Credit Agreement, among Pitney
Bowes Inc., the Lenders and issuing banks party thereto and JP Morgan Chase, N.A., as
administrative agent
Third Amendment, dated as of December 7, 2022, to the Credit Agreement, among
Pitney Bowes Inc., the Lenders and issuing banks party thereto and JP Morgan Chase,
N.A., as administrative agent.
Fourth Amendment, dated as of December 8, 2022, to the Credit Agreement, among
Pitney Bowes Inc., the Lenders and issuing banks party thereto and JP Morgan Chase,
N.A., as administrative agent
Fifth Amendment, dated as of June 6, 2023, among Pitney Bowes Inc., the subsidiaries
of Pitney Bowes Inc. party thereto, the lenders and issuing banks party thereto, and JP
Morgan Chase Bank, N.A., as administrative agent
Sixth Amendment, dated as of July 31, 2023, among Pitney Bowes Inc., the subsidiaries
of Pitney Bowes Inc. party thereto, the lenders and issuing banks party thereto, and JP
Morgan Chase Bank, N.A., as administrative agent
33
Incorporated by reference to Exhibit 10.5 to Form 10-Q filed with
the Commission on November 2, 2023 (Commission file number
1-3579)
Exhibit 10(e)
Incorporated by reference to Exhibit 10.6 to Form 10-Q filed with
the Commission on November 2, 2023 (Commission file number
1-3579)
Incorporated by reference to Exhibit 10.11 to Form 10-Q filed with
the Commission on November 2, 2023 (Commission file number
1-3579)
Incorporated by reference to Exhibit 10.7 to Form 10-Q filed with
the Commission on November 2, 2023 (Commission file number
1-3579)
Incorporated by reference to Exhibit 10(k) to Form 10-K filed with
the Commission on February 25, 2013 (Commission file number 1-
3579)
Incorporated by reference to Exhibit 10(o) to Form 10-K filed with
the Commission on February 22, 2016 (Commission file number 1-
3579)
Incorporated by reference to Exhibit 10.8 to Form 10-Q filed with
the Commission on November 2, 2023 (Commission file number
1-3579)
Incorporated by reference to Annex A to the Definitive Proxy
Statement for the 2013 Annual Meeting of Stockholders filed with
the Commission on March 25, 2013 (Commission file number 1-
3579)
Incorporated by reference to Exhibit 10.9 to Form 10-Q filed with
the Commission on November 2, 2023 (Commission file number
1-3579)
Incorporated by reference to Exhibit 10.1 to the Form 8-K filed
with the Commission on November 5, 2019 (Commission file
number 1-3579)
Incorporated by reference to Exhibit 10.1 to the Form 8-K filed
with the Commission on February 20, 2020 (Commission file
number 1-3579)
Incorporated by reference to Exhibit 10.1 to the Form 8-K filed
with the Commission on March 23, 2021 (Commission file number
1-3579)
Incorporated by reference to Exhibit 10.2 to the Form 8-K filed
with the Commission on March 23, 2021 (Commission file number
1-3579)
Incorporated by reference to Exhibit 10.1 to the Form 10-Q filed
with the Commission on November 4, 2022 (Commission file
number 1-3579)
Incorporated by reference to Exhibit 10.1 to the Form 8-K filed
with the Commission on December 8, 2022 (Commission file
number 1-3579)
Incorporated by reference to Exhibit 10(x) to the Form 10-K filed
with the Commission on February 17, 2023 (Commission file
number 1-3579)
Incorporated by reference to Exhibit 10.1 to the Form 8-K filed
with the Commission on June 6, 2023 (Commission file number 1-
3579)
Incorporated by reference to Exhibit 10.2 to the Form 8-K filed
with the Commission on July 31, 2023 (Commission file number
1-3579)
PART IV
Description
Status or incorporation by reference
Reg. S-K
exhibits
10(w)
Separation Agreement and General Release, dated as of September 29, 2023, between
Pitney Bowes Inc. and Marc Lautenbach
10(x)
Letter Agreement, dated as of September 29, 2023, between Pitney Bowes Inc. and
Jason Dies
21
23
31.1
31.2
32.1
32.2
97
Subsidiaries of the registrant
Consent of independent registered accounting firm
Certification of Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a)
under the Securities Exchange Act of 1934, as amended.
Certification of Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under
the Securities Exchange Act of 1934, as amended.
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350
Compensation Recoupment Policy of Pitney Bowes Inc. dated December 1, 2023
Incorporated by reference to Exhibit 10.1 to the Form 8-K filed
with the Commission on October 2, 2023 (Commission file
number 1-3579)
Incorporated by reference to Exhibit 10.2 to the Form 8-K filed
with the Commission on October 2, 2023 (Commission file
number 1-3579)
Exhibit 21
Exhibit 23
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2
Incorporated by reference to Exhibit 10.12 to Form 10-Q filed with
the Commission on November 2, 2023 (Commission file number
1-3579)
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Calculation Linkbase Document
101.DEF XBRL Taxonomy Definition Linkbase Document
101.LAB XBRL Taxonomy Label Linkbase Document
101.PRE XBRL Taxonomy Presentation Linkbase Document
104
The cover page from the Company's Annual Report on Form 10-K for the year ended
December 31, 2023, formatted in Inline XBRL (included as Exhibit 101).
* The Exhibits identified above with an asterisk (*) are management contracts or compensatory plans or arrangements.
The Company has certain outstanding long-term indebtedness that does not exceed 10% of the total assets of the Company; therefore, copies of instruments defining the rights of holders of such
indebtedness are not included as exhibits. The Company agrees to furnish copies of such instruments to the SEC upon request.
ITEM 16. FORM 10-K SUMMARY
None
34
PART IV
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Registrant
Date: February 20, 2024 PITNEY BOWES INC.
By: /s/ Jason C. Dies
Jason C. Dies
Interim Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated.
Signature
/s/ Jason C. Dies
Jason C. Dies
/s/ Ana Maria Chadwick
Ana Maria Chadwick
/s/ Joseph R. Catapano
Joseph R. Catapano
/s/ Mary J. Steele Guilfoile
Mary J. Steele Guilfoile
/s/ Steven D. Brill
Steven D. Brill
/s/ Todd Everett
Todd Everett
/s/ Katie May
Katie May
/s/ Milena Alberti-Perez
Milena Alberti-Perez
/s/ Sheila A. Stamps
Sheila A. Stamps
/s/ Darrell Thomas
Darrell Thomas
/s/ Kurt Wolf
Kurt Wolf
/s/ William S. Simon
William S. Simon
/s/ Jill Sutton
Jill Sutton
Interim Chief Executive Officer (Principal Executive Officer)
February 20, 2024
Title
Date
Executive Vice President, Chief Financial Officer (Principal Financial Officer)
February 20, 2024
Vice President, Chief Accounting Officer (Principal Accounting Officer)
February 20, 2024
Non-Executive Chairman - Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
35
February 20, 2024
February 20, 2024
February 20, 2024
February 20, 2024
February 20, 2024
February 20, 2024
February 20, 2024
February 20, 2024
February 20, 2024
February 20, 2024
PART IV
Report of Independent Registered Public Accounting Firm (PCAOB ID: 238)
Consolidated Financial Statements of Pitney Bowes Inc.
Consolidated Statements of Operations for the years ended December 31, 2023, 2022 and 2021
Consolidated Statements of Comprehensive (Loss) Income for the years ended December 31, 2023, 2022 and 2021
Consolidated Balance Sheets at December 31, 2023 and 2022
Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021
Consolidated Statements of Stockholders' (Deficit) Equity for the years ended December 31, 2023, 2022 and 2021
Notes to Consolidated Financial Statements
Financial Statement Schedule
Schedule II - Valuation and Qualifying Accounts and Reserves for the years ended December 31, 2023, 2022 and 2021
Page Number
37
39
40
41
42
43
44
88
36
To the Board of Directors and Stockholders of Pitney Bowes Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
Report of Independent Registered Public Accounting Firm
We have audited the accompanying consolidated balance sheets of Pitney Bowes Inc. and its subsidiaries (the “Company”) as of December 31,
2023 and 2022, and the related consolidated statements of operations, comprehensive (loss) income, stockholders’ (deficit) equity and cash
flows for each of the three years in the period ended December 31, 2023, including the related notes and financial statement schedule listed in
the index appearing under Item 15(a)(1) (collectively referred to as the “consolidated financial statements”). We also have audited the
Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the
Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period
ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion,
the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on
criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over
financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report
on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s
consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public
accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or
fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also
included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the
design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures
as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
37
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that
was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to
the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of
critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by
communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to
which it relates.
Goodwill Impairment Triggering Event Assessments – Global Ecommerce Reporting Unit
As described in Notes 1 and 8 to the consolidated financial statements, the Company’s consolidated goodwill balance was $734 million as of
December 31, 2023, and the goodwill balance associated with the Global Ecommerce reporting unit was zero. Goodwill is tested annually for
impairment at the reporting unit level as of the beginning of the fourth quarter or sooner if circumstances indicate an impairment may exist.
The impairment test for goodwill determines the fair value of each reporting unit and compares it to the reporting unit’s carrying value,
including goodwill. If the fair value of a reporting unit is less than the carrying value of the net assets assigned to the reporting unit, a
goodwill impairment loss is calculated as the difference between these amounts, limited to the amount of goodwill allocated to the reporting
unit. The performance of the Global Ecommerce reporting unit, continuing changes in macroeconomic conditions and the long-term outlook
for the business were triggering events that caused management to evaluate the Global Ecommerce goodwill for impairment during the
second and fourth quarters 0f 2023. The assessments indicated that the estimated fair value of the reporting unit was less than the carrying
value and management recorded a non-cash, pre-tax goodwill impairment charge of $119 million and $220 million in the second and fourth
quarter, respectively. The fair value was estimated using a discounted cash flow model based on management developed cash flow
projections, which included judgments and assumptions related to revenue growth rates, operating margins, operating income, and the
discount rate.
The principal considerations for our determination that performing procedures relating to the goodwill impairment triggering event
assessments of the Global Ecommerce reporting unit is a critical audit matter are (i) the significant judgment by management when
developing the fair value estimates of the Global Ecommerce reporting unit; (ii) a high degree of auditor judgment, subjectivity, and effort in
performing procedures and evaluating management’s significant assumptions related to revenue growth rates, certain forecasted costs
included in the determination of projected operating margins and operating income, and the discount rate; and (iii) the audit effort involved
the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the
consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s goodwill
impairment assessments, including controls over the valuation of the Global Ecommerce reporting unit. These procedures also included,
among others, (i) testing management’s process for developing the fair value estimates of the reporting unit; (ii) evaluating the
appropriateness of the discounted cash flow model used by management; (iii) testing the completeness and accuracy of underlying data used
in the discounted cash flow model; and (iv) evaluating the reasonableness of the significant assumptions used by management related to
revenue growth rates, certain forecasted costs included in the determination of projected operating margins and operating income, and the
discount rate. Evaluating management’s assumptions related to revenue growth rates and certain forecasted costs included in the
determination of projected operating margins and operating income involved evaluating whether the assumptions used by management were
reasonable considering (i) the current and past performance of the reporting unit, (ii) the consistency with external market and industry data,
and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and
knowledge were used to assist in evaluating the appropriateness of the discounted cash flow model and the reasonableness of the discount
rate assumption.
/s/ PricewaterhouseCoopers LLP
Stamford, Connecticut
February 20, 2024
We have served as the Company’s auditor since 1934.
38
PITNEY BOWES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Revenue:
Business services
Support services
Financing
Equipment sales
Supplies
Rentals
Total revenue
Costs and expenses:
Cost of business services
Cost of support services
Financing interest expense
Cost of equipment sales
Cost of supplies
Cost of rentals
Selling, general and administrative
Research and development
Restructuring charges
Goodwill impairment
Interest expense, net
Other components of net pension and postretirement (income) cost
Other (income) expense
Total costs and expenses
(Loss) income from continuing operations before income taxes
(Benefit) provision for income taxes
(Loss) income from continuing operations
Loss from discontinued operations, net of tax
Net (loss) income
Basic (loss) earnings per share attributable to common stockholders
(1)
:
Continuing operations
Discontinued operations
Net (loss) income
Diluted (loss) earnings per share attributable to common stockholders
(1)
:
Continuing operations
Discontinued operations
Net (loss) income
(1)
The sum of the earnings per share amounts may not equal the totals due to rounding.
Years Ended December 31,
2023
2022
2021
$
$
$
$
$
$
2,045,069
410,734
271,197
323,739
147,709
67,900
3,266,348
1,756,616
137,676
63,281
223,757
43,347
19,614
897,260
41,405
61,585
339,184
100,445
(8,256)
(3,064)
3,672,850
(406,502)
(20,875)
(385,627)
—
(385,627)
(2.20)
—
(2.20)
(2.20)
—
(2.20)
$
$
$
$
$
$
2,249,941
438,191
274,508
354,960
154,186
66,256
3,538,042
1,934,206
148,829
51,789
253,843
43,778
25,105
905,570
43,657
18,715
—
89,980
4,308
(21,618)
3,498,162
39,880
2,940
36,940
—
36,940
0.21
—
0.21
0.21
—
0.21
$
$
$
$
$
$
2,334,674
460,888
294,418
350,138
159,438
74,005
3,673,561
2,034,477
149,706
47,059
251,914
43,980
24,427
924,163
46,777
19,003
—
96,886
1,010
41,574
3,680,976
(7,415)
(10,922)
3,507
(4,858)
(1,351)
0.02
(0.03)
(0.01)
0.02
(0.03)
(0.01)
See Notes to Consolidated Financial Statements
39
PITNEY BOWES INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(In thousands)
Net (loss) income
Other comprehensive (loss) income, net of tax:
Foreign currency translations, net of tax of $(741), $(3,942) and $(767), respectively
Net (loss) gain on cash flow hedges, net of tax of $(1,847), $2,900 and $1,738, respectively
Net unrealized gain (loss) on available for sale securities, net of tax of $1,878, $(10,424) and $(2,217),
respectively
Adjustments to pension and postretirement plans, net of tax of $(18,875), $4,312 and $17,986,
respectively
Amortization of pension and postretirement costs, net of tax of $4,461, $9,315 and $12,755,
respectively
Other comprehensive (loss) income, net of tax
Comprehensive (loss) income
2023
Years Ended December 31,
2022
2021
$
(385,627)
$
36,940
$
(1,351)
25,279
(5,541)
5,977
(55,128)
13,732
(15,681)
(401,308)
$
$
(71,344)
8,700
(33,191)
9,297
31,286
(55,252)
(18,312)
$
(34,168)
5,214
(6,651)
54,618
39,806
58,819
57,468
See Notes to Consolidated Financial Statements
40
PITNEY BOWES INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amount)
ASSETS
Current assets:
Cash and cash equivalents
Short-term investments (includes $2,382 and $1,882, respectively, reported at fair value)
Accounts and other receivables (net of allowance of $6,139 and $5,344 respectively)
Short-term finance receivables (net of allowance of $14,347 and $11,395, respectively)
Inventories
Current income taxes
Other current assets and prepayments
Total current assets
Property, plant and equipment, net
Rental property and equipment, net
Long-term finance receivables (net of allowance of $8,880 and $10,555, respectively)
Goodwill
Intangible assets, net
Operating lease assets
Noncurrent income taxes
Other assets (includes $227,131 and $229,936, respectively, reported at fair value)
Total assets
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Accounts payable and accrued liabilities
Customer deposits at the Bank
Current operating lease liabilities
Current portion of long-term debt
Advance billings
Current income taxes
Total current liabilities
Long-term debt
Deferred taxes on income
Tax uncertainties and other income tax liabilities
Noncurrent operating lease liabilities
Other noncurrent liabilities
Total liabilities
Commitments and contingencies (See Note 15)
Stockholders' (deficit) equity:
Common stock, $1 par value (480,000 shares authorized; 270,338 and 323,338 shares issued, respectively)
Retained earnings
Accumulated other comprehensive loss
Treasury stock, at cost (93,972 and 149,307 shares, respectively)
Total stockholders’ (deficit) equity
Total liabilities and stockholders’ (deficit) equity
December 31, 2023
December 31, 2022
$
$
$
$
601,053
22,166
342,236
563,536
70,053
564
92,309
1,691,917
383,628
23,583
653,085
734,409
62,250
309,958
60,995
352,360
4,272,185
875,476
640,323
60,069
58,931
89,087
6,523
1,730,409
2,087,101
211,477
19,091
277,981
314,702
4,640,761
270,338
3,077,988
(851,245)
(2,865,657)
(368,576)
4,272,185
$
$
$
$
669,981
11,172
343,557
564,972
83,720
8,790
115,824
1,798,016
420,672
27,487
627,124
1,066,951
77,944
296,129
46,613
380,419
4,741,355
907,083
628,072
52,576
32,764
105,207
2,101
1,727,803
2,172,502
263,131
23,841
265,696
227,729
4,680,702
323,338
5,125,677
(835,564)
(4,552,798)
60,653
4,741,355
See Notes to Consolidated Financial Statements
41
PITNEY BOWES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Years Ended December 31,
2023
2022
2021
Cash flows from operating activities:
Net (loss) income
Loss from discontinued operations, net of tax
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
$
(385,627)
—
$
36,940
—
$
Depreciation and amortization
Allowance for credit losses
Stock-based compensation
Amortization of debt fees
(Gain) loss on debt redemption/refinancing
Restructuring charges
Restructuring payments
Pension contributions and retiree medical payments
Gain on sale of businesses, including transaction costs
Gain on sale of assets
Goodwill impairment
Deferred taxes
Other, net
Changes in operating assets and liabilities, net of acquisitions/divestitures:
Accounts and other receivables
Finance receivables
Inventories
Other current assets and prepayments
Accounts payable and accrued liabilities
Current and noncurrent income taxes
Advance billings
Net cash from operating activities
Cash flows from investing activities:
Capital expenditures
Purchases of investment securities
Proceeds from sales/maturities of investment securities
Net investment in loan receivables
Proceeds from sale of business, net of cash sold
Proceeds from asset sales
Acquisitions, net of cash acquired
Settlement of derivative contracts
Other investing activities, net
Net cash from investing activities: continuing operations
Net cash from investing activities: discontinued operations
Net cash from investing activities
Cash flows from financing activities:
Proceeds from the issuance of debt, net of discount
Principal payments of debt
Premiums and fees to refinance debt
Dividends paid to stockholders
Customer deposits at the Bank
Common stock repurchases
Other financing activities, net
Net cash from financing activities
Effect of exchange rate changes on cash and cash equivalents
Change in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
160,430
16,687
9,597
10,698
(3,064)
61,585
(34,443)
(33,815)
—
—
339,184
(50,815)
6,040
(6,027)
(2,646)
14,293
30,841
(43,110)
6,904
(17,244)
79,468
(102,878)
(18,887)
25,390
(29,754)
—
—
—
427
2,870
(122,832)
—
(122,832)
266,750
(322,886)
(10,531)
(35,215)
86,223
—
(15,607)
(31,266)
5,702
(68,928)
669,981
601,053
$
163,816
8,937
16,629
8,674
4,993
18,715
(15,406)
(26,769)
(12,205)
(14,372)
—
3,688
13,997
(29,303)
(12,591)
(4,942)
2,727
18,577
(14,464)
8,342
175,983
(124,840)
(8,863)
28,724
(53,114)
111,593
50,766
(5,139)
(27,660)
4,264
(24,269)
—
(24,269)
—
(124,101)
(8,535)
(34,718)
(3,990)
(13,446)
(13,293)
(198,083)
(16,130)
(62,499)
732,480
669,981
$
$
(1,351)
4,858
162,859
7,808
20,862
7,163
56,209
19,003
(21,990)
(27,534)
(10,201)
(1,434)
—
(19,883)
9,179
37,503
20,934
(8,008)
(1,184)
57,780
2,971
(14,029)
301,515
(184,042)
(74,923)
97,358
(6,288)
27,573
1,840
(14,996)
—
—
(153,478)
(1,773)
(155,251)
1,195,500
(1,445,734)
(50,763)
(34,800)
14,862
—
(9,436)
(330,371)
(4,863)
(188,970)
921,450
732,480
See Notes to Consolidated Financial Statements
42
PITNEY BOWES INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY
(In thousands)
Balance at December 31, 2020
Net loss
Other comprehensive income
Dividends ($0.20 per share)
Issuance of common stock
Stock-based compensation
Balance at December 31, 2021
Net income
Other comprehensive loss
Dividends ($0.20 per share)
Issuance of common stock
Stock-based compensation
Repurchase of common stock
Balance at December 31, 2022
Net loss
Other comprehensive loss
Dividends ($0.20 per share)
Issuance of common stock
Stock-based compensation
Retirement of treasury stock
Balance at December 31, 2023
Common
Stock
Additional
Paid-in
Capital
Retained
earnings
Accumulated
other
comprehensive
loss
Treasury stock
Total (deficit)
equity
$
$
323,338
—
—
—
—
—
323,338
—
—
—
—
—
—
323,338
—
—
—
—
—
(53,000)
$
$
68,502
—
—
—
(86,879)
20,862
2,485
—
—
—
(19,114)
16,629
—
—
—
—
—
(9,597)
9,597
—
5,205,421
(1,351)
—
(34,800)
—
—
5,169,270
36,940
—
(34,718)
(45,815)
—
—
5,125,677
(385,627)
—
(35,215)
(63,877)
—
(1,562,970)
$
(839,131)
—
58,819
—
—
—
(780,312)
—
(55,252)
—
—
—
—
(835,564)
—
(15,681)
—
—
—
—
$
(4,687,509)
—
—
—
85,360
—
(4,602,149)
—
—
—
62,797
—
(13,446)
(4,552,798)
—
—
—
71,171
—
1,615,970
$
270,338
$
—
$
3,077,988
$
(851,245)
$
(2,865,657)
$
70,621
(1,351)
58,819
(34,800)
(1,519)
20,862
112,632
36,940
(55,252)
(34,718)
(2,132)
16,629
(13,446)
60,653
(385,627)
(15,681)
(35,215)
(2,303)
9,597
—
(368,576)
See Notes to Consolidated Financial Statements
43
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
1. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying Consolidated Financial Statements of Pitney Bowes Inc. and its wholly owned subsidiaries (we, us, our, or the company) have been
prepared in conformity with accounting principles generally accepted in the United States of America (GAAP). Intercompany transactions and balances
have been eliminated.
Pre-tax income for the twelve months ended December 31, 2022 includes a benefit of $3 million to correct misstatements related to prior periods. The
impact of these misstatements is not material to the consolidated financial statements of the current annual period or for any prior quarterly or annual
periods.
Factors Affecting Comparability
Certain transactions and changes occurred during 2022 that impact the comparability to our 2023 financial results. These transactions and changes include:
•
•
the sale of our Borderfree cross-border ecommerce solutions business (Borderfree) in July 2022. Accordingly, reported revenue and costs for the
twelve months ended December 31, 2022 include six months of revenue and costs for Borderfree. Net income of Borderfree for these periods was
not significant.
a change in the presentation of revenue for digital delivery services effective October 1, 2022, from a gross basis to a net basis. Accordingly, in
2023, revenue and costs of revenue for certain digital delivery services are reported on a net basis as business services revenue; whereas in 2022,
revenue and cost of revenue for these services through September 30 were reported as business services revenue and cost of business services,
respectively. The change primarily impacts our Global Ecommerce segment.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires the use of estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues, expenses and accompanying disclosures, including the disclosure of contingent assets and liabilities. These estimates and assumptions
are based on management's best knowledge of current events, historical experience and other information available when the financial statements are
prepared. These estimates include, but are not limited to, goodwill and intangible asset impairment review, deferred tax asset valuation allowance, income
tax reserves, revenue recognition for multiple element arrangements, pension and other postretirement costs, allowance for credit losses, residual values of
leased assets, useful lives of long-lived and intangible assets, restructuring costs and loss contingencies. Actual results could differ from those estimates and
assumptions.
Cash and Cash Equivalents
Cash equivalents include interest-earning investments with maturities of three months or less at the date of purchase. Restricted cash included in cash and
cash equivalents at December 31, 2023 and 2022 was $3 million and $1 million, respectively. Restricted cash represent cash balances which are legally or
contractually restricted.
Investment Securities
Investment securities classified as available-for-sale are recorded at fair value with changes in fair value due to market conditions (i.e., interest rates)
recorded in accumulated other comprehensive loss (AOCL), and changes in fair value due to credit conditions recorded in earnings. Purchase premiums
and discounts are amortized using the effective interest method over the term of the security. Gains and losses on sales of available-for-sale securities are
recorded on the trade date using the specific identification method. There were no unrealized losses due to credit losses charged to earnings in 2023, 2022,
or 2021. Investment securities classified as held-to-maturity and are carried at amortized cost.
We also hold certain other investments, whereby their nature, changes in fair value are recorded through earnings on a recurring basis or upon the
occurrence of an observable transaction.
Accounts and Other Receivables and Allowance for Credit Losses
Accounts receivables are generally due within 30 days after the invoice date. We provide an allowance for credit losses based on historical loss experience,
the age of the receivables, specific troubled accounts and other currently available information.
Accounts receivables are written off against the allowance after all collection efforts have been exhausted and management deems the account to be
uncollectible, or when they are 365 days past due, if sooner. We believe that our accounts receivable credit risk is low
44
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
because of the geographic and industry diversification of our clients and small account balances for most of our clients. We continually evaluate the
adequacy of the allowance for credit losses and adjust as necessary.
Finance Receivables and Allowance for Credit Losses
Finance receivables are comprised of sales-type leases, secured loans and unsecured loans. Sales-type leases and secured loans are from financing options
provided to clients for Pitney Bowes equipment or leasing of other manufacturers' equipment and are generally due in installments over periods ranging
from three to five years. Unsecured loans comprise revolving credit lines offered to our clients for postage, supplies and working capital purposes. These
revolving credit lines are generally due monthly; however, clients may rollover outstanding balances. Interest is recognized on finance receivables using the
effective interest method. Annual fees are recognized ratably over the annual period covered and client acquisition costs are expensed as incurred.
We provide an allowance for credit losses based on historical loss experience, the nature of our portfolios, adverse situations that may affect a client's
ability to pay and current economic conditions and outlook based on reasonable and supportable forecasts. We continually evaluate the adequacy of the
allowance for credit losses and adjust as necessary.
Credit approval limits are established based on the credit quality of the client and the type of equipment financed. We cease revenue recognition for lease
receivables and unsecured loan receivables that are more than 90 days past due. Revenue recognition is resumed when the client's payments reduce the
account aging to less than 60 days past due. Finance receivables are written off against the allowance after all collection efforts have been exhausted and
management deems the account to be uncollectible. We believe that our finance receivable credit risk is low because of the geographic and industry
diversification of our clients and small account balances for most of our clients.
Inventories
Inventories are stated at the lower of cost, determined on the first-in, first-out (FIFO) basis or net realizable value.
Fixed Assets
Property, plant and equipment and rental equipment are stated at cost and depreciated principally using the straight-line method over their estimated useful
lives, which are 50 years for buildings, 10-20 years for building improvements, up to 3 years for internal use software development costs, 3-12 years for
machinery and equipment and 3-6 years for rental equipment. Leasehold improvements are amortized over the shorter of their estimated useful life or the
remaining lease term. Major improvements that add to the productive capacity or extend the life of an asset are capitalized while repairs and maintenance
are charged to expense. Fully depreciated assets are retained in fixed assets and accumulated depreciation until they are removed from service.
Intangible Assets
Finite-lived intangible assets are amortized using the straight-line method over their estimated useful lives of up to 10 years.
Deferred Costs
Certain incremental costs to obtain a contract are capitalized if we expect the benefit of those costs to be realized over a period greater than one year. These
costs primarily relate to contract costs and sales commissions on multi-year equipment sales. Costs are amortized in a manner consistent with the timing of
the related revenue over the contract performance period or longer, if renewals are expected and the renewal commission is not commensurate with the
initial commission. Unamortized deferred costs at December 31, 2023 and December 31, 2022, included in other assets, were $39 million and $41 million,
respectively. Amortization expense for these costs for the years ended December 31, 2023, 2022 and 2021 was $18 million, $22 million and $18 million,
respectively.
Revenue Recognition
We derive revenue from multiple sources including sales, rentals, financing and services. Certain transactions are consummated at the same time and can
therefore generate revenue from multiple sources. The most common form of these transactions involves a sale or noncancelable lease of equipment, meter
services and an equipment maintenance agreement. We determine whether each product and service within the contract should be treated as a separate
performance obligation (unit of accounting) for revenue recognition purposes. For contracts that include multiple performance obligations, the transaction
price is allocated based on relative standalone selling prices (SSP), which are a range of selling prices that we would sell a product or service to a customer
on a separate basis. SSP are established for each performance obligation at the inception of the contract and can be observable prices or estimated. The
allocation of the transaction price to the various performance obligations impacts the timing of revenue recognition, but does not change the total revenue
recognized. More specifically, revenue related to our offerings is recognized as follows:
45
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
Business services
Business services includes fulfillment, delivery and return services, cross-border solutions, mail processing services and shipping subscription solutions.
Revenue for fulfillment, delivery and return services, cross-border solutions and mail processing services is recognized over time using an output method
based on the number of parcels or mail pieces either processed or delivered, depending on the service type, since that measure best depicts the value of
goods and services transferred to the client over the contract period. Revenue for shipping subscription solutions is recognized ratably over the contract
period as the client obtains equal benefit from these services throughout the period. We review third-party relationships and record revenue on a gross basis
when we act as a principal in a transaction and on a net basis when we act as an agent between a client and vendor. In determining whether we are acting as
principal or agent, we consider several factors such as whether we are the primary obligor to the client or have control over pricing.
Support services
Support services includes providing maintenance, professional and subscription services for our equipment and digital mailing and shipping technology
solutions. Revenue is allocated to these services using selling prices charged in standalone transactions. Revenue for maintenance and subscription services
is recognized ratably over the contract period and revenue for professional services is recognized when services are provided.
Financing
We provide financing for our products primarily through sales-type leases and revolving lines of credit for the purchase of postage and supplies. Financing
revenue also includes finance income, late fees and investment income, gains and losses at the Bank. We record financing income over the lease term using
the effective interest method. Financing revenue also includes amounts related to sales-type leases that customers have extended or renewed for an
additional term. Revenue for these contracts is recognized over the term of the modified lease using the effective interest method. We believe that our sales-
type lease portfolio contains only normal collection risk.
Equipment residual values are determined at the inception of the lease using management's best estimate of fair value at the end of the lease term. Fair
value estimates are determined based on historical renewal experience, used equipment markets, competition and technological changes. We evaluate
residual values on an annual basis or sooner if circumstances warrant. Declines in estimated residual values considered "other-than-temporary" are
recognized immediately. Increases in estimated future residual values are not recognized until the equipment is remarketed.
Equipment sales
We sell and lease equipment directly to customers and to distributors (re-sellers) throughout the world. The amount of revenue allocated to the equipment is
based on a range of observable selling prices in standalone transactions. Revenue is recognized as control of the equipment transfers to the customer.
Revenue from the sale of equipment under sales-type leases is recognized upon shipment for self-installed products and upon installation or customer
acceptance for other products. Revenue from the direct sale of equipment is recognized upon delivery for self-installed products and upon installation or
customer acceptance for other products. We do not typically offer any rights of return.
Supplies
Supplies revenue includes the sale of supplies for our mailing equipment and is recognized upon delivery.
Rentals
Rentals revenue includes revenue from mailing equipment that does not meet the criteria for as a sales-type lease. We may invoice in advance for rentals
according to the terms of the agreement. Advanced billings are initially deferred and recognized on a straight-line basis over the billing period. Revenue
generated from financing clients for the continued use of equipment subsequent to the expiration of the original lease is recognized as rentals revenue.
Shipping and Handling
Shipping and handling costs are recognized as costs of revenue as incurred.
Research and Development Costs
Research and development includes research, development and engineering activities relating to the development of new products and solutions and
enhancements of existing products and solutions. Costs primarily include salaries, benefits and other employee-related expenses, materials, contract
services, information systems and facilities and equipment costs. Research and development costs are charged to expense as incurred.
46
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
Restructuring Charges
Restructuring charges may include employee severance and related separation costs and facility abandonment and other related charges. Employee
severance and separation costs are recognized when a liability is incurred, which is generally upon communication to the affected employee, and the
amount to be paid is both probable and can be reasonably estimated. Severance accruals are based on company policy, historical experience and negotiated
settlements.
Stock-based Compensation
Compensation expense for stock-based awards is measured based on the estimated fair value of the awards expected to vest and recognized ratably over the
requisite service period. We may issue restricted stock and non-qualified stock options under our stock award plans. The fair value of restricted stock is
estimated based on the market price of our common stock on the grant date, less the present value of expected dividends. The fair value of non-qualified
stock options is determined using the Black-Scholes valuation model. We believe that these valuation techniques and the underlying assumptions are
appropriate in estimating the fair value of stock awards. Forfeitures are estimated at the time of grant to recognize expense for those awards that are
expected to vest and are based on our historical forfeiture rates. Stock-based compensation expense is recognized primarily in selling, general and
administrative expense.
Retirement Plans
Net periodic benefit cost includes service cost, interest cost, expected return on plan assets and the amortization of actuarial gains and losses. Actuarial
gains and losses arise from actual results that differ from previous assumptions and changes in assumptions. The expected return on plan assets is based on
a market-related valuation of plan assets where differences between the actual and expected return on plan assets are recognized over a five-year period.
Actuarial gains and losses are recognized in other comprehensive loss, net of tax, and amortized to benefit cost primarily over the life expectancy of plan
participants. The funded status of pension and other postretirement benefit plans is recognized in the consolidated balance sheets.
Impairment Review
Long-lived assets and finite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be fully recoverable. The estimated undiscounted future cash flows expected to result from the use and eventual disposition of the asset is
compared to the asset's carrying value. The fair value of the asset is determined using probability weighted expected cash flow estimates, derived from our
long-term business plan and historical experience, quoted market prices when available and appraisals, as appropriate.
Goodwill is tested annually for impairment at the reporting unit level as of the beginning of the fourth quarter or sooner if circumstances indicate an
impairment may exist. The impairment test for goodwill determines the fair value of each reporting unit and compares it to the reporting unit's carrying
value, including goodwill. If the fair value of a reporting unit exceeds the carrying value of the net assets assigned to that reporting unit, goodwill is not
impaired. If the fair value of the reporting unit is less than the carrying value of the net assets assigned to the reporting unit, a goodwill impairment loss is
calculated as the difference between these amounts, limited to the amount of goodwill allocated to the reporting unit.
During 2023, we recorded non-cash, pre-tax goodwill impairment charges in the second and fourth quarters of $119 million and $220 million, respectively.
See Note 8 for further details.
Derivative Instruments
We are exposed to the impact of changes in foreign currency exchange rates and interest rates. We limit these risks by following established risk
management policies and procedures. We may also use derivatives to limit the effects of currency exchange rate fluctuations on financial results and
manage the related cost of debt. We do not use derivatives for trading or speculative purposes.
Derivatives are measured at fair value and reported as assets and liabilities, as applicable. The accounting for changes in fair value depends on the intended
use of the derivative, the resulting designation and the effectiveness of the instrument in offsetting the risk exposure it is designed to hedge. To qualify as a
hedge, a derivative must be highly effective in offsetting the risk designated for hedging purposes. The hedge relationship must be formally documented at
inception, detailing the particular risk management objective and strategy for the hedge. The effectiveness of the hedge relationship is evaluated on a
retrospective and prospective basis.
The use of derivatives exposes us to counterparty credit risk. To mitigate such risks, we only enter into agreements with financial institutions that meet
stringent credit requirements. We regularly review our credit exposure and the creditworthiness of our counterparties. We have not seen a material change
in the creditworthiness of our derivative counterparties.
Income Taxes
We recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the carrying amounts of assets and
liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using the enacted tax
47
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change
in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date of such change. A valuation
allowance is provided when it is more likely than not that a deferred tax asset will not be realized. In estimating the necessity and amount of a valuation
allowance, we consider all available evidence for each jurisdiction, including historical operating results, estimates of future taxable income and the
feasibility of ongoing tax planning strategies. We adjust the valuation allowance through income tax expense when new information becomes available that
would alter our determination of the amount of deferred tax assets that will ultimately be realized.
Earnings per Share
Basic earnings per share is computed based on the weighted-average number of common shares outstanding during the year. Diluted earnings per share is
computed based on the weighted-average number of common shares outstanding during the year plus the weighted-average dilutive effect of common stock
equivalents.
Translation of Non-U.S. Currency Amounts
In general, the functional currency of our foreign operations is the local currency. Assets and liabilities of subsidiaries operating outside the U.S. are
translated at rates in effect at the end of the period and revenue and expenses are translated at average rates during the period. Net deferred translation gains
and losses are included as a component of accumulated other comprehensive loss.
Loss Contingencies
In the ordinary course of business, we are routinely defendants in, or party to, a number of pending and threatened legal actions. On a quarterly basis, we
review the status of each significant matter and assess the potential financial exposure. If the potential loss from any claim or legal action is considered
probable and can be reasonably estimated, we establish a liability for the estimated loss. The assessment of the ultimate outcome of each claim or legal
action and the determination of the potential financial exposure requires significant judgment. Estimates of potential liabilities for claims or legal actions
are based only on information that is available at that time. As additional information becomes available, we may revise our estimates, and these revisions
could have a material impact on our results of operations and financial position. Legal fees are expensed as incurred.
Accounting Pronouncements Adopted in 2023
On January 1, 2023, we adopted ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures,
which requires disclosure of gross write-offs of finance receivables by year of origination. The adoption of this standard did not have a material impact on
our disclosures.
Accounting Pronouncements Not Yet Adopted
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which would require additional
transparency for income tax disclosures, including the income tax rate reconciliation table and cash taxes paid both in the United States and foreign
jurisdictions. This standard is effective for annual periods beginning after December 15, 2024. We are currently assessing the impact this standard will have
on our disclosures.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which would
require enhanced disclosures about significant segment expenses and information used to assess segment performance. This standard is effective for fiscal
years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. We are
currently assessing the impact this standard will have on our disclosures.
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial
Reporting. The transition to new reference interest rates will require certain contracts to be modified and the ASU is intended to provide temporary optional
expedients and exceptions to U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the
expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. The
accommodations provided by the ASU are effective through December 31, 2024, and may be applied at the beginning of any interim period within that
time frame.
With the modification of our revolving credit facility in December 2022, we elected to apply the practical expedient to the replacement of LIBOR reference
rate and our assessment of hedge effectiveness. We may apply other expedients as additional reference rate changes occur. We continue to assess the impact
of this standard on our financial statements.
48
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
2. Revenue
Disaggregated Revenue
The following tables disaggregate our revenue by source and timing of recognition:
Global Ecommerce Presort Services
Year Ended December 31, 2023
SendTech
Solutions
Revenue from
products and
services
Revenue from
leasing
transactions and
financing
Total consolidated
revenue
Revenue from products and services
Business services
Support services
Financing
Equipment sales
Supplies
Rentals
Subtotal
$
1,355,326 $
617,599 $
72,144 $
—
—
—
—
—
—
—
—
—
—
1,355,326
617,599
410,734
—
88,144
147,709
—
718,731
Revenue from leasing transactions and financing
Total revenue
—
—
574,692
$
1,355,326 $
617,599 $ 1,293,423 $
— $
—
271,197
235,595
—
67,900
574,692 $
2,045,069
410,734
271,197
323,739
147,709
67,900
3,266,348
2,045,069 $
410,734
—
88,144
147,709
—
2,691,656 $
574,692
3,266,348
Timing of revenue recognition from products and services
Products/services transferred at a point in time
Products/services transferred over time
Total
$
$
— $
1,355,326
1,355,326 $
— $
617,599
617,599 $
306,414 $
412,317
718,731 $
306,414
2,385,242
2,691,656
Revenue from products and services
Business services
Support services
Financing
Equipment sales
Supplies
Rentals
Subtotal
Revenue from leasing transactions and financing
Total revenue
Timing of revenue recognition from products and services
Products/services transferred at a point in time
Products/services transferred over time
Total
Global Ecommerce Presort Services
$ 1,576,348 $
602,016 $
—
—
—
—
—
—
—
—
—
—
Year Ended December 31, 2022
SendTech
Solutions
Revenue from
products and
services
Revenue from
leasing
transactions and
financing
Total consolidated
revenue
71,577 $ 2,249,941 $
438,191
—
88,022
154,186
—
438,191
—
88,022
154,186
—
— $ 2,249,941
438,191
—
274,508
274,508
354,960
266,938
154,186
—
66,256
66,256
607,702 $ 3,538,042
1,576,348
602,016
751,976
2,930,340 $
—
$ 1,576,348 $
—
607,702
607,702
602,016 $ 1,359,678 $ 3,538,042
$
— $
1,576,348
$ 1,576,348 $
— $
602,016
602,016 $
318,438
318,438 $
433,538
2,611,902
751,976 $ 2,930,340
49
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
Revenue from products and services
Business services
Support services
Financing
Equipment sales
Supplies
Rentals
Subtotal
Global Ecommerce Presort Services
$ 1,702,580 $
573,480 $
—
—
—
—
—
—
—
—
—
—
Year Ended December 31, 2021
SendTech
Solutions
Revenue from
products and
services
Revenue from
leasing
transactions and
financing
Total consolidated
revenue
58,614 $ 2,334,674 $
460,888
—
91,015
159,438
—
460,888
—
91,015
159,438
—
— $ 2,334,674
460,888
—
294,418
294,418
350,138
259,123
159,438
—
74,005
74,005
627,546 $ 3,673,561
1,702,580
573,480
769,955
3,046,015 $
Revenue from leasing transactions and financing
Total revenue
—
$ 1,702,580 $
—
627,546
627,546
573,480 $ 1,397,501 $ 3,673,561
Timing of revenue recognition from products and services
Products/services transferred at a point in time
Products/services transferred over time
Total
$
— $
1,702,580
$ 1,702,580 $
— $
573,480
573,480 $
318,077
318,077 $
451,878
2,727,938
769,955 $ 3,046,015
Our performance obligations for revenue from products and services are as follows:
Business services includes fulfillment, delivery and return services, cross-border solutions, mail processing services and shipping subscription solutions.
Revenue for fulfillment, delivery and return services, cross-border solutions and mail processing services is recognized over time using an output method
based on the number of parcels or mail pieces either processed or delivered, depending on the service type, since that measure best depicts the value of
goods and services transferred to the client over the contract period. Contract terms for these services initially range from one to five years and contain
annual renewal options. Revenue for shipping subscription solutions is recognized ratably over the contract period as the client obtains equal benefit from
these services throughout the period.
Support services includes providing maintenance, professional and subscription services for our equipment and digital mailing and shipping technology
solutions. Contract terms range from one to five years, depending on the term of the lease contract for the related equipment. Revenue for maintenance and
subscription services is recognized ratably over the contract period and revenue for professional services is recognized when services are provided.
Equipment sales generally includes the sale of mailing and shipping equipment, excluding sales-type leases. We recognize revenue upon delivery for self-
install equipment and upon acceptance or installation for other equipment. We provide a warranty that the equipment is free of defects and meets stated
specifications. The warranty is not considered a separate performance obligation.
Supplies revenue includes revenue from the sale of supplies for our mailing equipment and is recognized upon delivery.
Revenue from leasing transactions and financing includes revenue from sales-type and operating leases, finance income, late fees and investment income,
gains and losses at the Bank.
Advance Billings from Contracts with Customers
Advance billings, current
Advance billings, noncurrent
Balance Sheet Location
Advance billings
Other noncurrent liabilities
December 31,
2023
December 31,
2022
Increase/
(decrease)
$
$
82,124
507
$
$
97,904
906
$
$
(15,780)
(399)
Advance billings are recorded when cash payments are due in advance of our performance. Revenue is recognized ratably over the contract term. Items in
advance billings primarily relate to support services on mailing equipment. Revenue recognized during the
50
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
twelve months ended December 31, 2023 includes $79 million of advance billings at the beginning of the period. Advance billings, current at both
December 31, 2023 and 2022 also includes $7 million from leasing transactions.
Future Performance Obligations
Future performance obligations primarily include maintenance and subscription services bundled with our leasing contracts. The transaction prices
allocated to future performance obligations will be recognized as follows:
SendTech Solutions
$
241,205
$
196,422
$
256,715
$
694,342
2024
2025
2026-2028
Total
The table above does not include revenue for performance obligations under contracts with terms less than 12 months or revenue for performance
obligations where revenue is recognized based on the amount billable to the customer.
3. Segment Information
Our reportable segments are Global Ecommerce, Presort Services and SendTech Solutions. The principal products and services of each reportable segment
are as follows:
Global Ecommerce: Includes the revenue and related expenses from domestic parcel services, cross-border solutions and digital delivery services.
Presort Services: Includes the revenue and related expenses from sortation services to qualify large volumes of First Class Mail, Marketing Mail and
Marketing Mail Flats and Bound Printed Matter for postal worksharing discounts.
SendTech Solutions: Includes the revenue and related expenses from physical and digital mailing and shipping technology solutions,
financing, services, supplies and other applications to help simplify and save on the sending, tracking and receiving of letters, parcels
and flats.
Management measures segment profitability and performance using adjusted segment earnings before interest and taxes (EBIT). Adjusted segment EBIT is
calculated by deducting from segment revenue the related costs and expenses attributable to the segment. Adjusted segment EBIT excludes interest, taxes,
general corporate expenses, restructuring charges, goodwill impairment charges and other items not allocated to a particular business segment. Costs
related to shared assets are allocated to the relevant segments. Management believes that adjusted segment EBIT provides investors a useful measure of
operating performance and underlying trends of the business. Adjusted segment EBIT may not be indicative of our overall consolidated performance and
therefore, should be read in conjunction with our consolidated results of operations. The following tables provide information about our reportable
segments and reconciliation of adjusted segment EBIT to net income or loss.
Global Ecommerce
Presort Services
SendTech Solutions
Total revenue
Geographic data:
United States
Outside United States
Total revenue
Revenue
Years Ended December 31,
2023
1,355,326
617,599
1,293,423
3,266,348
2,899,502
366,846
3,266,348
$
$
$
$
2022
1,576,348
602,016
1,359,678
3,538,042
3,065,211
472,831
3,538,042
$
$
$
$
2021
1,702,580
573,480
1,397,501
3,673,561
3,114,905
558,656
3,673,561
$
$
$
$
51
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
Global Ecommerce
Presort Services
SendTech Solutions
Total adjusted segment EBIT
Reconciling items:
Interest, net
Unallocated corporate expenses
Restructuring charges
Goodwill impairment
Gain on sale of assets
Gain on sale of businesses, including transaction costs
Gain (loss) on debt redemption/refinancing
Proxy solicitation fees
Foreign currency loss on intercompany loans
Benefit (provision) for income taxes
(Loss) income from continuing operations
Loss from discontinued operations, net of tax
Net (loss) income
Global Ecommerce
Presort Services
SendTech Solutions
Total for reportable segments
Corporate
Total depreciation and amortization
Global Ecommerce
Presort Services
SendTech Solutions
Total for reportable segments
Corporate
Total capital expenditures
Adjusted Segment EBIT
Years Ended December 31,
2023
(133,733)
110,912
405,347
382,526
(163,726)
(210,931)
(61,585)
(339,184)
—
—
3,064
(10,905)
(5,761)
20,875
(385,627)
—
(385,627)
$
$
2022
(100,308)
82,430
400,909
383,031
(141,769)
(204,251)
(18,715)
—
14,372
12,205
(4,993)
—
—
(2,940)
36,940
—
36,940
$
$
2021
(98,673)
79,721
429,415
410,463
(143,945)
(207,774)
(19,003)
—
1,434
7,619
(56,209)
—
—
10,922
3,507
(4,858)
(1,351)
Depreciation and amortization
Years Ended December 31,
2023
2022
2021
66,664
33,642
30,005
130,311
30,119
160,430
$
$
78,296
28,039
29,489
135,824
27,992
163,816
Capital expenditures
Years Ended December 31,
2023
2022
34,757
11,182
38,840
84,779
18,099
102,878
$
$
51,430
23,363
33,364
108,157
16,683
124,840
$
$
$
$
79,128
27,243
29,950
136,321
26,538
162,859
2021
89,488
36,628
26,028
152,144
31,898
184,042
$
$
$
$
$
$
52
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
Global Ecommerce
Presort Services
SendTech Solutions
Total for reportable segments
Cash and cash equivalents
Short-term investments
Long-term investments
Other corporate assets
Consolidated assets
Identifiable long-lived assets:
United States
Outside United States
Total
Assets
December 31,
2022
996,297
510,345
2,023,020
3,529,662
669,981
11,172
259,977
270,563
4,741,355
730,347
13,941
744,288
$
$
$
$
2023
597,073
500,757
2,054,889
3,152,719
601,053
22,166
250,240
246,007
4,272,185
703,484
13,685
717,169
$
$
$
$
$
$
$
$
2021
1,032,434
479,392
2,013,361
3,525,187
732,480
14,440
333,052
353,712
4,958,871
658,070
14,294
672,364
53
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
4. Earnings per Share (EPS)
The calculations of basic and diluted earnings per share are presented below. The sum of earnings per share amounts may not equal the totals due to
rounding.
Numerator:
(Loss) income from continuing operations
Loss from discontinued operations, net of tax
Net (loss) income attributable to common stockholders (numerator for EPS)
Denominator:
Weighted-average shares used in basic EPS
Dilutive effect of common stock equivalents
(1)
Weighted-average shares used in diluted EPS
Basic (loss) earnings per share:
Continuing operations
Discontinued operations
Net (loss) income
Diluted (loss) earnings per share:
Continuing operations
Discontinued operations
Net (loss) income
Years Ended December 31,
2023
2022
2021
$
$
$
$
$
$
(385,627) $
—
(385,627) $
36,940 $
—
36,940 $
175,640
—
175,640
173,912
3,340
177,252
(2.20) $
—
(2.20) $
(2.20) $
—
(2.20) $
0.21 $
—
0.21 $
0.21 $
—
0.21 $
3,507
(4,858)
(1,351)
173,914
5,191
179,105
0.02
(0.03)
(0.01)
0.02
(0.03)
(0.01)
Common stock equivalents excluded from calculation of diluted earnings per share because
their impact would be anti-dilutive:
9,421
10,234
6,514
(1)
Due to the net loss from continuing operations for the year ended December 31, 2023, an additional 4.0 million of common stock equivalents were also
excluded from the calculation of diluted earnings per share.
5. Inventories
Inventories consisted of the following:
Raw materials
Supplies and service parts
Finished products
Total inventory, net
December 31,
2023
2022
$
$
21,201
25,522
23,330
70,053
$
$
25,539
27,573
30,608
83,720
54
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
6. Finance Assets and Lessor Operating Leases
Finance Assets
All finance receivables are in our SendTech Solutions segment. We segregate our finance receivables into a North America portfolio and International
portfolio. Finance receivables consisted of the following:
Sales-type lease receivables
Gross finance receivables
Unguaranteed residual values
Unearned income
Allowance for credit losses
Net investment in sales-type lease receivables
Loan receivables
Loan receivables
Allowance for credit losses
Net investment in loan receivables
Net investment in finance receivables
December 31, 2023
December 31, 2022
North America
International
Total
North America
International
Total
$
$
987,743 $
38,059
(253,711)
(13,942)
758,149
143,466 $
7,211
(42,847)
(2,786)
105,044
1,131,209 $
45,270
(296,558)
(16,728)
863,193
967,298 $
38,832
(239,238)
(14,131)
752,761
342,062
(6,346)
335,716
1,093,865 $
17,865
(153)
17,712
122,756 $
359,927
(6,499)
353,428
1,216,621 $
311,887
(4,787)
307,100
1,059,861 $
158,167 $
8,798
(48,334)
(2,893)
115,738
16,636
(139)
16,497
132,235 $
1,125,465
47,630
(287,572)
(17,024)
868,499
328,523
(4,926)
323,597
1,192,096
Maturities of finance receivables at December 31, 2023 were as follows:
2024
2025
2026
2027
2028
Thereafter
Total
Sales-type Lease Receivables
North America
International
$
$
367,413
277,861
192,750
110,336
38,034
1,349
987,743
$
$
58,142
40,631
25,379
13,623
4,809
882
143,466
$
$
Total
425,555
318,492
218,129
123,959
42,843
2,231
1,131,209
$
$
North America
International
Loan Receivables
254,964
35,099
25,818
18,114
6,438
1,629
342,062
$
$
17,865
—
—
—
—
—
17,865
$
$
Total
272,829
35,099
25,818
18,114
6,438
1,629
359,927
55
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
Allowance for Credit Losses
Activity in the allowance for credit losses on finance receivables was as follows:
Balance at December 31, 2020
Amounts charged to expense
Write-offs
Recoveries
Other
Balance at December 31, 2021
Amounts charged to expense
Write-offs
Recoveries
Other
Balance at December 31, 2022
Amounts charged to expense
Write-offs
Recoveries
Other
Balance at December 31, 2023
Sales-type Lease Receivables
Loan Receivables
Allowance for Credit Losses
North
America
International
North
America
International
Total
$
$
22,917
648
(7,120)
3,097
4
19,546
(2,476)
(6,043)
3,184
(80)
14,131
2,096
(4,757)
2,454
18
13,942
$
$
6,006
(1,788)
(846)
173
(299)
3,246
712
(791)
39
(313)
2,893
1,178
(1,448)
181
(18)
2,786
$
$
6,484
(426)
(6,045)
3,245
1
3,259
3,992
(4,903)
2,447
(8)
4,787
4,847
(5,182)
1,893
1
6,346
$
$
462
19
(302)
3
(15)
167
288
(295)
1
(22)
139
389
(391)
—
16
153
$
$
35,869
(1,547)
(14,313)
6,518
(309)
26,218
2,516
(12,032)
5,671
(423)
21,950
8,510
(11,778)
4,528
17
23,227
The table below shows write-offs of gross finance receivables by year of origination.
Sales Type Lease Receivables
December 31, 2023
Write-offs
$
883
$
1,680
$
1,551
$
1,079
$
619
$
393
$
5,573
$
11,778
2023
2022
2021
2020
2019
Prior
Loan
Receivables
Total
Aging of Receivables
The aging of gross finance receivables was as follows:
Past due amounts 0 - 90 days
Past due amounts > 90 days
Total
Past due amounts 0 - 90 days
Past due amounts > 90 days
Total
Sales-type Lease Receivables
Loan Receivables
North
America
International
North
America
International
December 31, 2023
977,744
9,999
987,743
$
$
140,857
2,609
143,466
Sales-type Lease Receivables
North
America
959,203
8,095
967,298
$
$
International
155,596
2,571
158,167
$
$
$
$
339,789
2,273
342,062
$
$
17,664
201
17,865
December 31, 2022
Loan Receivables
North
America
International
308,872
3,015
311,887
$
$
16,503
133
16,636
$
$
$
$
Total
1,476,054
15,082
1,491,136
Total
1,440,174
13,814
1,453,988
$
$
$
$
56
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
Credit Quality
The extension of credit and management of credit lines to new and existing clients uses a combination of a client's credit score, where available, a detailed
manual review of their financial condition and payment history or an automated process. Once credit is granted, the payment performance of the client is
managed through automated collections processes and is supplemented with direct follow up should an account become delinquent. We have robust
automated collections and extensive portfolio management processes to ensure that our global strategy is executed, collection resources are allocated and
enhanced tools and processes are implemented as needed.
Over 85% of our finance receivables are within our North American portfolio. We use a third party to score the majority of this portfolio on a quarterly
basis using a proprietary credit score. The relative scores are determined based on a number of factors, including financial information, payment history,
company type and ownership structure. We stratify the credit scores of our clients into low, medium and high-risk accounts. Due to timing and other issues,
our entire portfolio may not be scored at period end. We report these amounts as "Not Scored"; however, absence of a score is not indicative of the credit
quality of the account. The credit score is used to predict client payment behaviors and the probability that an account will become greater than 90 days
past due during the subsequent 12-month period.
•
Low risk accounts are companies with very good credit scores and a predicted delinquency rate of less than 5%.
• Medium risk accounts are companies with average to good credit scores and a predicted delinquency rate between 5% and 10%.
• High risk accounts are companies with poor credit scores, are delinquent or are at risk of becoming delinquent. The predicted delinquency rate would
be greater than 10%.
We do not use a third party to score our International portfolio because the cost to do so is prohibitive as there is no single credit score model that covers all
countries. Accordingly, the entire International portfolio is reported in the Not Scored category. This portfolio comprises less than 15% of total finance
receivables. Most of the International credit applications are small dollar applications (i.e. below $50 thousand) and are subjected to an automated review
process. Larger credit applications are manually reviewed, which includes obtaining client financial information, credit reports and other available
information.
The table below shows gross finance receivables by relative risk class and year of origination based on the relative scores of the accounts within each class
as of December 31, 2023 and 2022.
2023
261,583
46,208
4,455
59,335
371,581
2022
286,297
53,419
6,492
71,435
417,643
$
$
$
$
2022
222,947
35,891
4,217
49,839
312,894
2021
206,511
40,669
3,840
53,831
304,851
$
$
$
$
$
$
$
$
Sales Type Lease Receivables
2021
155,193
24,483
2,554
33,494
215,724
$
$
2020
96,986
16,027
1,853
15,944
130,810
Sales Type Lease Receivables
2020
140,800
27,013
3,119
29,957
200,889
$
$
2019
95,485
19,668
1,942
19,232
136,327
2019
Prior
46,635
10,503
740
5,089
62,967
2018
34,721
6,751
750
5,889
48,111
$
$
$
$
27,164
8,041
862
1,166
37,233
Prior
12,674
3,441
508
1,021
17,644
$
$
$
$
Loan
Receivables
264,232
62,910
7,487
25,298
359,927
Loan
Receivables
239,635
56,048
6,800
26,040
328,523
$
$
$
$
Total
1,074,740
204,063
22,168
190,165
1,491,136
Total
1,016,123
207,009
23,451
207,405
1,453,988
$
$
$
$
Low
Medium
High
Not Scored
Total
Low
Medium
High
Not Scored
Total
Lease Income
Lease income from sales-type leases, excluding variable lease payments, was as follows:
Profit recognized at commencement
Interest income
Total lease income from sales-type leases
Years Ended December 31,
2023
2022
2021
$
$
120,011
154,998
275,009
$
$
134,717
163,485
298,202
$
$
127,469
186,532
314,001
57
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
Lessor Operating Leases
We also lease mailing equipment under operating leases with terms of one to five years. Maturities of these operating leases are as follows:
2024
2025
2026
2027
2028
Total
7. Fixed Assets
Fixed assets consisted of the following:
Machinery and equipment
Capitalized software
Leasehold improvements
Accumulated depreciation
Property, plant and equipment, net
Rental property and equipment
Accumulated depreciation
Rental property and equipment, net
$
$
20,627
19,939
15,827
4,573
2,153
63,119
December 31,
2023
669,122
569,525
131,786
1,370,433
(986,805)
383,628
76,719
(53,136)
23,583
$
$
$
$
2022
673,898
516,816
127,357
1,318,071
(897,399)
420,672
111,188
(83,701)
27,487
$
$
$
$
Depreciation expense was $145 million, $140 million and $132 million for the years ended December 31, 2023, 2022 and 2021, respectively.
8. Intangible Assets and Goodwill
Intangible Assets
Intangible assets consisted of the following:
Customer relationships
Software & technology
Total intangible assets, net
Gross
Carrying
Amount
December 31, 2023
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
December 31, 2022
Accumulated
Amortization
Net
Carrying
Amount
$
$
155,712 $
3,047
158,759 $
(95,409) $
(1,100)
(96,509) $
60,303 $
1,947
62,250 $
155,715 $
22,000
177,715 $
(80,188) $
(19,583)
(99,771) $
75,527
2,417
77,944
Amortization expense was $16 million, $24 million and $30 million for the years ended December 31, 2023, 2022 and 2021, respectively.
58
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
Future amortization expense for intangible assets at December 31, 2023 is as follows:
2024
2025
2026
2027
2028
Thereafter
Total
$
$
15,731
15,527
14,538
11,481
2,438
2,535
62,250
Actual amortization expense may differ from the amounts above due to, among other things, fluctuations in foreign currency exchange rates, acquisitions,
divestitures and impairment charges.
Goodwill
The performance of our Global Ecommerce reporting unit, continuing changes in macroeconomic conditions and our long-term outlook for this business
were triggering events that caused us to evaluate the Global Ecommerce goodwill for impairment during the second and fourth quarters. To assess Global
Ecommerce goodwill for impairment, we determined the fair value of the reporting unit and compared it to the unit's carrying value, including goodwill.
We engaged a third party to assist in the determination of the fair value of the reporting unit. The fair value was estimated using a discounted cash flow
model based on management developed cash flow projections, which included judgements and assumptions related to revenue growth rates, operating
margins, operating income, and a discount rate. The estimates and assumptions are considered Level 3 inputs under the fair value hierarchy. Our
assessments indicated that the estimated fair value of the reporting unit was less than its carrying value and recorded non-cash, pre-tax goodwill impairment
charges in the second and fourth quarters of 2023 of $119 million and $220 million, respectively.
The results of our annual impairment test as of the beginning of the fourth quarter for our other reporting units indicated that no impairment existed.
Changes in the carrying amount of goodwill by reporting segment are shown in the tables below.
Global Ecommerce
Presort Services
SendTech Solutions
Total goodwill
Global Ecommerce
Presort Services
SendTech Solutions
Total goodwill
Goodwill before
accumulated
impairment
$
$
537,353
223,763
504,004
1,265,120
$
$
Accumulated
impairment
(198,169)
—
—
(198,169)
December 31, 2022
339,184
$
223,763
504,004
1,066,951
$
$
$
Impairment
FX Impact
(339,184) $
—
—
(339,184) $
—
—
6,642
6,642
December 31, 2023
—
$
223,763
510,646
734,409
$
December 31, 2021 Acquisitions/(dispositions)
$
$
395,062
220,992
519,049
1,135,103
$
$
(55,878) $
2,771
—
(53,107) $
FX Impact
—
—
(15,045)
(15,045)
December 31, 2022
339,184
$
223,763
504,004
1,066,951
$
Goodwill before
accumulated
impairment
Accumulated
impairment
$
$
593,231
220,992
519,049
1,333,272
$
$
(198,169)
—
—
(198,169)
59
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
9. Fair Value Measurements and Derivative Instruments
We measure certain financial assets and liabilities at fair value on a recurring basis. Fair value is a market-based measure considered from the perspective
of a market participant rather than an entity-specific measure. An entity is required to classify certain assets and liabilities measured at fair value based on
the following fair value hierarchy that prioritizes the inputs used to measure fair value:
Level 1 – Unadjusted quoted prices in active markets for identical assets and liabilities.
Level 2 – Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets
or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 – Unobservable inputs that are supported by little or no market activity, may be derived from internally developed methodologies based on
management's best estimate of fair value and that are significant to the fair value of the asset or liability.
Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our
assessment of the significance of a particular input to the fair value measurement requires judgment and may affect its placement within the fair value
hierarchy. The following tables show, by level within the fair value hierarchy, our financial assets and liabilities that are accounted for at fair value on a
recurring basis.
Assets:
Investment securities
Money market funds
Equity securities
Commingled fixed income securities
Government and related securities
Corporate debt securities
Mortgage-backed / asset-backed securities
Derivatives
Interest rate swaps
Total assets
Level 1
Level 2
Level 3
Total
December 31, 2023
13,366 $
—
1,581
11,489
—
—
—
26,436 $
188,484 $
15,341
5,741
18,999
54,330
119,901
8,425
411,221 $
— $
—
—
—
—
—
—
— $
201,850
15,341
7,322
30,488
54,330
119,901
8,425
437,657
$
$
60
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
Assets:
Investment securities
Money market funds
Equity securities
Commingled fixed income securities
Government and related securities
Corporate debt securities
Mortgage-backed / asset-backed securities
Derivatives
Interest rate swap
Foreign exchange contracts
Total assets
Liabilities:
Derivatives
Foreign exchange contracts
Total liabilities
Investment Securities
Level 1
Level 2
Level 3
Total
December 31, 2022
$
$
$
$
29,087 $
—
1,520
10,253
—
—
—
—
40,860 $
238,536 $
13,233
6,526
18,796
52,319
126,882
15,283
479
472,054 $
— $
— $
(1,472) $
(1,472) $
— $
—
—
—
—
—
—
—
— $
— $
— $
267,623
13,233
8,046
29,049
52,319
126,882
15,283
479
512,914
(1,472)
(1,472)
The valuation of investment securities is based on a market approach using inputs that are observable, or can be corroborated by observable data, in an
active marketplace. The following information relates to our classification within the fair value hierarchy:
• Money Market Funds: Money market funds typically invest in government securities, certificates of deposit, commercial paper and other highly liquid,
low risk securities. Money market funds are principally used for overnight deposits and are classified as Level 1 when unadjusted quoted prices in
active markets are available and as Level 2 when they are not actively traded on an exchange.
•
•
Equity Securities: Equity securities are comprised of mutual funds investing in U.S. and foreign stocks. These mutual funds are classified as Level 2.
Commingled Fixed Income Securities: Commingled fixed income securities are comprised of mutual funds that invest in a variety of fixed income
securities, including securities of the U.S. government and its agencies, corporate debt, mortgage-backed securities and asset-backed securities. Fair
value is based on the value of the underlying investments owned by each fund, minus its liabilities, divided by the number of shares outstanding, as
reported by the fund manager. These mutual funds are classified as Level 1 when unadjusted quoted prices in active markets are available and as Level
2 when they are not actively traded on an exchange.
• Government and Related Securities: Debt securities are classified as Level 1 when unadjusted quoted prices in active markets are available. Debt
securities are classified as Level 2 where fair value is determined using quoted market prices for similar securities or benchmarking model derived
prices to quoted market prices and trade data for identical or comparable securities.
•
Corporate Debt Securities: Corporate debt securities are valued using recently executed comparable transactions, market price quotations or bond
spreads for the same maturity as the security. These securities are classified as Level 2.
• Mortgage-Backed Securities / Asset-Backed Securities: These securities are valued based on external pricing indices or on external price/spread data.
These securities are classified as Level 2.
Derivative Securities
•
•
Foreign Exchange Contracts: The valuation of foreign exchange derivatives is based on a market approach using observable market inputs, such as
foreign currency spot and forward rates and yield curves. These securities are classified as Level 2.
Interest Rate Swaps: The valuation of interest rate swaps is based on an income approach using inputs that are observable or that can be derived from,
or corroborated by, observable market data. These securities are classified as Level 2.
61
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
Available-For-Sale Securities
Available-for-sale securities consisted of the following:
Government and related securities
Corporate debt securities
Commingled fixed income securities
Mortgage-backed / asset-backed securities
Total
Government and related securities
Corporate debt securities
Commingled fixed income securities
Mortgage-backed / asset-backed securities
Total
Investment securities in a loss position were as follows:
Greater than 12 continuous months
Government and related securities
Corporate debt securities
Mortgage-backed / asset-backed securities
Total
Less than 12 continuous months
Government and related securities
Corporate debt securities
Commingled fixed income securities
Mortgage-backed / asset-backed securities
Total
$
$
$
$
$
$
Amortized cost
December 31, 2023
Gross unrealized
losses
Estimated fair
value
35,048
65,008
1,788
146,022
247,866
$
$
(7,018)
(10,678)
(207)
(26,121)
(44,024)
$
$
28,030
54,330
1,581
119,901
203,842
December 31, 2022
Gross unrealized
gains
Gross unrealized
losses
11
—
—
—
11
(8,210)
(13,981)
(229)
(29,470)
(51,890)
Estimated fair value
27,545
$
52,319
1,520
126,882
208,266
$
$
$
$
$
Amortized cost
35,744
66,300
1,749
156,352
260,145
December 31, 2023
Fair Value
Gross unrealized
losses
28,030
51,948
119,901
199,879
—
2,382
1,581
—
3,963
$
$
$
$
7,018
10,466
26,121
43,605
—
212
207
—
419
December 31, 2022
Fair Value
Gross unrealized
losses
17,063
48,812
114,839
180,714
10,061
3,508
1,520
12,042
27,131
$
$
$
$
2,753
13,749
28,040
44,542
5,457
232
229
1,430
7,348
$
$
$
$
$
$
At December 31, 2023, all securities in the investment portfolio were in a loss position. However, no impairment loss has been recognized as we have the
ability and intent to hold these securities until recovery of the unrealized losses or expect to receive the stated principal and interest at maturity.
62
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
At December 31, 2023, scheduled maturities of available-for-sale securities were as follows:
Within 1 year
After 1 year through 5 years
After 5 years through 10 years
After 10 years
Total
Amortized cost
Estimated fair
value
$
$
2,594
15,103
70,702
159,467
247,866
$
$
2,382
14,029
60,099
127,332
203,842
The actual maturities may not coincide with scheduled maturities as certain securities contain early redemption features and/or allow for the prepayment of
obligations with or without penalty.
Held-to-Maturity Securities
Held-to-maturity securities at December 31, 2023 and 2022 totaled $265 million and $22 million, respectively. Held-to-maturity securities include
certificates of deposits with maturities less than 90 days and highly-liquid government securities with maturities less than two years.
Derivative Instruments
Foreign Exchange Contracts
We may enter into foreign exchange contracts to mitigate the currency risk associated with anticipated inventory purchases between affiliates and from
third parties. These contracts are designated as cash flow hedges. The effective portion of the gain or loss on cash flow hedges is included in AOCL in the
period that the change in fair value occurs and is reclassified to earnings in the period that the hedged item is recorded in earnings. No amount of
ineffectiveness was recorded in earnings for these designated cash flow hedges. There were no outstanding contracts associated with these anticipated
transactions at December 31, 2023. At December 31, 2022, outstanding contracts associated with these anticipated transactions had a notional value of
$1 million.
Interest Rate Swaps
We enter into interest rate swaps to manage the cost of our variable rate debt. At December 31, 2023, we had outstanding interest rate swaps that effectively
convert $200 million of our variable rate debt to fixed rates. These swaps are designated as cash flow hedges. The fair value of the interest rate swaps is
recorded as a derivative asset or liability at the end of each reporting period with the change in fair value reflected in AOCL.
The fair value of our derivative instruments was as follows:
Designation of Derivatives
Balance Sheet Location
2023
2022
December 31,
Derivatives designated as hedging instruments
Foreign exchange contracts
Interest rate swaps
Derivatives not designated as hedging instruments
Foreign exchange contracts
Other current assets and prepayments
Accounts payable and accrued liabilities
Other current assets and prepayments
Other assets
Other current assets and prepayments
Accounts payable and accrued liabilities
Total derivative assets
Total derivative liabilities
Total net derivative asset
$
$
$
—
—
8,425
—
—
—
8,425
—
8,425
$
15
(23)
—
15,283
464
(1,449)
15,762
(1,472)
14,290
63
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
The following represents the results of cash flow hedging relationships:
Derivative Gain (Loss)
Recognized in AOCI
(Effective Portion)
Derivative Instrument
2023
2022
Foreign exchange contracts
Interest rate swaps
$
$
(25)
(6,858)
(6,883)
$
$
159
12,180
12,339
Years Ended December 31,
Location of Gain (Loss)
(Effective Portion)
Cost of sales
Interest expense
Gain (Loss) Reclassified
from AOCI to Earnings
(Effective Portion)
2023
2022
$
$
(33)
9,708
9,675
$
$
178
549
727
Non-designated derivative instruments
We have a number of short-term interest-bearing intercompany loans denominated in a foreign currency. The revaluation of these intercompany loans is
recorded in earnings. Historically, we entered into foreign exchange contracts to minimize the impact on earnings from the revaluation of these
intercompany loans. In the fourth quarter of 2023, management decided to no longer use foreign exchange contracts to hedge the revaluation of these
intercompany loans.
The following represents the mark-to-market adjustment on our non-designated derivative instruments:
Derivatives Instrument
Foreign exchange contracts
Location of Derivative Gain (Loss)
Selling, general and administrative expense
Years Ended December 31,
Derivative Gain (Loss)
Recognized in Earnings
2023
2022
$
3,551
$
(28,228)
Fair Value of Financial Instruments
Our financial instruments include cash and cash equivalents, investment securities, accounts receivable, loan receivables, derivative instruments, accounts
payable and debt. The carrying value of cash and cash equivalents, accounts receivable, loans receivable, held-to-maturity investment securities and
accounts payable approximate fair value. The fair value of available-for-sale investment securities and derivative instruments are presented above. The fair
value of our debt is estimated based on recently executed transactions and market price quotations. The inputs used to determine the fair value of our debt
were classified as Level 2 in the fair value hierarchy. The carrying value and estimated fair value of our debt was as follows:
Carrying value
Fair value
December 31,
2023
2,146,032
1,893,620
$
$
2022
2,205,266
1,856,878
$
$
64
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
10. Supplemental Financial Statement Information
Selected balance sheet information is as follows:
Other assets:
Long-term investments
Other
Total
Accounts payable and accrued liabilities:
Accounts payable
Customer deposits
Employee related liabilities
Other
Total
Other noncurrent liabilities:
Pension liabilities
Postretirement medical benefits
Customer deposits
Other
Total
Activity in the allowance for credit losses on accounts receivable is presented below.
Balance at beginning of year
Amounts charged to expense
Write-offs, recoveries and other
Balance at end of period
Accounts and other receivables
Other assets
Total
Acquisitions/Divestitures
December 31,
2023
2022
$
$
$
$
$
$
250,240
102,120
352,360
282,425
213,315
240,159
139,577
875,476
98,784
83,222
83,995
48,701
314,702
$
$
$
$
$
$
259,977
120,442
380,419
315,351
209,662
216,273
165,797
907,083
74,681
87,745
10,757
54,546
227,729
Years Ended December 31,
2023
2022
2021
5,864 $
8,177
(7,902)
6,139 $
6,139 $
—
6,139 $
29,179 $
6,421
(29,736)
5,864 $
5,344 $
520
5,864 $
35,344
9,355
(15,520)
29,179
11,168
18,011
29,179
$
$
$
$
In 2022, we sold Borderfree for proceeds of $95 million, net of cash transferred, and received additional proceeds of $7 million related to the 2021 sale of
Tacit, a U.K. based software consultancy business. In 2021, we received net proceeds of $28 million from the sale of Tacit and acquired CrescoData for
$15 million.
65
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
Other (income) expense consisted of the following:
(Gain) loss on redemption/refinancing of debt
Insurance proceeds
Gain on sale of assets
Gain on sale of businesses, including transaction costs
Other (income) expense
Supplemental cash flow information is as follows:
Purchases of property and equipment in accounts payable
Cash interest paid
Cash income tax payments, net of refunds
Years Ended December 31,
2023
2022
2021
(3,064) $
—
—
—
(3,064) $
4,993 $
—
(14,372)
(12,239)
(21,618) $
56,209
(3,000)
(1,434)
(10,201)
41,574
Years Ended December 31,
2023
2022
2021
4,764 $
164,046 $
22,626 $
5,213 $
134,247 $
14,553 $
5,305
124,084
4,337
$
$
$
$
$
Other, net within cash flows from operating activities includes $14 million and $11 million of losses from the disposal of fixed assets for the years ended
December 31, 2023 and 2022, respectively.
66
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
11. Restructuring Charges
In May 2023, we approved a worldwide restructuring plan (the 2023 Plan) designed to improve profitability and cash flow. This will be achieved through
the elimination of 850-950 positions worldwide in part through further centralization and standardization of processes, including the expansion of our
shared services activities, increased automation, and the consolidation or closure of select facilities in North America. Total charges are expected to be
$60 million-$70 million and we expect to substantially complete these actions by the end of the first half of 2024.
Activity in our restructuring reserves was as follows:
Balance at December 31, 2021
Amounts charged to expense
Cash payments
Noncash activity
Balance at December 31, 2022
Amounts charged to expense
Cash payments
Noncash activity
Balance at December 31, 2023
Components of restructuring expense were as follows:
Severance
Facilities and other
Total
2023 Plan
Prior Plan
Total
—
—
—
—
—
57,986
(23,197)
(8,661)
26,128
$
$
5,747
18,715
(15,406)
(1,409)
7,647
3,599
(11,246)
—
—
$
$
5,747
18,715
(15,406)
(1,409)
7,647
61,585
(34,443)
(8,661)
26,128
$
$
Year Ended December 31, 2023
2023 Plan
Prior Plan
Total
Year Ended
December 31,
2022
Prior Plan
$
$
49,325
8,661
57,986
$
$
3,057
542
3,599
$
$
52,382
9,203
61,585
$
$
14,750
3,965
18,715
67
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
12. Debt
Notes due March 2024
Term loan due March 2026
Notes due March 2027
Notes due March 2028
Term loan due March 2028
Notes due March 2029
Notes due January 2037
Notes due March 2043
Other debt
Principal amount
Less: unamortized costs, net
Total debt
Less: current portion long-term debt
Long-term debt
Interest rate
4.625%
SOFR + 2.25%
6.875%
SOFR + 6.9%
SOFR + 4.0%
7.25%
5.25%
6.70%
December 31,
2023
—
285,500
380,000
274,313
437,625
350,000
35,841
425,000
1,181
2,189,460
43,428
2,146,032
58,931
2,087,101
$
2022
236,749
351,500
396,750
—
442,125
350,000
35,841
425,000
2,446
2,240,411
35,145
2,205,266
32,764
2,172,502
$
During 2023, we issued an aggregate $275 million of senior secured notes that mature in March 2028 (the March 2028 Notes). The March 2028 Notes bear
interest of SOFR plus 6.9%, payable quarterly and were issued with original issue discount of 3%. The net proceeds were used to redeem the March 2024
notes and repay $30 million of the term loan due March 2026. We also repurchased an aggregate $39 million of the March 2024 notes and March 2027
notes at a gain of $3 million and made scheduled term loan principal repayments of $42 million. At December 31, 2023, the interest rate on the term loan
due 2026 was 7.7%, the interest rate on the term loan due 2028 was 9.5% and the interest rate on the March 2028 notes was 12.2%.
The credit agreement that governs our $500 million secured revolving credit facility and the term loan due March 2026 contains certain financial
covenants. These covenants require us to maintain, on a quarterly basis, a maximum leverage ratio and a minimum interest coverage ratio, both of which
are defined and calculated in accordance with the credit agreement. The maximum leverage ratio decreases from 4.25x to 4.0x as of June 30, 2024 and the
minimum interest coverage ratio increases from 1.75x to 2.0x as of March 31, 2025. At December 31, 2023, we were in compliance with these financial
covenants. Additionally, management expects that we will remain in compliance with these financial covenants over the next twelve months. However,
events and circumstances could occur, some beyond our control, that could adversely impact our compliance with these covenants and require us to obtain
a waiver from our lenders, modify our existing covenants or refinance certain debt to cure the noncompliance. If we are unable to cure the noncompliance,
amounts due under our revolving credit facility and term loan due March 2026 could be called by our lenders. At December 31, 2023, there were no
outstanding borrowings under the revolving credit facility. Borrowings under our secured debt are secured by assets of the company.
We have outstanding interest rate swaps that effectively convert $200 million of our variable rate debt to fixed rates. In January 2023, the reference rate of
the interest rate swaps was amended to align with the secured revolving credit facility. Under the terms of the interest rate swaps, we pay fixed-rate interest
of 0.585% and receive variable-rate interest based on one-month SOFR plus 0.1%. The variable interest rates under the term loans and the swaps reset
monthly.
The PB Bank (the Bank), a wholly owned subsidiary, is a member of the Federal Home Loan Bank (FHLB) of Des Moines and has access to certain credit
products as a funding source known as "advances." As of December 31, 2023, there were no outstanding advances.
Annual maturities of outstanding principal at December 31, 2023 are as follows:
2024
2025
2026
2027
2028
Thereafter
Total
$
$
58,931
53,250
196,250
387,250
682,938
810,841
2,189,460
68
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
13. Retirement Plans and Postretirement Medical Benefits
Retirement Plans
We provide retirement benefits to eligible employees in the U.S. and outside the U.S. under various defined benefit retirement plans. Benefit accruals under
most of our defined benefit plans have been frozen. The benefit obligations and funded status of defined benefit pension plans are as follows:
Accumulated benefit obligation
Projected benefit obligation
Benefit obligation - beginning of year
Service cost
Interest cost
Net actuarial loss (gain)
Foreign currency changes
Settlements
Benefits paid
Benefit obligation - end of year
Fair value of plan assets
Fair value of plan assets - beginning of year
Actual return on plan assets
Company contributions
Settlements
Foreign currency changes
Benefits paid
Fair value of plan assets - end of year
Amounts recognized in the Consolidated Balance Sheets
Noncurrent asset
Current liability
Noncurrent liability
Funded status
United States
Foreign
2023
1,205,108
1,205,183
44
63,533
36,882
—
(2,892)
(97,610)
1,205,140
1,161,361
86,044
6,587
(2,892)
—
(97,610)
1,153,490
—
(5,057)
(46,593)
(51,650)
$
$
$
$
$
$
$
$
$
$
$
$
$
$
2022
1,205,135
1,609,508
55
44,348
(349,261)
—
(1,574)
(97,893)
1,205,183
1,549,157
(293,968)
5,639
(1,574)
—
(97,893)
1,161,361
—
(7,294)
(36,528)
(43,822)
$
$
$
$
$
$
$
2023
2022
488,531
$
447,401
451,337
766
21,238
22,984
19,854
(213)
(23,199)
492,767
438,403
17,057
16,034
(213)
18,605
(23,199)
466,687
27,805
(1,694)
(52,191)
(26,080)
$
$
$
$
$
$
770,468
1,214
13,568
(242,488)
(68,519)
—
(22,906)
451,337
737,443
(218,325)
8,731
—
(66,540)
(22,906)
438,403
26,570
(1,351)
(38,153)
(12,934)
Information provided in the table below is only for pension plans with an accumulated benefit obligation in excess of plan assets:
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
United States
2023
1,205,141
1,205,108
1,153,490
$
$
$
2022
1,205,183
1,205,135
1,161,361
$
$
$
Foreign
2023
2022
396,690
392,586
342,805
$
$
$
38,238
37,972
—
$
$
$
69
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
Pretax amounts recognized in AOCI consist of:
Net actuarial loss
Prior service (credit) cost
Transition asset
Total
United States
Foreign
2023
2022
2023
2022
$
$
717,530
(85)
—
717,445
$
$
698,815
(105)
—
698,710
$
$
331,536
7,266
(7)
338,795
$
$
297,753
7,552
(7)
305,298
The components of net periodic benefit (income) cost for defined benefit pension plans were as follows:
Service cost
Interest cost
Expected return on plan assets
Amortization of prior service (credit) cost
Amortization of net actuarial loss
Settlements
Net periodic benefit (income) cost
2023
44 $
63,533
(86,008)
(20)
17,362
771
(4,318) $
$
$
United States
2022
2021
2023
55 $
44,348
(71,080)
(44)
33,164
394
6,837 $
102 $
42,434
(77,119)
(60)
38,233
551
4,141 $
766 $
21,238
(29,899)
286
2,068
(25)
(5,566) $
Foreign
2022
1,214 $
13,568
(26,770)
252
6,767
—
(4,969) $
2021
1,528
11,811
(31,869)
268
9,350
—
(8,912)
Other changes in plan assets and benefit obligations for defined benefit pension plans recognized in other comprehensive income were as follows:
Net actuarial loss
Amortization of net actuarial loss
Amortization of prior service credit (cost)
Settlements
Total recognized in other comprehensive income
United States
Foreign
2023
2022
2023
2022
$
$
36,846
(17,362)
20
(771)
18,733
$
$
15,788
(33,164)
44
(394)
(17,726)
$
$
35,826
(2,068)
(286)
25
33,497
$
$
2,607
(6,767)
(252)
—
(4,412)
70
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
Weighted-average actuarial assumptions used to determine year end benefit obligations and net periodic benefit cost for defined benefit pension plans
include:
United States
Used to determine benefit obligations
Discount rate
Rate of compensation increase
Used to determine net periodic benefit cost
Discount rate
Expected return on plan assets
Rate of compensation increase
Foreign
Used to determine benefit obligations
Discount rate
Rate of compensation increase
Used to determine net periodic benefit cost
Discount rate
Expected return on plan assets
Rate of compensation increase
2023
5.15%
N/A
5.55%
6.50%
N/A
2022
5.55%
N/A
2.85%
5.10%
N/A
2021
2.85%
N/A
2.54%
5.60%
N/A
1.95 % - 4.60%
2.00 % - 3.50%
1.95 % - 5.10%
2.00 % - 3.00%
0.85 % - 2.85%
1.50 % - 3.65%
1.95 % - 5.10%
2.75 % - 5.26%
2.00 % - 3.60%
0.85 % - 2.85%
3.75 % - 5.75%
1.50 % - 2.50%
0.70 % - 2.40%
3.50 % - 5.75%
1.50 % - 2.50%
A discount rate is used to determine the present value of our future benefit obligations. The discount rate for our U.S. pension plans is determined by
matching the expected cash flows associated with our benefit obligations to a pool of corporate long-term, high-quality fixed income debt instruments
available as of the measurement date. The discount rate for our largest foreign plan, the U.K. Qualified Pension Plan (the U.K. Plan), is determined using a
model that discounts each year's estimated benefit payments by an applicable spot rate derived from a yield curve created from a large number of high
quality corporate bonds. For our other smaller foreign pension plans, the discount rate is selected based on high-quality fixed income indices available in
the country in which the plan is domiciled.
The expected return on plan assets is based on the target asset allocation for the applicable pension plan and expected rates of return for various asset
classes in the investment portfolio after analyzing historical experience, future expectations of returns and volatility of asset classes.
Investment Strategy and Asset Allocation
The investment strategy for our pension plans is to maximize returns within reasonable and prudent risk levels, achieve and maintain full funding of the
accumulated benefit obligation and the actuarial liabilities and earn the expected rate of return while adhering to regulations and restrictions.
Pension plan assets are invested in accordance with our strategic asset allocation policy. Pension plan assets are exposed to various risks, including interest
rate risks, market risks and credit risks. Investments are diversified across asset classes and within each class to reduce the risk of large losses and are
periodically rebalanced. Derivatives, such as swaps, options, forwards and futures contracts may be used for market exposure, to alter risk/return
characteristics and to manage foreign currency exposure. We do not have any significant concentrations of credit risk within the plan assets.
71
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
U.S. Pension Plans
Investment objectives and investment managers are reviewed periodically. Target and actual asset allocations for the U.S. pension plans were as follows:
Asset category
Equities
Multi-asset credit
Fixed income
Real estate
Private equity
Total
Foreign Pension Plans
Target allocation
Percent of Plan Assets at December 31,
2024
2023
2022
16 %
2 %
76 %
5 %
1 %
100 %
15 %
2 %
76 %
6 %
1 %
100 %
15 %
2 %
74 %
8 %
1 %
100 %
Our foreign pension plan assets are managed by outside investment managers and monitored regularly by local trustees and our corporate personnel. Target
and actual asset allocations for the U.K. Plan, which comprises 74% of the total foreign pension plan assets, were as follows:
Asset category
Global equities
Fixed income
Multi-asset credit
Real estate
Diversified growth
Cash
Total
Target Allocation
Percent of Plan Assets at December 31,
2024
2023
2022
10 %
70 %
10 %
10 %
— %
— %
100 %
8 %
69 %
8 %
13 %
— %
2 %
100 %
8 %
70 %
— %
13 %
8 %
1 %
100 %
72
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
Fair Value Measurements of Plan Assets
The following tables show the U.S. and foreign pension plans' assets, by level within the fair value hierarchy. The plan asset categories presented in the
following tables are subsets of the broader asset allocation categories.
United States Pension Plans
Money market funds
Equity securities
Commingled fixed income securities
Government and related securities
Corporate debt securities
Mortgage-backed /asset-backed securities
Real estate
Securities lending collateral
Total plan assets at fair value
Securities lending payable
Investments valued at NAV
Cash
Other
Fair value of plan assets
Money market funds
Equity securities
Commingled fixed income securities
Government and related securities
Corporate debt securities
Mortgage-backed /asset-backed securities
Real estate
Securities lending collateral
Total plan assets at fair value
Securities lending payable
Investments valued at NAV
Cash
Other
Fair value of plan assets
Level 1
Level 2
Level 3
Total
December 31, 2023
—
—
—
170,540
—
—
—
—
170,540
$
$
13,842
102,795
220,041
28,518
545,615
49,300
—
104,630
1,064,741
$
$
—
—
—
—
—
—
67,256
—
67,256
Level 1
Level 2
Level 3
December 31, 2022
—
—
—
114,084
—
—
—
—
114,084
$
$
10,623
137,505
220,281
21,479
527,407
26,450
—
113,802
1,057,547
$
$
—
—
—
—
—
—
91,500
—
91,500
$
$
$
$
$
$
13,842
102,795
220,041
199,058
545,615
49,300
67,256
104,630
1,302,537
(104,630)
5,615
1,240
(51,272)
1,153,490
Total
10,623
137,505
220,281
135,563
527,407
26,450
91,500
113,802
1,263,131
(113,802)
10,416
3,525
(1,909)
1,161,361
$
$
$
$
73
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
Foreign Plans
Money market funds
Equity securities
Commingled fixed income securities
Government and related securities
Corporate debt securities
Real estate
Diversified growth funds
Total plan assets at fair value
Cash
Other
Fair value of plan assets
Money market funds
Equity securities
Commingled fixed income securities
Government and related securities
Corporate debt securities
Real estate
Diversified growth funds
Total plan assets at fair value
Cash
Other
Fair value of plan assets
Level 1
Level 2
Level 3
Total
December 31, 2023
$
$
$
$
—
—
—
—
—
—
—
—
$
$
5,997
44,088
295,105
38,028
28,389
4,869
—
416,476
$
$
—
—
—
—
—
43,205
—
43,205
Level 1
Level 2
Level 3
December 31, 2022
—
—
—
—
—
—
—
—
$
$
8,338
42,717
247,337
35,887
26,336
4,446
—
365,061
$
$
—
—
—
—
—
42,980
24,394
67,374
$
$
$
$
$
$
5,997
44,088
295,105
38,028
28,389
48,074
—
459,681
6,501
505
466,687
Total
8,338
42,717
247,337
35,887
26,336
47,426
24,394
432,435
5,485
483
438,403
The following information relates to our classification of investments into the fair value hierarchy:
• Money Market Funds: Money market funds typically invest in government securities, certificates of deposit, commercial paper and other highly liquid,
low risk securities. Money market funds are principally used for overnight deposits and are classified as Level 1 when unadjusted quoted prices in
active markets are available and as Level 2 when they are not actively traded on an exchange.
•
•
Equity Securities: Equity securities are comprised of mutual funds and collective trust funds investing in U.S. and foreign stocks. These mutual funds
are classified as Level 2.
Commingled Fixed Income Securities: Commingled fixed income securities are comprised of mutual funds that invest in a variety of fixed income
securities, including securities of the U.S. government and its agencies, corporate debt, mortgage-backed securities and asset-backed securities. Fair
value is based on the value of the underlying investments owned by each fund, minus its liabilities, divided by the number of shares outstanding, as
reported by the fund manager. These mutual funds are classified as Level 1 when unadjusted quoted prices in active markets are available and as Level
2 when they are not actively traded on an exchange.
• Government and Related Securities: Debt securities are classified as Level 1 where active, high-volume trades for identical securities exist. Valuation
adjustments are not applied to these securities. Debt securities are classified as Level 2 where fair value is determined using quoted market prices for
similar securities or benchmarking model derived prices to quoted market prices and trade data for identical or comparable securities.
74
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
•
Corporate Debt Securities: Corporate debt securities are valued using recently executed comparable transactions, market price quotations or bond
spreads for the same maturity as the security. These securities are classified as Level 2.
• Mortgage-Backed Securities / Asset-Backed Securities: These securities are valued based on external pricing indices or on external price/spread data.
These securities are classified as Level 2.
•
Real Estate: include units in open-ended commingled real estate funds. Funds that are valued and traded on a daily basis in an active market are
classified as Level 2. Investments that are valued on an annual basis by certified appraisers are classified as Level 3. The valuation techniques used to
value Level 3 investments include the cost approach, sales-comparison method and the income approach.
• Diversified Growth Funds: comprised of units in commingled diversified growth funds that comprise a mix of different asset classes. The underlying
investments may not be listed on an exchange in an active market or traded on a daily basis and may fall into all three fair value categories.
Accordingly, these securities are classified as Level 3.
•
Securities Lending Fund: represents a commingled fund through our custodian's securities lending program. The U.S. pension plan lends securities that
are held within the plan to other banks and/or brokers, and receives collateral, typically cash. This collateral is invested in a commingled fund that
invests in short-term fixed income securities. This investment is classified as Level 2. This amount invested in the fund is offset by a corresponding
liability reflected in the U.S. pension plan's net assets available for benefits.
Investments Valued at Net Asset Value
Represents investments in private equity limited partnerships that are measured at fair value using the Net Asset Value (NAV) per share as a practical
expedient and are not categorized in the fair value hierarchy. There is no active market for these investments and the pension plan receives a proportionate
share of the gains, losses and expenses in accordance with the partnership agreements. There was a remaining unfunded commitment of $6 million at both
December 31, 2023 and 2022. These investments comprise approximately 1% of total U.S. Pension Fund assets at both December 31, 2023 and 2022.
Level 3 Gains and Losses
The following table summarizes the changes in the fair value of Level 3 assets:
Balance at December 31, 2021
Realized gains
Unrealized gains (losses)
Net purchases, sales and settlements
Foreign currency and other
Balance at December 31, 2022
Realized gains
Unrealized losses
Net purchases, sales and settlements
Foreign currency and other
Balance at December 31, 2023
U.S. Plans
Real estate
Foreign Plans
Real estate
Diversified Growth
Funds
$
$
77,494
1,058
12,666
282
—
91,500
4,505
(18,386)
(10,363)
—
67,256
$
$
52,491
—
(6,741)
1,729
(4,499)
42,980
—
(3,951)
2,014
2,162
43,205
$
$
52,169
—
(5,933)
(16,474)
(5,368)
24,394
—
(3,133)
(22,396)
1,135
—
75
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
Postretirement Medical Benefits
We provide certain employer subsidized health care and employer provided life insurance benefits in the U.S. and Canada to eligible retirees and their
dependents. The cost of these benefits is recognized over the period the employee provides credited service to the company. The benefit obligation and
funded status for postretirement medical benefit plans are as follows:
Benefit obligation
Benefit obligation - beginning of year
Service cost
Interest cost
Net actuarial gain
Foreign currency changes
Benefits paid, net
Benefit obligation - end of year
(1)
Fair value of plan assets
Fair value of plan assets - beginning of year
Company contribution
Benefits paid, net
Fair value of plan assets - end of year
Amounts recognized in the Consolidated Balance Sheets
Current liability
Noncurrent liability
Funded status
2023
2022
99,275
367
5,031
(206)
214
(11,194)
93,487
—
11,194
(11,194)
—
(10,265)
(83,222)
(93,487)
$
$
$
$
$
$
139,516
731
3,679
(31,512)
(740)
(12,399)
99,275
—
12,399
(12,399)
—
(11,530)
(87,745)
(99,275)
$
$
$
$
$
$
(1) Includes a benefit obligation for the U.S. postretirement plan of $84 million and $90 million at December 31, 2023 and 2022, respectively.
Pretax amounts recognized in AOCL consist of:
Net actuarial gain
The components of net periodic benefit cost for postretirement medical benefit plans were as follows:
Service cost
Interest cost
Amortization of prior service cost
Amortization of net actuarial loss
Net periodic benefit cost
2023
367
5,031
—
(2,249)
3,149
$
$
$
$
$
Other changes in benefit obligation for postretirement medical benefit plans recognized in other comprehensive income were as follows:
Net actuarial gain
Amortization of net actuarial loss
Total recognized in other comprehensive income
2023
(206)
2,249
2,043
$
$
76
2023
2022
(14,360)
$
(16,405)
2022
2021
731
3,679
—
68
4,478
$
$
$
$
909
3,755
129
4,090
8,883
2022
(31,512)
(68)
(31,580)
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
The weighted-average discount rates used to determine end of year benefit obligation and net periodic pension cost include:
Discount rate used to determine benefit obligation
U.S.
Canada
Discount rate used to determine net period benefit cost
U.S.
Canada
2023
2022
2021
5.20 %
4.60 %
5.60 %
5.15 %
5.60 %
5.15 %
2.80 %
2.90 %
2.80 %
2.90 %
2.35 %
2.50 %
The discount rate for our U.S. postretirement medical benefit plan is determined by matching the expected cash flows associated with our benefit
obligations to a pool of corporate long-term, high-quality fixed income debt instruments available as of the measurement date. The discount rate for our
Canada postretirement medical benefit plan is determined by matching the expected cash flows associated with our benefit obligations to spot rates along a
yield curve developed based on yields of corporate long-term, high-quality fixed income debt instruments available as of the measurement date.
The assumed health care cost trend rate used in measuring the accumulated postretirement benefit obligation for the U.S. plan was 6.75% for 2023 and
6.5% for 2022. The assumed health care trend rate is 6.25% for 2024 and will gradually decline to 5.0% by the year 2028 and remain at that level
thereafter. Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans.
Estimated Future Benefit Payments
The following benefit payments, which reflect expected future service, are expected to be paid.
2024
2025
2026
2027
2028
Thereafter
Pension Benefits
Postretirement
Medical Benefits
$
$
123,016
123,566
121,323
120,468
120,025
576,290
1,184,688
$
$
10,514
10,065
9,626
9,130
8,654
36,181
84,170
During 2024, we do not anticipate making contributions to our U.S. pension plans and contributing approximately $6 million to our foreign pension plans.
Savings Plans
We offer a voluntary defined contribution 401(k) plan to our U.S. employees designed to help them accumulate additional savings for retirement. We
provide a core contribution to all employees, regardless of if they participate in the plan, and an additional contribution to participating employees based on
their eligible pay. Total employer contributions to the 401(k) plan were $28 million in both 2023 and 2022.
77
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
14. Income Taxes
(Loss) income from continuing operations before taxes consisted of the following:
U.S.
International
Total
Years Ended December 31,
2023
(472,848)
66,346
(406,502)
$
$
$
$
2022
2021
(39,294)
79,174
39,880
$
$
(85,258)
77,843
(7,415)
The (benefit) provision for income taxes from continuing operations consisted of the following:
U.S. Federal:
Current
Deferred
U.S. State and Local:
Current
Deferred
International:
Current
Deferred
Total current
Total deferred
Total (benefit) provision for income taxes
Effective tax rate
Years Ended December 31,
2023
2022
2021
13,722
(44,504)
(30,782)
5,641
(12,189)
(6,548)
10,577
5,878
16,455
29,940
(50,815)
(20,875)
$
$
223
(12,284)
(12,061)
(9,716)
7,137
(2,579)
8,745
8,835
17,580
(748)
3,688
2,940
$
$
(7,419)
(13,825)
(21,244)
5,401
(5,827)
(426)
10,979
(231)
10,748
8,961
(19,883)
(10,922)
$
$
5.1 %
7.4 %
147.3 %
The effective tax rate for 2023 includes a benefit of $3 million on the aggregate $339 million goodwill impairment charge as the majority of this charge is
nondeductible.
The effective tax rate for 2022 includes a tax benefit of $5 million on the pre-tax gain of $5 million from the Borderfree sale as the tax basis was higher
than book basis and a $1 million benefit associated with the 2019 sale of a business.
The effective tax rate for 2021 includes benefits of $7 million from the resolution of tax matters, $5 million due to tax legislation in the U.K., $3 million
from an affiliate reorganization and $2 million from the vesting of restricted stock, partially offset by charges of $6 million on the pre-tax gain of
$10 million from the sale of a business as the tax basis was lower than the book basis and $1 million for the write-off of deferred tax assets associated with
the expiration of out-of-the-money stock options.
78
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
A reconciliation of income taxes computed at the federal statutory rate and our provision for income taxes consist of the following:
(1)
Federal statutory provision
State and local income taxes
Impact of foreign operations taxed at rates other than the U.S. statutory rate
Accrual/release of uncertain tax amounts related to foreign operations
U.S. tax impacts of foreign income in the U.S.
CARES Act carryback benefit
Tax credits
Unrealized stock compensation benefits
Goodwill impairment
Borderfree tax basis differences
Other, net
(4)
(3)
(2)
(Benefit) provision for income taxes
Years Ended December 31,
2023
2022
2021
$
$
(85,366)
(5,173)
2,646
(2,829)
1,099
—
(1,683)
574
68,557
—
1,300
(20,875)
$
$
8,375
(1,612)
3,349
(2,753)
1,089
—
(850)
572
—
(5,610)
380
2,940
$
$
(1,558)
(336)
(2,220)
(7,288)
4,441
(2,270)
(500)
(505)
—
—
(686)
(10,922)
(1)
(2)
(3)
Includes a benefit of $1 million related to tax resolutions and a benefit of $1 million for tax return true-ups for the year ended December 31, 2022.
Includes a charge of $2 million for a deferred rate change and a charge of $1 million for the establishment of a valuation allowance for the year ended
December 31, 2022 and a benefit of $5 million for a deferred rate change for the year ended December 31, 2021.
Includes a benefit of $1 million for the year ended December 31, 2022 associated with the sale of a business.
(4)
Includes a $1 million charge associated with nondeductible officer compensation for the year ended December 31, 2023 and a $3 million benefit from
an affiliate reorganization and a charge of $3 million related to the sale of a business for the year ended December 31, 2021.
79
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
Deferred tax liabilities and assets consisted of the following:
Deferred tax liabilities:
Depreciation
Deferred profit (for tax purposes) on sale to finance subsidiary
Lease revenue and related depreciation
Intangible assets
Operating lease liability
Basis adjustment in subsidiary
Other
Gross deferred tax liabilities
Deferred tax assets:
Postretirement medical benefits
Pension
Operating lease asset
Long-term incentives
Net operating and capital losses
Tax credit carry forwards
Section 163j carryforward
Tax uncertainties gross-up
Other
Gross deferred tax assets
Less: Valuation allowance
Net deferred tax assets
Total deferred taxes, net
December 31,
2023
2022
(16,585)
(43,057)
(205,773)
(60,420)
(76,910)
(51,548)
(19,690)
(473,983)
23,472
15,042
83,696
11,814
182,482
65,095
47,802
4,904
48,537
482,844
(159,342)
323,502
(150,481)
$
$
(51,717)
(26,765)
(216,282)
(65,916)
(73,403)
—
(27,366)
(461,449)
24,892
9,640
78,765
12,946
130,640
66,256
23,917
4,982
50,345
402,383
(157,450)
244,933
(216,516)
$
$
The valuation allowance relates primarily to certain foreign, state and local net operating loss and tax credit carryforwards that will more-likely-than-not
expire unutilized.
We have a federal net operating loss carryforward of $3 million as of December 31, 2023, that have a 20 year carryforward period. We have net operating
loss carryforwards in international jurisdictions of $390 million as of December 31, 2023, of which $138 million can be carried forward indefinitely and the
remainder expire over the next 20 years. We also have net operating loss carryforwards in most states totaling $969 million that will expire over the next 20
years. In addition, we have tax credit carryforwards of $65 million, of which $52 million can be carried forward indefinitely and the remainder expire over
the next 10 years.
As of December 31, 2023, we assert that we are permanently reinvested in our pre-1987 and post-2017 undistributed earnings of $365 million as well as all
other outside basis differences. While a determination of the full liability that would be incurred if these earnings were repatriated is not practicable, we
have estimated the withholding taxes would be approximately $3 million.
80
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
Uncertain Tax Positions
A reconciliation of the amount of unrecognized tax benefits is as follows:
Balance at beginning of year
Increases from prior period positions
Decreases from prior period positions
Increases from current period positions
Decreases relating to settlements with tax authorities
Reductions from lapse of applicable statute of limitations
Balance at end of year
2023
2022
2021
33,300
343
(524)
400
(350)
(2,937)
30,232
$
$
45,072
6
(6,830)
340
(1,966)
(3,322)
33,300
$
$
50,064
3,016
(4,247)
492
(1,270)
(2,983)
45,072
$
$
The amount of the unrecognized tax benefits at December 31, 2023, 2022 and 2021 that would affect the effective tax rate if recognized was $26 million,
$29 million and $39 million, respectively.
On a regular basis, we conclude tax return examinations, statutes of limitations expire, and court decisions interpret tax law. We regularly assess tax
uncertainties in light of these developments. As a result, it is reasonably possible that the amount of our unrecognized tax benefits will decrease in the next
12 months, and we expect this change could be up to 15% of our unrecognized tax benefits. We recognize interest and penalties related to uncertain tax
positions in our provision for income taxes. Amounts included in our provision for income taxes related to interest and penalties on uncertain tax positions
for each of the years ended December 31, 2023, 2022 and 2021 were not significant. We had approximately $4 million and $3 million accrued for the
payment of interest and penalties at December 31, 2023 and 2022, respectively.
Other Tax Matters
With regard to U.S. Federal income tax, the Internal Revenue Service examination of our consolidated U.S. income tax returns for tax years prior to 2020
are closed to audit, except for review of the Tax Cuts and Jobs Act (TCJA) Sec 965 transition tax. On a state and local level, returns for most jurisdictions
are closed through 2017. For our significant non-U.S. jurisdictions, Canada is closed to examination through 2018 except for a specific issue under current
exam, and France, Germany and the U.K. are closed through 2019, 2016, and 2021 respectively. We also have other less significant tax filings currently
subject to examination.
We regularly assess the likelihood of tax adjustments in each of the tax jurisdictions in which we have operations and account for the related financial
statement implications. We believe we have established tax reserves that are appropriate given the possibility of tax adjustments. However, determining the
appropriate level of tax reserves requires judgment regarding the uncertain application of tax law and the possibility of tax adjustments. Future changes in
tax reserve requirements could have a material positive or negative impact on our results of operations, financial position and cash flows.
15. Commitments and Contingencies
From time to time, in the ordinary course of business, we are involved in litigation pertaining to, among other things, contractual rights under vendor,
insurance or other contracts; intellectual property or patent rights; equipment, service, payment or other disputes with clients; or disputes with employees.
Some of these actions may be brought as a purported class action on behalf of a purported class of customers, employees, or others. Due to uncertainties
inherent in litigation, any actions could have an adverse effect on our financial position, results of operations or cash flows; however, in management's
opinion, the final outcome of outstanding matters will not have a material adverse effect on our business.
81
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
16. Leased Assets and Liabilities
We lease real estate and equipment under operating and finance lease agreements. Our leases have terms of up to 15 years, and may include renewal
options. At lease commencement, a lease liability and corresponding right-of-use asset is recognized. Lease liabilities represent the present value of future
lease payments over the expected lease term, including options to extend or terminate the lease when it is reasonably certain those options will be
exercised. Lease payments include all fixed payments and variable payments tied to an index, but exclude costs such as common area maintenance charges,
property taxes, insurance and mileage. The present value of the lease liability is determined using our incremental borrowing rate at lease commencement.
Information regarding operating and financing leases is as follows:
Leases
Balance Sheet Location
December 31, 2023
December 31, 2022
Assets
Operating
Finance
Total leased assets
Liabilities
Operating
Finance
Total lease liabilities
Lease Cost
Operating lease expense
Finance lease expense
Amortization of leased assets
Interest on lease liabilities
Variable lease expense
Sublease income
Total expense
Operating lease assets
Property, plant and equipment, net
Current operating lease liabilities
Noncurrent operating lease liabilities
Accounts payable and accrued liabilities
Other noncurrent liabilities
$
$
$
$
309,958 $
51,049
361,007 $
60,069 $
277,981
13,005
40,530
391,585 $
296,129
54,063
350,192
52,576
265,696
11,690
43,858
373,820
Years Ended December 31,
2023
2022
2021
87,876 $
67,041 $
62,269
13,043
3,407
28,018
(466)
131,878 $
12,321
3,323
26,870
(1,086)
108,469 $
9,191
2,826
33,924
(1,761)
106,449
$
$
Operating lease expense includes immaterial amounts related to leases with terms of 12 months or less.
Future Lease Payments
2024
2025
2026
2027
2028
Thereafter
Total
Less: present value discount
Lease liability
Operating Leases
Finance Leases
Total
$
$
88,000 $
82,817
72,006
62,721
53,899
71,379
430,822
92,772
338,050 $
16,341 $
14,634
12,516
10,376
7,008
2,005
62,880
9,345
53,535 $
104,341
97,451
84,522
73,097
60,907
73,384
493,702
102,117
391,585
Future lease payments exclude $17 million of payments for leases signed but not yet commenced at December 31, 2023.
82
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
Lease Term and Discount Rate
Weighted-average remaining lease term
Operating leases
Finance leases
Weighted-average discount rate
Operating leases
Finance leases
Cash Flow Information
Operating cash outflows - operating leases
Operating cash outflows - finance leases
Financing cash outflows - finance leases
Leased assets obtained in exchange for new lease obligations
Operating leases
Finance leases
17. Stockholders' Equity
Retirement of Treasury Stock
December 31, 2023
December 31, 2022
5.6 years
4.4 years
9.5%
7.7%
6.4 years
5.1 years
8.2%
6.2%
Years Ended December 31,
2023
2022
2021
84,024 $
3,407 $
12,154 $
65,012 $
3,323 $
11,091 $
59,748
2,826
7,707
74,778 $
9,158 $
135,359 $
20,927 $
48,662
30,840
$
$
$
$
$
In December 2023, we retired 53 million shares of treasury stock and returned these shares to the status of unissued shares of common stock.
The following table summarizes the changes in shares of Common Stock outstanding and Treasury Stock:
Balance at December 31, 2020
Issuance of treasury stock
Balance at December 31, 2021
Repurchases of common stock
Issuance of treasury stock
Balance at December 31, 2022
Retirement of treasury stock
Issuance of treasury stock
Balance at December 31, 2023
Common Stock
Outstanding
Treasury Stock
171,975,188
2,756,207
174,731,395
(2,750,000)
2,049,192
174,030,587
—
2,335,246
176,365,833
151,362,724
(2,756,207)
148,606,517
2,750,000
(2,049,192)
149,307,325
(53,000,000)
(2,335,246)
93,972,079
At December 31, 2023, 31,471,987 shares were reserved for issuance under our stock plans and dividend reinvestment program.
83
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
18. Accumulated Other Comprehensive Loss
Reclassifications out of accumulated other comprehensive loss were as follows:
Cash flow hedges
Revenue
Cost of sales
Interest expense
Total before tax
Tax provision (benefit)
Net of tax
Available for sale securities
Financing revenue
Selling, general and administrative expense
Total before tax
Tax benefit
Net of tax
Pension and Postretirement Benefit Plans (b)
Prior service costs
Actuarial losses
Settlement
Total before tax
Tax benefit
Net of tax
Gain (Loss) Reclassified from AOCL (a)
Years Ended December 31,
2023
2022
2021
$
$
$
$
$
$
—
(33)
9,708
9,675
2,419
7,256
(11)
—
(11)
(3)
(8)
(266)
(17,181)
(746)
(18,193)
(4,461)
(13,732)
$
$
$
$
$
$
—
178
549
727
181
546
(9)
—
(9)
(2)
(7)
(208)
(39,999)
(394)
(40,601)
(9,315)
(31,286)
$
$
$
$
$
$
289
(117)
(366)
(194)
(49)
(145)
(6)
(7)
(13)
(2)
(11)
(337)
(51,673)
(551)
(52,561)
(12,755)
(39,806)
(a) Amounts in parentheses indicate reductions to income and increases to other comprehensive income.
(b) Reclassified from accumulated other comprehensive loss to other components of net pension and postretirement cost. These amounts are included in net periodic costs
for defined benefit pension plans and postretirement medical benefit plans (see Note 14 for additional details).
84
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
Changes in accumulated other comprehensive loss, net of tax, were as follows:
Balance at December 31, 2020
$
(1,411) $
402 $
(851,063) $
12,941 $
Cash flow hedges
Available-for-sale
securities
Pension and
postretirement benefit
plans
Foreign currency
adjustments
Other comprehensive income (loss) before
reclassifications
Amounts reclassified from accumulated other
comprehensive loss
Net other comprehensive income (loss)
Balance at December 31, 2021
Other comprehensive income (loss) before
reclassifications
Amounts reclassified from accumulated other
comprehensive loss
Net other comprehensive income (loss)
Balance at December 31, 2022
Other comprehensive (loss) income before
reclassifications
Amounts reclassified from accumulated other
comprehensive loss
Net other comprehensive (loss) income
Balance at December 31, 2023
19. Stock-Based Compensation Plans
5,069
145
5,214
3,803
9,246
(546)
8,700
12,503
1,715
(6,662)
11
(6,651)
(6,249)
(33,198)
7
(33,191)
(39,440)
5,969
54,618
39,806
94,424
(756,639)
9,297
31,286
40,583
(716,056)
(55,128)
(34,168)
—
(34,168)
(21,227)
(71,344)
—
(71,344)
(92,571)
25,279
(7,256)
(5,541)
6,962 $
8
5,977
(33,463) $
$
13,732
(41,396)
(757,452) $
—
25,279
(67,292) $
Total
(839,131)
18,857
39,962
58,819
(780,312)
(85,999)
30,747
(55,252)
(835,564)
(22,165)
6,484
(15,681)
(851,245)
We may grant restricted stock units, non-qualified stock options and other stock awards to eligible employees. All stock-based awards are approved by the
Executive Compensation Committee of the Board of Directors. We settle stock awards with treasury shares. At December 31, 2023, there were 15,950,013
shares available for future grants.
Restricted Stock Units
Restricted stock units (RSUs) typically vest ratably over a three-year service period and entitle the holder to shares of common stock as the units vest. We
may also grant RSUs to certain employees where vesting is contingent upon the achievement of certain performance targets. RSUs granted in 2023
included 1,513,928 awards subject to a performance target. The following table summarizes information about RSUs:
Outstanding - beginning of the year
Granted
Vested
Forfeited
Outstanding - end of the year
2023
Shares
7,197,755
2,068,825
(2,819,824)
(921,563)
5,525,193
Weighted average
fair value
$
$
6.09
4.19
5.53
5.63
5.74
2022
Shares
5,738,293
5,280,429
(2,221,027)
(1,599,940)
7,197,755
$
$
Weighted average
fair value
6.95
4.82
6.10
4.69
6.09
The fair value of RSUs is determined based on the stock price on the grant date less the present value of expected dividends. At December 31, 2023, there
was $4 million of unrecognized compensation cost related to RSUs that is expected to be recognized over a weighted-average period of 1.2 years. The
intrinsic value of RSUs outstanding at December 31, 2023 was $24 million. The fair value of RSUs vested during 2023, 2022 and 2021 was $12 million,
$11 million and $22 million, respectively. During 2021, we granted 2,100,126 RSUs at a weighted average fair value of $8.36.
In 2023 and 2022, RSUs granted include 222,833 and 158,416, respectively, to non-employee directors. These RSUs vest one year from the grant date.
85
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
Performance Stock Units
Performance stock units (PSUs) are stock awards where the number of shares ultimately awarded is based upon the attainment of certain performance
targets and total shareholder return relative to peer companies. PSUs vest at the end of a three-year service period. Awards outstanding at December 31,
2023 represent awards that have been deferred and will be issued at a later date.
Outstanding - beginning of the year
Vested
Outstanding - end of the year
Stock Options
2023
Shares
Weighted average
fair value
811,620
—
811,620
$
$
9.57
—
9.57
2022
Shares
1,009,091
(197,471)
811,620
$
$
Weighted average
fair value
6.60
6.73
9.57
Stock options are granted at an exercise price equal to or greater than the market price of our common stock on the grant date. Options vest ratably over
three years and expire ten years from the grant date. We did not grant any options in 2023 or 2022; accordingly, at December 31, 2023, unrecognized
compensation cost was not significant. The intrinsic value of options outstanding and exercisable at December 31, 2023 was not significant.
The following table summarizes information about stock option activity:
Options outstanding - beginning of the year
Canceled
Expired
Options outstanding - end of the year
Options exercisable - end of the year
2023
2022
Shares
10,027,048
(435,403)
(440,000)
9,151,645
9,057,268
Per share weighted
average exercise
prices
$
$
$
9.91
7.91
20.27
9.50
9.52
Shares
11,120,069
(93,021)
(1,000,000)
10,027,048
8,912,286
Per share weighted
average exercise
prices
$
$
$
10.65
8.09
18.29
9.91
10.42
During 2021, 777,429 stock options were exercised at a weighted average fair value of $6.11.
The following table provides additional information about stock options outstanding and exercisable at December 31, 2023:
Range of per share exercise prices
$3.98 - $6.60
$8.55 - $8.76
$12.64 - $21.54
Options Outstanding
Options Exercisable
Shares
4,250,995 $
744,908 $
4,155,742 $
9,151,645 $
Per share weighted-
average exercise price
5.05
8.63
14.21
9.50
Weighted-average
remaining contractual
life
5.5 years
6.7 years
3.0 years
4.5 years
Shares
4,250,995 $
650,531 $
4,155,742 $
9,057,268 $
Per share weighted-
average exercise price
5.05
8.63
14.21
9.52
Weighted-average
remaining contractual
life
5.5 years
6.7 years
3.0 years
4.5 years
The following table lists the weighted average assumptions used to calculate the fair value of stock options granted in 2021:
Expected dividend yield
Expected stock price volatility
Risk-free interest rate
Expected life
Weighted-average fair value per option granted
Fair value of options granted
86
2.4 %
70.0 %
1.1 %
7 years
$4.53
$3,342
PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)
Employee Stock Purchase Plan (ESPP)
We maintain a non-compensatory ESPP that enables substantially all U.S. and Canadian employees to purchase shares of our common stock at an offering
price of 95% of the average market price on the offering date. At no time will the exercise price be less than the lowest price permitted under Section 423
of the Internal Revenue Code. Employees purchased 371,982 shares and 381,229 shares in 2023 and 2022, respectively. We have reserved 1,065,516
common shares for future purchase under the ESPP.
87
PITNEY BOWES INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(Dollars in thousands)
Description
Valuation allowance for deferred tax asset
2023
2022
2021
Balance at beginning
of year
Additions charged to
expense
Deductions
Balance at end of year
$
$
$
157,450
121,778
116,543
$
$
$
9,826
44,188
7,490
$
$
$
(7,934)
(8,516)
(2,255)
$
$
$
159,342
157,450
121,778
88
DESCRIPTION OF THE REGISTRANT’S SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934
Exhibit 4
Pitney Bowes Inc. (“Pitney Bowes”, the “Company”, “we”, “our” or “us”) has two classes of securities registered under
Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”): our common stock, par value $1.00 per
share (the “Common Stock”) and our 6.70% Notes Due 2043 (the “notes”). When we refer to “Pitney Bowes”, the “Company”,
“we”, “our” and “us” in this exhibit, we mean only Pitney Bowes Inc., and not Pitney Bowes Inc. together with any of its
subsidiaries, unless the context indicates or requires otherwise.
DESCRIPTION OF COMMON STOCK
The following summary description sets forth some of the general terms and provisions of the Common Stock. Because this is a
summary description, it does not contain all of the information that may be important to you. For a more detailed description of
the Common Stock, you should refer to the provisions of our restated certificate of incorporation (the “certificate of
incorporation”) and our by-laws, as amended and restated, each of which is an exhibit to the Annual Report on Form 10-K to
which this description is an exhibit.
General
Under the certificate of incorporation, the Company is authorized to issue up to 480,000,000 shares of Common Stock with a par
value of $1.00 per share, 600,000 shares of cumulative preferred stock with a par value of $50.00 per share (the “preferred
stock”) and 5,000,000 shares of preference stock without a par value (the “preference stock”). The shares of Common Stock
currently outstanding are fully paid and nonassessable. As of January 31, 2024, there were 176,528,703 shares of Common Stock
outstanding and no shares of preferred stock or preference stock outstanding. The Board of Directors has the authority to make,
alter, amend or repeal the by-laws, subject to certain limitations set forth in the certificate of incorporation and the by-laws.
No Preemptive, Redemption or Conversion Rights
The Common Stock is not redeemable, is not subject to sinking fund provisions, does not have any conversion rights and is not
subject to call. Holders of shares of Common Stock have no preemptive rights to maintain their percentage of ownership in future
offerings or sales of stock of the Company.
Voting Rights
Holders of shares of Common Stock have one vote per share in all elections of directors and on all other matters submitted to a
vote of stockholders of the Company. Holders of shares of Common Stock do not have cumulative voting rights.
Board of Directors
Our Board of Directors is not classified. Our by-laws establish that the size of the whole Board of Directors shall be not less than
3, with the exact number of directors to be fixed from time to time by a duly adopted resolution of the Board of Directors.
No Action by Stockholder Consent
The certificate of incorporation prohibits action that is required or permitted to be taken at any annual or special meeting of
stockholders of the Company from being taken by the written consent of stockholders without a meeting.
Power to Call Special Stockholder Meeting
Under Delaware law, a special meeting of stockholders may be called by our Board of Directors or by any other person
authorized to do so in the certificate of incorporation or by-laws. Pursuant to our by-laws, special meetings of the stockholders
may be called, for any purpose or purposes, only by the Board of Directors at any time pursuant to a resolution approved by the
majority of the Board of Directors.
Advance Notice Requirements
Our by-laws establish advance notice procedures with regard to stockholder proposals relating to the nomination of candidates
for election as directors or other business to be brought before meetings of our stockholders. These procedures provide that notice
of stockholder proposals of these kinds must be timely given in writing to the Secretary of the Company before the meeting at
which the action is to be taken. Generally, to be timely, notice of stockholder proposals generally must be delivered no later than
the 90th and no earlier than the 120th day before the first anniversary of the preceding year’s annual meeting. However, in the
event that the date of the annual meeting is more than 30 days before or 60 days after such anniversary, notice must be delivered
no earlier than the 120th day before such annual meeting and no later than the latest of (i) the 90th day before such annual
meeting or (ii) if the first public announcement of the date of such annual meeting is less than 100 days prior to the date of such
annual meeting, the 10th day following the day on which public announcement is first made. The notice must contain certain
information specified in the by-laws.
Dividend Rights
Subject to the preferences applicable to any outstanding shares of preferred stock or preference stock, the holders of Common
Stock are entitled to receive dividends, if any, when and as declared, from time to time, by our Board of Directors out of the
assets legally available therefor.
Liquidation, Dissolution or Similar Rights
Subject to the preferences applicable to any outstanding shares of preferred stock or preference stock, upon the dissolution,
liquidation or winding up of the Company, the remainder of the assets of the Company shall be distributed ratably among the
holders of the shares of Common Stock at the time outstanding.
DESCRIPTION OF THE NOTES
The following summary description sets forth some of the general terms and provisions of the notes. Because this is a summary
description, it does not contain all of the information that may be important to you. For a more detailed description of the notes,
you should refer to the provisions of the indenture dated as of February 14, 2005, as amended or supplemented from time to time
(the “indenture”), between us and The Bank of New York Mellon (formerly known as The Bank of New York), as successor
trustee to Citibank, N.A., as trustee (the “trustee”), which has been filed as an exhibit to our registration statement on Form S-3
(File No. 333-151753) filed with the SEC on June 18, 2008.
General
As of December 31, 2023, there was $425 million total principal amount of the notes outstanding. We may, without the consent
of the holders of the notes, issue additional senior debt securities having the same ranking and the same interest rate, maturity
date and other terms as the notes. Any such additional senior debt securities, together with the notes currently outstanding, will
constitute a single series of senior debt securities under the indenture.
The notes are our unsecured senior obligations and rank equally with all of our other unsubordinated debt. The notes do not
constitute obligations of our subsidiaries. Creditors of our subsidiaries are entitled to a claim on the assets of those subsidiaries
Consequently, in the event of a liquidation or reorganization of any subsidiary, creditors of the subsidiary are likely to be paid in
full before any distribution is made to the Company and holders of notes, except to the extent that the Company is itself
recognized as a creditor of such subsidiary, in which case the Company’s claims would still be subordinate to any security
interests in the assets of such subsidiary and any debt of such subsidiary senior to that held by the Company.
The notes will mature at 100% of their principal amount on March 7, 2043. However, we may redeem, or may be required to
repurchase, the notes prior to their maturity at a redemption or repurchase price described below under “Optional Redemption” or
“Change of Control Offer”, respectively. There is no sinking fund for the notes.
The notes have been issued only in minimum denominations of $25.00 or an integral multiple of $25.00 in excess thereof.
We will not pay any additional amounts to compensate any beneficial owner of notes for any United States tax withheld from
payments of principal of or premium, if any, or interest on the notes.
The notes are subject to defeasance in the manner described under the heading “Defeasance” below.
Principal and interest is payable, and transfers of the notes may be registered, at the office or offices or agency we maintain for
such purposes, provided that payment of interest on the notes will be paid at such place by check mailed to the persons entitled
thereto at the addresses of such persons appearing on the security register. The notes have been issued as global debt securities.
For more information, please refer to “Book-Entry Delivery and Form” below. DTC will be the
depositary with respect to the notes. The notes have been issued as fully-registered securities in the name of Cede & Co., DTC’s
nominee.
Interest
The notes bear interest from the most recent interest payment date (as defined below) on which we paid or provided for interest
on the notes, at the rate of 6.70% per annum. We pay interest on each note quarterly in arrears on March 7, June 7, September 7
and December 7 of each year. We refer to each of these dates as an “interest payment date”. We pay interest on the notes on an
interest payment date to the person in whose name that note was registered at the close of business on the date that is 15 calendar
days immediately preceding an interest payment date, whether or not a business day, which we refer to herein as a “regular record
date”. Interest on the notes is paid on the basis of a 360-day year comprised of twelve 30-day months.
In the event that an interest payment date, stated maturity date or date of earlier redemption or repurchase, as the case may be, is
not a business day, we will pay interest on the next day that is a business day, with the same force and effect as if made on such
interest payment date, stated maturity date or date of earlier redemption or repurchase, as the case may be, and without any
interest or other payment with respect to the delay. For purposes of the notes, a “business day” is a day other than a Saturday, a
Sunday or any other day on which banking institutions in The City of New York are authorized or required by law or executive
order to remain closed.
Optional Redemption
We may redeem the notes at our option, in whole or in part in $25.00 increments, at any time or from time to time on or after
March 7, 2018 at a redemption price equal to the sum of 100% of the principal amount of the notes being redeemed, plus accrued
and unpaid interest, if any, on those notes to the redemption date; provided, however, that interest shall be payable on an interest
payment date that falls on or before the redemption date to holders of notes on the regular record date for such interest payment
date.
If we have given notice as provided in the indenture and made funds available for the redemption of any notes called for
redemption on the redemption date referred to in that notice, those notes will cease to bear interest on that redemption date. We
will give written notice of any redemption of any notes to holders of the notes to be redeemed at their addresses, as shown in the
security register for the notes, at least 30 days and not more than 60 days prior to the date fixed for redemption. The notice of
redemption will specify, among other items, the date fixed for redemption, the redemption price and the aggregate principal
amount of the notes to be redeemed.
If we choose to redeem less than all of the notes, we will notify the trustee at least 60 days before giving notice of redemption, or
such shorter period as is satisfactory to the trustee, of the aggregate principal amount of the notes to be redeemed and the
applicable redemption date. The trustee will select, in such manner as it shall deem appropriate and fair, the notes to be redeemed
in part.
Change of Control Offer
If a change of control triggering event occurs, unless we have exercised our option to redeem the notes as described above under
“Optional Redemption”, we will be required to make an offer (the “change of control offer”) to each holder of notes to repurchase
all or any part (equal to a principal amount of $25.00 or an integral multiple of $25.00 in excess thereof) of that holder’s notes on
the terms set forth in the notes. In the change of control offer, we will be required to offer payment in cash equal to 101% of the
principal amount of the notes to be repurchased plus accrued and unpaid interest, if any, on the notes to be repurchased to the date
of repurchase (the “change of control payment”), subject to the rights of holders of the notes on a regular record date to receive
interest due on the related interest payment date falling on or prior to the date of repurchase.
Within 30 days following any change of control triggering event or, at our option, prior to any change of control, but after public
announcement of the transaction that constitutes or may constitute the change of control, we will mail a notice to holders of the
notes, with a copy to the trustee, describing the transaction that constitutes or may constitute the change of control triggering
event and offering to repurchase the notes on the date specified in the notice, which date will be no earlier than 30 days and no
later than 60 days from the date such notice is mailed (the “change of control payment date”). The notice, if mailed prior to the
date of consummation of the change of control, will state that the offer to purchase is conditioned on the change of control
triggering event occurring on or prior to the change of control payment date. In the event that such offer to purchase fails to
satisfy the condition in the preceding sentence, we will cause another notice meeting the aforementioned requirements to be
mailed to holders of the notes.
On the change of control payment date, we will, to the extent lawful:
•
accept for payment all notes or portions of notes properly tendered pursuant to the change of control offer;
• deposit with the paying agent an amount equal to the change of control payment in respect of all notes or portions of notes
properly tendered; and
• deliver or cause to be delivered to the trustee the notes properly accepted together with an officers’ certificate stating the
aggregate principal amount of notes or portions of notes being repurchased.
The paying agent will promptly transmit to each holder of properly tendered notes the change of control payment for the notes
being repurchased, and the trustee will promptly authenticate and mail (or cause to be transferred by book-entry) to each holder a
new note equal in principal amount to any unrepurchased portion, if any, of any notes surrendered; provided, that each new note
will be in a principal amount of $25.00 or an integral multiple of $25.00 in excess thereof.
We will not be required to make a change of control offer upon the occurrence of a change of control triggering event if a third
party makes such an offer in the manner, at the times and otherwise in compliance with the requirements for an offer made by us
and the third party repurchases all notes properly tendered and not withdrawn under its offer. In addition, we will not repurchase
any notes if there has occurred and is continuing on the change of control
payment date an event of default under the indenture, other than a default in the payment of the change of control payment upon a
change of control triggering event.
Upon the occurrence of a change of control triggering event, we may not have sufficient funds to repurchase the notes in the
amount of the change of control payment in cash at such time. In addition, our ability to repurchase the notes for cash may be
limited by law or the terms of other agreements relating to our indebtedness outstanding at the time. The failure to make such
repurchase would result in a default under the notes.
We will comply with the requirements of Rule 14e-1 under the Exchange Act, and any other securities laws and regulations
thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the notes as a result of a
change of control triggering event. To the extent that the provisions of any such securities laws or regulations conflict with the
change of control offer provisions of the notes, we will comply with those securities laws and regulations and will not be deemed
to have breached our obligations under the change of control offer provisions of the notes by virtue of any such conflict.
For purposes of the change of control offer provisions of the notes, the following terms will be applicable:
“Change of control” means the occurrence of any of the following: (1) the consummation of any transaction (including,
without limitation, any merger or consolidation) the result of which is that any “person” (as that term is used in Section 13(d)(3)
of the Exchange Act) (other than Pitney Bowes, any subsidiary or employee benefit plan of Pitney Bowes or employee benefit
plan of any subsidiary of Pitney Bowes) becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act), directly or indirectly, of more than 50% of the voting stock of Pitney Bowes or other voting stock into which the voting
stock of Pitney Bowes is reclassified, consolidated, exchanged or changed, measured by voting power rather than number of
shares; (2) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in
one or more series of transactions approved by the board of directors of Pitney Bowes as part of a single plan, of 85% or more of
the total consolidated assets of Pitney Bowes as shown on Pitney Bowes’s most recent audited balance sheet, to one or more
“persons” (as that term is defined in the indenture) (other than Pitney Bowes or one of the subsidiaries of Pitney Bowes); or (3)
the first day on which a majority of the members of the board of directors of Pitney Bowes are not continuing directors.
Notwithstanding the foregoing, a transaction will not be deemed to involve a change of control if (1) Pitney Bowes becomes a
direct or indirect wholly-owned subsidiary of a holding company and (2)(A) the direct or indirect holders of the voting stock of
such holding company immediately following that transaction are substantially the same as the holders of the voting stock of
Pitney Bowes immediately prior to that transaction or (B) immediately following that transaction, no person or group (other than
a holding company satisfying the requirements of this sentence) is the beneficial owner, directly or indirectly, of more than 50%
of the voting stock of such holding company.
“Change of control triggering event” means the occurrence of both a change of control and a rating event.
“Continuing directors” means, as of any date of determination, any member of the board of directors of Pitney Bowes who
(1) was a member of such board of directors on the date the notes
were issued or (2) was nominated for election, elected or appointed to such board of directors with the approval of a majority of
the continuing directors who were members of such board of directors at the time of such nomination, election or appointment
(either by a specific vote or by approval of the proxy statement of Pitney Bowes in which such member was named as a nominee
for election as a director, without objection to such nomination).
“Investment grade rating” means a rating equal to or higher than Baa3 (or the equivalent) by Moody’s and BBB- (or the
equivalent) by S&P, and the equivalent investment grade credit rating from any additional rating agency or rating agencies
selected by Pitney Bowes.
“Moody’s” means Moody’s Investors Service, Inc., and its successors.
“Rating agencies” means (1) each of Moody’s and S&P; and (2) if either of Moody’s or S&P ceases to rate the notes or fails
to make a rating of the notes publicly available, in each case for reasons outside of the control of Pitney Bowes, a “nationally
recognized statistical rating organization” within the meaning of Section 3(a)(62) of the Exchange Act selected by Pitney Bowes
(as certified by a resolution of the board of directors of Pitney Bowes) as a replacement agency for Moody’s or S&P, or both of
them, as the case may be.
“Rating event” means the rating on the notes is lowered by each of the rating agencies and the notes are rated below an
investment grade rating by each of the rating agencies on any day within the 60-day period (which 60-day period will be
extended so long as the rating of the notes is under publicly announced consideration for a possible downgrade by any of the
rating agencies) after the earlier of (1) the occurrence of a change of control and (2) public notice of the occurrence of a change
of control or the intention of Pitney Bowes to effect a change of control; provided, however, that a rating event otherwise arising
by virtue of a particular reduction in rating will be deemed not to have occurred in respect of a particular change of control (and
thus will not be deemed a rating event for purposes of the definition of change of control triggering event) if the rating agencies
making the reduction in rating to which this definition would otherwise apply do not announce or publicly confirm or inform the
trustee in writing at Pitney Bowes’s or its request that the reduction was the result, in whole or in part, of any event or
circumstance consisting of or arising as a result of, or in respect of, the applicable change of control (whether or not the
applicable change of control has occurred at the time of the rating event).
“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and its successors.
“Voting stock” means, with respect to any specified “person” (as that term is used in Section 13(d)(3) of the Exchange Act) as
of any date, the capital stock of such person that is at the time entitled to vote generally in the election of the board of directors of
such person.
Certain Covenants
Set forth below are certain covenants applicable to the notes. You can find the definitions of certain terms used in this section
under “Certain Covenant Definitions”.
Limitation on Liens
So long as any of the notes remain outstanding, we will not, nor will we permit any Restricted Subsidiary to, issue, assume,
guarantee or become liable for any Indebtedness if that Indebtedness is secured by a Mortgage upon any Principal Domestic
Manufacturing Plant or upon any shares of stock or Indebtedness of any Restricted Subsidiary without in any such case
effectively providing that the notes will be secured equally and ratably with (or prior to) that Indebtedness, except that the
foregoing restrictions will not apply to:
• Mortgages on property of any corporation existing at the time that corporation is acquired by us or a Restricted Subsidiary
(including by way of merger or consolidation) or at the time of a sale, lease or other disposition of all or substantially all
of the properties of a corporation to us or a Restricted Subsidiary, as long as any such Mortgage is not extended to cover
any property previously owned by us or a Restricted Subsidiary;
• Mortgages on property of a corporation existing at the time the corporation first becomes a Restricted Subsidiary;
• Mortgages on any property existing on the date the notes are first issued under the indenture or when we acquired that
property;
• Mortgages securing any Indebtedness that a wholly-owned Restricted Subsidiary owes to us or another wholly-owned
Restricted Subsidiary;
• Mortgages that we enter into within specified time periods to finance the acquisition, repair, improvement or construction
of any property;
• mechanics’ liens, tax liens, liens in favor of a governmental body to secure progress payments or the acquisition of real or
personal property from the governmental body, and other specified liens which were not incurred in connection with any
borrowing of money, as long as we are contesting those liens in good faith or those liens do not materially impair the use
of any Principal Domestic Manufacturing Plant;
• Mortgages arising from any judgment, decree or order of a court in a pending proceeding;
• any extension, renewal or replacement of any of the Mortgages described above, as long as the amount of Indebtedness
secured does not exceed the amount originally secured plus any fees incurred in connection with the refinancing.
Notwithstanding the above, we may issue, assume, guarantee or become liable for, and may permit any Restricted Subsidiary to
issue, assume, guarantee or become liable for, secured Indebtedness which would otherwise be subject to the foregoing
restrictions, provided that the total of the aggregate amount of that Indebtedness then outstanding, excluding secured
Indebtedness permitted under the foregoing exceptions, together with the aggregate amount of all Attributable Debt with respect
to sale and leaseback transactions, does not exceed 15% of Consolidated Net Tangible Assets.
Limitation on Sales and Leasebacks
We will not, nor will we permit any Restricted Subsidiary to, enter into any sale and leaseback arrangement involving a Principal
Domestic Manufacturing Plant which has a term of more than
three years, except for sale and leaseback arrangements between us and a wholly-owned Restricted Subsidiary or between
wholly-owned Restricted Subsidiaries, unless:
• we enter into the sale and leaseback transaction within 180 days after the Principal Domestic Manufacturing Plant is
acquired, constructed or placed into service by us;
• the rent that we pay under the related lease is reimbursed under a contract between us or a Restricted Subsidiary and the
United States government or one of its agencies or instrumentalities;
• the aggregate amount of all Attributable Debt with respect to sale and leaseback transactions plus all Indebtedness secured
by Mortgages on Principal Domestic Manufacturing Plants or upon shares of stock or Indebtedness of any Restricted
Subsidiary (with the exception of secured Indebtedness which is excluded as described under “Limitation on Liens”
above) does not exceed 15% of Consolidated Net Tangible Assets; or
• we apply an amount equal to, in the case of a sale or transfer for cash, the lesser of the net proceeds of the sale or transfer
of the Principal Domestic Manufacturing Plant and the net book value, or, in the case of a sale or transfer otherwise than
for cash, the lesser of the fair market value of the Principal Domestic Manufacturing Plant and the net book value, within
180 days of the effective date of the sale and leaseback arrangement to the retirement of our or a Restricted Subsidiary’s
unsubordinated Indebtedness, which may include the notes. However, we cannot satisfy this test by retiring Indebtedness
that we were otherwise obligated to repay within the 180-day period.
Consolidation, Merger or Sale of Assets
We shall not consolidate or merge with or into any other corporation and shall not sell, lease or convey our assets as an entirety,
or substantially as an entirety, to another corporation if, as a result of that action, any of our assets would become subject to a
Mortgage, unless either:
• that Mortgage could be created under the indenture without equally and ratably securing the notes; or
• the notes will be secured equally and ratably with or prior to the Indebtedness secured by that Mortgage.
The indenture provides that we may consolidate with, sell, convey or lease all or substantially all of our assets to, or merge with
or into, any other corporation, if:
• either we are the continuing corporation or the successor corporation is a domestic corporation and expressly assumes the
due and punctual payment of the principal of and premium, if any, and interest on all the debt securities outstanding under
the indenture, including the notes, according to their tenor and the due and punctual performance and observance of all of
the covenants and conditions of the indenture to be performed or observed by us; and
• immediately after such merger, consolidation, sale, conveyance or lease, we or such successor corporation, as the case may
be, is not in material default in the performance or observance of any such covenant or condition.
Certain Covenant Definitions
For purposes of the foregoing covenants applicable to the notes, the following terms will be applicable:
“Attributable Debt” in respect of a sale and leaseback arrangement means, at the time of determination, the lesser of:
• the sale price of the Principal Domestic Manufacturing Plant to be leased multiplied by a fraction the numerator of which
is the remaining portion of the base term of the lease and the denominator of which is the base term of the lease; and
• the total rental payments under the lease discounted to present value using an interest factor determined in accordance with
generally accepted financial practice. However, if we cannot readily determine that interest factor, we will use an annual
rate of 11%, compounded semi-annually. We will also exclude from rental payments any amounts paid on account of
property taxes, maintenance, repairs, insurance, water rates and other items which are not payments for property rights.
“Consolidated Net Tangible Assets” means as of any particular time, the aggregate amount of assets after deducting current
liabilities, goodwill, patents, copyrights, trademarks, and other intangibles, in each case as shown on our most recent consolidated
financial statements prepared in accordance with U.S. generally accepted accounting principles.
“Consolidated Net Worth” means the sum of (1) the par value of our capital stock, (2) our capital in excess of par value and
(3) retained earnings, in each case as shown on our most recent consolidated financial statements prepared in accordance with
U.S. generally accepted accounting principles.
“Indebtedness” means any notes, bonds, debentures or other similar indebtedness for money borrowed.
“Mortgage” means a mortgage, security interest, pledge or lien.
“Principal Domestic Manufacturing Plant” means any manufacturing or processing plant or warehouse (other than any plant
or warehouse which, in the opinion of our board of directors, is not material to our total business), including land and fixtures,
which is owned by us or a Subsidiary, located in the United States and has a gross book value (without deduction of any
depreciation reserves) on the determination date of more than 1% of our Consolidated Net Worth.
“Restricted Subsidiary” means any Subsidiary of ours which
• is organized under the laws of the United States or any state of the United States or the District of Columbia;
• transacts all or a substantial part of its business in the United States; and
• owns a Principal Domestic Manufacturing Plant.
However, “Restricted Subsidiary” does not include Pitney Bowes Credit Corporation or any other Subsidiary which
• is primarily engaged in providing or obtaining financing for the sale or lease of products that we or our Subsidiaries sell or
lease or is otherwise primarily engaged in the business of a finance company; or
• is primarily engaged in the business of owning, developing or leasing real property other than a Principal Domestic
Manufacturing Plant.
“Subsidiary” means any corporation of which at least a majority of the outstanding voting stock is owned by us, or by us and
one or more Subsidiaries, or by one or more Subsidiaries.
Trustee, Paying Agent, Authenticating Agent and Registrar
The Bank of New York Mellon acts as trustee for the notes, which have been issued under the indenture. From time to time, we
and some of our subsidiaries maintain deposit accounts and conduct other banking transactions, including lending transactions,
with the trustee in the ordinary course of business.
Notices
Any notices required to be given to the holders of the notes will be given to DTC.
Governing Law
The indenture and the notes are governed by, and will be construed in accordance with, New York law.
Book-Entry Delivery and Form
The notes have been issued in the form of one or more global securities that were deposited upon issuance with the trustee as
custodian for DTC in New York, New York, and registered in the name of Cede & Co., DTC’s nominee.
Beneficial interests in the global securities are represented through book-entry accounts of financial institutions acting on behalf
of beneficial owners as direct or indirect participants in DTC. Investors hold their interests in the global securities through either
DTC (in the United States) or (in Europe) through Clearstream or Euroclear. Investors may hold their interests in the global
securities directly if they are participants of such systems, or indirectly through organizations that are participants in these
systems. Clearstream and Euroclear will hold interests on behalf of their participants through customers’ securities accounts in
Clearstream’s and Euroclear’s names on the books of their respective U.S. depositaries, which in turn will hold these interests in
customers’ securities accounts in the depositaries’ names on the books of DTC. Except as set forth below, the global securities
may be transferred, in whole and not in part, only to another nominee of DTC or to a successor of DTC or its nominee.
Notes represented by a global security can be exchanged for definitive securities in registered form only if:
• DTC notifies us that it is unwilling or unable to continue as depositary for that global security and we do not appoint a
successor depositary within 90 days after receiving that notice;
• at any time DTC ceases to be a clearing agency registered or in good standing under the Exchange Act or other applicable
law and we do not appoint a successor depositary within 90 days after becoming aware that DTC has ceased to be
registered or in good standing as a clearing agency; or
• we determine that that global security will be exchangeable for definitive securities in registered form and notify the
trustee of our decision.
A global security that can be exchanged as described in the preceding paragraph will be exchanged for definitive securities of the
same series and terms issued in authorized denominations in registered form for the same aggregate principal amount. The
definitive securities will be registered in the names of the owners of the beneficial interests in the global security as directed by
DTC.
We will make principal, premium, if any, and interest payments on all notes represented by a global security to the paying agent
which in turn will make payment to DTC or its nominee, as the case may be, as the sole registered owner and the sole holder of
the notes represented by a global security for all purposes under the indenture. Accordingly, we, the trustee and any paying agent
will have no responsibility or liability for:
• any aspect of DTC’s records relating to, or payments made on account of, beneficial ownership interests in a note
represented by a global security;
• any other aspect of the relationship between DTC and its participants or the relationship between those participants, and
the owners of beneficial interests in a global security held through those participants, or the maintenance, supervision or
review of any of DTC’s records relating to those beneficial ownership interests.
DTC has advised us that its practice is to credit participants’ accounts on each payment date with payments in amounts
proportionate to their respective beneficial interests in the principal amount of such global security as shown on DTC’s records
upon DTC’s receipt of funds and corresponding detail information. Payments by participants to owners of beneficial interests in a
global security will be governed by standing instructions and customary practices, as is the case with securities held for customer
accounts registered in “street name”, and will be the sole responsibility of those participants. Book-entry notes may be more
difficult to pledge because of the lack of a physical note.
So long as DTC or its nominee is the registered owner of a global security, DTC or its nominee, as the case may be, will be
considered the sole owner and holder of the notes represented by that global security for all purposes of the notes. Owners of
beneficial interests in the notes will not be entitled to have notes registered in their names, will not receive or be entitled to
receive physical delivery of the notes in definitive form and will not be considered owners or holders of notes under the
indenture. Accordingly, each person owning a beneficial interest in a global security must rely on the procedures of DTC and, if
that person is not a DTC participant, on the procedures of the participant through which that person owns its interest, to exercise
any rights of a holder of notes. The laws of some jurisdictions require that certain purchasers of securities take physical delivery
of the securities in certificated form. These laws may impair the ability to transfer beneficial interests in a global security.
Beneficial owners may experience delays in
receiving payments on their notes since payments will initially be made to DTC and must then be transferred through the chain of
intermediaries to the beneficial owner’s account.
We understand that, under existing industry practices, if we request holders to take any action, or if an owner of a beneficial
interest in a global security desires to take any action which a holder is entitled to take under the indenture, then DTC would
authorize the participants holding the relevant beneficial interests to take that action and those participants would authorize the
beneficial owners owning through such participants to take that action or would otherwise act upon the instructions of beneficial
owners owning through them.
Beneficial interests in a global security will be shown on, and transfers of those ownership interests will be effected only through,
records maintained by DTC and its participants for that global security. The conveyance of notices and other communications by
DTC to its participants and by its participants to owners of beneficial interests in the notes will be governed by arrangements
among them, subject to any statutory or regulatory requirements in effect.
Redemption notices shall be sent to DTC or its nominee, Cede & Co. If less than all of the notes are being redeemed, DTC’s
practice is to determine by lot the amount of the interest of each direct participant in such notes to be redeemed.
A beneficial owner will be required to give notice of any option to elect to have its notes repurchased by us, through its
participant, to the trustee, and will effect delivery of those notes by causing the direct participant to transfer the participant’s
interest in the global security representing those notes, on DTC’s records, to the trustee. The requirement for physical delivery of
notes in connection with a demand for repurchase will be deemed satisfied when the ownership rights in the global security
representing those notes are transferred by direct participants on DTC’s records.
Payments in respect of the notes will be made to Cede & Co., or such other nominee as may be requested by an authorized
representative of DTC. DTC’s practice is to credit direct participants’ accounts upon DTC’s receipt of funds and corresponding
detail information from an issuer or agent, on the payable date in accordance with their respective holdings shown on DTC’s
records. Payments by participants to beneficial owners will be governed by standing instructions and customary practices, as is
the case with notes held for the accounts of customers in bearer form or registered in “street name” and will be the responsibility
of such participant and not of DTC, the agent, or the issuer, subject to any statutory or regulatory requirements as may be in effect
from time to time. Payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC)
is the responsibility of the issuer or agent, disbursement of such payments to direct participants will be the responsibility of DTC,
and disbursement of such payments to the beneficial owners will be the responsibility of direct and indirect participants.
The indenture does not limit the amount of debt securities that can be issued thereunder and provide that debt securities of any
series may be issued thereunder up to the aggregate principal amount that we may authorize from time to time. The indenture
does not limit the amount of other indebtedness or securities that we may issue.
The indenture requires the annual filing by the Company with the trustee of a certificate as to compliance with certain covenants
contained in the indenture.
We will comply with Section 14(e) under the Exchange Act, to the extent applicable, and any other tender offer rules under the
Exchange Act that may then be applicable, in connection with any obligation to purchase notes at the option of the holders
thereof.
Except as described herein, there are no covenants or provisions contained in the indenture that may afford the holders of the
notes protection in the event that we enter into a highly-leveraged transaction.
Events of Default
An Event of Default with respect to the debt securities of any series issued under the indenture, including the notes, is defined as:
• default in the payment of any installment of interest upon any of the debt securities of such series as and when the same
shall become due and payable, and continuance of such default for a period of 30 days;
• default in the payment of all or any part of the principal of any of the debt securities of such series as and when the same
shall become due and payable either at maturity, upon any redemption, by declaration or otherwise;
• default in the performance, or breach, of any other covenant or warranty contained in the debt securities of such series or
set forth in the indenture (other than a covenant or warranty included in the indenture solely for the benefit of one or more
series of debt securities other than such series) and continuance of such default or breach for a period of 90 days after due
notice by the trustee or by the holders of at least 25% in principal amount of the outstanding securities of such series; or
• certain events of bankruptcy, insolvency or reorganization of the Company.
The indenture provides that the trustee shall notify the holders of debt securities of each series of any continuing default known to
the trustee which has occurred with respect to such series within 90 days after the occurrence thereof. The indenture provides
that, notwithstanding the foregoing, except in the case of default in the payment of the principal of, or interest, if any, on any of
the debt securities of such series, the trustee may withhold such notice if the trustee in good faith determines that the withholding
of such notice is in the interests of the holders of debt securities of such series.
The indenture provides that if an Event of Default with respect to any series of debt securities shall have occurred and be
continuing, either the trustee or the holders of not less than 25% in aggregate principal amount of debt securities of such series
then outstanding may declare the principal amount of all debt securities of such series to be due and payable immediately, but
upon certain conditions such declaration may be annulled. Any past defaults and the consequences thereof, except a default in the
payment of principal of or interest, if any, on debt securities of such series, may be waived by the holders of a majority in
principal amount of the debt securities of such series then outstanding.
Subject to the provisions of the indenture relating to the duties of the trustee, in case an Event of Default with respect to any
series of debt securities shall occur and be continuing, the trustee shall not be under any obligation to exercise any of the trusts or
powers vested in it by the
indentures at the request or direction of any of the holders of such series, unless such holders shall have offered to such trustee
reasonable security or indemnity. The holders of a majority in aggregate principal amount of the debt securities of each series
affected and then outstanding shall have the right, subject to certain limitations, to direct the time, method and place of
conducting any proceeding for any remedy available to the trustee under the indenture or exercising any trust or power conferred
on the trustee with respect to the debt securities of such series; provided that the trustee may refuse to follow any direction which
is in conflict with any law or the indenture and subject to certain other limitations.
No holder of any debt security of any series will have any right under the indenture to institute any proceeding with respect to the
indenture or for any remedy thereunder, unless such holder shall have previously given the trustee written notice of an Event of
Default with respect to debt securities of such series and unless the holders of at least 25% in aggregate principal amount of the
outstanding debt securities of such series also shall have made written request, and offered reasonable indemnity, to the trustee to
institute the proceeding, and the trustee shall have failed to institute the proceeding within 60 days after its receipt of such
request, and the trustee shall not have received from the holders of a majority in aggregate principal amount of the outstanding
debt securities of such series a direction inconsistent with such request. However, the right of a holder of any debt security to
receive payment of the principal of and interest, if any, on such debt security on or after the due dates expressed in such debt
security, or to institute suit for the enforcement of any such payment on or after such dates, shall not be impaired or affected
without the consent of such holder.
Merger
The indenture provides that the Company may consolidate with, sell, convey or lease all or substantially all of its assets to, or
merge with or into, any other corporation, if:
• either the Company is the continuing corporation or the successor corporation is a domestic corporation and expressly
assumes the due and punctual payment of the principal of and interest on all the debt securities outstanding under the
indenture according to their tenor and the due and punctual performance and observance of all of the covenants and
conditions of the indenture to be performed or observed by the Company; and
• immediately after such merger, consolidation, sale, conveyance or lease, the Company or such successor corporation, as
the case may be, is not in material default in the performance or observance of any such covenant or condition.
Satisfaction and Discharge of Indentures
The indenture with respect to any series of debt securities—except for certain specified surviving obligations including the
Company’s obligation to pay the principal of and interest on the debt securities of such series—will be discharged and cancelled
upon the satisfaction of certain conditions, including the payment of all the debt securities of such series or the deposit with the
trustee under the indenture of cash or appropriate government obligations or a combination thereof sufficient for such payment or
redemption in accordance with the indenture and the terms of the debt securities of such series.
Modification of the Indentures
The indenture contains provisions permitting the Company and the trustee, with the consent of the holders of not less than a
majority in aggregate principal amount of the debt securities of each series at the time outstanding under the indenture affected
thereby, to execute supplemental indentures adding any provisions to, or changing in any manner or eliminating any of the
provisions of, the indenture or any supplemental indenture or modifying in any manner the rights of the holders of the debt
securities of each such series. No such supplemental indenture, however, may:
• extend the final maturity date of any debt security, or reduce the principal amount thereof, or reduce the rate or extend the
time of payment of any interest thereon, or reduce any amount payable on redemption thereof, or impair or affect the right
of any holder of debt securities to institute suit for payment thereof or, if the debt securities provide therefor, any right of
repayment at the option of the holders of the debt securities, without the consent of the holder of each debt security so
affected;
• reduce the aforesaid percentage of debt securities of such series, the consent of the holders of which is required for any
such supplemental indenture, without the consent of the holders of all debt securities of such series so affected; or
• reduce the amount of principal payable upon acceleration of the maturity date of any original issue discount security.
Additionally, in certain circumstances prescribed in the indenture, the Company and the trustee may execute supplemental
indentures without the consent of the holders of debt securities.
Defeasance
The indenture provides, if such provision is made applicable to the debt securities of any series, that the Company may elect to
terminate, and be deemed to have satisfied and to be discharged from, all its obligations with respect to such series of debt
securities— except for the obligations to register the transfer or exchange of such debt securities, to replace mutilated, destroyed,
lost or stolen debt securities, to maintain an office or agency in respect of such debt securities, to compensate and indemnify the
trustee and to pay or cause to be paid the principal of, and interest, if any, on all debt securities of such series when due—upon
the deposit with the trustee, in trust for such purpose, of funds or government obligations which through the payment of principal
and interest in accordance with their terms will provide funds in an amount sufficient, in the opinion of a nationally recognized
independent registered public accounting firm, to pay the principal of and premium and interest, if any, on the outstanding debt
securities of such series, and any mandatory sinking fund or analogous payments thereon, on the scheduled due dates therefor.
We call this termination, satisfaction and discharge “defeasance.” Such a trust may be established only if, among other things:
• the Company has delivered to the trustee an opinion of counsel with regard to certain matters, including an opinion to the
effect that the holders of such debt securities will not recognize income, gain or loss for federal income tax purposes as a
result of such deposit and discharge and will be subject to federal income tax on the same amounts and in the
same manner and at the same times as would have been the case if such deposit and defeasance had not occurred, and
which opinion of counsel must be based upon:
• a ruling of the U.S. Internal Revenue Service to the same effect; or
• a change in applicable U.S. federal income tax law after the date of the indenture such that a ruling is no longer
required;
• no Event of Default shall have occurred or be continuing; and
• such deposit shall not result in a breach or violation of, or constitute a default under the indenture or any other material
agreement or instrument to which the Company is a party or by which the Company is bound.
Exhibit 10(e)
PITNEY BOWES SEVERANCE PAY PLAN
As Amended and Restated Effective October 1, 2023
PITNEY BOWES SEVERANCE PAY PLAN
As Amended and Restated Effective October 1, 2023
I. PURPOSE
The purpose of the Pitney Bowes Severance Pay Plan (“Plan”) is to provide income to Employees who are involuntarily
terminated by the Company for certain reasons. The provisions of this Plan generally do not apply in the case of an Employee’s
voluntary termination. However, the Plan contains provisions providing certain benefits to Employees who resign under specified
circumstances following a Change of Control.
A. “Board” means the board of directors of Pitney Bowes Inc.
II. DEFINITIONS
B. “Cause” means with respect to the Company, embezzlement, malfeasance, commission of a felony, the non-performance of
one’s job or duties as determined by the Company in its sole discretion and acts of moral turpitude.
C. “Change of Control” means the following where:
(i) there is an acquisition, in any one transaction or a series of transactions, other than from Pitney Bowes Inc., by any
individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)), of beneficial ownership (within the meaning of Rule 13(d)(3) promulgated under the
Exchange Act) of 30% or more of either the then outstanding shares of common stock or the combined voting power of
the then outstanding voting securities of Pitney Bowes Inc. entitled to vote generally in the election of directors, but
excluding, for this purpose, any such acquisition by Pitney Bowes Inc. or any of its subsidiaries, or any employee benefit
plan (or related trust) of Pitney Bowes Inc. or its subsidiaries, or any corporation with respect to which, following such
acquisition, more than 50% of the then outstanding shares of common stock of such corporation and the combined voting
power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is
then beneficially owed, directly or indirectly, by the individuals and entities who were the beneficial owners, respectively,
of the common stock and voting securities of Pitney Bowes Inc. immediately prior to such acquisition in substantially the
same proportion as their ownership, immediately prior to such acquisition, of the then outstanding shares of common
stock or the combined voting power of the then outstanding voting securities of Pitney Bowes Inc. entitled to vote
generally in the election of directors, as the case may be; or
(ii) during any period of 12 consecutive calendar months, individuals who, as the first day of such period constitute the
Board (as of such date, the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board,
provided that any individual becoming a director subsequent to the first day of such period, whose appointment, election,
or nomination for election by Pitney Bowes’ shareholders, was approved by a vote of at least a majority of directors then
comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the
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directors until such time (if ever) as such individual is approved by a majority of the directors then comprising the
Incumbent Board; or
(iii) there occurs either (A) the consummation of a reorganization, merger, consolidation, or sale or other disposition of
all or substantially all of the assets of the Company in each case, with respect to which the individuals and entities who
were the respective beneficial owners of the common stock and voting securities of Pitney Bowes Inc. immediately prior
to such reorganization, merger, consolidation or sale or other disposition do not, following such reorganization, merger,
consolidation or sale or other disposition, beneficially own, directly or indirectly, more than 50% of, respectively, the then
outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case may be, of the corporation resulting from such reorganization,
merger, consolidation or sale or other disposition, or (B) an approval by the shareholders of Pitney Bowes Inc. of a
complete liquidation or dissolution of Pitney Bowes Inc. or of the sale or other disposition of all or substantially all of the
assets of Pitney Bowes Inc.
D. “Committee” means the Employee Benefits Committee established by the Company.
E. “Company” means Pitney Bowes Inc., its subsidiaries and affiliates participating in this Plan (and any successor entity)
F. “Contract Employee” means an employee (including any Fixed Term Contract Employee formerly known as a Buffer
Employee) who is employed by the Company pursuant to a written agreement and who is employed only for the duration of a
particular project.
G. “Employee” means any regular full-time Employee on the U.S. payroll who is employed by the Company or any wholly-
owned, fully-integrated subsidiary which is on the Pitney Bowes Inc. HR information system, but excluding Contract
Employees (including Fixed Term Contract Employees formerly known as Buffer Employees), Leased Employees, PB Credit
Union Employees, Temporary and other Contingent Employees/Workers, Part-Time Employees and independent contractors.
Except in the case of a Change of Control, Employee does not include an Employee of the Company who participates in the
Company’s Supplemental Unemployment Benefit Plan. In the case of a Change of Control the Company’s Employees are
eligible to participate in this Plan’s Change of Control benefits to the exclusion of any other plan’s benefits. There shall be no
duplication of severance benefits between this Plan and any other severance plan under which the Employee is eligible for
benefits.
For purposes of determining an individual’s eligibility to participate in the Plan, an individual who is an independent
contractor and is reclassified by the Company, any governmental agency or a court as an employee for any purpose, including
for purposes of employment taxes and wage withholding for Federal income taxes, shall not be eligible for participation in the
Plan for the period during which such individual was an independent contractor. Subsequent participation in the Plan by a
reclassified employee shall be based on eligibility requirements under the Plan then applicable to the reclassified employee.
H. “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
I. “Leased Employees” means any individuals who meet the definition of “leased employee” in Section 414(n) of the Internal
Revenue Code, as amended and related regulations.
J. “Part-Time Employees” means employees who regularly work less than 30 hours per week.
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K. “Participant” means any Employee who is covered by the Plan. An Employee will not participate in this Plan if he or she is
eligible to participate in the Company’s Supplemental Unemployment Benefit Plan (“SUB Plan”), except in the case of a
Change of Control. In the case of a Change of Control, the Company’s Employees are eligible to participate in this Plan’s
Change of Control benefits to the exclusion of any other severance benefits offered by the Company (e.g. benefits provided
under the SUB Plan). There shall be no duplication of severance benefits between this Plan and any other severance plan
under which the Employee is eligible for benefits.
L. “Pay” means the base rate of pay (excluding any shift differential or premium) that is effective on the last working day of
employment. For sales representatives, “Pay” will be the earnings paid to the Employee for the 52-week period ending with
the last pay date at least 45 days preceding the date the Employee terminates employment (“termination date”). The following
items will not be considered “Pay”: overtime, profit sharing, compensation in lieu of vacation, suggestion awards, special
awards and prizes, adoption payments, severance payments, relocation payments, referral payments, tuition reimbursements,
year-end override bonus, performance-based compensation such as a payment under the Pitney Bowes Incentive Plan, sales
representatives’ vacation pay and cash incentive unit awards.
M. “PB Credit Union Employee” means an employee of the Pitney Bowes Credit Union.
N. “Pitney Bowes” means Pitney Bowes Inc.
O. “Plan” means the Pitney Bowes Severance Pay Plan as amended and restated effective as of October 1, 2023, as amended
and restated from time to time.
P. “Temporary and other Contingent Employees/Workers” means an individual whose engagement with the Company is
intended to be for a limited period, generally not to exceed 24 months and whose work activity consists of short-term projects
other than as a Contract Employee.
Q. “Years of Service” means completed years and months of service with the Company based on the period of service
beginning with the Employee’s employment date (the date he or she first performs an hour of service as an Employee) to his
or her termination date. The Employee shall continue to accrue Years of Service during approved leaves of absence, military
service absences, paid holidays, paid vacations, temporary absences due to illness or injury, disability, or any other reason, if
service is customarily accrued for purposes of the Pitney Bowes Pension Plan or the retirement plan of the Company’s
subsidiary for which the Employee works. In case of reemployment, subsequent termination pay entitlement will be based
upon credited service beginning on the date of rehire.
III. ELIGIBLITY
A. Eligibility. Each Employee shall be entitled to severance pay under the Plan payable in accordance with the applicable
severance benefit formula set forth in Section IV, provided his or her employment is terminated by the Company for any one
of the following reasons:
1. The full or partial shutdown of a business or a facility or department.
2. The sale of all or part of a business of the Company by means of a sale of assets or stock, or any form of merger, spin-off
or reorganization, including outsourcing of a business or function.
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3. The elimination of the Employee’s job or the consolidation or restructuring of his or her job functions on account of
reorganization.
4. Employment termination within two years after a Change of Control of the Company.
5. Any other circumstances deemed appropriate by the Company in its sole discretion from time to time, subject to Section
III.C. hereof.
B. Exception. Notwithstanding any other provision hereunder, an Employee shall not be eligible for severance pay hereunder if:
1. Within 30 days prior to or after termination of employment with the Company or its subsidiaries and affiliates, the
Employee is offered a comparable job with or accepts a job offered by the Company or its subsidiaries and affiliates,
except that an offer of continued employment or reemployment after a Change of Control shall be subject to the
limitations set forth in Section IV.E herein;
2. The Employee is terminated for Cause.
3. Within 30 days of termination of employment with the Company or its subsidiaries or affiliates, the Employee is either
offered a comparable job or accepts a position offered by a purchaser, joint venturer, affiliate, transferee, spun-off entity,
successor in interest (including without limitation one resulting from a merger or reorganization) of the Company or any
of its subsidiaries or affiliates or other entity acquiring the stock or the assets of the Company or any of its subsidiaries or
affiliates, including without limitation, an outsourcing company taking over a function or portion of the business of the
Company or its subsidiaries or affiliates.
A “comparable job” for purposes of Section III shall mean a job that pays at least 85% of the Employee’s base salary or
straight time hourly rate of pay immediately prior to the offer of employment and the location of which is no more than 35
miles from the Employee’s former primary worksite. The 35 mile requirement will not be applicable where the Employee’s
commutation to the new primary worksite is less than the Employee’s commutation the former primary worksite. The
Committee shall determine the primary worksite where the Employee does not report to any one work location on a regular
basis. An offer of continued employment or reemployment after a Change of Control shall be subject to the limitations set
forth in Section IV. E. “Change of Control Termination” herein. The Committee’s determination as to whether a job is
“comparable” shall be made in the Committee’s sole and absolute discretion and shall be final and binding on all parties.
C. Release. Notwithstanding any other provision hereunder to the contrary, any additional discretionary payments made
pursuant to Section III.A.5. and Section IV.A.(other than Section IV.A.1) may at the Company’s discretion be conditioned on
the Employee’s signing a waiver and release of claims to the satisfaction of the company.
IV. PAYMENT FORMULA
A. 1. Base Severance. The Company shall pay a minimum of two (2) weeks of Pay in severance benefits under this Plan if an
eligible Employee’s employment is terminated under circumstances described in Section III (“Minimum Severance Benefit”).
2. Conditional Severance. Severance benefits paid in excess of Base Severance is referred to as Conditional Severance. The
Company will provide one week of Pay, inclusive of Base Severance, for each completed full Year of Service (and one
additional half week of Pay if an
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Employee, in addition to completed full Years of Service, also has completed at least 6 months, but less than 12 months of
service in an only partially completed year), if the Participant’s service exceeds three years and the Employee signs a
separation agreement prepared by the Company containing a waiver and release of claims. If the Employee signs a separation
agreement prepared by the Company containing a waiver and release of claims, the minimum severance benefit payable
inclusive of Base and Conditional Severance shall be three (3) weeks of Pay, if the Participant’s service is three years or less.
For Employees below compensation Band I, severance benefits, including Base Severance, are capped at thirty-nine (39)
weeks.
3. Additional Conditional Severance. In addition, the Company reserves the right to pay additional amounts to Employees,
but the Company may exercise its discretion to pay no additional amount at all. In order to receive Additional Conditional
Severance, the Employee is required to sign a separation agreement prepared by the Company containing a waiver and
release of claims.
Notwithstanding the foregoing formula, the Company reserves the right to make discretionary severance payments as
business conditions warrant in lieu of payments based on the normal severance benefit formula described herein and to
require a waiver and release of claims for such discretionary severance.
B. Change of Control Exception. If any Employee employed by the Company as of the date of a Change of Control resigns for
any Good Reason set forth in Section IV.E. hereof and is then not subject to termination of employment by the Company for
Cause or, if any Employee is terminated by the Company for the reasons set forth in Section III.A. (and the exception under
Section III.B. is not applicable for this purpose) within two years after a Change of Control occurs whether or not such
termination is in connection with such Change of Control (“Change of Control Termination”), such Employee shall be
entitled to severance pay in accordance with the following:
1. For non-exempt Employees, two weeks of Pay for each completed full or partial Year of Service, with a minimum of four
weeks.
2. For exempt Employees below compensation Band F, three weeks of Pay for each completed full or partial Year of
Service, with a minimum of three months.
3. For Employees in compensation bands F or G, four weeks of Pay for each full or partial Year of Service, with a minimum
of six months.
Employees in compensation Bands H, I and J are not eligible for Change of Control severance benefits under this Plan.
C. Applicability of Change of Control. “Change of Control” provisions only apply if Pitney Bowes Inc. incurs a “Change of
Control.” Such provisions do not apply to employees of a Pitney Bowes subsidiary if that subsidiary or affiliated company
undergoes a change of control.
D. Maximum Severance Benefit. Notwithstanding anything to the contrary, the maximum severance pay benefit payable
hereunder to any Employee shall be an amount equal to two years of Pay.
E. Change of Control Termination. A “Change of Control Termination” shall include termination of the Employee’s
employment by the Employee for the following Good Reasons:
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1. The assignment to an Employee of any duties inconsistent in any respect with the Employee’s position, authority, duties
or responsibilities as existed on the day immediately prior to the Change of Control, or any other action by the Company
which results in a diminution in such position, authority, duties, or responsibilities, excluding for this purpose an isolated,
insubstantial, and inadvertent action taken in good faith and remedied by the Company or subsidiary, as applicable,
promptly after receipt of notice thereof given by the Employee;
2. Any failure by the Company following a Change of Control to continue to provide the Employee with Pay, benefits, or
other compensation equal to or greater than that to which such Employee was entitled immediately prior to the date of the
Change of Control, other than an isolated, insubstantial, and inadvertent failure occurring in good faith and remedied by
the Company promptly after receipt of notice thereof given by the Employee;
3. The Company’s requiring the Employee after a Change in Control to be based at any office or location more than 35
miles farther from the Employee’s place of residence or the office or location at which the Employee is employed
immediately prior to the date of the Change of Control; or
4. Any failure by Pitney Bowes Inc. to require any successor company who acquires all or substantially all of the business
and/or assets of Pitney Bowes Inc. (whether direct or indirect, by purchase, merger, consolidation or otherwise) to
expressly assume and agree to perform the Company’s obligations under the Plan in the same manner and to the same
extent that the Company would be required to perform it if no such succession had taken place.
For purposes of subparagraphs 1 through 4 of Section IV, any good faith determination made by an affected Employee
shall be conclusive.
F. Notice of Termination. As a condition of receiving any severance pay hereunder in connection with a Change of Control
Termination, any termination by the Employee shall be communicated by a Notice of Termination to the Company. Any
Notice of Termination shall be by written instrument which (i) indicates the specific termination provision in paragraph E
above relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of
the Employee’s employment under the provision so indicated, and (iii) if the date of termination is other than the date of
receipt of such notice, specifies the termination date (which date shall not be more than 15 days after the giving of such
notice). The failure by any Employee to set forth in the Notice of Termination any fact or circumstance which contributes to a
showing of entitlement to, terminate under subparagraphs 1 through 4 of paragraph E above shall not waive any right of such
Employee or preclude such Employee from asserting such fact or circumstance in enforcing his rights.
G. Cure Period. Notwithstanding the foregoing, a termination of employment for Good Reason under Section IV. E. shall not
occur if, within 30 days after the date the Employee gives a Notice of Termination to the Company after a Change of Control,
the Company corrects the action or failure to act that constitutes the grounds for termination for Good Reason as described in
Section IV.E. and as set forth in the Employee’s Notice of Termination. If the Company does not correct the action or failure
to act, the Employee must terminate his or her employment for Good Reason within 60 days after the end of the cure period,
in order for the termination to be considered a Good Reason termination.
H. Best-Net Cutback. In the event that any benefits payable to an Employee pursuant to the Plan (“Payments”) (i) constitute
“parachute payments” within the meaning of Section 280G
7
of the Code, and (ii) but for this Section IV would be subject to the excise tax imposed by Section 4999 of the Code, or any
comparable successor provisions (the “Excise Tax”), then the Employee’s Payments hereunder shall be either (x) provided to
the Employee in full, or (y) provided to the Employee as to such lesser extent which would result in no portion of such
benefits being subject to the Excise Tax, whichever of the foregoing amounts, when taking into account applicable federal,
state, local and foreign income and employment taxes, the Excise Tax, and any other applicable taxes, results in the receipt by
the Employee, on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such
benefits may be taxable under the Excise Tax. In the event that the payments and/or benefits are to be reduced pursuant to this
Section IV, such payments and benefits shall be reduced such that the reduction of compensation to be provided to the
Employee as a result of this Section IV is minimized. In applying this principle, the reduction shall be made in a manner
consistent with the requirements of Section 409A of the Code and where two economically equivalent amounts are subject to
reduction but payable at different times, such amounts shall be reduced on a pro rata basis but not below zero. Unless the
Company and the Employee otherwise agree in writing, any determination required under this Section IV shall be made in
writing in good faith by a nationally recognized accounting firm selected by the Company (the “Accountants”). The Company
shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section
IV.
I. Other Severance and Severance –type Payments. Any severance pay benefits otherwise payable under this Plan, shall be
reduced by amounts paid or payable under a severance pay arrangement or agreement between Pitney Bowes (including such
company that Pitney Bowes has acquired, divested, reorganized, merged into or spun-off) and the Employee.
V. FORMS OF PAYMENT
Severance shall be paid in a stream of payments on normal paydays following the termination date at the salary rate in effect on
the termination date, however, in no event shall the payment schedule extend over a period of more than two years from the date
of termination from employment.
Notwithstanding the above, severance payable as a result of a termination of employment occurring within two years after a
Change of Control shall be paid either: (a) in a single lump sum payment within fifteen (15) days following the termination of
employment or (b) in a stream of payments payable on regular pay periods following the termination of employment only if the
Change of Control event does not meet the definition of “change of control” under IRC Section 409A and if required to be paid
in that fashion by IRC Section 409A to avoid the additional tax imposed by IRC Section 409A.
VI. DEATH
If an Employee dies during a period of severance payment hereunder, any remaining severance pay that would otherwise be
payable if the Employee had not died shall be paid to the Employee’s estate. No severance benefits not otherwise payable
hereunder shall be payable under this Plan by reason of the Employee’s death.
VII. CLAIM PROCEDURE
A. Administrative Review. If an Employee makes a written request alleging a right to receive payments under this Plan or
alleging a right to receive an adjustment in benefits being paid under this Plan, such actions shall be treated as a claim for
benefits. All claims for benefits under this Plan shall be administered by the Vice President, Global Compensation & HR
Shared Services or equivalent role or, if delegated, to such human resources director or
8
appropriate administrator at the Employee’s business unit (“Administrator”). If the Administrator determines that any
individual who has claimed a right to receive benefits, or different benefits, under this Plan is not entitled to receive all or any
part of the benefits claimed, the Administrator shall inform the claimant in writing of such determination and the reasons
therefore in terms calculated to be understood by the claimant. The notice shall be sent within 90 days of the claim unless the
Administrator determines that additional time, not exceeding 90 days, is needed. The notice shall make specific reference to
the pertinent Plan provisions on which the denial is based, and shall describe any additional material or information that is
necessary. Such notice shall, in addition, inform the claimant of the procedure that the claimant should follow to take
advantage of the review procedure set forth below in the event the claimant desires to contest the denial of the claim. If the
Employee is not notified within the 90 day period specified herein, he or she may assume the claim has been denied.
B. Appeal to the Committee. The claimant may within 90 days thereafter submit in writing to the Committee a notice that the
claimant contests the denial of his or her claims and desires a further review by the Committee. The Committee shall within
60 days thereafter review the claim. The Committee will render a final decision on behalf of the Company with specific
reasons therefore in writing and will transmit it to the claimant within 60 days of the written request for review, unless it is
determined that additional time, not exceeding 60 days, is needed, and so notifies the Employee. If the Committee fails to
respond to a claim filed in accordance with the foregoing within 60 days or any such extended period, the Company shall be
deemed to have denied the claim.
C. Reimbursement of Claimant’s Expenses. If, after a Change of Control, an Employee institutes any legal action seeking to
obtain or enforce, or is required to defend in any legal action the validity or enforceability of, any right or benefit provided by
this Plan, the Company will pay for all actual legal fees and expenses incurred (as incurred) by such Employee, regardless of
the outcome of such action and whether such action is between the Company and the Participant or between either of them
and any third party.
D. Statute of Limitations. Completion of the claims and appeals process set forth in this Section VII. and Plan is a prerequisite
to seeking any remedy in court. A participant may not bring any legal action relating to a claim for benefits under the Plan
unless and until the participant has followed the claims procedures under the Plan and exhausted his or her administrative
remedies under such claims procedures. Moreover, any ERISA claim filed in state or federal court more than six-months after
receipt of notice of an adverse benefit determination at the conclusion of the appeals process set forth herein shall be barred
as untimely. For purposes of this Article Ten, notice shall be deemed to be received five days after the date of the written
notification.
VIII. AMENDMENT AND TERMINATION
A. This Plan is established by the Company on a voluntary basis and not on past consideration for services rendered, and the
benefits herein are provided at the will of the Company. Neither the establishment of this Plan nor the payment of benefits by
the Company shall be construed or interpreted as a condition of employment, nor shall this Plan modify or enlarge any rights
of any person covered by it to be continued or to be retained in the employ of the Company.
B. Prior to the time a Change of Control has occurred, the Company may, in its sole discretion, without notice, amend or
modify, in whole or in part, all of the terms and conditions of this Plan; provided, however, that this Plan may not be so
amended or modified in connection with an actual or threatened Change of Control in any manner which would adversely
affect
9
the interests of Employees. Such amendment or modification may be retroactive in application; provided, however, such
retroactive application shall not require or provide for the return or repayment of any benefits paid prior to the date of the
adoption of the amendment or modification.
C. Prior to the time a Change of Control has occurred, the Company shall have the sole and absolute right to terminate this Plan
without notice at any time; provided, however, that this Plan may not be so terminated in connection with an actual or
threatened Change of Control. Such termination shall be effective as of the date specified by the Company and, if no date is
specified, the date of the action of termination by the Company. Upon termination, the Company will continue to make
payments according to the terms of any effective terminated pay agreements, which have not been fully paid.
D. When a Change of Control, as defined herein, occurs, then all rights to severance payments contained herein shall vest in all
covered Employees and shall be considered a contract right enforceable against the Company and any successors thereto.
IX. PLAN ADMINSTRATON
A. The Committee shall be authorized to adopt administrative rules and procedures concerning the Plan or delegate to the
business units such authority and any such rules and procedures shall be binding upon Participants, except insofar the matter
deals with an executive officer of the Company. In Plan matters involving executive officers of the Company, the Executive
Compensation Committee of the Company’s Board of Directors has reserved to itself all powers and authority with respect to
this Plan, which it has otherwise delegated to the Committee with respect to non-executive officers.
B. All expenses reasonably incurred in the administration of the Plan shall be paid by the Company.
C. The determination or action of the Committee with respect to any question arising out of or in connection with the
administration of the Plan shall, to the extent not inconsistent with the provisions of the Plan, be final, conclusive, and
binding upon all persons having an interest in the Plan.
D. The Committee shall have the following powers and duties concerning the Plan:
1. to interpret and construe the terms and provisions of the Plan, to apply such terms and provisions as the Committee may
exclusively determine, to determine questions of eligibility and of the status and rights of Participants;
2. to make and enforce such rules and regulations as it shall deem necessary or proper for the efficient administration of the
Plan;
3. to delegate to the business units at Pitney Bowes such powers and duties to enable them to administer the Plan.
E. The Committee shall be the “Plan Administrator” of the Plan for purposes of ERISA. However, the Committee has delegated
to the appropriate Human Resources professionals in the business units the day-to-day, on-going administrative
responsibilities of the Plan. In addition, the Committee has delegated to the Human Resources professionals administrative
responsibility regarding employee eligibility for the Plan. It is intended that Human Resources administrators in the business
units shall have no discretion such that these
10
individuals performing services in these business units with respect to the Plan would not be considered to be “fiduciaries”
within the meaning of Section (3)(21) of ERISA.
F. All fiduciaries shall discharge their duties with respect to the Plan solely in the interest of the Employees and for the
exclusive purpose of providing benefits to Employees and of defraying reasonable expenses of administering the Plan, with
the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity
and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims. The Company
shall purchase and maintain liability insurance (which insurance shall not permit recourse against the insured parties), with
scope of coverage and limits of liability sufficient to protect the fiduciaries from monetary liability for any breach of their
responsibilities not resulting from their own gross negligence or willful misconduct.
X. MISCELLANEOUS
A. Benefits under the Plan are not in any way subject to the debts or other obligations of the persons entitled thereto and may
not be voluntarily or involuntarily sold, transferred, hypothecated, pledged or assigned. When any person entitled to benefits
under the Plan is under a legal disability, or in the opinion of the Committee is in any way incapacitated so as to be unable to
manage his or her affairs, the Committee may cause such person’s benefits to be paid to or for the benefit of such person in
any manner that the Committee may determine without responsibility of the Committee or the Company. Payments made
pursuant to such power shall operate as a complete discharge of the obligation under the Plan to make such payments.
Payments hereunder are, however, subject to all applicable withholding taxes.
B. The headings of the section in this Plan are placed herein for convenience of reference and, in the case of any conflict, the
text of the Plan, rather than such headings, shall control.
C. The masculine or feminine pronoun used herein refers to both men and women and, used in singular, is intended to include
the plural, whenever appropriate.
D. To the extent not inconsistent with ERISA, the provisions of this Plan shall be construed in accordance with the laws of the
State of Connecticut other than its choice of law rules.
E. In the event a person receives a benefit payment under the Plan which is in excess of the benefit payment that should have
been made, the Committee shall have the right to recover the amount of such excess from such person. The Committee may
at its option, deduct the amount of such excess from any subsequent benefits payable under the Plan to, or for, the person.
F. Any action required or permitted to be taken under the Plan by the Company may be taken by such individual, Committee or
entity as the Company may designate from time to time.
G. No payment may be made under this Plan that would cause it to be a “pension” plan as distinguished from a “welfare” plan
under the Employees Retirement Income Security Act of 1974 and the Department of Labor Regulations 29 C.F.R. 2510.3-
2(b) and successor regulations.
H. This Plan shall have no effect on the Employee’s eligibility for other benefits customarily provided after termination unless
otherwise stated in a written agreement executed by an authorized representative of the Company or in the applicable
employee benefit plan document. The payments of benefits under this Plan shall not be deemed to be a continuation of
employment.
11
I. This Plan is intended to be an unfunded plan. All payments pursuant to the Plan shall be made from the general funds of the
Company and no special or separate fund shall be established or other segregation of assets made to assure payment. No
Participant or other person shall have under any circumstances any interest in any particular property or assets of the
Company as a result of participating in the Plan.
J. Code Section 409A. If and to the extent that Code Section 409A applies to amounts payable under the Plan, distributions may
only be made under the Plan upon an event and in a manner permitted by Section 409A. To the extent that any provision of
the Plan would cause a conflict with any applicable requirements of Section 409A, or would cause the administration of the
Plan to fail to satisfy the applicable requirements of Section 409A, such provision shall be deemed null and void.
This Agreement is intended to comply with Code Section 409A and its corresponding regulations, or an exemption, to the
extent applicable. Notwithstanding anything in the Plan to the contrary, if Code Section 409A applies to the Plan and if an
Employee is a “specified employee,” as defined in Code Section 409A, payment of benefits under this Plan upon termination
of employment shall be postponed for six months after termination of employment if required in order to avoid adverse
taxation under Code Section 409A. If payment of benefits under the Plan is required to be postponed pursuant to Code
Section 409A, the accumulated amounts withheld on account of Code Section 409A shall be paid in a lump sum payment
within five days after the end of the required postponement period along with interest at the Applicable Federal Rate (short-
term) on the unpaid balance for the postponement period. If the Employee dies during such postponement period prior to the
payment of benefits, the amounts withheld on account of Code Section 409A shall be paid to the Employee’s beneficiary
determined under Section VI.
As used in this Plan, the term “termination of employment” shall mean an Employee’s separation from service with the
Company within the meaning of Code Section 409A. For purposes of Code Section 409A, the right to a series of payments
under the Agreement shall be treated as a right to a series of separate payments. In no event may a Participant, directly or
indirectly, designate the calendar year of a payment. All reimbursements and in-kind benefits provided under this Plan and
any separation agreement hereunder shall be made or provided in accordance with the requirements of Code Section 409A.
K. The invalidity or unenforceability of any provision of this Plan shall not affect the validity or enforceability of any other
provision of this Plan, which shall remain in full force and effect, and any prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
12
PITNEY BOWES INC.
SUBSIDIARIES OF REGISTRANT
The Registrant, Pitney Bowes Inc., a Delaware Corporation, has no parent
The following are subsidiaries of the Registrant
(as of December 31, 2023)
Exhibit 21
Subsidiary Name
B. Williams Funding Corp.
Cresco Data Australia Pty Ltd
Cresco Data Pte. Ltd
Harvey Company, L.L.C
MCGW Technology Development Private Limited
Mount Verde Insurance Company, Inc.
OldEurope Limited
OldMS Limited
PB Equipment Management Inc.
PB European UK LLC
PB Nova Scotia Holdings ULC
PB Nova Scotia II ULC
PB Nova Scotia VI ULC
PB Nova Scotia VII ULC
PB Professional Services Inc.
PB Worldwide Inc.
Pitney Bowes (Asia Pacific) Pte. Ltd
Pitney Bowes Australia FAS Pty Limited
Pitney Bowes Australia Pty Limited
Pitney Bowes Brasil Equipamentos e Servicos Ltda
Pitney Bowes Canada II LP
Pitney Bowes Deutschland GmbH
Pitney Bowes Finance Limited
Pitney Bowes Funding SRL
Pitney Bowes Global Ecommerce (APAC) Co. Ltd.
Pitney Bowes Global Ecommerce Inc.
Pitney Bowes Global Ecommerce Ireland Limited
Pitney Bowes Global Ecommerce UK Limited
Pitney Bowes Global Financial Services LLC
Pitney Bowes Global Limited
Pitney Bowes Global LLC
Pitney Bowes Global Logistics LLC
Pitney Bowes Holdco Limited
Pitney Bowes Holding SNC
Pitney Bowes Holdings Limited
Pitney Bowes India Private Limited
Pitney Bowes International Finance Limited
Pitney Bowes International Holdings, Inc.
Pitney Bowes Ireland Limited
Pitney Bowes Japan K.K.
Pitney Bowes Limited
Country or state of incorporation
Delaware
Australia
Singapore
Delaware
India
Vermont
United Kingdom
United Kingdom
Delaware
Delaware
Canada
Canada
Canada
Canada
Delaware
Delaware
Singapore
Australia
Australia
Brazil
Canada
Germany
United Kingdom
Barbados
China
Delaware
Ireland
United Kingdom
Delaware
United Kingdom
Delaware
Delaware
United Kingdom
France
United Kingdom
India
United Kingdom
Delaware
Ireland
Japan
United Kingdom
Pitney Bowes Luxembourg Holding S.a.r.l.
Pitney Bowes New Zealand Limited
Pitney Bowes Nova Scotia ULC
Pitney Bowes of Canada Ltd. - Pitney Bowes du Canada Ltee
Pitney Bowes PayCo Hong Kong Limited
Pitney Bowes Polska Sp. z.o.o.
Pitney Bowes Presort Services, LLC
Pitney Bowes Puerto Rico, Inc.
Pitney Bowes SAS
Pitney Bowes Shelton Realty LLC
Pitney Bowes Software Pty Ltd
Pitney Bowes UK Funding Limited
Pitney Bowes UK LP
The Pitney Bowes Bank, Inc.
Wheeler Financial from Pitney Bowes Inc.
Luxembourg
New Zealand
Canada
Canada
Hong Kong
Poland
Delaware
Puerto Rico
France
Connecticut
Australia
United Kingdom
United Kingdom
Utah
Delaware
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-269872) and on Form S-8 (Nos. 333-266460,
333-240336, 333-231313, 333-224833, 333-190308, 333-132591, 333-132590, and 333-05731) of Pitney Bowes Inc. of our report dated February 20, 2024
relating to the financial statements, the financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this
Form 10-K.
EXHIBIT 23
/s/ PricewaterhouseCoopers LLP
Stamford, Connecticut
February 20, 2024
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 31.1
I, Jason C. Dies, certify that:
1. I have reviewed this Annual Report on Form 10-K of Pitney Bowes Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control
over financial reporting.
Date: February 20, 2024
/s/ Jason C. Dies
Jason C. Dies
Interim Chief Executive Officer
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 31.2
I, Ana Maria Chadwick, certify that:
1. I have reviewed this Annual Report on Form 10-K of Pitney Bowes Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control
over financial reporting.
Date: February 20, 2024
/s/ Ana Maria Chadwick
Ana Maria Chadwick
Executive Vice President and Chief Financial Officer
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.1
In connection with the Annual Report of Pitney Bowes Inc. (the "Company") on Form 10-K for the year ended December 31, 2023 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Jason C. Dies, Interim Chief Executive Officer of the Company, certify, to the
best of my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)
(2)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Company.
/s/ Jason C. Dies
Jason C. Dies
Interim Chief Executive Officer
Date: February 20, 2024
The foregoing certification is being furnished solely to accompany this report pursuant to 18 U.S.C. §1350, and is not being filed for purposes of Section 18
of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company.
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.2
In connection with the Annual Report of Pitney Bowes Inc. (the "Company") on Form 10-K for the year ended December 31, 2023 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Ana Maria Chadwick, Executive Vice President and Chief Financial Officer of
the Company, certify, to the best of my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:
(1)
(2)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Company.
/s/ Ana Maria Chadwick
Ana Maria Chadwick
Executive Vice President and Chief Financial Officer
Date: February 20, 2024
The foregoing certification is being furnished solely to accompany this report pursuant to 18 U.S.C. §1350, and is not being filed for purposes of Section 18
of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company.