UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
þQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2012 
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
Commission file number: 1-3579
PITNEY BOWES INC.
(Exact name of registrant as specified in its charter)

 	 	 	
Delaware	 	06-0495050	
(State or other jurisdiction of incorporation or organization)	 	(I.R.S. Employer Identification No.)	
 	 	 	
1 Elmcroft Road, Stamford, Connecticut	 	06926-0700	
(Address of principal executive offices)	 	(Zip Code)	

 	
(203) 356-5000	
(Registrant’s telephone number, including area code)	
 	
(Former name, former address and former fiscal year, if changed since last report)	
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 þ	No o          	
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes þ	No o          	
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o	
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o	No þ          	
Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of November 1, 2012.

Class	 	Outstanding	
Common Stock, $1 par value per share	 	200,751,672 shares	

1

PITNEY BOWES INC.
INDEX

 	 	 	
 	 	Page Number	
 	 	 	
Part I - Financial Information:	 	
 	 	 	
Item 1:	Financial Statements (Unaudited)	 	
 	 	 	
 	Condensed Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2012 and 2011	3

 	Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2012 and 2011	4	
 	 	 	
 	Condensed Consolidated Balance Sheets at September 30, 2012 and December 31, 2011	5	
 	 	 	
 	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2012 and 2011	6	
 	 	 	
 	Notes to Condensed Consolidated Financial Statements	7	
 	 	 	
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26	
 	 	 	
Item 3:	Quantitative and Qualitative Disclosures about Market Risk	35	
 	 	 	
Item 4:	Controls and Procedures	35	
 	 	 	
Part II - Other Information:	 	
 	 	 	
Item 1:	Legal Proceedings	36	
 	 	 	
Item 1A:	Risk Factors	36	
 	 	 	
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	36	
 	 	 	
Item 6:	Exhibits	36	
 	 	 	
Signatures	37	

2

PART I. FINANCIAL INFORMATION
Item 1: Financial Statements
PITNEY BOWES INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited; in thousands, except per share data)

 	Three Months Ended	 	Nine Months Ended	
 	September 30,	 	September 30,	
 	2012	 	2011	 	2012	 	2011	
Revenue:	 	

 	 	 	
 	
Equipment sales	$	212,103	
 	 	$	221,475	
 	 	$	656,517	
 	 	$	706,027	
 	
Supplies	66,902	
 	 	74,271	
 	 	213,789	
 	 	235,728	
 	
Software	93,476	
 	 	113,224	
 	 	302,377	
 	 	318,305	
 	
Rentals	142,288	
 	 	154,210	
 	 	428,174	
 	 	467,064	
 	
Financing	123,999	
 	 	136,000	
 	 	373,695	
 	 	412,958	
 	
Support services	171,652	
 	 	175,286	
 	 	516,424	
 	 	530,707	
 	
Business services	405,257	
 	 	425,258	
 	 	1,226,175	
 	 	1,266,478	
 	
Total revenue	1,215,677	
 	 	1,299,724	
 	 	3,717,151	
 	 	3,937,267	
 	
Costs and expenses:	 	

 	 	 	
 	
Cost of equipment sales	105,556	
 	 	97,559	
 	 	309,190	
 	 	316,697	
 	
Cost of supplies	20,694	
 	 	22,611	
 	 	65,428	
 	 	74,365	
 	
Cost of software	22,784	
 	 	23,431	
 	 	68,281	
 	 	73,541	
 	
Cost of rentals	25,182	
 	 	35,819	
 	 	87,257	
 	 	107,834	
 	
Financing interest expense	19,604	
 	 	21,430	
 	 	61,385	
 	 	66,915	
 	
Cost of support services	107,095	
 	 	114,074	
 	 	334,304	
 	 	344,767	
 	
Cost of business services	315,830	
 	 	326,415	
 	 	948,359	
 	 	985,232	
 	
Selling, general and administrative	400,862	
 	 	427,412	
 	 	1,203,653	
 	 	1,286,739	
 	
Research and development	36,669	
 	 	35,573	
 	 	104,518	
 	 	107,772	
 	
Restructuring charges and asset impairments	9,986	
 	 	32,956	
 	 	11,060	
 	 	63,974	
 	
Goodwill impairment	18,315	
 	 	45,650	
 	 	18,315	
 	 	45,650	
 	
Other interest expense	27,541	
 	 	28,932	
 	 	87,261	
 	 	86,006	
 	
Interest income	(2,057	)	 	(1,265	)	 	(5,793	)	 	(4,702	)	
Other expense (income), net	—	
 	 	(10,718	)	 	1,138	
 	 	(10,718	)	
Total costs and expenses	1,108,061	
 	 	1,199,879	
 	 	3,294,356	
 	 	3,544,072	
 	
Income from continuing operations before income taxes	107,616	
 	 	99,845	
 	 	422,795	
 	 	393,195	
 	
Provision (benefit) for income taxes	26,489	
 	 	(17,087	)	 	93,519	
 	 	77,319	
 	
Income from continuing operations	81,127	
 	 	116,932	
 	 	329,276	
 	 	315,876	
 	
Income from discontinued operations, net of tax	—	
 	 	60,428	
 	 	19,332	
 	 	57,911	
 	
Net income before attribution of noncontrolling interests	81,127	
 	 	177,360	
 	 	348,608	
 	 	373,787	
 	
Less: Preferred stock dividends of subsidiaries attributable to noncontrolling interests	4,594	
 	 	4,593	
 	 	13,782	
 	 	13,781	
 	
Net income - Pitney Bowes Inc.	$	76,533	
 	 	$	172,767	
 	 	$	334,826	
 	 	$	360,006	
 	
Amounts attributable to common stockholders:	 	

 	 	 	
 	
Net income from continuing operations	$	76,533	
 	 	$	112,339	
 	 	$	315,494	
 	 	$	302,095	
 	
Income from discontinued operations, net of tax	—	
 	 	60,428	
 	 	19,332	
 	 	57,911	
 	
Net income - Pitney Bowes Inc.	$	76,533	
 	 	$	172,767	
 	 	$	334,826	
 	 	$	360,006	
 	
Basic earnings per share attributable to common stockholders (1):	 	

 	 	 	
 	
Continuing operations	$	0.38	
 	 	$	0.56	
 	 	$	1.58	
 	 	$	1.49	
 	
Discontinued operations	—	
 	 	0.30	
 	 	0.10	
 	 	0.29	
 	
Net income - Pitney Bowes Inc.	$	0.38	
 	 	$	0.86	
 	 	$	1.67	
 	 	$	1.78	
 	
Diluted earnings per share attributable to common stockholders (1):	 	

 	 	 	
 	
Continuing operations	$	0.38	
 	 	$	0.56	
 	 	$	1.57	
 	 	$	1.48	
 	
Discontinued operations	—	
 	 	0.30	
 	 	0.10	
 	 	0.28	
 	
Net income - Pitney Bowes Inc.	$	0.38	
 	 	$	0.85	
 	 	$	1.66	
 	 	$	1.77	

(1)	The sum of the earnings per share amounts may not equal the totals due to rounding.	
See Notes to Condensed Consolidated Financial Statements

3

PITNEY BOWES INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited; in thousands)

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended	 	Nine Months Ended	
 	 	September 30,	 	September 30,	
 	 	2012	 	2011	 	2012	 	2011	
 	 	 	 	 	 	 	 	 	
Net income - Pitney Bowes Inc.	 	$	76,533	
 	 	$	172,767	
 	 	$	334,826	
 	 	$	360,006	
 	
Other comprehensive income, net of tax:	 	 	 	 	 	 	 	 	
Foreign currency translations	 	19,025	
 	 	(111,317	)	 	(883	)	 	(35,336	)	
Net unrealized gain on cash flow hedges, net of tax of $21, $773, $374 and $1,018, respectively	 	25	
 	 	1,209	
 	 	578	
 	 	1,596	
 	
Net unrealized gain on investment securities, net of tax of $377, $2,012, $618 and $2,722, respectively	 	589	
 	 	3,147	
 	 	967	
 	 	4,258	
 	
Amortization of pension and postretirement costs, net of tax of $6,755, $4,825, $20,221 and $14,658, respectively	 	12,151	
 	 	8,692	
 	 	35,115	
 	 	25,857	
 	
Other comprehensive income (loss)	 	31,790	
 	 	(98,269	)	 	35,777	
 	 	(3,625	)	
Comprehensive income - Pitney Bowes Inc.	 	108,323	
 	 	74,498	
 	 	370,603	
 	 	356,381	
 	
Preferred stock dividends of subsidiaries attributable to noncontrolling interests	 	4,594	
 	 	4,593	
 	 	13,782	
 	 	13,781	
 	
Total comprehensive income	 	$	112,917	
 	 	$	79,091	
 	 	$	384,385	
 	 	$	370,162	

See Notes to Condensed Consolidated Financial Statements

4

PITNEY BOWES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; in thousands, except share and per share data)

 	September 30, 2012	 	December 31, 2011	
ASSETS	 	

Current assets:	 	

Cash and cash equivalents	$	424,789	
 	 	$	856,238	
 	
Short-term investments	36,238	
 	 	12,971	
 	
Accounts receivable, gross	695,575	
 	 	755,485	
 	
Allowance for doubtful accounts receivables	(28,355	)	 	(31,855	)	
Accounts receivable, net	667,220	
 	 	723,630	
 	
Finance receivables	1,218,080	
 	 	1,296,673	
 	
Allowance for credit losses	(26,368	)	 	(45,583	)	
Finance receivables, net	1,191,712	
 	 	1,251,090	
 	
Inventories	187,082	
 	 	178,599	
 	
Current income taxes	22,044	
 	 	102,556	
 	
Other current assets and prepayments	144,987	
 	 	134,774	
 	
Total current assets	2,674,072	
 	 	3,259,858	
 	
Property, plant and equipment, net	382,850	
 	 	404,146	
 	
Rental property and equipment, net	249,310	
 	 	258,711	
 	
Finance receivables	1,047,411	
 	 	1,123,638	
 	
Allowance for credit losses	(18,235	)	 	(17,847	)	
Finance receivables, net	1,029,176	
 	 	1,105,791	
 	
Investment in leveraged leases	34,373	
 	 	138,271	
 	
Goodwill	2,127,114	
 	 	2,147,088	
 	
Intangible assets, net	175,995	
 	 	212,603	
 	
Non-current income taxes	45,615	
 	 	89,992	
 	
Other assets	555,661	
 	 	530,644	
 	
Total assets	$	7,274,166	
 	 	$	8,147,104	
 	
LIABILITIES, NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY (DEFICIT)	 	 	
 	
Current liabilities:	 	

Accounts payable and accrued liabilities	$	1,643,395	
 	 	$	1,840,465	
 	
Current income taxes	220,236	
 	 	242,972	
 	
Notes payable and current portion of long-term obligations	375,000	
 	 	550,000	
 	
Advance billings	449,051	
 	 	458,425	
 	
Total current liabilities	2,687,682	
 	 	3,091,862	
 	
Deferred taxes on income	25,017	
 	 	175,944	
 	
Tax uncertainties and other income tax liabilities	193,867	
 	 	194,840	
 	
Long-term debt	3,305,504	
 	 	3,683,909	
 	
Other non-current liabilities	641,093	
 	 	743,165	
 	
Total liabilities	6,853,163	
 	 	7,889,720	
 	
Noncontrolling interests (Preferred stockholders’ equity in subsidiaries)	296,370	
 	 	296,370	
 	
Commitments and contingencies (See Note 11)	

 	
 	
Stockholders’ equity (deficit):	 	 	 	
Cumulative preferred stock, $50 par value, 4% convertible	4	
 	 	4	
 	
Cumulative preference stock, no par value, $2.12 convertible	653	
 	 	659	
 	
Common stock, $1 par value (480,000,000 shares authorized; 323,337,912 shares issued)	323,338	
 	 	323,338	
 	
Additional paid-in capital	222,620	
 	 	240,584	
 	
Retained earnings	4,709,761	
 	 	4,600,217	
 	
Accumulated other comprehensive loss	(625,868	)	 	(661,645	)	
Treasury stock, at cost (122,592,062 and 123,586,842 shares, respectively)	(4,505,875	)	 	(4,542,143	)	
Total Pitney Bowes Inc. stockholders’ equity (deficit)	124,633	
 	 	(38,986	)	
Total liabilities, noncontrolling interests and stockholders’ equity (deficit)	$	7,274,166	
 	 	$	8,147,104	
 	
See Notes to Condensed Consolidated Financial Statements

5

PITNEY BOWES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in thousands)

 	Nine Months Ended September 30,	
 	2012	 	2011	
Cash flows from operating activities:	 	

Net income before attribution of noncontrolling interests	$	348,608	
 	 	$	373,787	
 	
Restructuring payments	(60,746	)	 	(78,379	)	
Special pension plan contributions	(95,000	)	 	(123,000	)	
Tax payments related to sale of leveraged lease assets	(99,249	)	 	—	
 	
Adjustments to reconcile net income to net cash provided by operating activities:	 	

Goodwill impairment	18,315	
 	 	45,650	
 	
Gain on sale of leveraged lease assets, net of tax	(12,886	)	 	(26,689	)	
Depreciation and amortization	191,507	
 	 	205,001	
 	
Stock-based compensation	13,505	
 	 	13,393	
 	
Restructuring charges and asset impairments	11,060	
 	 	63,974	
 	
Changes in operating assets and liabilities:	 	

(Increase) decrease in accounts receivable	58,135	
 	 	113,422	
 	
(Increase) decrease in finance receivables	144,442	
 	 	169,109	
 	
(Increase) decrease in inventories	(7,620	)	 	(12,731	)	
(Increase) decrease in other current assets and prepayments	(18,018	)	 	(3,707	)	
Increase (decrease) in accounts payable and accrued liabilities	(124,559	)	 	(102,092	)	
Increase (decrease) in current and non-current income taxes	38,761	
 	 	133,893	
 	
Increase (decrease) in advance billings	(1,551	)	 	(22,392	)	
Increase (decrease) in other operating capital, net	34,929	
 	 	1,217	
 	
Net cash provided by operating activities	439,633	
 	 	750,456	
 	
Cash flows from investing activities:	 	

Short-term and other investments	(58,255	)	 	(100,268	)	
Capital expenditures	(127,816	)	 	(123,029	)	
Proceeds from sale of leveraged lease assets	105,506	
 	 	101,784	
 	
Net investment in external financing	(134	)	 	(4,458	)	
Reserve account deposits	(15,373	)	 	(14,528	)	
Net cash used in investing activities	(96,072	)	 	(140,499	)	
Cash flows from financing activities:	 	

Decrease in notes payable, net	—	
 	 	(50,000	)	
Principal payments of long-term obligations	(550,000	)	 	—	
 	
Proceeds from issuance of common stock	6,989	
 	 	10,436	
 	
Stock repurchases	—	
 	 	(99,997	)	
Dividends paid to stockholders	(225,282	)	 	(225,676	)	
Dividends paid to noncontrolling interests	(9,188	)	 	(9,188	)	
Net cash used in financing activities	(777,481	)	 	(374,425	)	
Effect of exchange rate changes on cash and cash equivalents	2,471	
 	 	(4,701	)	
(Decrease) increase in cash and cash equivalents	(431,449	)	 	230,831	
 	
Cash and cash equivalents at beginning of period	856,238	
 	 	484,363	
 	
Cash and cash equivalents at end of period	$	424,789	
 	 	$	715,194	
 	
Cash interest paid	$	170,119	
 	 	$	177,682	
 	
Cash income tax payments (refund), net	$	145,090	
 	 	$	(68,659	)	

See Notes to Condensed Consolidated Financial Statements

6

PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands of dollars, unless otherwise noted)

1. Description of Business and Basis of Presentation
Pitney Bowes Inc. and its subsidiaries (the company, we, us, and our) is a global provider of software, hardware and services that enables both physical and digital communications and that integrates those physical and digital communications channels. We offer a full suite of equipment, supplies, software, services and solutions for managing and integrating physical and digital communication channels. We conduct our business activities in seven reporting segments within two business groups: Small & Medium Business Solutions and Enterprise Business Solutions. See Note 12 for information regarding our reportable segments.
The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and the instructions to Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In addition, the December 31, 2011 Condensed Consolidated Balance Sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. In management's opinion, all adjustments, consisting of normal recurring adjustments, considered necessary to present fairly our financial position, results of operations and cash flows for the periods presented have been included. Operating results for the periods presented are not necessarily indicative of the results that may be expected for any other interim period or the year ending December 31, 2012.
These statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report to Stockholders on Form 10-K for the year ended December 31, 2011 (the 2011 Annual Report). Certain prior year amounts have been reclassified to conform to the current period presentation.
2. Inventories
Inventories at September 30, 2012 and December 31, 2011 consisted of the following:

 	September 30,
2012	 	December 31,
2011	
Raw materials and work in process	$	64,333	
 	 	$	63,216	
 	
Supplies and service parts	75,053	
 	 	68,600	
 	
Finished products	74,653	
 	 	71,958	
 	
Inventory at FIFO cost	214,039	
 	 	203,774	
 	
Excess of FIFO cost over LIFO cost	(26,957	)	 	(25,175	)	
Total inventory, net	$	187,082	
 	 	$	178,599	

7

PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands of dollars, unless otherwise noted)

3. Finance Assets
Finance Receivables
Finance receivables are comprised of sales-type lease receivables and unsecured revolving loan receivables. Sales-type lease receivables are generally due in monthly, quarterly or semi-annual installments over periods ranging from three to five years. Loan receivables arise primarily from financing services offered to our customers for postage and related supplies. Loan receivables are generally due each month; however, customers may rollover outstanding balances.
Finance receivables at September 30, 2012 and December 31, 2011 consisted of the following:

 	September 30, 2012	
 	North America	 	International	 	Total	
Sales-type lease receivables	 	

 	
Gross finance receivables	$	1,603,444	
 	 	$	456,370	
 	 	$	2,059,814	
 	
Unguaranteed residual values	155,999	
 	 	20,733	
 	 	176,732	
 	
Unearned income	(317,457	)	 	(105,525	)	 	(422,982	)	
Allowance for credit losses	(17,138	)	 	(9,820	)	 	(26,958	)	
Net investment in sales-type lease receivables	1,424,848	
 	 	361,758	
 	 	1,786,606	
 	
Loan receivables	 	

 	
Loan receivables	404,099	
 	 	47,848	
 	 	451,947	
 	
Allowance for credit losses	(15,477	)	 	(2,188	)	 	(17,665	)	
Net investment in loan receivables	388,622	
 	 	45,660	
 	 	434,282	
 	
Net investment in finance receivables	$	1,813,470	
 	 	$	407,418	
 	 	$	2,220,888	

 	December 31, 2011	
 	North America	 	International	 	Total	
Sales-type lease receivables	 	

 	
Gross finance receivables	$	1,727,653	
 	 	$	460,101	
 	 	$	2,187,754	
 	
Unguaranteed residual values	185,450	
 	 	20,443	
 	 	205,893	
 	
Unearned income	(348,286	)	 	(102,618	)	 	(450,904	)	
Allowance for credit losses	(28,661	)	 	(12,039	)	 	(40,700	)	
Net investment in sales-type lease receivables	1,536,156	
 	 	365,887	
 	 	1,902,043	
 	
Loan receivables	 	

 	
Loan receivables	436,631	
 	 	40,937	
 	 	477,568	
 	
Allowance for credit losses	(20,272	)	 	(2,458	)	 	(22,730	)	
Net investment in loan receivables	416,359	
 	 	38,479	
 	 	454,838	
 	
Net investment in finance receivables	$	1,952,515	
 	 	$	404,366	
 	 	$	2,356,881	
 	
Allowance for Credit Losses and Aging of Receivables
We estimate our finance receivable risks and provide allowances for credit losses accordingly. We establish credit approval limits based on the credit quality of the customer and the type of equipment financed. We believe that our concentration of credit risk is limited because of our large number of customers, small account balances for most of our customers, and customer geographic and industry diversification.

Our policy is to discontinue revenue recognition for lease receivables that are more than 120 days past due and for unsecured loan receivables that are more than 90 days past due. We resume revenue recognition when customer payments reduce the account balance aging to 60 days or less past due. We evaluate the adequacy of the allowance for credit losses based on historical loss experience, the nature and volume of our portfolios, adverse situations that may affect a customer’s ability to pay and prevailing economic conditions, and make adjustments to the reserves as necessary. This evaluation is inherently subjective and actual results may differ significantly from estimated reserves.

8

PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands of dollars, unless otherwise noted)

We maintain a program for U.S. borrowers in our North America loan portfolio who are experiencing financial difficulties, but are able to make reduced payments over an extended period of time. Upon acceptance into the program, the borrower’s credit line is closed, interest accrual is suspended, the borrower’s minimum required payment is reduced and the account is re-aged and classified as current. There is generally no forgiveness of debt or reduction of balances owed. The loans in the program are considered to be troubled debt restructurings because of the concessions granted to the borrower. At September 30, 2012 and December 31, 2011, loans in this program had a balance of $5 million and $7 million, respectively.

The allowance for credit losses for these modified loans is determined by the difference between the cash flows expected to be received from the borrower discounted at the original effective rate and the carrying value of the loan. The allowance for credit losses related to such loans was $1 million at September 30, 2012 and $2 million at December 31, 2011 and is included in the allowance for credit losses of North America loans in the table below. Management believes that the allowance for credit losses is adequate for these loans and all other loans in the portfolio. Write-offs of loans in the program for the past twelve months were less than $1 million.

Activity in the allowance for credit losses for finance receivables for the nine months ended September 30, 2012 was as follows:

 	Sales-type Lease Receivables	 	Loan Receivables	 	 	
 	North
America	 	International	 	North
America	 	International	 	Total	
Balance at January 1, 2012	$	28,661	
 	 	$	12,039	
 	 	$	20,272	
 	 	$	2,458	
 	 	$	63,430	
 	
Amounts charged to expense	1,171	
 	 	1,489	
 	 	4,069	
 	 	703	
 	 	7,432	
 	
Accounts written off	(12,694	)	 	(3,708	)	 	(8,864	)	 	(973	)	 	(26,239	)	
Balance at September 30, 2012	$	17,138	
 	 	$	9,820	
 	 	$	15,477	
 	 	$	2,188	
 	 	$	44,623	

The aging of finance receivables at September 30, 2012 and December 31, 2011 was as follows:

 	Sales-type Lease Receivables	 	Loan Receivables	 	 	
 	North
America	 	International	 	North
America	 	International	 	Total	
September 30, 2012	 	

 	 	 	

< 31 days	$	1,520,139	
 	 	$	429,389	
 	 	$	382,897	
 	 	$	42,549	
 	 	$	2,374,974	
 	
> 30 days and < 61 days	30,160	
 	 	8,996	
 	 	11,268	
 	 	3,451	
 	 	53,875	
 	
> 60 days and < 91 days	29,187	
 	 	5,444	
 	 	4,302	
 	 	1,211	
 	 	40,144	
 	
> 90 days and < 121 days	6,441	
 	 	3,118	
 	 	2,280	
 	 	347	
 	 	12,186	
 	
> 120 days	17,517	
 	 	9,423	
 	 	3,352	
 	 	290	
 	 	30,582	
 	
Total	$	1,603,444	
 	 	$	456,370	
 	 	$	404,099	
 	 	$	47,848	
 	 	$	2,511,761	
 	
Past due amounts > 90 days	 	

 	 	 	

Still accruing interest	$	6,441	
 	 	$	3,118	
 	 	$	—	
 	 	$	—	
 	 	$	9,559	
 	
Not accruing interest	17,517	
 	 	9,423	
 	 	5,632	
 	 	637	
 	 	33,209	
 	
Total	$	23,958	
 	 	$	12,541	
 	 	$	5,632	
 	 	$	637	
 	 	$	42,768	

9

PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands of dollars, unless otherwise noted)

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Sales-type Lease Receivables	 	Loan Receivables	 	 	
 	North
America	 	International	 	North
America	 	International	 	Total	
December 31, 2011	 	

 	 	 	

< 31 days	$	1,641,706	
 	 	$	434,811	
 	 	$	414,434	
 	 	$	38,841	
 	 	$	2,529,792	
 	
> 30 days and < 61 days	41,018	
 	 	10,152	
 	 	12,399	
 	 	1,066	
 	 	64,635	
 	
> 60 days and < 91 days	24,309	
 	 	5,666	
 	 	4,362	
 	 	425	
 	 	34,762	
 	
> 90 days and < 121 days	4,912	
 	 	3,207	
 	 	2,328	
 	 	186	
 	 	10,633	
 	
> 120 days	15,708	
 	 	6,265	
 	 	3,108	
 	 	419	
 	 	25,500	
 	
Total	$	1,727,653	
 	 	$	460,101	
 	 	$	436,631	
 	 	$	40,937	
 	 	$	2,665,322	
 	
Past due amounts > 90 days	 	

 	 	 	

Still accruing interest	$	4,912	
 	 	$	3,207	
 	 	$	—	
 	 	$	—	
 	 	$	8,119	
 	
Not accruing interest	15,708	
 	 	6,265	
 	 	5,436	
 	 	605	
 	 	28,014	
 	
Total	$	20,620	
 	 	$	9,472	
 	 	$	5,436	
 	 	$	605	
 	 	$	36,133	
 	
Credit Quality
The extension of credit and management of credit lines to new and existing customers uses a combination of an automated credit score, where available, and a detailed manual review of the customer’s financial condition and, when applicable, the customer’s payment history. Once credit is granted, the payment performance of the customer 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. The portfolio management processes ensure that our global strategy is executed, collection resources are allocated appropriately and enhanced tools and processes are implemented as needed.
We use a third party to score the majority of the North America portfolio on a quarterly basis using a commercial credit score. We do not use a third party to score our International portfolios because the cost to do so is prohibitive, it is a localized process and there is no single credit score model that covers all countries.
The table below shows the North America portfolio at September 30, 2012 and December 31, 2011 by relative risk class (low, medium, high) based on the relative scores of the accounts within each class. The relative scores are determined based on a number of factors, including the company type, ownership structure, payment history and financial information. A fourth class is shown for accounts that are not scored. Absence of a score is not indicative of the credit quality of the account. The degree of risk, as defined by the third party, refers to the relative risk that an account in the next 12 month period may become delinquent.
 	 	
•	Low risk accounts are companies with very good credit scores and are considered to approximate the top 30% of all commercial borrowers.	
 	 	
•	Medium risk accounts are companies with average to good credit scores and are considered to approximate the middle 40% of all commercial borrowers.	
 	 	
•	High risk accounts are companies with poor credit scores, are delinquent or are at risk of becoming delinquent and are considered to approximate the bottom 30% of all commercial borrowers.	

10

PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands of dollars, unless otherwise noted)

 	 	 	 	 	 	 	 	
 	September 30,
2012	 	December 31,
2011	
Sales-type lease receivables	 	

Risk Level	 	

Low	$	1,070,643	
 	 	$	1,096,676	
 	
Medium	416,138	
 	 	473,394	
 	
High	50,222	
 	 	58,177	
 	
Not Scored	66,441	
 	 	99,406	
 	
Total	$	1,603,444	
 	 	$	1,727,653	
 	
Loan receivables	 	

Risk Level	 	

Low	$	258,849	
 	 	$	269,547	
 	
Medium	126,984	
 	 	115,490	
 	
High	15,114	
 	 	21,081	
 	
Not Scored	3,152	
 	 	30,513	
 	
Total	$	404,099	
 	 	$	436,631	

 	

Although the relative score of accounts within each class is used as a factor in determining a customer credit limit, it is not indicative of our actual history of losses due to the business essential nature of our products and services. The aging schedule included above, showing approximately 1.7% of the portfolio as greater than 90 days past due, and the roll-forward schedule of the allowance for credit losses, showing the actual losses for the nine months ended September 30, 2012, are more representative of the potential loss performance of our portfolio than relative risk based on scores, as defined by the third party.

Leveraged Leases
Our investment in leveraged lease assets consisted of the following:

 	September 30,
2012	 	December 31,
2011	
Rental receivables	$	89,193	
 	 	$	810,306	
 	
Unguaranteed residual values	14,312	
 	 	13,784	
 	
Principal and interest on non-recourse loans	(60,762	)	 	(606,708	)	
Unearned income	(8,370	)	 	(79,111	)	
Investment in leveraged leases	34,373	
 	 	138,271	
 	
Less: deferred taxes related to leveraged leases	(20,199	)	 	(101,255	)	
Net investment in leveraged leases	$	14,174	
 	 	$	37,016	
 	
The following is a summary of the components of income from leveraged leases:

 	Three Months Ended September 30,	 	Nine Months Ended September 30,	
 	2012	 	2011	 	2012	 	2011	
Pretax leveraged lease income	$	467	
 	 	$	1,457	
 	 	$	1,692	
 	 	$	4,551	
 	
Income tax effect	8	
 	 	(641	)	 	33	
 	 	(804	)	
Income from leveraged leases	$	475	
 	 	$	816	
 	 	$	1,725	
 	 	$	3,747	
 	
During 2012, we sold certain non-U.S. leveraged lease assets for cash. The investment in the leveraged lease assets at the date of sale was $109 million and an after-tax gain of $13 million was recognized. In the third quarter 2011, we also sold certain non-U.S. leveraged lease assets for cash. The investment in the leveraged lease assets at the date of sale was $109 million and an after-tax gain of $27 million was recognized. The effects of these sales are not included in the table above.

11

PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands of dollars, unless otherwise noted)

4. Intangible Assets and Goodwill
Intangible assets
Intangible assets at September 30, 2012 and December 31, 2011 consisted of the following:

 	September 30, 2012	 	December 31, 2011	
 	Gross
Carrying
Amount	 	Accumulated
Amortization	 	Net
Carrying
Amount	 	Gross
Carrying
Amount	 	Accumulated
Amortization	 	Net
Carrying
Amount	
Customer relationships	$	406,746	
 	 	$	(260,737	)	 	$	146,009	
 	 	$	409,489	
 	 	$	(237,536	)	 	$	171,953	
 	
Supplier relationships	29,000	
 	 	(21,387	)	 	7,613	
 	 	29,000	
 	 	(19,213	)	 	9,787	
 	
Software & technology	168,912	
 	 	(149,360	)	 	19,552	
 	 	170,286	
 	 	(143,456	)	 	26,830	
 	
Trademarks & trade names	34,844	
 	 	(32,101	)	 	2,743	
 	 	33,908	
 	 	(30,076	)	 	3,832	
 	
Non-compete agreements	7,487	
 	 	(7,409	)	 	78	
 	 	7,564	
 	 	(7,363	)	 	201	
 	
Total intangible assets	$	646,989	
 	 	$	(470,994	)	 	$	175,995	
 	 	$	650,247	
 	 	$	(437,644	)	 	$	212,603	

Amortization expense for intangible assets was $10 million and $14 million for the three months ended September 30, 2012 and 2011, respectively, and $35 million and $43 million for the nine months ended September 30, 2012 and 2011, respectively. We also recorded impairment charges of $3 million to write-down the carrying values of certain intangible assets associated with our International Mail Services business to their respective fair values. See Goodwill section below for further details of the impairment charge and method of determining fair value.
The future amortization expense for intangible assets as of September 30, 2012 was as follows:

Remaining for year ended December 31, 2012	$	10,222	
 	
Year ended December 31, 2013	39,429	
 	
Year ended December 31, 2014	36,774	
 	
Year ended December 31, 2015	32,812	
 	
Year ended December 31, 2016	24,182	
 	
Thereafter	32,576	
 	
Total	$	175,995	
 	
Actual amortization expense may differ from the amounts above due to, among other things, fluctuations in foreign currency exchange rates, impairments, future acquisitions and accelerated amortization.
Goodwill
We perform our annual goodwill impairment test during the fourth quarter of each year, or sooner, if circumstances indicate an impairment may exist. Based on the recent performance of our International Mail Services (IMS) business and to enable us to better focus on higher growth cross-border ecommerce parcel opportunities, in the third quarter of 2012, we began exploring strategic alternatives for the IMS business. In October 2012, we made a strategic decision to exit the IMS business related to the international delivery of mail and catalogs. We are engaged in negotiations with potential buyers and have received preliminary indications of interest and written offers. As a result of these factors, we concluded that it was more likely than not that the fair value of the IMS reporting unit was below its book value and an interim impairment test was performed. The fair value of the reporting unit was determined in combination of the written offers received as well as applying an income approach with revised cash flow projections. The inputs used to determine the fair value of the IMS business are classified as Level 3 in the fair value hierarchy. Based on the results of our impairment test, a non-cash goodwill impairment charge of $18 million was recorded in the third quarter of 2012 to write-down the carrying value of goodwill associated with the IMS business to its implied fair value.

12

PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands of dollars, unless otherwise noted)

The changes in the carrying amount of goodwill, by reporting segment, for the nine months ended September 30, 2012 were as follows:

 	Gross value before accumulated impairment	 	Accumulated impairment	 	December 31, 2011	 	Impairment	 	Other (1)	 	September 30, 2012	
North America Mailing	$	352,897	
 	 	$	—	
 	 	$	352,897	
 	 	$	—	
 	 	$	(178	)	 	$	352,719	
 	
International Mailing	189,067	
 	 	—	
 	 	189,067	
 	 	—	
 	 	(8,105	)	 	180,962	
 	
Small & Medium Business Solutions	541,964	
 	 	—	
 	 	541,964	
 	 	—	
 	 	(8,283	)	 	533,681	
 	
Production Mail	127,589	
 	 	—	
 	 	127,589	
 	 	—	
 	 	2,603	
 	 	130,192	
 	
Software	667,124	
 	 	—	
 	 	667,124	
 	 	—	
 	 	3,479	
 	 	670,603	
 	
Management Services	487,223	
 	 	(84,500	)	 	402,723	
 	 	—	
 	 	542	
 	 	403,265	
 	
Mail Services	259,105	
 	 	(45,650	)	 	213,455	
 	 	(18,315	)	 	—	
 	 	195,140	
 	
Marketing Services	194,233	
 	 	—	
 	 	194,233	
 	 	—	
 	 	—	
 	 	194,233	
 	
Enterprise Business Solutions	1,735,274	
 	 	(130,150	)	 	1,605,124	
 	 	(18,315	)	 	6,624	
 	 	1,593,433	
 	
Total	$	2,277,238	
 	 	$	(130,150	)	 	$	2,147,088	
 	 	$	(18,315	)	 	$	(1,659	)	 	$	2,127,114	

(1)	Primarily foreign currency translation adjustments.	

5. Debt
In March 2012, we redeemed, at par plus accrued interest, a $150 million term loan that was scheduled to mature in the fourth quarter of 2012.
In April 2012, we entered into forward starting swap agreements with an aggregate notional value of $150 million to hedge the interest rate risk associated with the forecasted issuance of long-term debt. The anticipated debt issuance did not occur prior to the expiration of these swap agreements and a loss of $6 million was recognized in the second quarter of 2012.
In June 2012, we redeemed our $400 million, 4.625% notes (the 2012 Notes) that were scheduled to mature in October 2012. As a result of the early redemption of the 2012 Notes, we recorded a net loss of $2 million on the extinguishment of debt.
At September 30, 2012, there were no outstanding commercial paper borrowings. During the quarter, commercial paper borrowings averaged $418 million at a weighted-average interest rate of 0.48% and the maximum amount outstanding at any time was $709 million.
In October 2012, we borrowed $220 million under term loan agreements. The loans bear interest at the applicable London Interbank Offered Rate (LIBOR) plus 2.25% or Prime Rate plus 1.25%, at our option. Interest is payable quarterly and the loans mature in 2015 and 2016. The proceeds from the loans will be used for general corporate purposes, including the repayment of commercial paper and 2013 debt maturities.
6. Noncontrolling Interests (Preferred Stockholders’ Equity in Subsidiaries)
Pitney Bowes International Holdings, Inc. (PBIH), a subsidiary, has 300,000 shares, or $300 million, of outstanding perpetual voting preferred stock (the Preferred Stock) held by certain institutional investors. The holders of the Preferred Stock are entitled as a group to 25% of the combined voting power of all classes of capital stock of PBIH. All outstanding common stock of PBIH, representing the remaining 75% of the combined voting power of all classes of capital stock, is owned directly or indirectly by the company. The Preferred Stock is entitled to cumulative dividends at a rate of 6.125% through 2016 after which it becomes callable and, if it remains outstanding, will yield a dividend that increases by 50% every six months thereafter. No dividends were in arrears at September 30, 2012 or December 31, 2011. There was no change in the carrying value of noncontrolling interests during the period ended September 30, 2012 or the year ended December 31, 2011.

13

PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands of dollars, unless otherwise noted)

7. Income Taxes
The effective tax rate for the three months ended September 30, 2012 and 2011 was 24.6% and (17.1)%, respectively. The effective tax rate for the three months ended September 30, 2012 includes tax benefits of $36 million from the resolution of tax examinations and tax accruals of $28 million for the repatriation of non-U.S. earnings. The effective tax rate for the three months ended September 30, 2011 includes tax benefits of $34 million from the sale of non-U.S. leveraged lease assets and $18 million from the resolution of tax examinations.
The effective tax rate for the nine months ended September 30, 2012 and 2011 was 22.1% and 19.7%, respectively. The effective tax rate for the nine months ended September 30, 2012 include tax benefits of $17 million from the sale of non-U.S. leveraged lease assets (net of $15 million of tax accrued to repatriate these earnings), $58 million from the resolution of tax examinations, and tax accruals of $28 million for the repatriation of additional non-U.S. earnings. The effective tax rate for the nine months ended September 30, 2011 includes the tax benefit of $34 million from the sale of non-U.S. leveraged lease assets and $27 million from the resolution of tax examinations.
With the exception of the impact of unusual sales of leveraged lease assets and the one-time restructuring of our Canadian operations that led us to accrue taxes for the repatriation of certain earnings, it is our intention to permanently reinvest substantially all of our foreign cash in our foreign operations.
On August 27, 2012, the Third Circuit Court of Appeals overturned a prior Tax Court decision and ruled in favor of the IRS and adverse to the Historic Boardwalk Hall LLC, a partnership in which we had made an investment in 2000. The judgment is not yet final. Based on our partnership contractual relationship, we do not expect this matter to have a material effect on our financial position or results of operations.
As is the case with other large corporations, our tax returns are examined each year by tax authorities in the United States, other countries and local jurisdictions in which we have operations. Except for issues arising out of certain partnership investments, the IRS examination of tax years 2001-2004 is closed to audit and the examination of years 2005-2008 is expected to be closed to audit by the end of 2012. Other significant tax filings subject to examination include various post-2000 U.S. state and local, post 2007 Canadian and German, and post-2008 French and U.K. tax filings. We have other less significant tax filings currently under examination or 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 impact, positive or negative, on our results of operations, financial position and cash flows.

14

PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands of dollars, unless otherwise noted)

8. Stockholders’ Equity

Changes in stockholders’ equity for the nine months ended September 30, 2012 and 2011 were as follows:

 	Preferred
stock	 	Preference
stock	 	Common Stock	 	Additional Paid-in Capital	 	Retained earnings	 	Accumulated other comprehensive loss	 	Treasury stock	 	Total equity	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at January 1, 2012	$	4	
 	 	$	659	
 	 	$	323,338	
 	 	$	240,584	
 	 	$	4,600,217	
 	 	$	(661,645	)	 	$	(4,542,143	)	 	$	(38,986	)	
Net income	—	
 	 	—	
 	 	—	
 	 	—	
 	 	334,826	
 	 	—	
 	 	—	
 	 	334,826	
 	
Other comprehensive income	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	35,777	
 	 	—	
 	 	35,777	
 	
Cash dividends	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Common ($1.125 per share)	—	
 	 	—	
 	 	—	
 	 	—	
 	 	(225,244	)	 	—	
 	 	—	
 	 	(225,244	)	
Preference	—	
 	 	—	
 	 	—	
 	 	—	
 	 	(38	)	 	—	
 	 	—	
 	 	(38	)	
Issuances of common stock	—	
 	 	—	
 	 	—	
 	 	(31,306	)	 	—	
 	 	—	
 	 	36,138	
 	 	4,832	
 	
Conversions to common stock	—	
 	 	(6	)	 	—	
 	 	(124	)	 	—	
 	 	—	
 	 	130	
 	 	—	
 	
Stock-based compensation expense	—	
 	 	—	
 	 	—	
 	 	13,466	
 	 	—	
 	 	—	
 	 	—	
 	 	13,466	
 	
Balance at September 30, 2012	$	4	
 	 	$	653	
 	 	$	323,338	
 	 	$	222,620	
 	 	$	4,709,761	
 	 	$	(625,868	)	 	$	(4,505,875	)	 	$	124,633	

 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Preferred
stock	 	Preference
stock	 	Common Stock	 	Additional Paid-in Capital	 	Retained earnings	 	Accumulated other comprehensive loss	 	Treasury stock	 	Total equity	
Balance at January 1, 2011	$	4	
 	 	$	752	
 	 	$	323,338	
 	 	$	250,928	
 	 	$	4,282,316	
 	 	$	(473,806	)	 	$	(4,480,113	)	 	$	(96,581	)	
Net income	—	
 	 	—	
 	 	—	
 	 	—	
 	 	360,006	
 	 	—	
 	 	—	
 	 	360,006	
 	
Other comprehensive income	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	(3,625	)	 	—	
 	 	(3,625	)	
Cash dividends	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Common ($1.11 per share)	—	
 	 	—	
 	 	—	
 	 	—	
 	 	(225,632	)	 	—	
 	 	—	
 	 	(225,632	)	
Preference	—	
 	 	—	
 	 	—	
 	 	—	
 	 	(44	)	 	—	
 	 	—	
 	 	(44	)	
Issuances of common stock	—	
 	 	—	
 	 	—	
 	 	(25,387	)	 	—	
 	 	—	
 	 	32,584	
 	 	7,197	
 	
Conversions to common stock	—	
 	 	(28	)	 	—	
 	 	(621	)	 	—	
 	 	—	
 	 	649	
 	 	—	
 	
Stock-based compensation expense	—	
 	 	—	
 	 	—	
 	 	13,393	
 	 	—	
 	 	—	
 	 	—	
 	 	13,393	
 	
Repurchase of common stock	—	
 	 	—	
 	 	—	
 	 	 	 	—	
 	 	—	
 	 	(99,997	)	 	(99,997	)	
Balance at September 30, 2011	$	4	
 	 	$	724	
 	 	$	323,338	
 	 	$	238,313	
 	 	$	4,416,646	
 	 	$	(477,431	)	 	$	(4,546,877	)	 	$	(45,283	)	

The components of accumulated other comprehensive loss at September 30, 2012 and 2011 were as follows:

 	January 1, 2012	 	Other comprehensive income	 	September 30, 2012	 	January 1, 2011	 	Other comprehensive income	 	September 30, 2011	
Foreign currency translation adjustments	$	83,952	
 	 	$	(883	)	 	$	83,069	
 	 	$	137,521	
 	 	$	(35,336	)	 	$	102,185	
 	
Net unrealized (loss) gain on derivatives	(8,438	)	 	578	
 	 	(7,860	)	 	(10,445	)	 	1,596	
 	 	(8,849	)	
Net unrealized gain on investment securities	4,387	
 	 	967	
 	 	5,354	
 	 	1,439	
 	 	4,258	
 	 	5,697	
 	
Net unamortized (loss) gain on pension and postretirement plans	(741,546	)	 	35,115	
 	 	(706,431	)	 	(602,321	)	 	25,857	
 	 	(576,464	)	
Accumulated other comprehensive loss	$	(661,645	)	 	$	35,777	
 	 	$	(625,868	)	 	$	(473,806	)	 	$	(3,625	)	 	$	(477,431	)	

15

PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands of dollars, unless otherwise noted)

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.
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 at September 30, 2012 and December 31, 2011. 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 their placement within the fair value hierarchy.

 	September 30, 2012	
 	Level 1	 	Level 2	 	Level 3	 	Total	
Assets:	 	

 	 	 	
 	
Investment securities	 	

 	 	 	
 	
Money market funds / commercial paper	$	198,431	
 	 	$	20,717	
 	 	$	—	
 	 	$	219,148	
 	
Equity securities	—	
 	 	24,891	
 	 	—	
 	 	24,891	
 	
Commingled fixed income securities	—	
 	 	29,286	
 	 	—	
 	 	29,286	
 	
Debt securities - U.S. and foreign governments, agencies and municipalities	119,858	
 	 	21,322	
 	 	—	
 	 	141,180	
 	
Debt securities - corporate	—	
 	 	40,134	
 	 	—	
 	 	40,134	
 	
Mortgage-backed / asset-backed securities	—	
 	 	143,631	
 	 	—	
 	 	143,631	
 	
Derivatives	 	 	 	 	 	

 	
Interest rate swaps	—	
 	 	11,643	
 	 	—	
 	 	11,643	
 	
Foreign exchange contracts	—	
 	 	1,187	
 	 	—	
 	 	1,187	
 	
Total assets	$	318,289	
 	 	$	292,811	
 	 	$	—	
 	 	$	611,100	
 	
Liabilities:	 	

 	 	 	
 	
Derivatives	 	

 	 	 	
 	
Foreign exchange contracts	$	—	
 	 	$	(5,434	)	 	$	—	
 	 	$	(5,434	)	
Total liabilities	$	—	
 	 	$	(5,434	)	 	$	—	
 	 	$	(5,434	)	

16

PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands of dollars, unless otherwise noted)

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	December 31, 2011	
 	Level 1	 	Level 2	 	Level 3	 	Total	
Assets:	 	

 	 	 	
 	
Investment securities	 	

 	 	 	
 	
Money market funds / commercial paper	$	239,157	
 	 	$	300,702	
 	 	$	—	
 	 	$	539,859	
 	
Equity securities	—	
 	 	22,097	
 	 	—	
 	 	22,097	
 	
Commingled fixed income securities	—	
 	 	27,747	
 	 	—	
 	 	27,747	
 	
Debt securities - U.S. and foreign governments, agencies and municipalities	93,175	
 	 	19,042	
 	 	—	
 	 	112,217	
 	
Debt securities - corporate	—	
 	 	31,467	
 	 	—	
 	 	31,467	
 	
Mortgage-backed / asset-backed securities	—	
 	 	134,262	
 	 	—	
 	 	134,262	
 	
Derivatives	 	

 	 	

Interest rate swaps	—	
 	 	15,465	
 	 	—	
 	 	15,465	
 	
Foreign exchange contracts	—	
 	 	4,230	
 	 	—	
 	 	4,230	
 	
Total assets	$	332,332	
 	 	$	555,012	
 	 	$	—	
 	 	$	887,344	
 	
Liabilities:	 	

 	 	 	
 	
Derivatives	 	

 	 	 	
 	
Foreign exchange contracts	$	—	
 	 	$	(1,439	)	 	$	—	
 	 	$	(1,439	)	
Total liabilities	$	—	
 	 	$	(1,439	)	 	$	—	
 	 	$	(1,439	)	
Investment Securities
The valuation of investment securities is based on the 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 into the fair value hierarchy:
 	 	
•	Money Market Funds / Commercial Paper: Money market funds typically invest in government securities, certificates of deposit, commercial paper and other highly liquid and 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. Direct investments in commercial paper are not listed on an exchange in an active market and are classified as Level 2.	
 	 	
•	Equity Securities: Equity securities are comprised of mutual funds investing in U.S. and foreign common stock. These mutual funds are classified as Level 2 as they are not separately listed on an exchange.	
 	 	
•	Commingled Fixed Income Securities:  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. The value of the funds is based on the market 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 commingled funds are not listed on an exchange in an active market and are classified as Level 2.	
 	 	
•	Debt Securities – U.S. and Foreign Governments, Agencies and Municipalities: 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 valued using quoted market prices for similar securities or benchmarking model derived prices to quoted market prices and trade data for identical or comparable securities are classified as Level 2.	
 	 	
•	Debt Securities – Corporate: Corporate debt securities are valued using recently executed transactions, market price quotations where observable, or bond spreads. The spread data used are for the same maturity as the security. These securities are classified as Level 2.	
 	 	
•	Mortgage-Backed Securities (MBS) / Asset-Backed Securities (ABS): These securities are valued based on external pricing indices. When external index pricing is not observable, MBS and ABS are valued based on external price/spread data. These securities are classified as Level 2.	
The carrying value of our investment securities at September 30, 2012 and December 31, 2011 was $590 million and $861 million, respectively.

17

PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands of dollars, unless otherwise noted)

Investment securities include investments held by The Pitney Bowes Bank, a wholly owned subsidiary and a Utah-chartered Industrial Loan Company. The bank’s investments at September 30, 2012 and December 31, 2011 were $348 million and $282 million, respectively. These investments are reported on the Condensed Consolidated Balance Sheets as cash and cash equivalents, short-term investments and other assets depending on the type of investment and maturity.
We have not experienced any write-offs in our investment portfolio. The majority of our MBS are either guaranteed or supported by the U.S. government. Market events have not caused our money market funds to experience declines in their net asset value below $1.00 per share or to incur imposed limits on redemptions. We have no investments in inactive markets that would warrant a possible change in our pricing methods or classification within the fair value hierarchy. Further, we have no investments in auction rate securities.
Derivative Instruments
In the normal course of business, we are exposed to the impact of interest rate changes and foreign currency fluctuations. We limit these risks by following established risk management policies and procedures, including the use of derivatives. We use derivatives to manage the related cost of debt and to limit the effects of foreign exchange rate fluctuations on financial results. We do not use derivatives for trading or speculative purposes. We record our derivative instruments at fair value, and the accounting for changes in the fair value of the derivatives 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.
As required by the fair value measurements guidance, we have incorporated counterparty credit risk and our credit risk into the fair value measurement of our derivative assets and liabilities, respectively. We derive credit risk from observable data related to credit default swaps. We have not seen a material change in the creditworthiness of those banks acting as derivative counterparties.
The valuation of our interest rate swaps is based on the income approach using a model with inputs that are observable or that can be derived from or corroborated by observable market data. The valuation of our foreign exchange derivatives is based on the market approach using observable market inputs, such as forward rates.

The fair value of our derivative instruments at September 30, 2012 and December 31, 2011 was as follows:

Designation of Derivatives	 	Balance Sheet Location	 	September 30,
2012	 	December 31,
2011	
Derivatives designated as
hedging instruments	 	Other current assets and prepayments:	 	 	

 	 	Foreign exchange contracts	 	$	369	
 	 	$	780	
 	
 	 	Other assets:	 	 	

 	 	Interest rate swaps	 	11,643	
 	 	15,465	
 	
 	 	Accounts payable and accrued liabilities:	 	 	

 	 	Foreign exchange contracts	 	(240	)	 	(79	)	
Derivatives not designated as
hedging instruments	 	Other current assets and prepayments:	 	 	

 	 	Foreign exchange contracts	 	818	
 	 	3,450	
 	
 	 	Accounts payable and accrued liabilities:	 	 	

 	 	Foreign exchange contracts	 	(5,194	)	 	(1,360	)	
 	 	 	 	 	 	 	
 	 	Total derivative assets	 	$	12,830	
 	 	$	19,695	
 	
 	 	Total derivative liabilities	 	(5,434	)	 	(1,439	)	
 	 	Total net derivative assets	 	$	7,396	
 	 	$	18,256	

18

PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands of dollars, unless otherwise noted)

Interest Rate Swaps
Derivatives designated as fair value hedges include interest rate swaps related to fixed rate debt. Changes in the fair value of both the derivative and item being hedged are recognized in earnings. The following represents the results of fair value hedging relationships for the three and nine months ended September 30, 2012 and 2011:

 	 	 	 	Three Months Ended September 30,	
 	 	 	 	Derivative Gain
Recognized in Earnings	 	Hedged Item Expense
Recognized in Earnings	
Derivative Instrument	 	Location of Gain (Loss)	 	2012	 	2011	 	2012	 	2011	
Interest rate swaps	 	Interest expense	 	$	1,578	
 	 	$	3,488	
 	 	$	(5,484	)	 	$	(10,109	)	
 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	Nine Months Ended September 30,	
 	 	 	 	Derivative Gain
Recognized in Earnings	 	Hedged Item Expense
Recognized in Earnings	
Derivative Instrument	 	Location of Gain (Loss)	 	2012	 	2011	 	2012	 	2011	
Interest rate swaps	 	Interest expense	 	$	8,351	
 	 	$	8,406	
 	 	$	(25,652	)	 	$	(23,016	)	

Foreign Exchange Contracts
We enter into foreign currency exchange contracts to mitigate the currency risk associated with the anticipated purchase of inventory 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 accumulated other comprehensive income (AOCI) 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. At September 30, 2012 and December 31, 2011, we had outstanding contracts associated with these anticipated transactions with a notional amount of $21 million and $19 million, respectively. The net asset value of these contracts was less than $1 million at September 30, 2012 and December 31, 2011.
The amounts included in AOCI at September 30, 2012 will be recognized in earnings within the next 12 months. No amount of ineffectiveness was recorded in earnings for these designated cash flow hedges.
The following represents the results of cash flow hedging relationships for the three and nine months ended September 30, 2012 and 2011:

 	 	Three Months Ended September 30,	 	
 	 	Derivative Gain (Loss)
Recognized in AOCI
(Effective Portion)	 	Location of Gain (Loss)
(Effective Portion)	 	Gain (Loss) Reclassified
from AOCI to Earnings
(Effective Portion)	 	
Derivative Instrument	 	2012	 	2011	 	 	 	2012	 	2011	 	 	
Foreign exchange contracts	 	$	(863	)	 	$	1,746	
 	 	Revenue	 	$	456	
 	 	$	(129	)	 	 	

 	 	Cost of sales	 	(56	)	 	(146	)	 	 	

 	 	 	 	$	400	
 	 	$	(275	)	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Nine Months Ended September 30,	 	 	
 	 	Derivative Gain (Loss)
Recognized in AOCI
(Effective Portion)	 	Location of Gain (Loss)
(Effective Portion)	 	Gain (Loss) Reclassified
from AOCI to Earnings
(Effective Portion)	 	 	
Derivative Instrument	 	2012	 	2011	 	 	 	2012	 	2011	 	 	
Foreign exchange contracts	 	$	(1,672	)	 	$	2,049	
 	 	Revenue	 	$	1,230	
 	 	$	(260	)	 	 	

 	 	Cost of sales	 	(129	)	 	(700	)	 	 	

 	 	 	 	$	1,101	
 	 	$	(960	)	 	 	
We also enter into foreign exchange contracts to minimize the impact of exchange rate fluctuations on short-term intercompany loans and related interest that are denominated in a foreign currency. The revaluation of the intercompany loans and interest and the mark-to-market adjustment on the derivatives are both recorded in earnings. Outstanding foreign exchange contracts to buy or sell various currencies had a net liability value of $4 million at September 30, 2012 and a net asset value of $2 million at December 31, 2011. All outstanding contracts at September 30, 2012 mature by the end of the year.

19

PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands of dollars, unless otherwise noted)

The following represents the results of our non-designated derivative instruments for the three and nine months ended September 30, 2012 and 2011:

 	 	 	 	Three Months Ended September 30,	
 	 	 	 	Derivative Gain (Loss)
Recognized in Earnings	
Derivatives Instrument	 	Location of Derivative Gain (Loss)	 	2012	 	2011	
Foreign exchange contracts	 	Selling, general and administrative expense	 	$	939	
 	 	$	2,090	

 	 	 	 	Nine Months Ended September 30,	
 	 	 	 	Derivative Gain (Loss)
Recognized in Earnings	
Derivatives Instrument	 	Location of Derivative Gain (Loss)	 	2012	 	2011	
Foreign exchange contracts	 	Selling, general and administrative expense	 	$	(2,129	)	 	$	(18,770	)	

Credit-Risk-Related Contingent Features
Certain derivative instruments contain credit-risk-related contingent features that would require us to post collateral based on a combination of our long-term senior unsecured debt ratings and the net fair value of our derivatives. At September 30, 2012, we were not required to post any collateral. The maximum amount of collateral that we would have been required to post at September 30, 2012, had the credit-risk-related contingent features been triggered, was $5 million.

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 for cash and cash equivalents, accounts receivable, loans receivable, and accounts payable approximate fair value because of the short maturity of these instruments.
The fair value of our debt is estimated based on recently executed transactions and market price quotations.  We classify our debt as Level 2 in the fair value hierarchy. The carrying value and estimated fair value of our debt at September 30, 2012 and December 31, 2011 was as follows:

 	September 30, 2012	 	December 31, 2011	 	
Carrying value	$	3,680,504	
 	 	$	4,233,909	
 	 	
Fair value	$	3,909,732	
 	 	$	4,364,176	

10. Restructuring Charges and Asset Impairments
In 2009, we implemented a series of strategic transformation initiatives designed to enhance our responsiveness to changing market conditions, create improved processes and systems to further enable us to invest in future growth and transform and enhance the way we operate as a global company (the 2009 Program). In 2007, we implemented a program to lower our cost structure, accelerate efforts to improve operational efficiencies, and transition our product line to a new generation of fully digital, networked, and remotely-downloadable equipment (the 2007 Program). These programs are substantially complete.

Activity in restructuring reserves for these programs for the nine months ended September 30, 2012 was as follows:

 	Severance and benefits costs	 	Other exit
costs	 	Total	
Balance at January 1, 2012	$	105,036	
 	 	$	14,075	
 	 	$	119,111	
 	
Expenses, net	2,608	
 	 	(1,534	)	 	1,074	
 	
Cash payments	(55,865	)	 	(4,881	)	 	(60,746	)	
Balance at September 30, 2012	$	51,779	
 	 	$	7,660	
 	 	$	59,439	

The majority of the remaining restructuring payments are expected to be paid through 2014; however, due to certain international labor laws and long-term lease agreements, some payments will extend beyond 2014. We expect that cash flows from operations will be sufficient to fund these payments.

20

PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands of dollars, unless otherwise noted)

In connection with our strategic decision to exit the IMS business related to the international delivery of mail and catalogs, asset impairment charges of $7 million were recorded to write-down the carrying value of certain fixed assets of IMS and $3 million to write-down the carrying value of certain intangible assets of IMS to their fair values. The fair value of these assets was determined in combination of the written offers received for the IMS business as well as applying an income approach with revised cash flow projections. The inputs used to determine the fair value are classified as Level 3 in the fair value hierarchy. These charges are included in restructuring charges and asset impairments in the Condensed Consolidated Statements of Income. See Note 4 for further details.

 	 	 	 	 	 	
11. Commitments and Contingencies
In the ordinary course of business, we are routinely defendants in, or party to a number of pending and threatened legal actions. These may involve litigation by or against us relating to, among other things, contractual rights under vendor, insurance or other contracts; intellectual property or patent rights; equipment, service, payment or other disputes with customers; or disputes with employees. Some of these actions may be brought as a purported class action on behalf of a purported class of employees, customers or others.

In October 2009, the company and certain of its current and former officers were named as defendants in NECA-IBEW Health & Welfare Fund v. Pitney Bowes Inc. et al. ,  a class action lawsuit filed in the U.S. District Court for the District of Connecticut.  The complaint asserts claims under the Securities Exchange Act of 1934 on behalf of those who purchased the common stock of the company during the period between July 30, 2007 and October 29, 2007 alleging that the company, in essence, missed two financial projections.  Plaintiffs filed an amended complaint in September 2010. After briefing on the motion to dismiss was completed, the plaintiffs filed a new amended complaint on February 17, 2012. We have moved to dismiss this new amended complaint. We expect to prevail in this legal action; however, as litigation is inherently unpredictable, there can be no assurance in this regard. If the plaintiffs do prevail, the results may have a material effect on our financial position, results of operations or cash flows. Based upon our current understanding of the facts and applicable laws, we do not believe there is a reasonable possibility that any loss has been incurred.

12. Segment Information
We conduct our business activities in seven reporting segments within two business groups, Small & Medium Business Solutions and Enterprise Business Solutions. The principal products and services of each of our reporting segments are as follows:
Small & Medium Business Solutions:
North America Mailing: Includes the U.S. and Canadian revenue and related expenses from the sale, rental and financing of our mail finishing, mail creation, shipping equipment and software; supplies; support and other professional services; and payment solutions.
International Mailing: Includes the revenue and related expenses from the sale, rental and financing of our mail finishing, mail creation, shipping equipment and software; supplies; support and other professional services; and payment solutions outside North America.
Enterprise Business Solutions:
Production Mail: Includes the worldwide revenue and related expenses from the sale, support and other professional services of our high-speed, production mail systems, sorting and production print equipment and related software.
Software: Includes the worldwide revenue and related expenses from the sale and support services of non-equipment-based mailing, customer relationship and communication and location intelligence software.
Management Services: Includes worldwide revenue and related expenses from facilities management services; secure mail services; reprographic, document management services; and litigation support and eDiscovery services.
Mail Services: Includes worldwide revenue and related expenses from presort mail services and cross-border mail services.
Marketing Services: Includes revenue and related expenses from direct marketing services for targeted customers.
Segment earnings before interest and taxes (EBIT), a non-GAAP measure, is determined by deducting from segment revenue the related costs and expenses attributable to the segment. Segment EBIT excludes interest, taxes, general corporate expenses not allocated to a particular business segment, restructuring charges, asset impairments and goodwill charges which are recognized on a consolidated basis. Management uses segment EBIT to measure profitability and performance at the segment level. Segment

21

PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands of dollars, unless otherwise noted)

EBIT may not be indicative of our overall consolidated performance and therefore, should be read in conjunction with our consolidated results of operations.
Revenue and EBIT by business segment for the three and nine months ended September 30, 2012 and 2011 was as follows:

 	Three Months Ended September 30,	 	Nine Months Ended September 30,	
 	2012	 	2011	 	2012	 	2011	
Revenue:	 	

 	 	 	
 	
North America Mailing	$	447,920	
 	 	$	475,663	
 	 	$	1,362,709	
 	 	$	1,478,355	
 	
International Mailing	154,171	
 	 	177,797	
 	 	487,665	
 	 	524,488	
 	
Small & Medium Business Solutions	602,091	
 	 	653,460	
 	 	1,850,374	
 	 	2,002,843	
 	
Production Mail	122,251	
 	 	117,220	
 	 	360,334	
 	 	382,595	
 	
Software	88,629	
 	 	109,153	
 	 	288,830	
 	 	304,921	
 	
Management Services	220,887	
 	 	235,428	
 	 	679,078	
 	 	717,513	
 	
Mail Services	142,182	
 	 	143,055	
 	 	432,845	
 	 	421,611	
 	
Marketing Services	39,637	
 	 	41,408	
 	 	105,690	
 	 	107,784	
 	
Enterprise Business Solutions	613,586	
 	 	646,264	
 	 	1,866,777	
 	 	1,934,424	
 	
Total revenue	$	1,215,677	
 	 	$	1,299,724	
 	 	$	3,717,151	
 	 	$	3,937,267	

 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Three Months Ended September 30,	 	Nine Months Ended September 30,	
 	2012	 	2011	 	2012	 	2011	
EBIT:	 	

 	 	 	
 	
North America Mailing	$	168,934	
 	 	$	177,280	
 	 	$	514,975	
 	 	$	532,727	
 	
International Mailing	11,286	
 	 	25,105	
 	 	53,041	
 	 	75,033	
 	
Small & Medium Business Solutions	180,220	
 	 	202,385	
 	 	568,016	
 	 	607,760	
 	
Production Mail	3,555	
 	 	(3,426	)	 	11,928	
 	 	12,971	
 	
Software	956	
 	 	16,564	
 	 	20,135	
 	 	31,618	
 	
Management Services	10,266	
 	 	18,248	
 	 	36,187	
 	 	59,256	
 	
Mail Services	16,671	
 	 	35,107	
 	 	75,661	
 	 	55,191	
 	
Marketing Services	9,297	
 	 	8,716	
 	 	21,617	
 	 	19,668	
 	
Enterprise Business Solutions	40,745	
 	 	75,209	
 	 	165,528	
 	 	178,704	
 	
Total EBIT	220,965	
 	 	277,594	
 	 	733,544	
 	 	786,464	
 	
Reconciling items:	 	

 	 	 	
 	
Interest, net (1)	(45,088	)	 	(49,097	)	 	(142,853	)	 	(148,219	)	
Corporate and other expenses	(39,960	)	 	(50,046	)	 	(138,521	)	 	(135,426	)	
Restructuring charges and asset impairments	(9,986	)	 	(32,956	)	 	(11,060	)	 	(63,974	)	
Goodwill impairment	(18,315	)	 	(45,650	)	 	(18,315	)	 	(45,650	)	
Income from continuing operations before income taxes	$	107,616	
 	 	$	99,845	
 	 	$	422,795	
 	 	$	393,195	
 	
(1) Includes financing interest expense, other interest expense and interest income.

22

PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands of dollars, unless otherwise noted)

13. Pensions and Other Benefit Programs
Defined Benefit Pension Plans
The components of net periodic benefit cost for defined benefit pension plans for the three and nine months ended September 30, 2012 and 2011 were as follows:

 	Three Months Ended September 30,	
 	United States	 	Foreign	
 	2012	 	2011	 	2012	 	2011	
Service cost	$	4,735	
 	 	$	4,862	
 	 	$	1,774	
 	 	$	1,836	
 	
Interest cost	20,260	
 	 	21,935	
 	 	6,909	
 	 	7,089	
 	
Expected return on plan assets	(30,406	)	 	(30,765	)	 	(8,069	)	 	(7,945	)	
Amortization of transition credit	—	
 	 	—	
 	 	(2	)	 	(2	)	
Amortization of prior service cost	200	
 	 	36	
 	 	28	
 	 	42	
 	
Recognized net actuarial loss	13,240	
 	 	9,381	
 	 	3,558	
 	 	2,782	
 	
Settlement	—	
 	 	—	
 	 	192	
 	 	—	
 	
Special termination benefits	—	
 	 	229	
 	 	—	
 	 	—	
 	
Curtailment	—	
 	 	435	
 	 	—	
 	 	—	
 	
Net periodic benefit cost	$	8,029	
 	 	$	6,113	
 	 	$	4,390	
 	 	$	3,802	

 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Nine Months Ended September 30,	
 	United States	 	Foreign	
 	2012	 	2011	 	2012	 	2011	
Service cost	$	14,204	
 	 	$	14,587	
 	 	$	5,805	
 	 	$	5,650	
 	
Interest cost	60,780	
 	 	65,805	
 	 	20,766	
 	 	21,344	
 	
Expected return on plan assets	(91,218	)	 	(92,294	)	 	(24,133	)	 	(23,978	)	
Amortization of transition credit	—	
 	 	—	
 	 	(6	)	 	(6	)	
Amortization of prior service cost	602	
 	 	109	
 	 	83	
 	 	130	
 	
Recognized net actuarial loss	39,719	
 	 	28,142	
 	 	10,546	
 	 	8,307	
 	
Settlement	—	
 	 	—	
 	 	442	
 	 	—	
 	
Special termination benefits	—	
 	 	989	
 	 	—	
 	 	10	
 	
Curtailment	—	
 	 	2,531	
 	 	—	
 	 	224	
 	
Net periodic benefit cost	$	24,087	
 	 	$	19,869	
 	 	$	13,503	
 	 	$	11,681	

Through September 30, 2012, we contributed $92 million to our U.S. pension plan and $29 million to our foreign pension plans. This includes special contributions of $85 million to our U.S. pension plan and $10 million to our foreign pension plans.

23

PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands of dollars, unless otherwise noted)

Nonpension Postretirement Benefit Plans
The components of net periodic benefit cost for nonpension postretirement benefit plans for the three and nine months ended September 30, 2012 and 2011 were as follows:

 	Three Months Ended September 30,	 	Nine Months Ended September 30,	
 	2012	 	2011	 	2012	 	2011	
Service cost	$	801	
 	 	$	834	
 	 	$	2,560	
 	 	$	2,501	
 	
Interest cost	2,896	
 	 	3,387	
 	 	8,685	
 	 	10,158	
 	
Amortization of prior service credit	(523	)	 	(626	)	 	(1,569	)	 	(1,878	)	
Amortization of net loss	2,054	
 	 	1,917	
 	 	6,111	
 	 	5,750	
 	
Special termination benefits	—	
 	 	44	
 	 	—	
 	 	157	
 	
Curtailment	—	
 	 	416	
 	 	—	
 	 	1,652	
 	
Net periodic benefit cost	$	5,228	
 	 	$	5,972	
 	 	$	15,787	
 	 	$	18,340	
 	
Contributions for benefit payments were $7 million and $9 million for the three months ended September 30, 2012 and 2011, respectively, and $21 million and $23 million for the nine months ended September 30, 2012 and 2011, respectively.
14. Discontinued Operations
During the nine months ended September 30, 2012, we recognized $19 million of tax benefits in discontinued operations arising from the resolution of tax examinations related to our Capital Services business that was sold in 2006. During the third quarter of 2011, we entered into a series of settlements with the IRS in connection with their examination of our tax years 2001-2004. We agreed upon the tax treatment of a number of disputed issues, including issues related to our Capital Services business, and as a result, $60 million of previously provided tax and interest reserves were released through discontinued operations.

24

PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands of dollars, unless otherwise noted)

15. Earnings per Share
The calculations of basic and diluted earnings per share for the three and nine months ended September 30, 2012 and 2011 are presented below. The sum of earnings per share amounts may not equal the totals due to rounding.

 	Three Months Ended September 30,	 	Nine Months Ended September 30,	
 	2012	 	2011	 	2012	 	2011	
Numerator:	 	

 	 	 	
 	
Amounts attributable to common stockholders:	 	

 	 	 	
 	
Income from continuing operations	$	76,533	
 	 	$	112,339	
 	 	$	315,494	
 	 	$	302,095	
 	
Income from discontinued operations	—	
 	 	60,428	
 	 	19,332	
 	 	57,911	
 	
Net income (numerator for diluted EPS)	76,533	
 	 	172,767	
 	 	334,826	
 	 	360,006	
 	
Less: Preference stock dividend	(12	)	 	(15	)	 	(38	)	 	(44	)	
Income attributable to common stockholders (numerator for basic EPS)	$	76,521	
 	 	$	172,752	
 	 	$	334,788	
 	 	$	359,962	
 	
Denominator (in thousands):	 	

 	 	 	
 	
Weighted-average shares used in basic EPS	200,593	
 	 	201,294	
 	 	200,266	
 	 	202,664	
 	
Effect of dilutive shares:	 	

 	 	 	
 	
Preferred stock	2	
 	 	2	
 	 	2	
 	 	2	
 	
Preference stock	399	
 	 	447	
 	 	399	
 	 	451	
 	
Stock plans	608	
 	 	451	
 	 	458	
 	 	366	
 	
Weighted-average shares used in diluted EPS	201,602	
 	 	202,194	
 	 	201,125	
 	 	203,483	
 	
Basic earnings per share:	 	

 	 	 	
 	
Income from continuing operations	$	0.38	
 	 	$	0.56	
 	 	$	1.58	
 	 	$	1.49	
 	
Income from discontinued operations	—	
 	 	0.30	
 	 	0.10	
 	 	0.29	
 	
Net income	$	0.38	
 	 	$	0.86	
 	 	$	1.67	
 	 	$	1.78	
 	
Diluted earnings per share:	 	

 	 	 	
 	
Income from continuing operations	$	0.38	
 	 	$	0.56	
 	 	$	1.57	
 	 	$	1.48	
 	
Income from discontinued operations	—	
 	 	0.30	
 	 	0.10	
 	 	0.28	
 	
Net income	$	0.38	
 	 	$	0.85	
 	 	$	1.66	
 	 	$	1.77	

Anti-dilutive shares not used in calculating diluted weighted-average shares (in thousands):	13,607	
 	 	15,442	
 	 	14,391	
 	 	15,435	

25

Item 2: Management’s Discussion and Analysis ofFinancial Condition and Results of Operations
Forward-Looking Statements
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains statements that are forward-looking. We want to caution readers that any forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 in this Form 10-Q may change based on various factors. These forward-looking statements are based on current expectations and assumptions that 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 statements, whether as a result of new information, future events or otherwise. Factors which could cause future financial performance to differ materially from the expectations as expressed in any forward-looking statement made by or on our behalf include, without limitation:
 	 	
•	declining physical mail volumes	
 	 	
•	mailers’ utilization of alternative means of communication or competitors’ products	
 	 	
•	access to capital at a reasonable cost to continue to fund various discretionary priorities, including business investments, pension contributions and dividend payments	
 	 	
•	timely development and acceptance of new products and services	
 	 	
•	successful entry into new markets	
 	 	
•	success in gaining product approval in new markets where regulatory approval is required	
 	 	
•	changes in postal or banking regulations	
 	 	
•	interrupted use of key information systems	
 	 	
•	third-party suppliers’ ability to provide product components, assemblies or inventories	
 	 	
•	our success at managing the relationships with our outsource providers, including the costs of outsourcing functions and operations not central to our business	
 	 	
•	changes in privacy laws	
 	 	
•	intellectual property infringement claims	
 	 	
•	regulatory approvals and satisfaction of other conditions to consummate and integrate any acquisitions	
 	 	
•	negative developments in economic conditions, including adverse impacts on customer demand	
 	 	
•	our success at managing customer credit risk	
 	 	
•	significant changes in pension, health care and retiree medical costs	
 	 	
•	changes in interest rates, foreign currency fluctuations or credit ratings	
 	 	
•	income tax adjustments or other regulatory levies for prior audit years and changes in tax laws, rulings or regulations	
 	 	
•	impact on mail volume resulting from concerns over the use of the mail for transmitting harmful biological agents	
 	 	
•	changes in international or national political conditions, including any terrorist attacks	
 	 	
•	acts of nature	
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Condensed Consolidated Financial Statements contained in this report and our Annual Report to Stockholders on Form 10-K for the year ended December 31, 2011 (2011 Annual Report). All table amounts are presented in millions of dollars, unless otherwise stated. Table amounts may not sum to the total due to rounding.
Overview
For the third quarter of 2012, revenue decreased 6% to $1,216 million compared to $1,300 million in the prior year quarter. Software revenue declined 17% due in part to a strong prior year third quarter and an overall slowdown in our global markets, particularly in the public sector. Financing revenue declined 9% due to the impact of lower equipment sales in prior periods. Rental revenue and supplies revenue declined 8% and 10% respectively, due to a decrease in mail volumes and our installed meter base, and in the case of supplies, also due to lower ink and toner sales. Business services revenue declined 5% due to Management Services account contractions and pricing pressure and equipment sales declined 4% due uncertain economic conditions and revenue from a postal rate change in France in the prior year that did not recur this year. Foreign currency translation had an unfavorable impact of 1% on revenue in the quarter.

The results for the quarter also include goodwill and asset impairment charges totaling $28 million in connection with a strategic decision to exit the International Mail Services (IMS) business related to the international delivery of mail and catalogs. The total impairment charge consists of a goodwill impairment charge of $18 million and asset impairment charges of $10 million. Net income from continuing operations attributable to common stockholders was $77 million, or $0.38 per diluted share for the quarter compared to $112 million or $0.56 per diluted share for the prior year quarter.

For the nine months ended September 30, 2012, revenue decreased 6% to $3,717 million compared to $3,937 million for the nine months ended September 30, 2011. Our overall revenue continues to be adversely impacted by worldwide economic conditions, declining mail volumes, Management Services account contractions and pricing pressures. Foreign currency translation had an unfavorable impact of

26

1% on revenue. Net income from continuing operations attributable to common stockholders was $315 million, or $1.57 per diluted share for the nine months ended September 30, 2012 compared to $302 million, or $1.48 per diluted share for the nine months ended September 30, 2011.

Through September 30, 2012, we generated $440 million of cash from operations and received $106 million from the sale of leveraged lease assets. We used cash to redeem $550 million of long-term debt, pay dividends of $234 million and fund capital investments of $128 million.
Outlook
Worldwide economic weakness continues to create a challenging business environment causing many of our customers to remain cautious about spending and, therefore, impacting the performance of our business segments. Small and Medium Business Solutions (SMB) revenues will continue to be challenged by the decline in physical mail volumes as alternative means of communications evolve and gain further acceptance. The rate of decline in equipment sales slowed in the third quarter, due in part to global sales of our Connect+ TM  communications systems, SendSuite Live TM  shipping solutions and pbWebConnect TM mailing systems. We anticipate that the historical equipment sales trends should show improvement in future periods. A slowing of the rate of decline for overall SMB revenue will lag that of equipment sales because recurring revenue streams follow the equipment sales.

We anticipate revenue growth in certain of our Enterprise Business Solutions segments from continued expansion in Mail Services’ presort operations, new ecommerce initiatives and market acceptance for our new solutions that help customers grow their business by more effectively managing their physical and digital communications with their customers. We recently announced a partnership with Ebay to provide ecommerce solutions for international package delivery which will commence in the fourth quarter in time for the holiday season. We will continue to focus on the growth potential of ecommerce products and solutions; and in line with this strategy, we recently decided to exit the IMS business related to the international delivery of mail and catalogs.

Our growth strategies will focus on leveraging our expertise in physical communications with our expanding capabilities in digital and hybrid communications. We will continue to develop and invest in products, software, services and solutions that help customers grow their business by more effectively communicating with their customers across physical, digital and hybrid channels. We expect our mix of business will continue to shift to more enterprise related products and solutions, and that these new revenue streams will have lower margins than our traditional Mailing business. We intend to further streamline our business operations and reduce our cost structure to address this margin mix. We expect that these actions will result in a pretax restructuring charge in the fourth quarter of $40 million to $60 million.

27

RESULTS OF OPERATIONS
Revenue by source and the related cost of revenue are shown in the following tables:

Revenue	 	 	 	 	 	 	 	 	 	 	 	
 	Three Months Ended September 30,	 	Nine Months Ended September 30,	
 	2012	 	2011	 	% change	 	2012	 	2011	 	% change	
Equipment sales	$	212	
 	 	$	221	
 	 	(4	)%	 	$	657	
 	 	$	706	
 	 	(7	)%	
Supplies	67	
 	 	74	
 	 	(10	)%	 	214	
 	 	236	
 	 	(9	)%	
Software	93	
 	 	113	
 	 	(17	)%	 	302	
 	 	318	
 	 	(5	)%	
Rentals	142	
 	 	154	
 	 	(8	)%	 	428	
 	 	467	
 	 	(8	)%	
Financing	124	
 	 	136	
 	 	(9	)%	 	374	
 	 	413	
 	 	(10	)%	
Support services	172	
 	 	175	
 	 	(2	)%	 	516	
 	 	531	
 	 	(3	)%	
Business services	405	
 	 	425	
 	 	(5	)%	 	1,226	
 	 	1,266	
 	 	(3	)%	
Total revenue	$	1,216	
 	 	$	1,300	
 	 	(6	)%	 	$	3,717	
 	 	$	3,937	
 	 	(6	)%	

 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cost of revenue	 	

 	 	 	
 	 	 	 	 	 	 	 	 	
 	Three Months Ended September 30,	 	Nine Months Ended September 30,	
 	 	 	 	 	Percentage of Revenue	 	 	 	 	 	Percentage of Revenue	
 	2012	 	2011	 	2012	 	2011	 	2012	 	2011	 	2012	 	2011	
Cost of equipment sales	$	106	
 	 	$	98	
 	 	49.8	%	 	44.0	%	 	$	309	
 	 	$	317	
 	 	47.1	%	 	44.9	%	
Cost of supplies	21	
 	 	23	
 	 	30.9	%	 	30.4	%	 	65	
 	 	74	
 	 	30.6	%	 	31.5	%	
Cost of software	23	
 	 	23	
 	 	24.4	%	 	20.7	%	 	68	
 	 	74	
 	 	22.6	%	 	23.1	%	
Cost of rentals	25	
 	 	36	
 	 	17.7	%	 	23.2	%	 	87	
 	 	108	
 	 	20.4	%	 	23.1	%	
Financing interest expense	20	
 	 	21	
 	 	15.8	%	 	15.8	%	 	61	
 	 	67	
 	 	16.4	%	 	16.2	%	
Cost of support services	107	
 	 	114	
 	 	62.4	%	 	65.1	%	 	334	
 	 	345	
 	 	64.7	%	 	65.0	%	
Cost of business services	316	
 	 	326	
 	 	77.9	%	 	76.8	%	 	948	
 	 	985	
 	 	77.3	%	 	77.8	%	
Total cost of revenue	$	617	
 	 	$	641	
 	 	50.7	%	 	49.3	%	 	$	1,874	
 	 	$	1,969	
 	 	50.4	%	 	50.0	%	

Equipment sales
Equipment sales revenue decreased 4% to $212 million in the quarter compared to the prior year quarter. Foreign currency translation had an unfavorable impact on revenue of 2% and equipment sales for the prior year quarter included $6 million for scale updates from a postal rate change in France which did not recur this year. Excluding the effects of foreign currency translation and the revenue from the postal rate change, equipment sales for the quarter were slightly higher than the prior year quarter as higher sales of our high-end production mail and print equipment offset lower equipment sales in our mailing businesses. For the year-to-date period, equipment sales revenue decreased 7% to $657 million compared to the prior year period, primarily due to worldwide economic conditions causing customers to postpone purchases of new equipment. Foreign currency translation had an unfavorable impact on revenue of 2% on the year-to-date period. Cost of equipment sales as a percentage of revenue increased to 49.8% in the quarter compared to 44.0% in the prior year quarter due to fewer lease extensions compared to the prior year period and the margin from the postal rate change revenue. For the year-to-date period, cost of equipment sales as a percentage of revenue increased to 47.1% compared to 44.9% in the prior year, primarily due to a higher mix of lower margin product sales and pricing pressure on competitive placements.
Supplies
Supplies revenue decreased 10% to $67 million and 9% to $214 million in the quarter and year-to-date periods, respectively, compared with the same periods in 2011, primarily due to reduced mail volumes, fewer installed meters worldwide and lower ink and toner sales. Foreign currency translation had an unfavorable impact on revenue of 3% in the quarter and 2% in the year-to-date period. Cost of supplies as a percentage of revenue was 30.9% in the quarter compared with 30.4% in the prior year quarter. For the year-to-date period, the cost of supplies as a percentage of revenue improved to 30.6% compared to 31.5% in the comparable prior year period primarily due to a favorable mix of higher margin core supplies sales and price increases during the first half of 2012.
Software
Software revenue decreased 17% to $93 million in the quarter and 5% to $302 million in the year-to-date period compared with the same periods in 2011. The decrease in the quarter was primarily due to a strong prior year third quarter and a decline in the volume of business

28

and contract values, particularly in North America and the Asia-Pacific region. The year-to-date decrease was attributable to the decline in the volume of business and contract values in the third quarter and weak European sales driven by weak economic conditions and constrained public sector spending. Foreign currency had an unfavorable impact on revenue of 1% in the quarter and year-to-date periods. Cost of software as a percentage of revenue increased to 24.4% in the quarter compared with 20.7% in the prior year quarter primarily due to the decline in revenue. On a year-to-date basis, cost of software as a percentage of revenue improved slightly to 22.6% compared with 23.1% in the prior year-to-date period.
Rentals
Rentals revenue decreased 8% in both the quarter and year-to-date periods to $142 million and $428 million, respectively, compared with the same periods in 2011, primarily due to declines in North America from lower mail volumes and fewer meters in service and a change in mix from rental to equipment sales in France. Foreign currency translation had an unfavorable impact on revenue of 2% in the quarter and 1% in the year-to-date period. Cost of rentals as a percentage of revenue improved to 17.7% in the quarter compared to 23.2% in the prior year quarter and to 20.4% for the year-to-date period compared with 23.1% in the prior year-to-date period mainly due to lower depreciation expense.
Financing
Financing revenue decreased 9% to $124 million in the quarter and 10% to $374 million in the year-to-date period compared with the same periods in 2011, primarily due to lower equipment sales in prior periods. Financing interest expense as a percentage of revenue was 15.8% in both the current year and prior year quarter and 16.4% and 16.2% in the current and prior year-to-date periods, respectively. In computing our financing interest expense, which represents our cost of borrowing associated with the generation of financing revenue, we assume a 10:1 leveraging ratio of debt to equity and apply our overall effective interest rate to the average outstanding finance receivables.
Support Services
Support services revenue decreased 2% in the quarter to $172 million and 3% in the year-to-date period to $516 million compared with the same periods in 2011. The decreases were primarily driven by the unfavorable impacts of foreign currency translation, which reduced revenue by 2% in both the quarter and year-to-date periods. Cost of support services as a percentage of revenue improved to 62.4% in the quarter compared with 65.1% in the prior year quarter due to improving margins in our International Mailing business. Cost of support services as a percentage of revenue in the year-to-date period was 64.7% compared to 65.0% in the prior year-to-date period.
Business Services
Business services revenue decreased 5% to $405 million and 3% to $1,226 million in the quarter and year-to-date period, respectively, compared with the same periods in 2011. The decrease is primarily due to lower volumes, account contractions and pricing pressures on new business and contract renewals in our Management Services business. Foreign currency translation had an unfavorable impact of 1% on both the quarter and year-to-date revenue. Cost of business services as a percentage of revenue increased to 77.9% in the quarter compared with 76.8% in the prior year quarter primarily due to margin compression in our Management Services business. Cost of business services as a percentage of revenue was 77.3% in the year-to-date period compared to 77.8% in the prior year year-to-date period.
Selling, general and administrative (SG&A)
SG&A expense decreased 6% in both the quarter and year-to-date periods to $401 million and $1,204 million, respectively, compared to the same periods in the prior year. The quarter and year-to-date decreases were primarily driven by a 4% decrease in employee-related costs due to prior restructuring actions and productivity initiatives, a 2% decrease in depreciation and amortization expense due to lower capital expenditures and asset impairment charges in prior periods and a 2% decrease in credit loss and bad debt provisions.
Restructuring charges and asset impairments
Goodwill impairment
We perform our annual goodwill impairment test during the fourth quarter of each year, or sooner, if circumstances indicate an impairment may exist. Based on the recent performance of our IMS business and to enable us to better focus on higher growth cross-border ecommerce parcel opportunities, in the third quarter 2012, we began exploring strategic alternatives for the IMS business. In October 2012, we made a strategic decision to exit the IMS business related to the international delivery of mail and catalogs. We are engaged in negotiations with potential buyers and have received preliminary indications of interest and written offers. As a result of these factors, we concluded that it was more likely than not that the fair value of the IMS reporting unit was below its book value and an interim impairment test was performed. The fair value of the reporting unit was determined in combination of the written offers received as well as applying an income approach with revised cash flow projections. Based on the results of our impairment test, a non-cash goodwill impairment charge of $18 million was recorded in the third quarter 2012 to write-down the carrying value of goodwill associated with the IMS business to its implied fair value. We also recorded impairment charges of $10 million to write-down the carrying values of certain intangible and fixed assets associated with the IMS business to their respective fair values. These asset impairment charges are recorded as restructuring charges and asset impairments in the Condensed Consolidated Statements of Income.

29

In the third quarter of 2011, in connection with our long-term planning and budgeting process and due to the continuing under-performance of the IMS operations, a goodwill impairment charge of $46 million was recorded and asset impairment charges of $12 million were recorded to write-down goodwill and certain tangible and intangible assets of IMS to their implied fair values. Restructuring charges and asset impairments for the three and nine months ended September 30, 2011 also include $21 million and $52 million, respectively, related to restructuring actions.
Other (income) expense, net
Other (income) expense, net is comprised of the following:

 	(Income) / Expense	
 	2012	 	2011	
Insurance proceeds	$	(11	)	 	$	(18	)	
Loss on forward starting swap agreement	6	
 	 	—	
 	
Early termination of debt	2	
 	 	—	
 	
Pretax loss on sale of certain leverage lease assets	4	
 	 	7	
 	
Other (income) expense, net	$	1	
 	 	$	(11	)	

Insurance proceeds relate to proceeds received in connection with the 2011 fire at our Dallas presort facility.
 
During the year, we entered into forward starting swap agreements with an aggregate notional value of $150 million to hedge interest rate risk associated with a forecasted issuance of long-term debt. The anticipated debt issuance did not occur prior to the expiration of these swap agreements and a loss of $6 million was recognized.
 
On June 30, 2012, we redeemed our $400 million, 4.625% notes (the 2012 Notes) that were due in October 2012. As a result of the early redemption of the 2012 Notes, we incurred a net loss of $2 million comprised of a loss of $4 million for a make-whole payment and a gain of $2 million from the termination of interest rate swap contracts.

In the first quarter of 2012 and third quarter of 2011, we sold certain non-U.S. leveraged lease assets. The 2012 sale resulted in a pretax loss of $4 million and a tax benefit of $17 million (net after-tax gain $13 million) and the 2011 sale resulted in a pretax loss of $7 million and a tax benefit of $34 million (net after-tax gain $27 million). The tax benefit is included in the provision for income taxes.

Income taxes
See Note 7 to the unaudited Condensed Consolidated Financial Statements.

Discontinued operations
See Note 14 to the unaudited Condensed Consolidated Financial Statements.

Preferred stock dividends of subsidiaries attributable to noncontrolling interests
See Note 6 to the unaudited Condensed Consolidated Financial Statements.

30

Business segment results
We conduct our business activities in seven reporting segments within two business groups, Small & Medium Business Solutions and Enterprise Business Solutions. The following tables show revenue and EBIT by business segment for the three and nine months ended September 30, 2012 and 2011. Segment EBIT, a non-GAAP measure, is determined by deducting from segment revenue the related costs and expenses attributable to the segment. Segment EBIT excludes interest, taxes, general corporate expenses not allocated to a particular business segment, restructuring charges, asset impairments and goodwill charges, which are recognized on a consolidated basis. Management uses segment EBIT to measure profitability and performance at the segment level. Segment EBIT may not be indicative of our overall consolidated performance and therefore, should be read in conjunction with our consolidated results of operations. Refer to Note 12 to the Condensed Consolidated Financial Statements for a reconciliation of segment EBIT to income from continuing operations before income taxes.

Revenue	Three Months Ended September 30,	 	Nine Months Ended September 30,	
 	2012	 	2011	 	%
change	 	2012	 	2011	 	%
change	
North America Mailing	$	448	
 	 	$	476	
 	 	(6	)%	 	$	1,363	
 	 	$	1,478	
 	 	(8	)%	
International Mailing	154	
 	 	178	
 	 	(13	)%	 	488	
 	 	524	
 	 	(7	)%	
Small & Medium Business Solutions	602	
 	 	654	
 	 	(8	)%	 	1,850	
 	 	2,003	
 	 	(8	)%	
Production Mail	122	
 	 	117	
 	 	4	 %	 	360	
 	 	383	
 	 	(6	)%	
Software	89	
 	 	109	
 	 	(19	)%	 	289	
 	 	305	
 	 	(5	)%	
Management Services	221	
 	 	235	
 	 	(6	)%	 	679	
 	 	718	
 	 	(5	)%	
Mail Services	142	
 	 	143	
 	 	(1	)%	 	433	
 	 	422	
 	 	3	 %	
Marketing Services	40	
 	 	41	
 	 	(4	)%	 	106	
 	 	108	
 	 	(2	)%	
Enterprise Business Solutions	614	
 	 	646	
 	 	(5	)%	 	1,867	
 	 	1,934	
 	 	(3	)%	
Total	$	1,216	
 	 	$	1,300	
 	 	(6	)%	 	$	3,717	
 	 	$	3,937	
 	 	(6	)%	

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
EBIT	Three Months Ended September 30,	 	Nine Months Ended September 30,	
 	2012	 	2011	 	%
change	 	2012	 	2011	 	%
change	
North America Mailing	$	169	
 	 	$	177	
 	 	(5	)%	 	$	515	
 	 	$	533	
 	 	(3	)%	
International Mailing	11	
 	 	25	
 	 	(55	)%	 	53	
 	 	75	
 	 	(29	)%	
Small & Medium Business Solutions	180	
 	 	202	
 	 	(11	)%	 	568	
 	 	608	
 	 	(7	)%	
Production Mail	4	
 	 	(3	)	 	204	 %	 	12	
 	 	13	
 	 	(8	)%	
Software	1	
 	 	17	
 	 	(94	)%	 	20	
 	 	32	
 	 	(36	)%	
Management Services	10	
 	 	18	
 	 	(44	)%	 	36	
 	 	59	
 	 	(39	)%	
Mail Services	17	
 	 	35	
 	 	(53	)%	 	76	
 	 	55	
 	 	37	 %	
Marketing Services	9	
 	 	9	
 	 	7	 %	 	22	
 	 	20	
 	 	10	 %	
Enterprise Business Solutions	41	
 	 	75	
 	 	(46	)%	 	166	
 	 	179	
 	 	(7	)%	
Total	$	221	
 	 	$	278	
 	 	(20	)%	 	$	734	
 	 	$	786	
 	 	(7	)%	
Small & Medium Business Solutions
Small & Medium Business Solutions revenue decreased 8% in the quarter and year-to-date periods to $602 million and $1,850 million, respectively, compared to the same periods in 2011.  EBIT decreased 11% to $180 million and 7% to $568 million in the quarter and year-to-date periods, respectively, compared to the same periods in 2011. Within the Small & Medium Business Solutions group:
North America Mailing
Revenue for the North America Mailing segment decreased 6% to $448 million and 8% to $1,363 million in the quarter and year-to-date periods, respectively, compared with the same periods in 2011. Compared to the prior year periods, equipment sales declined 4% in the quarter and 6% in the year-to-date period due to continued concerns about economic conditions and declining mail volumes. Financing revenue declined 7% in the quarter and 9% in the year-to-date period compared to the prior year periods due to declining equipment sales in prior periods. Rentals revenue declined 6% in the quarter and 8% in the year-to-date period as compared to the prior year periods primarily due to fewer meters in service and supplies revenue declined 12% in the quarter and 13% in the year-to-date period as compared to the prior year periods due to lower mail volumes, a declining installed meter base and lower ink and toner sales.
EBIT decreased 5% to $169 million and 3% to $515 million in the quarter and year-to-date periods, respectively, compared with the same periods in 2011 primarily due to the decline in revenue.

31

International Mailing
Revenue for the International Mailing segment decreased 13% to $154 million and 7% to $488 million in the quarter and year-to-date periods, respectively, compared with the same periods in 2011; however, foreign currency translation had an unfavorable impact on revenue of 6% in both the quarter and year-to-date periods. The underlying decrease in the quarter was primarily due to lower equipment sales due to the prior year revenue of $6 million from the postal rate change in France and the uncertain economic environment in Europe.

The underlying decrease in the year-to-date revenue was driven by a 5% decline in rentals revenue due a change in mix from rentals to equipment sales in France and a 4% decrease in financing revenue, partially offset by higher equipment sales in France and the Nordics.

EBIT decreased 55% to $11 million and 29% to $53 million in the quarter and year-to-date periods, respectively, compared with the same periods in 2011, primarily due to an increase in the mix of lower margin product sales, the margin from the postal rate change revenue recognized in the prior year and foreign currency translation.
Enterprise Business Solutions
Enterprise Business Solutions revenue for the quarter and year-to-date periods decreased 5% to $614 million and 3% to $1,867 million, respectively, compared to the same periods in 2011. EBIT decreased 46% to $41 million in the quarter and 7% to $166 million in the year-to-date period compared with the same periods in 2011; however, these results were impacted by the fire in 2011 that destroyed a presort facility located in Dallas. See Mail Services section below. Within the Enterprise Business Solutions group:
Production Mail
Revenue for the Production Mail segment increased 4% to $122 million in the quarter compared to the prior year quarter, driven primarily by an increase in international equipment sales due in part to a weak prior year third quarter and the positive results of a trade show during the second quarter. Despite the increase in the third quarter, year-to-date revenues of $360 million were down 6% compared to the prior year due to uncertain economic conditions, resulting in customers worldwide prolonging their capital investment decisions and opting to retain their existing equipment longer than usual. Foreign currency translation had an unfavorable impact on revenue of 3% in both the quarter and year-to-date periods.

EBIT was $4 million in the quarter compared to a loss of $3 million in the prior year quarter primarily due to the increase in revenue and lower operating expenses. For the year-to-date period, EBIT decreased 8% to $12 million compared with the prior year period primarily due to the decline in revenue partially offset by lower operating expenses.

Software
Revenue for the Software segment decreased 19% to $89 million and 5% to $289 million in the quarter and year-to-date periods, respectively, compared to the same periods in 2011. The decrease in the quarter was due to a strong prior year third quarter and an overall slowdown in our global markets, particularly in North America and the Asia-Pacific region. The decrease in the year-to-date period was driven by the slowdown in our global markets due to uncertain economic conditions and constrained public sector spending.

EBIT decreased 94% to $1 million and 36% to $20 million in the quarter and year-to-date periods, respectively, compared to the same periods in 2011, primarily due to the decline in revenue and higher research and development and marketing costs.

Management Services
Revenue for the Management Services segment decreased 6% to $221 million and 5% to $679 million, in the quarter and year-to-date periods, respectively, compared with the same periods in 2011. EBIT decreased 44% to $10 million and 39% to $36 million, in the quarter and year-to-date periods, respectively, compared with the same periods in 2011. The decline in revenue and EBIT was primarily due to lower volumes, account contractions and pricing pressure. Foreign currency translation had an unfavorable impact on revenue of 1% in both the quarter and year-to-date periods.

Mail Services
Revenue for the Mail Services segment decreased 1% to $142 million in the quarter due to lower volumes in our International Mail Services business partially offset by higher standard mail volumes in our Presort business. For the year-to-date period, revenue increased 3% to $433 million compared to the prior year period; however, prior year revenue was adversely impacted by $19 million due to the fire that destroyed our Dallas presort facility. Excluding the impact of the fire, year-to-date revenue decreased 2% compared to the prior year due to lower volumes in our International Mail Services business partially offset by higher standard mail volumes in our Presort business.

EBIT for the quarter decreased 53% to $17 million compared to the prior year; however, EBIT for the prior year quarter includes an $18 million benefit from fire-related insurance recoveries. Excluding this benefit, EBIT decreased 3% primarily due to investments in our ecommerce business. For the year-to-date period, EBIT increased 37% to $76 million, compared to the prior year period. However, current year EBIT includes a benefit of $11 million from fire-related insurance recoveries while prior year EBIT includes the $19 million

32

adverse impact on revenue and the $18 million benefit from insurance recoveries. Excluding these fire-related impacts, EBIT increased 14% due to growth in our Presort business.

Marketing Services
Revenue for the Marketing Services segment for the quarter and year-to-date periods was $40 million and $106 million, respectively, down slightly when compared to the same periods in 2011 primarily due to a decline in household moves. EBIT for the quarter and year-to-date periods improved slightly to $9 million and $22 million, respectively, when compared with the same periods in 2011 due to lower print production costs and administrative costs.

LIQUIDITY AND CAPITAL RESOURCES
We believe that cash flow from operations, existing cash and investments, as well as borrowing capacity under our commercial paper program should be sufficient to support our business operations, interest and dividend payments, share repurchases, debt maturities, capital expenditures, and to cover customer deposits. We have the ability to supplement short-term liquidity and fund the long-term needs of our business through broad access to capital markets, a credit line facility, and our effective shelf registration statement. Cash and cash equivalents and short-term investments were $461 million at September 30, 2012 and $869 million at December 31, 2011.

Cash and cash equivalents held by our foreign subsidiaries are generally used to support the liquidity needs of these subsidiaries. Cash and cash equivalents held by our foreign subsidiaries were $143 million at September 30, 2012 and $538 million at December 31, 2011. Most of these amounts could be repatriated to the United States but would be subject to additional taxes. Repatriation of some foreign balances is restricted by local laws. With the exception of the impact of unusual sales of leveraged lease assets and the one-time restructuring of our Canadian operations that led us to accrue taxes for the repatriation of certain earnings, it is our intention to permanently reinvest substantially all of our foreign cash in our foreign operations.

There has not been a material variation in the underlying sources of cash flows currently used to finance our operations, and we have had consistent access to the commercial paper market. During the second quarter, one of the rating agencies reduced our credit ratings. There can be no assurances that one or more of the rating agencies will not take additional adverse actions in the future.

We continuously review our liquidity profile through published credit ratings and the credit default swap market. We monitor the creditworthiness of those banks acting as derivative counterparties, depository banks or credit providers.
Cash Flow Summary
The change in cash and cash equivalents is as follows:

 	Nine Months Ended September 30,	
 	2012	 	2011	 	Change	
Net cash provided by operating activities	$	440	
 	 	$	750	
 	 	$	(310	)	
Net cash used in investing activities	(96	)	 	(140	)	 	44	
 	
Net cash used in financing activities	(777	)	 	(374	)	 	(403	)	
Effect of exchange rate changes on cash and cash equivalents	2	
 	 	(5	)	 	7	
 	
(Decrease) increase in cash and cash equivalents	$	(431	)	 	$	231	
 	 	$	(662	)	
Net cash provided by operating activities was $440 million for the nine months ended September 30, 2012 compared to $750 million for the nine months ended September 30, 2011. The decrease of $310 million was primarily due to higher tax payments in 2012, as a result of tax payments related to the sale of leveraged lease assets, the loss of bonus depreciation and higher income tax refunds received in 2011, and lower collections of finance and accounts receivables in 2012.

Net cash used in investing activities was $96 million for the nine months ended September 30, 2012 compared to $140 million for the nine months ended September 30, 2011. The decrease in cash used in investing activities was primarily due to reduced investments in short-term and other investments.

Net cash used in financing activities was $777 million for the nine months ended September 30, 2012 compared to $374 million for the nine months ended September 30, 2011. This increase in cash used in financing activities was due to the repayment of $550 million of long-term debt during 2012 compared to the repayment of $50 million of commercial paper borrowings during 2011. There were no share repurchases during 2012 compared to $100 million of share repurchases in 2011.

33

Financings and Capitalization

We are a Well-Known Seasoned Issuer with the Securities and Exchange Commission, which allows us to issue debt securities, preferred stock, preference stock, common stock, purchase contracts, depositary shares, warrants and units in an expedited fashion. We have a commercial paper program that is an important source of inexpensive and flexible liquidity for us and a committed credit facility of $1.0 billion to support our commercial paper issuances. The credit facility expires in April 2016 and contains affirmative and negative covenants that we believe are usual and customary for senior unsecured credit agreements, including a financial covenant requiring a maximum of a 3.5 to 1.0 adjusted leverage ratio, which is the ratio of total adjusted debt to adjusted consolidated EBITDA, as defined in the credit facility agreement. We have not drawn upon the credit facility.

At September 30, 2012, there were no outstanding commercial paper borrowings. During the quarter, commercial paper borrowings averaged $418 million at a weighted-average interest rate of 0.48% and the maximum amount outstanding at any time was $709 million.

In March 2012, we redeemed, at par plus accrued interest, a $150 million term loan that was scheduled to mature in the fourth quarter of 2012 and in June 2012, we redeemed our $400 million, 4.625% notes (the 2012 Notes) that were also scheduled to mature in the fourth quarter of 2012. As a result of the early redemption of the 2012 Notes, we recorded a net loss of $2 million on the extinguishment of debt.

In April 2012, we entered into forward starting swap agreements with an aggregate notional value of $150 million to hedge the interest rate risk associated with the forecasted issuance of long-term debt. The swap agreements expired prior to the issuance of debt resulting in a cash payment of $6 million in the second quarter of 2012.

In October 2012, we borrowed $220 million under term loan agreements. The loans bear interest at the applicable London Interbank Offered Rate (LIBOR) plus 2.25% or Prime Rate plus 1.25%, at our option. Interest is payable quarterly and the loans mature in 2015 and 2016. The proceeds from the loans will be used for general corporate purposes, including the repayment of commercial paper and 2013 debt maturities.

Cash contributions to our pension plans totaled $8 million in the quarter and $121 million through September 30, 2012, and includes special contributions of $95 million. We anticipate making additional contributions of approximately $10 million to our pension plans in the fourth quarter.

Regulatory Matters
There have been no significant changes to the regulatory matters disclosed in our 2011 Annual Report.

34

Item 3: Quantitative and Qualitative Disclosures about Market Risk
There were no material changes to the disclosures made in the 2011 Annual Report regarding this matter.
Item 4: Controls and Procedures
Disclosure controls and procedures are designed to reasonably assure that information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934, as amended (the Exchange Act) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures are also designed to reasonably assure that such information is accumulated and communicated to our management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), as appropriate to allow timely decisions regarding required disclosure.
Under the direction of our CEO and CFO, we evaluated our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) and internal control over financial reporting. Our CEO and CFO concluded that, as of the end of the period covered by this report, such disclosure controls and procedures were effective to ensure that information we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Exchange Act. In addition, no changes in internal control over financial reporting occurred during the fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, such internal control over financial reporting. It should be noted that any system of controls is based in part upon certain assumptions designed to obtain reasonable (and not absolute) assurance as to its effectiveness, and there can be no assurance that any design will succeed in achieving its stated goals. Notwithstanding this caution, the disclosure controls and procedures are designed to provide reasonable assurance of achieving their stated objectives, and the CEO and CFO have concluded that the disclosure controls and procedures are effective at that reasonable assurance level.

35

PART II. OTHER INFORMATION
Item 1: Legal Proceedings
See Note 11 to the unaudited Condensed Consolidated Financial Statements.
Item 1A: Risk Factors
There were no material changes to the risk factors identified in the 2011 Annual Report.
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds
Repurchases of Equity Securities
We periodically repurchase shares of our common stock to manage the dilution created by shares issued under employee stock plans and for other purposes in the open market. At September 30, 2012, we have remaining authorization to repurchase up to $50 million of our common stock. There were no share repurchases during the quarter ended September 30, 2012.

 	 	 	 	 	 	 	 	
Item 6: Exhibits
See Index of Exhibits.

36

Signatures  
Pursuant to the requirements 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.

 	 	PITNEY BOWES INC.	
 	 	 	
Date:	November 2, 2012	 	
 	 	 	
 	 	/s/ Michael Monahan	
 	 	 	
 	 	Michael Monahan	
 	 	Executive Vice President and Chief Financial Officer	
 	 	(Principal Financial Officer)	
 	 	 	
 	 	/s/ Steven J. Green	
 	 	 	
 	 	Steven J. Green	
 	 	Vice President – Finance and Chief Accounting Officer	
 	 	(Principal Accounting Officer)	

37

Exhibit Index

Exhibit
Number	Description	 	Status or incorporation by reference	
 	 	 	 	
(12)	Computation of ratio of earnings to fixed charges	 	Exhibit 12	
 	 	 	 	
(31.1)	Certification of Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended	 	Exhibit 31.1	
 	 	 	 	
(31.2)	Certification of Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended	 	Exhibit 31.2	
 	 	 	 	
(32.1)	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350	 	Exhibit 32.1	
 	 	 	 	
(32.2)	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350	 	Exhibit 32.2	
 	 	 	 	
101.INS	XBRL Report Instance Document	 	 	
 	 	 	 	
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	 	 	

38

Exhibit (12)

PITNEY BOWES INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended September 30,	 	Nine Months Ended September 30,	
(Dollars in thousands)	 	2012	 	2011	 	2012	 	2011	
 	 	 	 	 	 	 	 	 	
Income from continuing operations before income taxes	 	$	107,616	
 	 	$	99,845	
 	 	$	422,795	
 	 	$	393,195	
 	
Add:	 	 	 	 	 	 	 	 	
Interest expense (1)	 	47,145	
 	 	50,362	
 	 	148,646	
 	 	152,921	
 	
Portion of rents representative of the interest factor	 	9,035	
 	 	10,059	
 	 	26,949	
 	 	29,112	
 	
Amortization of capitalized interest	 	243	
 	 	429	
 	 	730	
 	 	1,287	
 	
Income as adjusted	 	$	164,039	
 	 	$	160,695	
 	 	$	599,120	
 	 	$	576,515	

Fixed charges:	 	 	 	 	 	 	 	 	
Interest expense (1)	 	$	47,145	
 	 	$	50,362	
 	 	$	148,646	
 	 	$	152,921	
 	
Portion of rents representative of the interest factor	 	9,035	
 	 	10,059	
 	 	26,949	
 	 	29,112	
 	
Noncontrolling interests (preferred stock dividends of subsidiaries), excluding taxes	 	6,760	
 	 	6,855	
 	 	19,600	
 	 	20,386	
 	
Total fixed charges	 	$	62,940	
 	 	$	67,276	
 	 	$	195,195	
 	 	$	202,419	
 	
Ratio of earnings to fixed charges (2)	 	2.61	 	2.39	 	3.07	 	2.85	

(1)	Interest expense includes both financing interest expense and other interest expense.	

(2)	The computation of the ratio of earnings to fixed charges has been computed by dividing income from continuing operations before income taxes as adjusted by fixed charges. Included in fixed charges is one-third of rent expense as the representative portion of interest.	

Exhibit (31.1)
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Murray D. Martin, certify that:
 	 	
1.	I have reviewed this quarterly report on Form 10-Q 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(s) 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 registrants other certifying officer(s) 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: November 2, 2012 

 	
 	 	 	 	 	
/s/ Murray D. Martin	 	 	 	 	
Murray D. Martin	 	 	 	 	
Chairman, President and Chief Executive Officer	 	 	 	 	

Exhibit (31.2)
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Michael Monahan, certify that:
 	 	
1.	I have reviewed this quarterly report on Form 10-Q 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(s) 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(s) 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: November 2, 2012 

 	 	 	 	
/s/ Michael Monahan	 	 	 	
Michael Monahan	 	 	 	
Executive Vice President and Chief Financial Officer	 	 	 	

Exhibit (32.1)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Pitney Bowes Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Murray D. Martin, 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)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and	
 	 	
(2)	
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.	

 	
 	 	 	 	
/s/ Murray D. Martin	 	 	 	
Murray D. Martin	 	 	 	
Chairman, President and Chief Executive Officer	 	 	 	
Date:    November 2, 2012

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.

Exhibit (32.2)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Pitney Bowes Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael Monahan, 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)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and	
 	 	
(2)	
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.	

 	
 	 	 	 	
/s/ Michael Monahan	 	 	 	
Michael Monahan	 	 	 	
Executive Vice President and Chief Financial Officer	 	 	 	
Date:    November 2, 2012

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.