UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
þ☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2017March 31, 2022
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: 1-35791-03579
PITNEY BOWES INC.
(Exact name of registrant as specified in its charter)

DelawareState of incorporation:Delaware06-0495050
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
3001 Summer Street, Stamford, Connecticut06926
(Address of principal executive offices)(Zip Code)06-0495050
(203) 356-5000Address of Principal Executive Offices:3001 Summer Street,Stamford,Connecticut06926
(Registrant’s telephone number, including area code)Telephone Number:
(203)356-5000

Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common Stock, $1 par value per sharePBINew York Stock Exchange
6.7% Notes due 2043PBI.PRBNew York Stock Exchange

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 (§232.405 of this chapter) 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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”company,” and "emerging“emerging growth company"company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerþ
þ
Accelerated filero
☐
Non-accelerated filero
Smaller reporting companyo
☐
Emerging growth companyo☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B)13(a) of the SecuritiesExchange Act. 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
As of October 26, 2017, 186,728,127April 29, 2022, 173,432,129 shares of common stock, par value $1 per share, of the registrant were outstanding.


PITNEY BOWES INC.
INDEX
Page Number


PITNEY BOWES INC.
INDEX

Page Number
Part I - Financial Information:
Item 1:
Financial Statements (Unaudited)
Condensed Consolidated Statements of IncomeOperations for the Three and Nine Months Ended September 30, 2017March 31, 2022 and 20162021
3
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2017March 31, 2022 and 20162021
4
Condensed Consolidated Balance Sheets at September 30, 2017March 31, 2022 and December 31, 20162021
5
Condensed Consolidated Statements of Cash Flows for the NineThree Months Ended September 30, 2017March 31, 2022 and 20162021
6
Notes to Condensed Consolidated Financial Statements
7
2728
3935
3935
3935
3935
3935
Item 6:Exhibits
36
Exhibits37
40
Signatures
41

2




PART I. FINANCIAL INFORMATION
Item 1: Financial Statements
PITNEY BOWES INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOMEOPERATIONS
(Unaudited; in thousands, except per share amounts)
Three Months Ended March 31,
20222021
Revenue:  
Business services$597,384 $570,454 
Support services110,352 118,697 
Financing72,029 77,812 
Equipment sales89,296 86,803 
Supplies41,061 42,224 
Rentals16,820 19,207 
Total revenue926,942 915,197 
Costs and expenses:
Cost of business services503,215 499,534 
Cost of support services37,134 36,717 
Financing interest expense11,602 11,886 
Cost of equipment sales63,771 61,840 
Cost of supplies11,517 11,211 
Cost of rentals5,309 6,447 
Selling, general and administrative242,785 238,102 
Research and development11,334 11,316 
Restructuring charges4,184 2,889 
Interest expense, net22,124 25,158 
Other components of net pension and postretirement cost844 350 
Other (income) expense(11,901)51,394 
Total costs and expenses901,918 956,844 
Income (loss) from continuing operations before taxes25,024 (41,647)
Provision (benefit) for income taxes4,203 (13,992)
Income (loss) from continuing operations20,821 (27,655)
Loss from discontinued operations, net of tax— (3,886)
Net income (loss)$20,821 $(31,541)
Basic earnings (loss) per share (1):
Continuing operations$0.12 $(0.16)
Discontinued operations— (0.02)
Net income (loss)$0.12 $(0.18)
Diluted earnings (loss) per share (1):
Continuing operations$0.12 $(0.16)
Discontinued operations— (0.02)
Net income (loss)$0.12 $(0.18)
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Revenue: 
  
  
  
Equipment sales$157,649
 $173,143
 $479,248
 $485,145
Supplies58,296
 61,306
 188,342
 198,631
Software99,600
 89,087
 264,131
 257,760
Rentals95,901
 102,747
 291,770
 309,706
Financing81,184
 87,883
 250,582
 276,915
Support services120,479
 123,954
 354,625
 383,632
Business services229,711
 200,911
 672,133
 607,717
Total revenue842,820
 839,031
 2,500,831
 2,519,506
Costs and expenses: 
  
  
  
Cost of equipment sales85,647
 86,147
 232,398
 235,741
Cost of supplies18,827
 20,348
 60,207
 60,662
Cost of software25,713
 25,698
 75,816
 79,496
Cost of rentals20,818
 16,041
 63,056
 54,951
Financing interest expense12,629
 12,965
 38,446
 41,375
Cost of support services70,688
 74,799
 217,232
 224,790
Cost of business services166,984
 140,989
 470,890
 417,357
Selling, general and administrative304,398
 300,983
 908,169
 916,981
Research and development32,057
 28,680
 96,871
 89,761
Restructuring charges and asset impairments, net1,493
 16,494
 30,502
 49,503
Interest expense, net28,601
 22,294
 81,877
 62,394
Total costs and expenses767,855
 745,438
 2,275,464
 2,233,011
Income before income taxes74,965
 93,593
 225,367
 286,495
Provision for income taxes17,607
 23,197
 53,975
 93,615
Income from continuing operations57,358
 70,396
 171,392
 192,880
Loss from discontinued operations, net of tax—
 (291) —
 (1,951)
Net income57,358
 70,105
 171,392
 190,929
Less: Preferred stock dividends attributable to noncontrolling interests—
 4,593
 —
 13,781
Net income attributable to Pitney Bowes Inc.$57,358
 $65,512
 $171,392
 $177,148
Amounts attributable to common stockholders: 
  
  
  
Net income from continuing operations$57,358
 $65,803
 $171,392
 $179,099
Loss from discontinued operations, net of tax—
 (291) —
 (1,951)
Net income attributable to Pitney Bowes Inc.$57,358
 $65,512
 $171,392
 $177,148
Basic earnings per share attributable to common stockholders (1):
 
  
  
  
Continuing operations$0.31
 $0.35
 $0.92
 $0.95
Discontinued operations—
 —
 —
 (0.01)
Net income attributable to Pitney Bowes Inc.$0.31
 $0.35
 $0.92
 $0.94
Diluted earnings per share attributable to common stockholders (1):
 
  
  
  
Continuing operations$0.31
 $0.35
 $0.92
 $0.94
Discontinued operations—
 —
 —
 (0.01)
Net income attributable to Pitney Bowes Inc.$0.31
 $0.35
 $0.92
 $0.93
Dividends declared per share of common stock$0.1875
 $0.1875
 $0.5625
 $0.5625


(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 (LOSS)
(Unaudited; in thousands)



Three Months Ended March 31,
20222021
Net income (loss)$20,821 $(31,541)
Other comprehensive loss, net of tax:
Foreign currency translation, net of tax of $(167) and $(13), respectively(17,565)(14,258)
Net unrealized gain on cash flow hedges, net of tax of $1,768 and $1,601, respectively5,333 4,830 
Net unrealized loss on investment securities, net of tax of $(5,146) and $(2,956), respectively(15,522)(8,916)
Amortization of pension and postretirement costs, net of tax of $2,461 and $3,208, respectively7,736 9,937 
Other comprehensive loss, net of tax(20,018)(8,407)
Comprehensive income (loss)$803 $(39,948)



 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Net income$57,358
 $70,105
 $171,392
 $190,929
Less: Preferred stock dividends attributable to noncontrolling interests—
 4,593
 —
 13,781
Net income attributable to Pitney Bowes Inc.57,358
 65,512
 171,392
 177,148
Other comprehensive income, net of tax:       
Foreign currency translations33,517
 6,938
 100,223
 37,263
Net unrealized gain (loss) on cash flow hedges, net of tax of $122, $(40), $361 and $224, respectively195
 (64) 579
 358
Net unrealized gain on investment securities, net of tax of $220, $956, $1,322 and $4,399, respectively375
 1,628
 2,251
 7,491
Adjustments to pension and postretirement plans, net of tax of $(304) and $(777) for the nine months ended September 30, 2017 and 2016, respectively.—
 —
 (1,482) (1,230)
Amortization of pension and postretirement costs, net of tax of $3,484, $3,243, $10,440 and $10,362, respectively6,744
 5,963
 20,078
 18,791
Other comprehensive income, net of tax40,831
 14,465
 121,649
 62,673
Comprehensive income attributable to Pitney Bowes Inc.$98,189
 $79,977
 $293,041
 $239,821












































































See Notes to Condensed Consolidated Financial Statements

4

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



March 31, 2022December 31, 2021
ASSETS  
Current assets:  
Cash and cash equivalents$622,575 $732,480 
Short-term investments (includes $2,639 and $2,658, respectively, reported at fair value)11,383 14,440 
Accounts and other receivables (net of allowance of $10,061 and $11,168, respectively)297,713 334,630 
Short-term finance receivables (net of allowance of $12,024 and $12,812, respectively)564,835 560,680 
Inventories87,661 78,588 
Current income taxes12,778 13,894 
Other current assets and prepayments145,167 157,341 
Total current assets1,742,112 1,892,053 
Property, plant and equipment, net430,498 429,162 
Rental property and equipment, net33,849 34,774 
Long-term finance receivables (net of allowance of $13,207 and $13,406 respectively)588,040 587,427 
Goodwill1,129,027 1,135,103 
Intangible assets, net124,739 132,442 
Operating lease assets236,477 208,428 
Noncurrent income taxes66,208 68,398 
Other assets (includes $281,811 and $318,754, respectively, reported at fair value)436,114 471,084 
Total assets$4,787,064 $4,958,871 
LIABILITIES AND STOCKHOLDERS’ EQUITY 
Current liabilities:  
Accounts payable and accrued liabilities$876,645 $922,543 
Customer deposits at Pitney Bowes Bank619,103 632,062 
Current operating lease liabilities41,600 40,299 
Current portion of long-term debt24,746 24,739 
Advance billings102,289 99,280 
Current income taxes2,864 9,017 
Total current liabilities1,667,247 1,727,940 
Long-term debt2,199,833 2,299,099 
Deferred taxes on income286,536 286,445 
Tax uncertainties and other income tax liabilities31,358 31,935 
Noncurrent operating lease liabilities220,614 192,092 
Other noncurrent liabilities288,594 308,728 
Total liabilities4,694,182 4,846,239 
Commitments and contingencies (See Note 13)00
Stockholders’ equity:
Common stock, $1 par value (480,000 shares authorized; 323,338 shares issued)323,338 323,338 
Additional paid-in capital— 2,485 
Retained earnings5,141,636 5,169,270 
Accumulated other comprehensive loss(800,330)(780,312)
Treasury stock, at cost (149,929 and 148,607 shares, respectively)(4,571,762)(4,602,149)
Total stockholders’ equity92,882 112,632 
Total liabilities and stockholders’ equity$4,787,064 $4,958,871 

 September 30, 2017 December 31, 2016
ASSETS 
  
Current assets: 
  
Cash and cash equivalents$1,696,903
 $764,522
Short-term investments45,508
 38,448
Accounts receivable (net of allowance of $15,610 and $14,372, respectively)408,886
 455,527
Short-term finance receivables (net of allowance of $11,921 and $13,323, respectively)826,122
 893,950
Inventories118,282
 92,726
Current income taxes42,605
 11,373
Other current assets and prepayments82,251
 68,637
Total current assets3,220,557
 2,325,183
Property, plant and equipment, net338,340
 314,603
Rental property and equipment, net185,866
 188,054
Long-term finance receivables (net of allowance of $5,999 and $7,177, respectively)650,793
 673,207
Goodwill1,616,968
 1,571,335
Intangible assets, net145,376
 165,172
Noncurrent income taxes77,188
 74,806
Other assets546,319
 524,773
Total assets$6,781,407
 $5,837,133
    
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)  
Current liabilities: 
  
Accounts payable and accrued liabilities$1,348,395
 $1,378,822
Current income taxes13,542
 34,434
Current portion of long-term debt620,256
 614,485
Advance billings282,537
 299,878
Total current liabilities2,264,730
 2,327,619
Deferred taxes on income257,987
 204,289
Tax uncertainties and other income tax liabilities39,671
 61,276
Long-term debt3,562,672
 2,750,405
Other noncurrent liabilities555,514
 597,204
Total liabilities6,680,574
 5,940,793
    
Commitments and contingencies (See Note 12)

 

    
Stockholders’ equity (deficit):   
Cumulative preferred stock, $50 par value, 4% convertible1
 1
Cumulative preference stock, no par value, $2.12 convertible457
 483
Common stock, $1 par value (480,000,000 shares authorized; 323,337,912 shares issued)323,338
 323,338
Additional paid-in capital133,394
 148,125
Retained earnings5,174,602
 5,107,734
Accumulated other comprehensive loss(818,484) (940,133)
Treasury stock, at cost (136,777,086 and 137,669,194 shares, respectively)(4,712,475) (4,743,208)
Total Pitney Bowes Inc. stockholders’ equity (deficit)100,833
 (103,660)
Total liabilities and stockholders’ equity (deficit)$6,781,407
 $5,837,133








See Notes to Condensed Consolidated Financial Statements

5

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



Three Months Ended March 31,
20222021
Cash flows from operating activities:  
Net income (loss)$20,821 $(31,541)
Loss from discontinued operations, net of tax— 3,886 
Adjustments to reconcile net income (loss) to net cash from operating activities:  
Depreciation and amortization42,002 39,594 
Allowance for credit losses2,024 3,992 
Stock-based compensation4,495 5,221 
Amortization of debt fees1,479 2,645 
Loss on debt redemption/refinancing4,993 51,394 
Restructuring charges4,184 2,889 
Restructuring payments(3,285)(3,955)
Pension contributions and retiree medical payments(13,517)(13,230)
Gain on sale of assets(14,372)— 
Gain on sale of business(2,522)— 
Changes in operating assets and liabilities, net of acquisitions/divestitures:  
Accounts and other receivables33,086 57,642 
Finance receivables(172)27,714 
Inventories(7,936)1,900 
Other current assets and prepayments(25,426)(7,153)
Accounts payable and accrued liabilities(38,647)(54,022)
Current and noncurrent income taxes(3,836)(17,291)
Advance billings2,422 4,267 
Other, net4,769 (8,029)
   Net cash from operating activities10,562 65,923 
Cash flows from investing activities:  
Capital expenditures(32,555)(43,328)
Purchases of investment securities(3,988)(64,473)
Proceeds from sales/maturities of investment securities11,020 28,008 
Net investment in loan receivables(11,230)(7,316)
Proceeds from asset sales50,766 — 
Proceeds from sale of business9,016 — 
Other investing activities5,000 — 
   Net cash from investing activities28,029 (87,109)
Cash flows from financing activities:  
Proceeds from the issuance of debt, net of discount— 1,195,500 
Principal payments of debt(100,595)(1,327,315)
Premiums and fees paid to redeem/refinance debt(4,759)(44,418)
Dividends paid to stockholders(8,688)(8,625)
Customer deposits at Pitney Bowes Bank(12,959)(27,794)
Common stock repurchases(13,446)— 
Other financing activities(5,411)(5,648)
   Net cash from financing activities(145,858)(218,300)
Effect of exchange rate changes on cash and cash equivalents(2,638)(1,238)
Change in cash and cash equivalents(109,905)(240,724)
Cash and cash equivalents at beginning of period732,480 921,450 
Cash and cash equivalents at end of period$622,575 $680,726 

 Nine Months Ended September 30,
 2017 2016
Cash flows from operating activities: 
  
Net income$171,392
 $190,929
Restructuring payments(29,976) (51,161)
Special pension plan contributions—
 (36,731)
Adjustments to reconcile net income to net cash provided by operating activities: 
  
Loss on sale of assets—
 3,938
Gain on sale of technology(6,085) —
Depreciation and amortization131,989
 140,225
Gain on debt forgiveness—
 (10,000)
Stock-based compensation18,312
 16,014
Restructuring charges and asset impairments, net30,502
 49,503
Changes in operating assets and liabilities, net of acquisitions/divestitures: 
  
Decrease in accounts receivable55,913
 51,853
Decrease in finance receivables126,599
 113,180
Increase in inventories(22,814) (20,489)
(Increase) decrease in other current assets and prepayments(11,781) 3,312
Decrease in accounts payable and accrued liabilities(46,034) (119,818)
(Decrease) increase in current and noncurrent income taxes(31,377) 1,543
Decrease in advance billings(32,702) (47,183)
Other, net(23,361) 11,244
Net cash provided by operating activities330,577
 296,359
Cash flows from investing activities: 
  
Purchases of available-for-sale securities(108,571) (163,134)
Proceeds from sales/maturities of available-for-sale securities89,940
 167,424
Net change in short-term and other investments(8,083) 65,325
Capital expenditures(119,562) (115,532)
Proceeds from sale of assets5,458
 17,671
Acquisition of businesses, net of cash acquired(7,889) (37,942)
Change in reserve account deposits(2,508) 1,813
Other investing activities(4,500) (7,420)
Net cash used in investing activities(155,715) (71,795)
Cash flows from financing activities: 
  
Proceeds from the issuance of long-term debt1,437,659
 894,744
Principal payments of long-term debt(614,449) (371,007)
Net change in short-term borrowings—
 (90,000)
Dividends paid to stockholders(104,524) (105,791)
Common stock repurchases—
 (197,267)
Dividends paid to noncontrolling interests—
 (9,188)
Other financing activities(3,624) (5,430)
Net cash provided by financing activities715,062
 116,061
Effect of exchange rate changes on cash and cash equivalents42,457
 3,933
Increase in cash and cash equivalents932,381
 344,558
Cash and cash equivalents at beginning of period764,522
 640,190
Cash and cash equivalents at end of period$1,696,903
 $984,748
Cash interest paid$131,927
 $132,359
Cash income tax payments, net of refunds$88,021
 $95,487







See Notes to Condensed Consolidated Financial Statements

6

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



1. Description of Business and Basis of Presentation
Description of Business
Pitney Bowes Inc. (we, us, our, or the company), was incorporated in the state of Delaware in 1920. We are is a global technology company offering innovative products and solutions that help our clients navigate the complex world of commerce. We provide innovative products and solutions for mailing, shipping and cross border ecommercemailing company that enableprovides technology, logistics, and financial services to small and medium sized businesses, large enterprises, including more than 90 percent of the Fortune 500, retailers and government clients around the world. These clients rely on us to remove the complexity and increase the efficiency in their sending of packages globallymail and products and solutions for customerparcels. For additional information, management, location intelligence and customer engagement to help our clients market to their customers. Clients around the world rely on our products, solutions and services. For more information about us, our products, services and solutions, visit www.pb.comwww.pitneybowes.com.


Basis of Presentation
The accompanying unaudited Condensed Consolidated Financial Statementscondensed 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, 20162021 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 only of normal recurring adjustments, considered necessary to fairly state 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 for the year ending December 31, 2017.2022. 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, 2016 (20162021 (2021 Annual Report).
In
Net income for the fourth quarterthree months ended March 31, 2022 benefited by approximately $3 million from adjustments related to prior years. The impact of 2016,the adjustments is not material to the consolidated financial statements for any prior quarterly or annual periods, and is not expected to be material to the current annual period.

Risks and Uncertainties
The effects of COVID-19 on global economies and businesses continues to impact how we determined that certain investments were classified as cashconduct business and our operating results, financial position and cash equivalents. Accordingly,flows. Its impact on our business remains unpredictable and accordingly, we are not able to reasonably estimate the Condensed Consolidated Statementfull extent of Cash Flows for the period ended September 30, 2016 has been revised to reduce beginning cashimpact of COVID-19 on our operating results, financial position and cash equivalents by $10 millionflows.

Accounting Pronouncements Not Yet Adopted
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The transition to new reference interest rates will require certain contracts to be modified and ending cashthe ASU is intended to provide temporary optional expedients and cash equivalents by $7 million with a corresponding adjustmentexceptions to net change in short-termU.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other investing activities.interbank offered rates to alternative reference rates. The accommodations provided by the ASU are effective through December 31, 2022, and may be applied at the beginning of any interim period within that time frame.
New Accounting Pronouncements - Standards Adopted in 2017
In January 2017,We have matched LIBOR-based debt with LIBOR-based interest rate swaps and have elected to apply the Financial Accounting Standard Board (FASB) issued Accounting Standard Update (ASU) 2017-04, Intangibles - Goodwillpractical expedient related to probability and Other (Topic 350),  Simplifying the Test for Goodwill Impairment, which eliminates Step 2assessment of the current two-step goodwill impairment test and requires onlyeffectiveness for future LIBOR-indexed cash flows, which assumes that the debt instrument will use the same index rate as its corresponding interest rate swap once a one-step quantitative impairment test, whereby a goodwill impairment loss will be measurednew reference rate is established to replace LIBOR. We may apply other expedients as additional reference rate changes occur. We continue to assess the excess of a reporting unit’s carrying amount over its fair value (not to exceed the total goodwill allocated to that reporting unit).  The ASU is effective for interim and annual periods beginning after December 15, 2019, and is required to be applied prospectively. We elected to early adopt this standard effective January 1, 2017.  The adoptionimpact of this standard had no impact on our consolidated financial statements or disclosures.statements.

In March 2016,2022, the FASB issued ASU 2016-09, Compensation—Stock Compensation2022-02, Financial Instruments - Credit Losses (Topic 718)326): Improvements to Employee Share-Based Payment Accounting. The standard includes multiple provisions intended to simplify various aspects of the accounting for share-based payments. We retroactively adopted this ASU effective January 1, 2017. Accordingly, the Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2016 has been recast to increase both net cash provided by operating activitiesTroubled Debt Restructurings and net cash used in financing activities by $5 million.
In July 2015, the FASB issued ASU 2015-11, Inventory - Simplifying the Measurement of Inventory, Vintage Disclosures, which requires inventory to be measured at the lowerdisclosure of costgross write-offs and net realizable value (estimated selling price less reasonably predictable costsrecoveries of completion, disposal and transportation). Inventory measured using the last-in, first-out (LIFO) basis is not impactedfinancing receivables by the new guidance. This standard became effective January 1, 2017 and there was no impact on our consolidated financial statements or disclosures.
New Accounting Pronouncements - Standards Not Yet Adopted
In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The ASU changes the recognition and presentation requirementsyear of hedge accounting and reduces the cost and complexity of applying hedge accounting by easing the requirements for effectiveness testing and hedge documentation.origination. The standard is effective for interim and annual periods beginning after December 15, 2018 and2022, with early adoption is permitted. We are currently assessing the impact this standard will have on our consolidated financial statements.statement disclosures.
In May 2017, the FASB issued ASU 2017-09, Scope of Modification Accounting. The ASU provides guidance about which changes to terms and conditions of a share-based payment award require an entity to apply modification accounting. The standard is effective for interim and annual periods beginning after December 15, 2017 and would be applied prospectively to awards modified on or after the effective date. We do not expect the adoption of this standard will have any impact on our consolidated financial statements.


7

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

2. Revenue
In March 2017, the FASB issued ASU 2017-08, Receivables-Nonrefundable FeesDisaggregated Revenue
The following tables disaggregate our revenue by source and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. The ASU shortens the amortization period for certain callable debt securities held at a premium, requiring the premium to be amortized to the earliest call date. The standard will be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings astiming of the beginning of the period of adoption. The standard is effective for interim and annual periods beginning after December 15, 2018 and early adoption is permitted. We are currently assessing the impact this standard will have on our consolidated financial statements.recognition:
In March 2017, the FASB issued ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Benefit Cost. The ASU requires the service cost component of net periodic benefit cost to be presented in the same income statement line item as other employee compensation costs arising from services rendered during the period. Other components of the net periodic benefit cost are to be presented separately, in an appropriately titled line item outside of any subtotal of operating income or disclosed in the footnotes. The standard also limits the amount eligible for capitalization to the service cost component. The standard is effective for interim and annual periods beginning after December 15, 2017 and we are currently assessing the impact this standard will have on our consolidated financial statements.
Three Months Ended March 31, 2022
Global EcommercePresort ServicesSendTech SolutionsRevenue from products and servicesRevenue from leasing transactions and financingTotal consolidated revenue
Major products/service lines
Business services$418,527 $160,544 $18,313 $597,384 $— $597,384 
Support services— — 110,352 110,352 — 110,352 
Financing— — — — 72,029 72,029 
Equipment sales— — 21,299 21,299 67,997 89,296 
Supplies— — 41,061 41,061 — 41,061 
Rentals— — — — 16,820 16,820 
Subtotal418,527 160,544 191,025 770,096 $156,846 $926,942 
Revenue from leasing transactions and financing— — 156,846 156,846 
     Total revenue$418,527 $160,544 $347,871 $926,942 
Timing of revenue recognition from products and services
Products/services transferred at a point in time$— $— $78,373 $78,373 
Products/services transferred over time418,527 160,544 112,652 691,723 
      Total$418,527 $160,544 $191,025 $770,096 
In January 2017, the FASB issued ASU 2017-06 – Plan Accounting: Defined Benefit Pension Plans (Topic 960); Defined Contribution Pension Plans (Topic 962); Health and Welfare Benefit Plans (Topic 965): Employee Benefit Plan Master Trust Reporting. The ASU requires separate disclosure in the statement of net assets available for benefits and the statement of changes in net assets available for benefits of changes in any interests held in a Master Trust and other enhanced disclosures. The standard is effective for interim and annual periods beginning after December 15, 2018 and we are currently evaluating the impact of this standard on our consolidated financial statements.
In January 2017, the FASB issued ASU 2017-01, Clarifying the Definition of a Business,which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The standard is effective for interim and annual periods beginning after December 15, 2017. The impact on our consolidated financial statements will depend on the facts and circumstances of any specific future transactions.
Three Months Ended March 31, 2021
Global EcommercePresort ServicesSendTech SolutionsRevenue from products and servicesRevenue from leasing transactions and financingTotal consolidated revenue
Major products/service lines
Business services$413,086 $143,126 $14,242 $570,454 $— $570,454 
Support services— — 118,697 118,697 — 118,697 
Financing— — — — 77,812 77,812 
Equipment sales— — 19,118 19,118 67,685 86,803 
Supplies— — 42,224 42,224 — 42,224 
Rentals— — — — 19,207 19,207 
Subtotal413,086 143,126 194,281 750,493 $164,704 $915,197 
Revenue from leasing transactions and financing— — 164,704 164,704 
     Total revenue$413,086 $143,126 $358,985 $915,197 
Timing of revenue recognition from products and services
Products/services transferred at a point in time$— $— $77,538 $77,538 
Products/services transferred over time413,086 143,126 116,743 672,955 
      Total$413,086 $143,126 $194,281 $750,493 
In October 2016, the FASB issued ASU No. 2016-16, Income Taxes: Inter-entity Transfers of Assets other than Inventory, which requires tax expense to be recognized from the sale of intra-entity assets, other than inventory, when the transfer occurs, even though the effects of the transaction are eliminated in consolidation. Under current guidance, the tax effects of transfers are deferred until the transferred asset is sold or otherwise recovered through use. The standard is effective for interim and annual periods beginning after December 15, 2017 and early adoption is permitted, including adoption during an interim period. We are currently assessing the impact this standard will have on our consolidated financial statements.
In August, 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force). The ASU is intended to reduce diversity in practice in the presentation and classification of certain cash receipts and cash payments by providing guidance on eight specific cash flow issues. The ASU is effective for interim and annual periods beginning after December 15, 2017 and early adoption is permitted, including adoption during an interim period. We are currently assessing the impact this standard will have on our consolidated statement of cash flows.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses. The ASU sets forth a “current expected credit loss” (CECL) model which requires companies to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. This standard is effective for interim and annual periods beginning after December 15, 2019. We are currently assessing the impact this standard will have on our consolidated financial statements and disclosures.
In February 2016, the FASB issued ASU 2016-02, Leases. This standard, among other things, will require lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability and result in enhanced disclosures. The standard is effective for interim and annual periods beginning after December 15, 2018 and early adoption is permitted. We are currently assessing the impact this standard will have on our consolidated financial statements and disclosures.
In January 2016, the FASB issued ASU 2016-01, Financial Instruments–Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. This standard primarily affects the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. The standard is effective for interim and annual periods beginning after December 15, 2017, and early adoption is permitted. We are currently assessing the impact this standard will have on our consolidated financial statements and disclosures.




8

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

Our performance obligations for revenue from products and services are as follows:
In May 2014,Business services includes fulfillment, delivery and return services, cross-border solutions, mail processing services and shipping subscription solutions. Revenue for fulfillment, delivery and return services and cross-border solutions and mail processing services is recognized over time using an output method based on the FASB issued ASU 2014-09, number of parcels or mail pieces either processed or delivered, depending on the service type, since that measure best depicts the value of goods and services transferred to the client over the contract period. Contract terms for these services initially range from one to five years and contain annual renewal options. Revenue for shipping subscription solutions revenue is recognized ratably over the contract period as the client obtains equal benefit from these services through the period.
Support services includes providing maintenance, professional and subscription services for our equipment and digital mailing and shipping technology solutions. Contract terms range from one to five years, depending on the term of the lease contract for the related equipment. Revenue for maintenance and subscription services is recognized ratably over the contract period and revenue for professional services is recognized when services are provided.
Equipment sales generally includes the sale of mailing and shipping equipment, excluding sales-type leases. We recognize revenue upon delivery for self-install equipment and upon acceptance or installation for other equipment. We provide a warranty that the equipment is free of defects and meets stated specifications. The warranty is not considered a separate performance obligation.
Supplies revenue includes revenue from supplies for our mailing equipment and is recognized upon delivery.
Revenue from leasing transactions and financing includes revenue from sales-type and operating leases, finance income, late fees and investment income, gains and losses at the Bank.

Advance Billings from Contracts with Customers, which requires companies
Balance sheet locationMarch 31, 2022December 31, 2021Increase/ (decrease)
Advance billings, currentAdvance billings$93,905 $92,926 $979 
Advance billings, noncurrentOther noncurrent liabilities$772 $1,109 $(337)

Advance billings are recorded when cash payments are due in advance of our performance. Revenue is recognized ratably over the contract term. Items in advance billings primarily relate to recognize revenue forsupport services on mailing equipment. Revenue recognized during the transferperiod includes $55 million of goods and services to customers in amounts that reflect the consideration the company expects to receive in exchange for those goods and services.  In addition, the standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue.  There were several amendments to the standard during 2016. The standard is effective beginning January 1, 2018 and can be adopted either retrospectively to each reporting period presented or on a modified retrospective basis with a cumulative effect adjustmentadvance billings at the datebeginning of the initial application. We plan to adopt the standardperiod. Advance billings, current reported on the modified retrospective basiscondensed consolidated balance sheets at March 31, 2022 and December 31, 2021 also includes $8 million and $6 million, respectively, from leasing transactions.

Future Performance Obligations
Future performance obligations include revenue streams bundled with a cumulative effect adjustment. 
We have substantially completed our assessment of all potential impacts of the standardleasing contracts, primarily maintenance and do not expect a change in revenue recognition for the majority of our product and service offerings.subscription services. The standard will have the most impact on timing of certain revenues in our Software Solutions segment. Specifically, we have concluded that for certain data subscription offerings, the portion of the transaction priceprices allocated to the initial data setfuture performance obligations will be recognized as follows:
Remainder of 202220232024-2027Total
SendTech Solutions$205,644 $218,121 $264,498 $688,263 
The amounts above do not include revenue at the time of initial delivery rather than over the subscription period.  We also concluded that for certain software licenses, revenue will be recognized ratably over the specific contractperformance obligations under contracts with terms rather than predominately at the time of billing and delivery. Also, we concluded that certain marketing costs associated with the acquisition of new customers will be expensed as incurred rather than recognized over their expected revenue stream of eight years. We have also determined that certain sales commission plans will qualify for capitalization under the new standard. We plan to use the practical expedient that allows companies to expense costs to obtain a contract when the estimated amortization period is less than one year. We expect to complete our quantitative assessment of these key changes and the impact on our consolidated financial statements during the fourth quarter of 2017.
We continue to develop our internal controls, accounting policies and new disclosure requirements. We are enhancing our current systems and business processes to facilitate the preparation of financial information that will be required under the new standard. We expect to finalize these activities by the end of the year.
2. Segment Information
Effective January 1, 2017, we revised our segment reporting to reflect a change in how we manage and report office shipping solutions, which we previously reported within the Global Ecommerce segment. The needs of retail and ecommerce clients differ from those of office shipping clients. Accordingly, we now report the results12 months or revenue for office shipping solutions within Small & Medium Business Solutions and the retail and ecommerce shipping solutions remain in Global Ecommerce. We have recast prior period results to conform to our current segment presentation. The principal products and services of each of our reportable segments are as follows:
Small & Medium Business Solutions:
North America Mailing: Includes theperformance obligations where revenue and related expenses from mailing and office shipping solutions, financing services, and supplies for small and medium businesses to efficiently create physical and digital mail, evidence postage and help simplify and saveis recognized based on the sending, tracking and receiving of letters, parcels and flats in the U.S. and Canada.
International Mailing: Includes the revenue and related expenses from mailing and office shipping solutions, financing services, and supplies for small and medium businesses to efficiently create physical and digital mail, evidence postage and help simplify and save on the sending, tracking and receiving of letters, parcels and flats in areas outside the U.S. and Canada.

Enterprise Business Solutions:
Production Mail: Includes the worldwide revenue and related expenses from the sale of production mail inserting and sortation equipment, high-speed production print systems, supplies and related support services to large enterprise clients to process inbound and outbound mail.
Presort Services: Includes revenue and related expenses from presort mail and parcel services for our large enterprise clients to qualify large mail and parcel volumes for postal worksharing discounts.

Digital Commerce Solutions:
Software Solutions: Includes the worldwide revenue and related expenses from the licensing of customer engagement, customer information and location intelligence software solutions and related support services.
Global Ecommerce: Includes the worldwide revenue and related expenses from cross-border ecommerce transactions and domestic retail and ecommerce shipping solutions.

We determine segment earnings before interest and taxes (EBIT) by deducting from segment revenue the related costs and expenses attributableamount billable to the segment. Segment EBIT excludes interest, taxes, general corporate expenses, restructuring charges, and other items that are not allocated to a particular business segment. Management uses segment EBIT to measure profitability and performance at thecustomer.

9

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

3. Segment Information
Our reportable segments are Global Ecommerce, Presort Services and SendTech Solutions. The principal products and services of each reportable segment levelare as follows:
Global Ecommerce: Includes the revenue and related expenses from business to consumer logistics services for domestic and cross-border delivery, returns and fulfillment.
Presort Services: Includes revenue and related expenses from sortation services to qualify large volumes of First Class Mail, Marketing Mail, Marketing Mail Flats and Bound Printed Matter for postal worksharing discounts.
SendTech Solutions: Includes the revenue and related expenses from physical and digital mailing and shipping technology solutions, financing, services, supplies and other applications to help simplify and save on the sending, tracking and receiving of letters, parcels and flats.
Management measures segment profitability and performance using segment earnings before interest and taxes (EBIT). Segment EBIT is calculated by deducting from segment revenue the related costs and expenses attributable to the segment. Segment EBIT excludes interest, taxes, unallocated corporate expenses, restructuring charges, asset and goodwill impairment charges and other items not allocated to a business segment. Costs related to shared assets are allocated to the relevant segments. Management believes that itsegment EBIT provides investors a useful measure of operating performance and underlying trends of the businesses.business. Segment EBIT may not be indicative of our overall consolidated performance and therefore, should be read in conjunction with our consolidated results of operations. The following tables provide information about our reportable segments and reconciliation of segment EBIT to net income (loss).
Revenue and EBIT by business segment is presented below:
Revenue
Three Months Ended March 31,
20222021
Global Ecommerce$418,527 $413,086 
Presort Services160,544 143,126 
SendTech Solutions347,871 358,985 
Total revenue$926,942 $915,197 

EBIT
Three Months Ended March 31,
20222021
Global Ecommerce$(13,696)$(26,376)
Presort Services19,632 19,051 
SendTech Solutions104,575 114,470 
Total segment EBIT110,511 107,145 
Reconciliation of Segment EBIT to net income (loss):  
Unallocated corporate expenses(57,834)(57,465)
Restructuring charges(4,184)(2,889)
Interest expense, net(33,726)(37,044)
Loss on debt redemption/refinancing(4,993)(51,394)
Gain on sale of business2,522 — 
Gain on sale of assets14,372 — 
Transaction costs(1,644)— 
(Provision) benefit for income taxes(4,203)13,992 
Income (loss) from continuing operations20,821 (27,655)
Loss from discontinued operations, net of tax— (3,886)
Net income (loss)$20,821 $(31,541)
10
 Revenue
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
North America Mailing$319,966
 $349,785
 $1,016,640
 $1,064,456
International Mailing93,770
 96,730
 282,150
 309,297
Small & Medium Business Solutions413,736
 446,515
 1,298,790
 1,373,753
Production Mail104,387
 106,350
 278,912
 289,649
Presort Services119,074
 114,053
 370,203
 357,214
Enterprise Business Solutions223,461
 220,403
 649,115
 646,863
Software Solutions99,442
 89,031
 264,087
 257,417
Global Ecommerce106,181
 83,082
 288,839
 241,473
Digital Commerce Solutions205,623
 172,113
 552,926
 498,890
Total revenue$842,820
 $839,031
 $2,500,831
 $2,519,506

 EBIT
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
North America Mailing$107,777
 $141,968
 $369,662
 $449,696
International Mailing8,729
 9,198
 35,967
 32,842
Small & Medium Business Solutions116,506
 151,166
 405,629
 482,538
Production Mail14,920
 15,696
 31,515
 35,434
Presort Services19,474
 19,181
 69,461
 69,305
Enterprise Business Solutions34,394
 34,877
 100,976
 104,739
Software Solutions20,912
 10,329
 31,216
 17,908
Global Ecommerce(9,594) 1,544
 (17,894) (2,608)
Digital Commerce Solutions11,318
 11,873
 13,322
 15,300
Total segment EBIT162,218
 197,916
 519,927
 602,577
Reconciling items:     
  
Interest, net(41,230) (35,259) (120,323) (103,769)
Unallocated corporate expenses(38,848) (51,992) (144,138) (158,536)
Restructuring charges and asset impairments, net(1,493) (16,494) (30,502) (49,503)
Gain from the sale of technology—
 —
 6,085
 —
Acquisition and disposition-related expenses(5,682) (578) (5,682) (4,274)
Income before income taxes74,965
 93,593
 225,367
 286,495
Provision for income taxes17,607
 23,197
 53,975
 93,615
Loss from discontinued operations, net of tax—
 (291) —
 (1,951)
Net income$57,358
 $70,105
 $171,392
 $190,929


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

Effective for 2022, we refined our methodology for allocating transportation costs between Global Ecommerce and Presort Services, resulting in an increase to Global Ecommerce EBIT and a corresponding decrease to Presort Services EBIT of approximately $3 million for the three months ended March 31, 2022.
3.
4. Earnings per Share (EPS)
The calculationscalculation of basic and diluted earnings per share areis presented below. The sum of the earnings per share amounts may not equal the totals due to rounding.
Three Months Ended March 31,
20222021
Numerator:  
Income (loss) from continuing operations$20,821 $(27,655)
Loss from discontinued operations, net of tax— (3,886)
Net income (loss)$20,821 $(31,541)
Denominator:  
Weighted-average shares used in basic EPS174,115 172,856 
Dilutive effect of common stock equivalents (1)
3,919 — 
Weighted-average shares used in diluted EPS178,034 172,856 
Basic earnings (loss) per share:  
Continuing operations$0.12 $(0.16)
Discontinued operations— (0.02)
Net income (loss)$0.12 $(0.18)
Diluted earnings (loss) per share:
Continuing operations$0.12 $(0.16)
Discontinued operations— (0.02)
Net income (loss)$0.12 $(0.18)
Common stock equivalents excluded from calculation of diluted earnings per share because their impact would be anti-dilutive:9,590 6,440 
(1)     Due to the net loss for the three months ended March 31, 2021, common stock equivalents of 5,804 were also excluded from the calculation of diluted earnings per share.

 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Numerator: 
  
  
  
Amounts attributable to common stockholders: 
  
  
  
Net income from continuing operations$57,358
 $65,803
 $171,392
 $179,099
Loss from discontinued operations, net of tax—
 (291) —
 (1,951)
Net income attributable to Pitney Bowes Inc. (numerator for diluted EPS)57,358
 65,512
 171,392
 177,148
Less: Preference stock dividend9
 10
 28
 29
Income attributable to common stockholders (numerator for basic EPS)$57,349
 $65,502
 $171,364
 $177,119
Denominator: 
  
  
  
Weighted-average shares used in basic EPS186,497
 185,603
 186,257
 188,634
Effect of dilutive shares: 
  
  
  
Conversion of Preferred stock and Preference stock281
 299
 287
 301
Employee stock plans979
 781
 656
 657
Weighted-average shares used in diluted EPS187,757
 186,683
 187,200
 189,592
Basic earnings per share: 
  
  
  
Continuing operations$0.31
 $0.35
 $0.92
 $0.95
Discontinued operations—
 —
 —
 (0.01)
Net Income$0.31
 $0.35
 $0.92
 $0.94
Diluted earnings per share: 
  
  
  
Continuing operations$0.31
 $0.35
 $0.92
 $0.94
Discontinued operations—
 —
 —
 (0.01)
Net Income$0.31
 $0.35
 $0.92
 $0.93
Anti-dilutive shares not used in calculating diluted weighted-average shares9,927
 8,036
 10,211
 8,148
4.5. Inventories
Inventories are stated at the lower of cost, or net realizable value. Cost is determined on the last-in, first-out (LIFO) basis for most U.S. inventories and the first-in, first-out (FIFO) basis, for most non-U.S. inventories.or net realizable value. Inventories at September 30, 2017 and December 31, 2016 consisted of the following:
March 31,
2022		December 31,
2021
Raw materials$25,510 $22,352 
Supplies and service parts31,869 26,076 
Finished products30,282 30,160 
Total inventory, net$87,661 $78,588 






11
 September 30,
2017		 December 31,
2016
Raw materials$39,287
 $28,541
Work in process6,620
 6,498
Supplies and service parts51,854
 45,152
Finished products32,664
 24,678
Inventory at FIFO cost130,425
 104,869
Excess of FIFO cost over LIFO cost(12,143) (12,143)
Total inventory, net$118,282
 $92,726


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

6. Finance Assets and Lessor Operating Leases
5. Finance Assets
Finance Receivables
Finance receivables are comprised of sales-type lease receivables, secured loans and unsecured revolving loan receivables.loans. Sales-type lease receivablesleases and secured loans are from financing options provided to clients for Pitney Bowes equipment or leasing of other manufacturers' equipment and are generally due in monthly, quarterly or semi-annual installments over periods ranging from three to five years. Loan receivables arise primarily from financing servicesUnsecured loans comprise revolving credit lines offered to our customersclients for postage, supplies and supplies. Loan receivablesworking capital purposes. These revolving credit lines are generally due each month;monthly; however, customersclients may rollover outstanding balances. Interest is recognized on loanfinance receivables using the effective interest method and related annualmethod. Annual fees are initially deferred and recognized ratably over the annual period covered. Customercovered and client acquisition costs are expensed as incurred. All finance receivables are in our SendTech Solutions segment and we segregate finance receivables into a North America portfolio and an International portfolio.
Finance receivables at September 30, 2017 and December 31, 2016 consisted of the following:
March 31, 2022December 31, 2021
North AmericaInternationalTotalNorth AmericaInternationalTotal
Sales-type lease receivables      
Gross finance receivables$959,257 $172,840 $1,132,097 $958,440 $187,831 $1,146,271 
Unguaranteed residual values38,157 10,171 48,328 37,896 10,717 48,613 
Unearned income(243,818)(54,190)(298,008)(246,381)(56,643)(303,024)
Allowance for credit losses(18,960)(2,790)(21,750)(19,546)(3,246)(22,792)
Net investment in sales-type lease receivables734,636 126,031 860,667 730,409 138,659 869,068 
Loan receivables     
Loan receivables274,661 21,028 295,689 262,310 20,155 282,465 
Allowance for credit losses(3,297)(184)(3,481)(3,259)(167)(3,426)
Net investment in loan receivables271,364 20,844 292,208 259,051 19,988 279,039 
Net investment in finance receivables$1,006,000 $146,875 $1,152,875 $989,460 $158,647 $1,148,107 


Maturities of gross finance receivables at March 31, 2022 were as follows:

Sales-type Lease ReceivablesLoan Receivables
North AmericaInternationalTotalNorth AmericaInternationalTotal
Remainder 2022$289,762 $49,184 $338,946 $232,528 $21,028 $253,556 
2023302,598 55,706 358,304 18,278 — 18,278 
2024201,413 35,883 237,296 12,964 — 12,964 
2025113,862 20,896 134,758 8,246 — 8,246 
202647,423 9,061 56,484 2,417 — 2,417 
Thereafter4,199 2,110 6,309 228 — 228 
Total$959,257 $172,840 $1,132,097 $274,661 $21,028 $295,689 








12

PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
 September 30, 2017 December 31, 2016
 North America International Total North America International Total
Sales-type lease receivables 
  
  
  
  
  
Gross finance receivables$1,023,206
 $284,099
 $1,307,305
 $1,088,053
 $273,262
 $1,361,315
Unguaranteed residual values75,242
 14,301
 89,543
 90,190
 13,655
 103,845
Unearned income(213,852) (62,343) (276,195) (223,908) (60,458) (284,366)
Allowance for credit losses(7,103) (2,768) (9,871) (8,247) (2,647) (10,894)
Net investment in sales-type lease receivables877,493
 233,289
 1,110,782
 946,088
 223,812
 1,169,900
Loan receivables 
  
  
  
  
  
Loan receivables339,726
 34,456
 374,182
 374,147
 32,716
 406,863
Allowance for credit losses(6,960) (1,089) (8,049) (8,517) (1,089) (9,606)
Net investment in loan receivables332,766
 33,367
 366,133
 365,630
 31,627
 397,257
Net investment in finance receivables$1,210,259
 $266,656
 $1,476,915
 $1,311,718
 $255,439
 $1,567,157
Aging of Receivables

The aging of gross finance receivables was as follows:
March 31, 2022
Sales-type Lease ReceivablesLoan Receivables
North
America		InternationalNorth
America		InternationalTotal
Past due amounts 0 - 90 days$951,491 $170,651 $271,093 $20,944 $1,414,179 
Past due amounts > 90 days7,766 2,189 3,568 84 13,607 
Total$959,257 $172,840 $274,661 $21,028 $1,427,786 
Past due amounts > 90 days     
Still accruing interest$2,444 $666 $— $— $3,110 
Not accruing interest5,322 1,523 3,568 84 10,497 
Total$7,766 $2,189 $3,568 $84 $13,607 

December 31, 2021
Sales-type Lease ReceivablesLoan Receivables
North
America		InternationalNorth
America		InternationalTotal
Past due amounts 0 - 90 days$950,138 $185,057 $258,514 $20,018 $1,413,727 
Past due amounts > 90 days8,302 2,774 3,796 137 15,009 
Total$958,440 $187,831 $262,310 $20,155 $1,428,736 
Past due amounts > 90 days     
Still accruing interest$4,964 $682 $— $— $5,646 
Not accruing interest3,338 2,092 3,796 137 9,363 
Total$8,302 $2,774 $3,796 $137 $15,009 


Allowance for Credit Losses
We provide an allowance for probable credit losses based on historical loss experience, the nature and volume of our portfolios, adverse situations that may affect a client's ability to pay prevailingand current economic conditions and our ability to manage the collateral.outlook based on reasonable and supportable forecasts. We continually evaluate the adequacy of the allowance for credit losses and make adjustmentsadjust as necessary. The assumptions used in determining an estimate of credit losses are inherently subjective and actual results may differ significantly from estimated reserves.

We establish creditCredit approval limits are established based on the credit quality of the client and the type of equipment financed. Our policy is to discontinueWe cease financing 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 revenueRevenue recognition is resumed when the client's payments reduce the account aging to less than 60 days past due. Finance receivables deemed uncollectible are written off against the allowance after all collection efforts have been exhausted and management deems the account to be uncollectible. We believe that our finance receivable credit risk is low because of the geographic and industry diversification of our clients and small account balances for most of our clients.




















13

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

Activity in the allowance for credit losses for the nine months ended September 30, 2017 and 2016finance receivables was as follows:
Sales-type Lease ReceivablesLoan Receivables
North
America		InternationalNorth
America		InternationalTotal
Balance at January 1, 2022$19,546 $3,246 $3,259 $167 $26,218 
Amounts charged to expense297 47 616 143 1,103 
Write-offs(1,640)(360)(1,341)(117)(3,458)
Recoveries744 — 761 — 1,505 
Other13 (143)2 (9)(137)
Balance at March 31, 2022$18,960 $2,790 $3,297 $184 $25,231 
Sales-type Lease ReceivablesLoan Receivables
North
America		InternationalNorth
America		InternationalTotal
Balance at January 1, 2021$22,917 $6,006 $6,484 $462 $35,869 
Amounts charged to expense154 61 763 4 982 
Write-offs(1,024)(371)(1,833)(3)(3,231)
Recoveries935 29 991 — 1,955 
Other16 (119)2 — (101)
Balance at March 31, 2021$22,998 $5,606 $6,407 $463 $35,474 
 Sales-type Lease Receivables Loan Receivables  
 
North
America
 International 
North
America
 International Total
Balance at January 1, 2017$8,247
 $2,647
 $8,517
 $1,089
 $20,500
Amounts charged to expense7,807
 895
 3,892
 438
 13,032
Write-offs and other(8,951) (774) (5,449) (438) (15,612)
Balance at September 30, 2017$7,103
 $2,768
 $6,960
 $1,089
 $17,920
          
 Sales-type Lease Receivables Loan Receivables  
 
North
America
 International 
North
America
 International Total
Balance at January 1, 2016$6,606
 $3,542
 $10,024
 $1,518
 $21,690
Amounts charged to expense2,881
 464
 4,217
 688
 8,250
Write-offs and other(3,433) (1,419) (5,953) (1,010) (11,815)
Balance at September 30, 2016$6,054
 $2,587
 $8,288
 $1,196
 $18,125

Aging of Receivables
The aging of gross finance receivables at September 30, 2017 and December 31, 2016 was as follows:
 September 30, 2017
 Sales-type Lease Receivables Loan Receivables  
 
North
America
 International 
North
America
 International Total
1 - 90 days$970,891
 $279,517
 $331,233
 $34,224
 $1,615,865
> 90 days52,315
 4,582
 8,493
 232
 65,622
Total$1,023,206
 $284,099
 $339,726
 $34,456
 $1,681,487
Past due amounts > 90 days 
  
  
  
  
Still accruing interest$6,726
 $1,781
 $—
 $—
 $8,507
Not accruing interest45,589
 2,801
 8,493
 232
 57,115
Total$52,315
 $4,582
 $8,493
 $232
 $65,622
As of September 30, 2017, we had North America sales-type lease receivables aged greater than 90 days with a contract value of $52 million. As of October 31, 2017, we received payments with a contract value of approximately $23 million related to these receivables.
 December 31, 2016
 Sales-type Lease Receivables Loan Receivables  
 
North
America
 International 
North
America
 International Total
1 - 90 days$1,025,313
 $269,247
 $366,726
 $32,420
 $1,693,706
> 90 days62,740
 4,015
 7,421
 296
 74,472
Total$1,088,053
 $273,262
 $374,147
 $32,716
 $1,768,178
Past due amounts > 90 days 
  
  
  
  
Still accruing interest$8,831
 $972
 $—
 $—
 $9,803
Not accruing interest53,909
 3,043
 7,421
 296
 64,669
Total$62,740
 $4,015
 $7,421
 $296
 $74,472


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



Credit Quality
The extension of credit and management of credit lines to new and existing clients uses a combination of an automateda client's credit score, where available, and a detailed manual review of the client'stheir financial condition and when applicable, payment history.history, or an automated process. Once credit is granted, the payment performance of the client is managed through automated collections processes and is supplemented with direct follow up should an account become delinquent. We have robust automated collections and extensive portfolio management processes. The portfolio management processes to ensure that our global strategy is executed, collection resources are allocated appropriately and enhanced tools and processes are implemented as needed.
Over 85% of our finance receivables are within the North American portfolio. We use a third party to score the majority of the North Americathis portfolio on a quarterly basis using a proprietary commercial credit score. The relative scores are determined based on a number of factors, including financial information, payment history, company type and ownership structure. We stratify the third party's credit scores of our clients into low, medium and high-risk accounts. Due to timing and other issues, our entire portfolio may not be scored at period end. We report these amounts as "Not Scored"; however, absence of a score is not indicative of the credit quality of the account. The third-party credit score is used to predict the payment behaviors of our clients and the probability that an account will become greater than 90 days past due during the subsequent 12-month period.
•Low risk accounts are companies with very good credit scores and a predicted delinquency rate of less than 5%.
•Medium risk accounts are companies with average to good credit scores and a predicted delinquency rate between 5% and 10%.
•High risk accounts are companies with poor credit scores, are delinquent or are at risk of becoming delinquent. The predicted delinquency rate would be greater than 10%.

We do not use a third party to score our International portfolio because the cost to do so is prohibitive given that it is a localized process andas there is no single credit score model that covers all countries.
The table below shows Accordingly, the North Americaentire International portfolio at September 30, 2017 and December 31, 2016 by relative risk class based onis reported in the relative scoresNot Scored category. This portfolio comprises approximately 15% of total finance receivables. Most of the accounts within each class. The relative scoresInternational credit applications 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 (low, medium, high), 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 scoressmall dollar applications (i.e. below $50 thousand) and are consideredsubjected to approximate the top 30% of all commercial borrowers.an automated review process. Larger credit applications are manually reviewed, which includes obtaining client financial information, credit reports and other available financial information.
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.





14
 September 30,
2017		 December 31,
2016
Sales-type lease receivables 
  
Low$817,332
 $879,823
Medium136,995
 135,953
High21,528
 22,600
Not Scored47,351
 49,677
Total$1,023,206
 $1,088,053
Loan receivables 
  
Low$263,537
 $296,598
Medium52,630
 53,647
High6,897
 7,216
Not Scored16,662
 16,686
Total$339,726
 $374,147



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

The table below shows gross finance receivables by relative risk class and year of origination based on the relative scores of the accounts within each class as of March 31, 2022 and December 31, 2021.
6. Acquisition,
March 31, 2022
Sales Type Lease ReceivablesLoan ReceivablesTotal
20222021202020192018Prior
Low$76,624 $253,998 $180,703 $146,716 $79,663 $35,833 $202,419 $975,956 
Medium13,619 44,487 32,696 27,581 14,456 8,744 57,783 199,366 
High1,558 5,037 4,876 3,688 2,033 1,028 4,153 22,373 
Not Scored26,074 73,694 38,874 35,487 20,873 3,755 31,334 230,091 
Total$117,875 $377,216 $257,149 $213,472 $117,025 $49,360 $295,689 $1,427,786 
December 31, 2021
Sales Type Lease ReceivablesLoan ReceivablesTotal
20212020201920182017Prior
Low$274,191 $195,421 $162,479 $95,661 $33,698 $14,862 $192,161 $968,473 
Medium43,403 34,955 31,038 17,895 6,981 3,619 55,708 193,599 
High5,474 5,017 4,044 2,708 849 889 4,822 23,803 
Not Scored45,644 54,097 47,973 33,998 19,161 12,214 29,774 242,861 
Total$368,712 $289,490 $245,534 $150,262 $60,689 $31,584 $282,465 $1,428,736 


Lease Income
Lease income from sales-type leases, excluding variable lease payments, was as follows:
Three Months Ended March 31,
20222021
Profit recognized at commencement$35,040 $32,265 
Interest income42,283 48,496 
Total lease income from sales-type leases$77,323 $80,761 


Lessor Operating Leases
We also lease mailing equipment under operating leases with terms of one to five years. Maturities of these operating leases are as follows:
Remainder 2022$19,002 
202315,556 
202416,303 
20255,325 
20261,409 
Thereafter170 
Total$57,765 




15

PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
7. Intangible Assets and Goodwill
Acquisition
On October 2, 2017, we acquired Newgistics, a provider of parcel delivery, returns, fulfillment and digital commerce solutions for retailers and ecommerce brands, for $475 million. Newgistics will be included in the Global Ecommerce segment.
Intangible Assets
Intangible assets at September 30, 2017 and December 31, 2016 consisted of the following:
March 31, 2022December 31, 2021
Gross
Carrying
Amount		Accumulated
Amortization		Net
Carrying
Amount		Gross
Carrying
Amount		Accumulated
Amortization		Net
Carrying
Amount
Customer relationships$268,176 $(148,098)$120,078 $268,187 $(141,492)$126,695 
Software & technology21,967 (17,306)4,661 21,981 (16,234)5,747 
Total intangible assets$290,143 $(165,404)$124,739 $290,168 $(157,726)$132,442 
 September 30, 2017 December 31, 2016
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
Customer relationships$455,275
 $(327,947) $127,328
 $445,039
 $(300,906) $144,133
Software & technology154,571
 (142,604) 11,967
 150,037
 (136,508) 13,529
Trademarks & other37,326
 (31,245) 6,081
 36,212
 (28,702) 7,510
Total intangible assets$647,172
 $(501,796) $145,376
 $631,288
 $(466,116) $165,172


Amortization expense was $8 million and $10 millionfor both the three months ended September 30, 2017March 31, 2022 and 2016, respectively and $24 million and $32 million for the nine months ended September 30, 2017 and 2016, respectively.2021 was $8 million.
Future amortization expense as of September 30, 2017 was as follows:
Remaining for year ending December 31, 2017$7,727
Year ending December 31, 201827,356
Year ending December 31, 201923,977
Year ending December 31, 202018,389
Year ending December 31, 202115,365
Thereafter52,562
Total$145,376
March 31, 2022 is shown in the table below. Actual amortization expense may differ from the amounts above due to, among other things, fluctuations in foreign currency exchange rates, impairments, acquisitions, divestitures and accelerated amortization.impairment charges.
Remainder 2022$22,119 
202326,959 
202426,959 
202520,300 
202614,146 
Thereafter14,256 
Total$124,739 

Goodwill
Changes in the carrying value of goodwill by reporting segment for the nine months ended September 30, 2017are shown in the table below. Prior year amounts have been recast for the change in reportable segments.
December 31, 2021Currency impactMarch 31,
2022
Global Ecommerce$395,062 $— $395,062 
Presort Services220,992 — 220,992 
SendTech Solutions519,049 (6,076)512,973 
Total goodwill$1,135,103 $(6,076)$1,129,027 

Global Ecommerce goodwill is net of accumulated goodwill impairment charges of $198 million at March 31, 2022 and December 31, 2021.









16
 December 31, 2016 Acquisitions Foreign currency translation September 30,
2017
North America Mailing$354,000
 $—
 $13,208
 $367,208
International Mailing145,566
 —
 12,074
 157,640
Small & Medium Business Solutions499,566
 —
 25,282
 524,848
Production Mail101,099
 —
 5,734
 106,833
Presort Services196,890
 6,229
 —
 203,119
Enterprise Business Solutions297,989
 6,229
 5,734
 309,952
Software Solutions501,591
 —
 8,388
 509,979
Global Ecommerce272,189
 —
 —
 272,189
Digital Commerce Solutions773,780
 —
 8,388
 782,168
Total goodwill$1,571,335
 $6,229
 $39,404
 $1,616,968



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

7.8. 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 –
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.
Unadjusted quoted prices in active markets for identical assets and liabilities.
Level 2 –
Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 –
Unobservable inputs that are supported by little or no market activity, may be derived from internally developed methodologies based on management’s best estimate of fair value and that are significant to the fair value of the asset or liability.
Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect its placement within the fair value hierarchy. The following tables show, by level within the fair value hierarchy, our financial assets and liabilities that are accounted for at fair value on a recurring basis at September 30, 2017 and December 31, 2016.basis.
March 31, 2022
Level 1Level 2Level 3Total
Assets:    
Investment securities    
Money market funds$81,015 $172,525 $— $253,540 
Equity securities— 23,009 — 23,009 
Commingled fixed income securities1,618 15,038 — 16,656 
Government and related securities9,246 21,733 — 30,979 
Corporate debt securities— 59,597 — 59,597 
Mortgage-backed / asset-backed securities— 153,060 — 153,060 
Derivatives 
Interest rate swap— 10,313 — 10,313 
Foreign exchange contracts— 739 — 739 
Total assets$91,879 $456,014 $— $547,893 
Liabilities:    
Derivatives    
Foreign exchange contracts$— $(905)$— $(905)
Total liabilities$— $(905)$— $(905)
17
 September 30, 2017
 Level 1 Level 2 Level 3 Total
Assets: 
  
  
  
Investment securities 
  
  
  
Money market funds / commercial paper$348,659
 $726,283
 $—
 $1,074,942
Equity securities—
 25,242
 —
 25,242
Commingled fixed income securities1,571
 22,296
 —
 23,867
Debt securities - U.S. and foreign governments, agencies and municipalities118,439
 18,140
 —
 136,579
Debt securities - corporate—
 77,761
 —
 77,761
Mortgage-backed / asset-backed securities—
 161,461
 —
 161,461
Derivatives     
 

Interest rate swap—
 1,680
 —
 1,680
Foreign exchange contracts—
 62
 —
 62
Total assets$468,669
 $1,032,925
 $—
 $1,501,594
Liabilities: 
  
  
  
Derivatives 
  
  
  
Foreign exchange contracts$—
 $(389) $—
 $(389)
Total liabilities$—
 $(389) $—
 $(389)



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

December 31, 2016December 31, 2021
Level 1 Level 2 Level 3 TotalLevel 1Level 2Level 3Total
Assets: 
  
  
  
Assets:    
Investment securities 
  
  
  
Investment securities    
Money market funds / commercial paper$114,471
 $217,175
 $—
 $331,646
Money market fundsMoney market funds$88,705 $338,043 $— $426,748 
Equity securities—
 24,571
 —
 24,571
Equity securities— 29,356 — 29,356 
Commingled fixed income securities1,536
 22,132
 —
 23,668
Commingled fixed income securities1,692 16,815 — 18,507 
Debt securities - U.S. and foreign governments, agencies and municipalities116,822
 19,358
 —
 136,180
Debt securities - corporate—
 69,891
 —
 69,891
Government and related securitiesGovernment and related securities9,790 25,439 — 35,229 
Corporate debt securitiesCorporate debt securities— 65,167 — 65,167 
Mortgage-backed / asset-backed securities—
 158,996
 —
 158,996
Mortgage-backed / asset-backed securities— 172,018 — 172,018 
Derivatives 
  
  
 

Derivatives   
Interest rate swap—
 1,588
 —
 1,588
Interest rate swap— 3,103 — 3,103 
Foreign exchange contracts—
 637
 —
 637
Foreign exchange contracts— 2,474 — 2,474 
Total assets$232,829
 $514,348
 $—
 $747,177
Total assets$100,187 $652,415 $— $752,602 
Liabilities: 
  
  
  
Liabilities:    
Derivatives 
  
  
  
Derivatives    
Foreign exchange contracts$—
 $(3,717) $—
 $(3,717)Foreign exchange contracts$— $(304)$— $(304)
Total liabilities$—
 $(3,717) $—
 $(3,717)Total liabilities$— $(304)$— $(304)
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 intowithin the fair value hierarchy:
•Money Market Funds / Commercial Paper:Funds: Money market funds typically invest in government securities, certificates of deposit, commercial paper and other highly liquid, low risk securities. Money market funds are principally used for overnight deposits and are classified as Level 1 when unadjusted quoted prices in active markets are available and as Level 2 when they are not actively traded on an exchange. Direct investments in commercial paper are not listed on an exchange in an active market and are classified as Level 2.
•Equity Securities:Securities: Equity securities are comprised of mutual funds investing in U.S. and foreign common stock.stocks. These mutual funds are classified as Level 2 as they are not separately listed on an exchange.
2.
•Commingled Fixed Income Securities: Mutual Commingled fixed income securities are comprised of mutual funds that invest in a variety of fixed-incomefixed income securities, including securities of the U.S. government and its agencies, corporate debt, mortgage-backed securities and asset-backed securities. TheFair 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 commingledmutual funds are not listed on an exchange in an active market and are classified as Level 2.
1 when unadjusted quoted prices in active markets are available and as Level 2 when they are not actively traded on an exchange.
Debt Securities – U.S.•Government and Foreign Governments, Agencies and Municipalities:Related Securities: Debt securities are classified as Level 1 wherewhen unadjusted quoted prices in active high volume trades for identical securities exist. Valuation adjustmentsmarkets are not applied to these securities.available. Debt securities valuedare classified as Level 2 where fair value is determined using quoted market prices for similar securities or benchmarking model derived prices to quoted market prices and trade data for identical or comparable securities are classified as Level 2.
securities.
•Corporate Debt Securities – Corporate:Securities: Corporate debt securities are valued using recently executed comparable transactions, market price quotations where observable, or bond spreads. The spread data used arespreads for the same maturity as the security. These securities are classified as Level 2.
•Mortgage-Backed Securities / Asset-Backed Securities: These securities are valued based on external pricing indices. When external index pricing is not observable, these securities are valued based onindices or external price/spread data. These securities are classified as Level 2.
Investment
Derivative Securities
•Foreign Exchange Contracts: The valuation of foreign exchange derivatives is based on the market approach using observable market inputs, such as foreign currency spot and forward rates and yield curves. These securities include investments heldare classified as Level 2.
•Interest Rate Swaps: The valuation of interest rate swaps is based on an income approach using inputs that are observable or that can be derived from, or corroborated by, The Pitney Bowes Bank (the Bank), whose primary business is to provide financing solutions to clients that rent postage meters and purchase supplies. The Bank's assets and liabilities consist primarily of cash, finance receivables, short and long-term investments and deposit accounts.observable market data. These securities are classified as Level 2.



18

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


Available-For-Sale Securities
Certain investmentInvestment securities are classified as available-for-sale andare recorded at fair value with changes in the Condensed Consolidated Balance Sheets as cash and cash equivalents, short-term investments and other assets depending on the type of investment and maturity. Unrealized holding gains and losses arefair value due to market conditions (i.e., interest rates) recorded net of tax, in accumulated other comprehensive income (AOCI).loss (AOCL), and changes in fair value due to credit conditions recorded in earnings. There were no unrealized losses due to credit losses charged to earnings through the three months ended March 31, 2022.

Available-for-sale securities at September 30, 2017 and December 31, 2016 consisted of the following:
March 31, 2022
Amortized costGross unrealized gainsGross unrealized lossesEstimated fair value
Government and related securities$35,987 $57 $(5,065)$30,979 
Corporate debt securities67,599 46 (8,048)59,597 
Commingled fixed income securities1,730 — (112)1,618 
Mortgage-backed / asset-backed securities168,524 18 (15,482)153,060 
Total$273,840 $121 $(28,707)$245,254 
December 31, 2021
September 30, 2017Amortized costGross unrealized gainsGross unrealized lossesEstimated fair value
Amortized cost Gross unrealized gains Gross unrealized losses Estimated fair value
U.S. and foreign governments, agencies and municipalities$134,134
 $2,024
 $(850) $135,308
Corporate notes and bonds76,105
 1,888
 (232) 77,761
Government and related securitiesGovernment and related securities$36,160 $81 $(1,012)$35,229 
Corporate debt securitiesCorporate debt securities67,906 259 (2,998)65,167 
Commingled fixed income securities1,792
 —
 (22) 1,770
Commingled fixed income securities1,725 — (33)1,692 
Mortgage-backed / asset-backed securities160,948
 1,742
 (1,229) 161,461
Mortgage-backed / asset-backed securities176,559 144 (4,685)172,018 
Total$372,979
 $5,654
 $(2,333) $376,300
Total$282,350 $484 $(8,728)$274,106 

 December 31, 2016
 Amortized cost Gross unrealized gains Gross unrealized losses Estimated fair value
U.S. and foreign governments, agencies and municipalities$136,316
 $1,571
 $(1,707) $136,180
Corporate notes and bonds69,376
 1,180
 (665) 69,891
Commingled fixed income securities1,568
 —
 (32) 1,536
Mortgage-backed / asset-backed securities159,312
 1,566
 (1,882) 158,996
Total$366,572
 $4,317
 $(4,286) $366,603
Investment securities in a loss position were as follows:

March 31, 2022December 31, 2021
Fair ValueGross unrealized lossesFair ValueGross unrealized losses
Greater than 12 continuous months
Government and related securities$22,661 $3,330 $16,018 $579 
Corporate debt securities50,887 7,486 51,385 2,658 
Commingled fixed income securities1,618 112 — — 
Mortgage-backed / asset-backed securities141,267 14,813 135,441 4,057 
Total$216,433 $25,741 $202,844 $7,294 
Less than 12 continuous months
Government and related securities$7,547 $1,735 $15,438 $433 
Corporate debt securities5,366 561 8,859 339 
Commingled fixed income securities— — 1,692 33 
Mortgage-backed / asset-backed securities10,522 670 30,754 629 
Total$23,435 $2,966 $56,743 $1,434 
At September 30, 2017, investmentMarch 31, 2022, 58% of the securities that were in a loss positionposition. We believe our allowance for 12 or more continuous months had aggregate unrealized holdingcredit losses of $1 million and an estimated fair value of $90 million, andon available-for-sale investment securities that wereis adequate as our investments are primarily in a loss position for less than 12 continuous months had aggregate unrealized holding losses of $1 millionhighly liquid U.S. government and an estimated fair value of $76 million.

At December 31, 2016, investmentagency securities, that were in a loss position for 12 or more continuous months had aggregate unrealized holding losses of less than $1 millionhigh grade corporate bonds and an estimated fair value of $12 million, and investment securities that were in a loss position for less than 12 continuous months had aggregate unrealized holding losses of $4 million and an estimated fair value of $171 million.

municipal bonds. We have not recognized an other-than-temporary impairment on any of the investment securities in an unrealized loss position because we have the ability and intent to hold these securities until recovery of the unrealized losses and weor expect to receive the contractualstated principal and interest on these investment securities at maturity.

Scheduled maturities of available-for-sale securities at September 30, 2017 were as follows:
19
 Amortized cost Estimated fair value
Within 1 year$42,982
 $42,865
After 1 year through 5 years109,866
 110,445
After 5 years through 10 years61,744
 62,673
After 10 years158,387
 160,317
Total$372,979
 $376,300
The expected payments on mortgage-backed and asset-backed securities may not coincide with their contractual maturities as borrowers have the right to prepay obligations with or without prepayment penalties.


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

Scheduled maturities of available-for-sale securities at March 31, 2022 were as follows:
We have
Amortized costEstimated fair value
Within 1 year$2,495 $2,386 
After 1 year through 5 years16,186 15,163 
After 5 years through 10 years73,708 65,519 
After 10 years181,451 162,186 
Total$273,840 $245,254 
The actual maturities may not experienced any significant write-offs in our investment portfolio. The majoritycoincide with the scheduled maturities as certain securities contain early redemption features and/or allow for the prepayment of our mortgage-backedobligations.

Held-to-Maturity Securities
Held-to-maturity securities are either guaranteed or supported by the U.S. Government. We have no investments in inactive markets that would warrant a possible change in our pricing methods or classification within the fair value hierarchy.at March 31, 2022 and December 31, 2021 totaled $21 million and $20 million, respectively.

Derivative Instruments
In the normal course of business, we are exposed to the impact of changes in foreign currency exchange rates and interest rates. We limit these risks by following established risk management policies and procedures, including the use of derivatives. We use derivative instruments to limit the effects of currency exchange rate fluctuations on financial results and manage the related cost of debt. We do not use derivatives for trading or speculative purposes. We record derivativeDerivative instruments are recorded at fair value and the accounting for changes in the fair value depends on the intended use of the derivative, the resulting designation and the effectiveness of the instrument in offsetting the risk exposure it is designed to hedge.

Foreign Exchange Contracts
We enter into foreign exchange contracts to mitigate the currency risk associated with the anticipated purchase of inventory purchases between affiliates and from third parties. These contracts are designated as cash flow hedges. The effective portion of the gain or loss on cash flow hedges is included in AOCIAOCL 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, 2017March 31, 2022 and December 31, 2016, we had2021, outstanding contracts associated with these anticipated transactions withhad a notional amountsvalue of $12$2 million and $13$1 million, respectively. Amounts included in AOCL at March 31, 2022 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 valuation of foreign exchange derivatives is based on the market approach using observable market inputs, such as foreign currency spot and forward rates and yield curves. We have not seen a material change in the creditworthiness of those banks acting as derivative counterparties.


Interest Rate SwapSwaps
We entered into anhave interest rate swap agreements with aan aggregate notional amountvalue of $300$200 million to mitigatethat are designated as cash flow hedges. The fair value of the interest rate risk associated with our $300 million variable-rate term loans. The swapswaps is designatedrecorded as a cash flow hedge. The effective portionderivative asset or liability at the end of the gain or loss on the cash flow hedge is included in AOCI in theeach reporting period thatwith the change in fair value occurs and is reclassified to earningsreflected in the period that the hedged item is recorded in earnings. Under the terms of the swap agreement, we pay fixed-rate interest of 0.8826% and receive variable-rate interest based on 1-month LIBOR. The variable interest rate resets monthly.AOCL.
The valuation of our interest rate swap 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.












20

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

The fair value of derivative instruments at September 30, 2017 and December 31, 2016was as follows:
Designation of DerivativesBalance Sheet LocationMarch 31,
2022		December 31,
2021
Derivatives designated as
hedging instruments		  
Foreign exchange contractsOther current assets and prepayments$24 $21 
 Accounts payable and accrued liabilities(4)(10)
Interest rate swapsOther assets10,313 3,103 
Derivatives not designated as
hedging instruments		  
Foreign exchange contractsOther current assets and prepayments715 2,453 
 Accounts payable and accrued liabilities(901)(294)
 Total derivative assets$11,052 $5,577 
 Total derivative liabilities(905)(304)
 Total net derivative asset$10,147 $5,273 
Designation of Derivatives Balance Sheet Location September 30,
2017		 December 31,
2016
Derivatives designated as
hedging instruments
    
  
Foreign exchange contracts Other current assets and prepayments $3
 $487
  Accounts payable and accrued liabilities (309) (136)
       
Interest rate swap Other assets 1,680
 1,588
     
  
Derivatives not designated as
hedging instruments
    
  
Foreign exchange contracts Other current assets and prepayments 59
 150
  Accounts payable and accrued liabilities (80) (3,581)
       
  Total derivative assets $1,742
 $2,225
  Total derivative liabilities (389) (3,717)
  Total net derivative asset (liabilities) $1,353
 $(1,492)

The majority of the amounts included in AOCI at September 30, 2017 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 resultsResults of cash flow hedging relationships for the three and nine months ended September 30, 2017 and 2016:were as follows:
Three Months Ended March 31,
Derivative Gain (Loss)
Recognized in AOCL
(Effective Portion)		Location of Gain (Loss)
(Effective Portion)		Gain (Loss) Reclassified
from AOCL to Earnings
(Effective Portion)
Derivative Instrument2022202120222021
Foreign exchange contracts$23 $228 Revenue$— $126 
   Cost of sales14 (58)
Interest rate swap7,210 6,280 Interest expense137 — 
 $7,233 $6,508  $151 $68 
  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 2017 2016  2017 2016
Foreign exchange contracts $(152) $(158) Revenue $(139) $(443)
   
  
 Cost of sales (59) 301
Interest rate swap (229) (591) Interest Expense —
 —
  $(381) $(749)   $(198) $(142)
           
  Nine Months Ended September 30,
  
Derivative Gain (Loss)
Recognized in AOCL
(Effective Portion)
 
Location of Gain (Loss)
(Effective Portion)
 
Gain (Loss) Reclassified
from AOCL to Earnings
(Effective Portion)
Derivative Instrument 2017 2016  2017 2016
Foreign exchange contracts $(701) $(114) Revenue $(133) $290
   
  
 Cost of sales 89
 (69)
Interest rate swap 92
 (591) Interest Expense —
 —
  $(609) $(705)   $(44) $221
We also enter into foreign exchange contracts to minimize the impact of exchange rate fluctuations on short-term intercompany loans and related interest that are denominated in a foreign currency. The revaluation of the intercompany loans and interest and the mark-to-market adjustment on the derivatives are both recorded in earnings. All outstanding contracts at September 30, 2017March 31, 2022 mature within 123 months.
The mark-to-market adjustments of non-designated derivative instruments were as follows:
Three Months Ended March 31,
Derivative Gain (Loss) Recognized in Earnings
Derivatives InstrumentLocation of Derivative Gain (Loss)20222021
Foreign exchange contractsSelling, general and administrative expense$(3,414)$553 









21

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

The following represents the results of our non-designated derivative instruments for the three and nine months ended September 30, 2017 and 2016:
    Three Months Ended September 30,
    Derivative Gain (Loss) Recognized in Earnings
Derivatives Instrument Location of Derivative Gain (Loss) 2017 2016
Foreign exchange contracts Selling, general and administrative expense $(655) $1,719
       
    Nine Months Ended September 30,
    Derivative Gain (Loss) Recognized in Earnings
Derivatives Instrument Location of Derivative Gain (Loss) 2017 2016
Foreign exchange contracts Selling, general and administrative expense $(1,716) $322

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, 2017, we did not post any collateral and the maximum amount of collateral that we would be required to post had the credit-risk-related contingent features been triggered was not significant.

Fair Value of Financial Instruments
Our financial instruments include cash and cash equivalents, available-for-sale and held-to-maturity investment securities, accounts receivable, loan receivables, derivative instruments, accounts payable and debt. The carrying value forof cash and cash equivalents, held-to-maturity investment securities, accounts receivable, loans receivable, and accounts payable approximate fair value because of the short maturity of these instruments.
value. The fair value of ouravailable-for-sale investment securities and derivative instruments are presented above. The fair value of debt is estimated based on recently executed transactions and market price quotations. The inputs used to determine the fair value of our debt were classified as Level 2 in the fair value hierarchy. The carrying value and estimated fair value of our debt at September 30, 2017 and December 31, 2016 werewas as follows:
March 31, 2022December 31, 2021
Carrying value$2,224,579 $2,323,838 
Fair value$2,120,628 $2,355,894 


 September 30, 2017 December 31, 2016
Carrying value$4,182,928
 $3,364,890
Fair value$4,185,628
 $3,412,581

8. Restructuring Charges and Asset Impairments
9. Restructuring Charges
Activity in our restructuring reserves for the nine months ended September 30, 2017 and 2016 was as follows:
Severance and other exit costs
Balance at January 1, 2022$5,747 
Amounts charged to expense4,184
Cash payments(3,285)
Noncash activity(172)
Balance at March 31, 2022$6,474
Balance at January 1, 2021$10,063 
Amounts charged to expense2,889 
Cash payments(3,955)
Noncash activity(227)
Balance at March 31, 2021$8,770 
The majority of the restructuring reserves are expected to be paid over the next 12 to 24 months.




















22
 Severance and benefits costs 
Other exit
costs
 Total
Balance at January 1, 2017$28,376
 $281
 $28,657
Expenses, net25,225
 1,712
 26,937
Cash payments(29,259) (717) (29,976)
Balance at September 30, 2017$24,342
 $1,276
 $25,618
      
Balance at January 1, 2016$43,700
 $3,722
 $47,422
Expenses, net36,791
 1,660
 38,451
Cash payments(47,241) (3,920) (51,161)
Balance at September 30, 2016$33,250
 $1,462
 $34,712



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

The majority of the remaining restructuring reserves are expected to be paid over the next 12 to 24 months; however, due to certain international labor laws and long-term lease agreements, some payments will extend beyond 24 months. We expect to fund these payments from cash flows from operations.

Asset Impairments
During the nine months ended September 30, 2017, we recorded asset impairment charges of $4 million. For the nine months ended September 30, 2016, asset impairment charges totaled $9 million and consisted primarily of a loss of $5 million on the sale of a facility and an impairment charge of $3 million relating to a building.

9.10. Debt
Total debt at September 30, 2017 and December 31, 2016 consisted of the following:


Interest rateMarch 31, 2022December 31, 2021
Notes due April 20236.20%— 90,259 
Notes due March 20244.625%238,449 242,603 
Term loan due March 2026LIBOR + 1.75%365,750 370,500 
Notes due March 20276.875%400,000 400,000 
Term loan due March 2028LIBOR + 4.0%445,500 446,625 
Notes due March 20297.25%350,000 350,000 
Notes due January 20375.25%35,841 35,841 
Notes due March 20436.70%425,000 425,000 
Other debt3,378 3,685 
Principal amount2,263,918 2,364,513 
Less: unamortized costs, net39,339 40,675 
Total debt2,224,579 2,323,838 
Less: current portion long-term debt24,746 24,739 
Long-term debt$2,199,833 $2,299,099 


Interest rate September 30, 2017 December 31, 2016
Notes due September 20175.75% $—
 $385,109
Notes due March 20185.6% 250,000
 250,000
Notes due May 20184.75% 350,000
 350,000
Notes due March 20196.25% 300,000
 300,000
Notes due September 20203.625% 300,000
 —
Notes due October 20213.375% 600,000
 600,000
Notes due May 20223.875% 400,000
 —
Notes due April 20234.7% 400,000
 —
Notes due March 20244.625% 500,000
 500,000
Notes due January 20375.25% 35,841
 115,041
Notes due March 20436.7% 425,000
 425,000
Term loansVariable 650,000
 450,000
Other debt  5,586
 5,677
Principal amount  4,216,427
 3,380,827
Less: unamortized debt discount and issuance costs  38,911
 28,796
Plus: unamortized interest rate swap proceeds  5,412
 12,859
Total debt  4,182,928
 3,364,890
Less: current portion long-term debt  620,256
 614,485
Long-term debt  $3,562,672
 $2,750,405

In September 2017,March 2022, we issued $700redeemed the April 2023 notes and recorded a $5 million pre-tax loss in connection with this redemption.
At March 31, 2022, the interest rate on the 2026 Term Loan was 2.2% and the interest rate of the 2028 Term Loan was 4.5%. These term loans also require quarterly principal repayments.
We have outstanding interest rate swaps that effectively convert $200 million of our variable rate debt to fixed rates. Under the terms of these interest rate notesswap agreements, we pay fixed-rate interest of 0.56% and borrowed an additional $350 million under new term loan agreements. The fixed rate notes consisted of $300 million of 3.625% Notes due September 2020 and $400 million of 4.7% Notes due April 2023. Interest is payable semi-annually and is subject to adjustment from time to timereceive variable-rate interest based on changes in our credit ratings. Both of these notes may be redeemed, at our option, in whole or in part, at any time at par plus accrued, unpaidone-month LIBOR. The variable interest and a make-whole amount, if any.

The newrates under the term loans consist of a $200 million term loan that bears interest at the applicable Eurodollar Rate plus 1.5% and matures in September 2020 and a $150 million term loan that bears interest at the applicable Eurodollar Rate plus 1.125% and matures in August 2018, but includes an option to extend the maturity by one year. For the third quarter of 2017, the effective interest rate for the $200 million term loan was 3.1% and the effective interest rate for the $150 million term loan was 2.4%. The interest rates on these term loans are subject to adjustment from time to time based on changesswaps reset monthly.
At March 31, 2022, we were in our credit ratings.compliance with all covenants.


In May 2017, we issued $400 million of 3.875% Notes. Interest is payable semi-annually and is subject to adjustment based on changes in our credit ratings. The notes mature in May 2022, but may be redeemed, at our option, in whole or in part, at any time at par plus accrued, unpaid interest and a make-whole amount, if any.
















23

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


The net proceeds from these borrowings were used to repay a $150 million term loan in June 2017 and $385 million of 5.75% Notes in September 2017. Additionally, in October 2017, we redeemed $350 million of 4.75% Notes that were due in May 2018 and funded the Newgistics acquisition (see Note 6).

In January 2017, bondholders of the 5.25% Notes due 2037 caused us to redeem $79 million of the debt outstanding.

10.11. Pensions and Other Benefit Programs
The components of net periodic benefit cost (income) were as follows:
Defined Benefit Pension PlansNonpension Postretirement Benefit Plans
United StatesForeign
Three Months EndedThree Months EndedThree Months Ended
March 31,March 31,March 31,
202220212022202120222021
Service cost$24 $26 $355 $395 $179 $224 
Interest cost11,141 10,745 3,634 2,961 940 961 
Expected return on plan assets(17,863)(19,478)(7,205)(7,984)— — 
Amortization of prior service (credit) cost(11)(15)68 67 — 32 
Amortization of net actuarial loss8,232 9,638 1,821 2,345 87 1,078 
Net periodic benefit cost (income)$1,523 $916 $(1,327)$(2,216)$1,206 $2,295 
Contributions to benefit plans$1,138 $1,015 $8,221 $8,696 $4,158 $3,519 

 Defined Benefit Pension Plans Nonpension Postretirement Benefit Plans
 United States Foreign  
 Three Months Ended Three Months Ended Three Months Ended
 September 30, September 30, September 30,
 2017 2016 2017 2016 2017 2016
Service cost$34
 $26
 $587
 $549
 $438
 $512
Interest cost17,122
 18,452
 4,809
 5,366
 1,780
 1,994
Expected return on plan assets(24,369) (25,480) (8,214) (7,976) —
 —
Amortization of transition credit—
 —
 (2) (2) —
 —
Amortization of prior service (credit) cost(15) (15) (18) (19) 74
 74
Amortization of net actuarial loss7,229
 6,779
 2,055
 1,302
 905
 904
Settlement (1)
—
 183
 —
 —
 —
 —
Net periodic benefit cost (income)$1
 $(55) $(783) $(780) $3,197
 $3,484
            
            
 Defined Benefit Pension Plans Nonpension Postretirement Benefit Plans
 United States Foreign  
 Nine Months Ended Nine Months Ended Nine Months Ended
 September 30, September 30, September 30,
 2017 2016 2017 2016 2017 2016
Service cost$98
 $80
 $1,688
 $1,622
 $1,290
 $1,534
Interest cost51,488
 55,354
 13,993
 16,773
 5,321
 5,977
Expected return on plan assets(73,287) (76,439) (23,956) (25,029) —
 —
Amortization of transition credit—
 —
 (6) (6) —
 —
Amortization of prior service (credit) cost(45) (45) (53) (54) 223
 222
Amortization of net actuarial loss21,725
 20,336
 5,981
 4,018
 2,693
 2,711
Settlement (1)
—
 1,971
 —
 —
 —
 —
Net periodic benefit cost (income)$(21) $1,257
 $(2,353) $(2,676) $9,527
 $10,444

(1) Included in restructuring charges and asset impairments, net in the Condensed Consolidated Statements of Income.
Through September 30, 2017 and 2016, contributions to our U.S. pension plans were $5 million and $8 million, respectively, and contributions to our foreign plans were $11 million and $41 million, respectively. Nonpension postretirement benefit plan contributions were $13 million and $14 million through September 30, 2017 and September 30, 2016, respectively.

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

11.12. Income Taxes
The effective tax rate for the three months ended September 30, 2017March 31, 2022 was 16.8% and 2016 was 23.5% and 24.8%, respectively, and the effective tax rate for the nine months ended September 30, 2017 and 2016 was 23.9% and 32.7%, respectively. The effective tax rate for the nine months ended September 30, 2017 and 2016 includes a $4benefit of $1 million and $3 million charge, respectively, from the write-off of deferred tax assets associated with the expiration2019 sale of out-of-the-money vested stock options and the vesting of restricted stock.a business. The effective tax rate for the three and nine months ended September 30, 2017 alsoMarch 31, 2021 was a benefit of 33.6% and includes a $6benefits of $3 million and $20 million benefit, respectively, from the resolution of certain tax examinations. Additionally, the effective tax rate for both the three and nine months ended September 30, 2016 include a $15 million benefit from the resolution of certain tax examinations and a $5 million charge from the establishment of a valuation allowance on tax attribute carryovers.an affiliate reorganization.
As is the case with other large corporations, our tax returns are examined each year by tax authorities in the U.S. and other global taxing jurisdictions in which we have operations. As a result, it is reasonably possible that the amount of our unrecognized tax benefits will decrease in the next 12 months, and we expect this changedecrease could be up to 15% of our unrecognized tax benefits.
The IRSInternal Revenue Service examinations of our consolidated U.S. income tax returns for tax years prior to 20122018 are closed to audit; however, various post-2006post-2016 U.S. state and local tax returns are still subject to examination. Inexamination, with some states in appeals from 2011. For our significant non-U.S. jurisdictions, Canada the examination of our tax filings prior to 2012 areis closed to audit,examination through 2016 except for the pending application of legal principles toa specific issuesissue arising in earlier years. Other significant jurisdictions includeyears, France which is closed to audit through the end of 2012,2019, Germany which is closed to audit through the end of 20112016 and the UK, which, except for an item under appeal,U.K. is closed to audit through the end of 2011.2019. We also have other less significant tax filings currently subject to examination.

12.
13. 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 clients; 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 management's opinion, it is not reasonably possible that the potential liability, if any, that may result from these actions, either individually or collectively, is not reasonably expected towill have a material effect on our financial position, results of operations or cash flows. However, as litigation is inherently unpredictable, there can be no assurances in this regard.

As of March 31, 2022, we have entered into real estate and equipment leases with aggregate payments of $107 million and terms ranging from four to eight years that have not commenced.

13. Stockholders’ Equity (Deficit)


Changes in stockholders’ equity (deficit) for the nine months ended September 30, 2017 and 2016 were as follows:

24
 
Preferred
stock
 
Preference
stock
 Common stock Additional paid-in capital Retained earnings Accumulated other comprehensive loss Treasury stock Total equity (deficit)
Balance at January 1, 2017$1
 $483
 $323,338
 $148,125
 $5,107,734
 $(940,133) $(4,743,208) $(103,660)
Net income—
 —
 —
 —
 171,392
 —
 —
 171,392
Other comprehensive income—
 —
 —
 —
 —
 121,649
 —
 121,649
Dividends paid—
 —
 —
 —
 (104,524) —
 —
 (104,524)
Issuance of common stock—
 —
 —
 (32,538) —
 —
 30,202
 (2,336)
Conversion to common stock—
 (26) —
 (505) —
 —
 531
 —
Stock-based compensation expense—
 —
 —
 18,312
 —
 —
 —
 18,312
Balance at September 30, 2017$1
 $457
 $323,338
 $133,394
 $5,174,602
 $(818,484) $(4,712,475) $100,833



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

14. Stockholders’ Equity
 
Preferred
stock
 
Preference
stock
 Common stock Additional paid-in capital Retained earnings Accumulated other comprehensive loss Treasury stock Total equity
Balance at January 1, 2016$1
 $505
 $323,338
 $161,280
 $5,155,537
 $(888,635) $(4,573,305) $178,721
Net income—
 —
 —
 —
 177,148
 —
 —
 177,148
Other comprehensive loss—
 —
 —
 —
 —
 62,673
 —
 62,673
Dividends paid—
 —
 —
 —
 (105,791) —
 —
 (105,791)
Issuance of common stock—
 —
 —
 (27,251) —
 —
 25,930
 (1,321)
Conversion to common stock—
 (16) —
 (321) —
 —
 337
 —
Stock-based compensation expense—
 —
 —
 16,289
 —
 —
 —
 16,289
Repurchase of common stock—
��—
 —
 —
 —
 —
 (197,267) (197,267)
Balance at September 30, 2016$1
 $489
 $323,338
 $149,997
 $5,226,894
 $(825,962) $(4,744,305) $130,452

14. Accumulated Other Comprehensive Income

Reclassifications out of AOCI for the three and nine months ended September 30, 2017 and 2016Changes in stockholders’ equity were as follows:
Common stockAdditional paid-in capitalRetained earningsAccumulated other comprehensive lossTreasury stockTotal equity
Balance at January 1, 2022$323,338 $2,485 $5,169,270 $(780,312)$(4,602,149)$112,632 
Net income— — 20,821 — — 20,821 
Other comprehensive loss— — — (20,018)— (20,018)
Dividends paid ($0.05 per common share)— — (8,688)— — (8,688)
Issuance of common stock— (6,980)(39,767)— 43,833 (2,914)
Stock-based compensation expense— 4,495 — — — 4,495 
Repurchase of common stock— — — — (13,446)(13,446)
Balance at March 31, 2022$323,338 $— $5,141,636 $(800,330)$(4,571,762)$92,882 
 Amount Reclassified from AOCI (a)
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Gains (losses) on cash flow hedges       
Revenue$(139) $443
 $(133) $(290)
Cost of sales(59) (301) 89
 69
Interest expense, net(507) (507) (1,521) (1,521)
Total before tax(705) (365) (1,565) (1,742)
Benefit for income tax(274) (144) (610) (679)
Net of tax$(431) $(221) $(955) $(1,063)
        
Gains (losses) on available for sale securities       
Interest expense, net$(298) $(1,125) $(524) $(1,126)
Benefit provision for income tax(110) (433) (194) (433)
Net of tax$(188) $(692) $(330) $(693)
        
Pension and Postretirement Benefit Plans (b)       
Transition credit$2
 $2
 $6
 $6
Prior service costs(41) (40) (125) (123)
Actuarial losses(10,189) (9,168) (30,399) (29,036)
Total before tax(10,228) (9,206) (30,518) (29,153)
Benefit from income tax(3,484) (3,243) (10,440) (10,362)
Net of tax$(6,744) $(5,963) $(20,078) $(18,791)

(a)     Amounts in parentheses indicate reductions to income and increases to other comprehensive income (loss).
Common stockAdditional paid-in capitalRetained earningsAccumulated other comprehensive lossTreasury stockTotal equity
Balance at January 1, 2021$323,338 $68,502 $5,205,421 $(839,131)$(4,687,509)$70,621 
Net loss— — (31,541)— — (31,541)
Other comprehensive loss— — — (8,407)— (8,407)
Dividends paid ($0.05 per common share)— — (8,625)— — (8,625)
Issuance of common stock— (58,454)— — 54,574 (3,880)
Stock-based compensation expense— 5,221 — — — 5,221 
Balance at March 31, 2021$323,338 $15,269 $5,165,255 $(847,538)$(4,632,935)$23,389 

(b)Reclassified from accumulated other comprehensive loss into selling, general and administrative expenses. These amounts are included in the computation of net periodic costs (see Note 10 for additional details).


































25

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

15. Accumulated Other Comprehensive Loss
Changes in AOCI for the nine months ended September 30, 2017 and 2016Reclassifications out of AOCL were as follows:
Gain (Loss) Reclassified from AOCL
Three Months Ended March 31,
20222021
Cash flow hedges
Revenue$— $126 
Cost of sales14 (58)
Interest expense, net137 — 
Total before tax151 68 
Income tax provision37 17 
Net of tax$114 $51 
Available-for-sale securities
Financing revenue$(2)$(1)
Selling, general and administrative expense(13)42 
Total before tax(15)41 
Income tax provision(3)10 
Net of tax$(12)$31 
Pension and postretirement benefit plans
Prior service costs$(57)$(84)
Actuarial losses(10,140)(13,061)
Total before tax(10,197)(13,145)
Income tax benefit(2,461)(3,208)
Net of tax$(7,736)$(9,937)
 Cash flow hedges Available for sale securities Pension and postretirement benefit plans Foreign currency adjustments Total
Balance at January 1, 2017$(1,485) $120
 $(787,813) $(150,955) $(940,133)
Other comprehensive income (loss) before reclassifications (a)(376) 1,921
 (1,482) 100,223
 100,286
Reclassifications into earnings (a), (b)955
 330
 20,078
 —
 21,363
Net other comprehensive income579
 2,251
 18,596
 100,223
 121,649
Balance at September 30, 2017$(906) $2,371
 $(769,217) $(50,732) $(818,484)


 Cash flow hedges Available for sale securities Pension and postretirement benefit plans Foreign currency adjustments Total
Balance at January 1, 2016$(3,912) $536
 $(738,768) $(146,491) $(888,635)
Other comprehensive (loss) income before reclassifications (a)(705) 6,798
 (1,230) 37,263
 42,126
Reclassifications into earnings (a), (b)1,063
 693
 18,791
 —
 20,547
Net other comprehensive income358
 7,491
 17,561
 37,263
 62,673
Balance at September 30, 2016$(3,554) $8,027
 $(721,207) $(109,228) $(825,962)
(a)     Amounts areChanges in AOCL, net of tax. Amountstax were as follows:
Cash flow hedgesAvailable for sale securitiesPension and postretirement benefit plansForeign currency adjustmentsTotal
Balance at January 1, 2022$3,803 $(6,249)$(756,639)$(21,227)$(780,312)
Other comprehensive income (loss) before reclassifications5,447 (15,534)— (17,565)(27,652)
Reclassifications into earnings(114)12 7,736 — 7,634 
Net other comprehensive income (loss)5,333 (15,522)7,736 (17,565)(20,018)
Balance at March 31, 2022$9,136 $(21,771)$(748,903)$(38,792)$(800,330)

Cash flow hedgesAvailable for sale securitiesPension and postretirement benefit plansForeign currency adjustmentsTotal
Balance at January 1, 2021$(1,411)$402 $(851,063)$12,941 $(839,131)
Other comprehensive income (loss) before reclassifications4,881 (8,885)— (14,258)(18,262)
Reclassifications into earnings(51)(31)9,937 — 9,855 
Net other comprehensive income (loss)4,830 (8,916)9,937 (14,258)(8,407)
Balance at March 31, 2021$3,419 $(8,514)$(841,126)$(1,317)$(847,538)




26

PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in parentheses indicate debits to AOCI.thousands unless otherwise noted, except per share amounts)
(b)16. Supplemental Financial Statement Information
Activity in the allowance for credit losses on accounts receivables and other assets for the three months ended March 31, 2022 and 2021 is presented below. See table aboveNote 7 for additional detailsinformation regarding finance receivables.
Three Months Ended March 31,
20222021
Balance at beginning of year$29,179 $35,344 
Amounts charged to expense921 3,011 
Write-offs, recoveries and other(19,519)(1,314)
Balance at end of period$10,581 $37,041 
Accounts and other receivables$10,061 $20,480 
Other assets520 16,561 
Total$10,581 $37,041 
Other (income) expense consisted of these reclassifications.the following:

Three Months Ended March 31,
20222021
Loss on debt redemption/refinancing$4,993 $51,394 
Gain on sale of business(2,522)— 
Gain on sale of assets(14,372)— 
Other (income) expense$(11,901)$51,394 



During the first quarter of 2022, we recognized a pre-tax loss of $5 million on the early redemption of debt (see Note 10). During the quarter, we also received proceeds of $9 million related to the 2019 sale of six smaller international businesses and recognized a pre-tax gain of $3 million and closed on the sale and leaseback of our Shelton, Connecticut office building, receiving net proceeds of $51 million and recognizing a pre-tax gain of $14 million.


Supplemental cash flow information is as follows:
Three Months Ended March 31,
20222021
Cash interest paid$49,430 $39,658 
Cash income tax payments, net of refunds$8,079 $2,641 
Noncash activity
Capital assets obtained under capital lease obligations$8,721 $9,477 


27



Item 2: Management’s Discussion and Analysis ofFinancial Condition and Results of Operations
Forward-Looking Statements
This Management’sManagement'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 (Securities Act) and Section 21E of the Securities Exchange Act of 1934 (Exchange Act) may change based on various factors. These forward-lookingForward-looking statements are based on current expectations and assumptions, thatwhich we believe are reasonable; however, such statements are subject to risks and uncertainties, and actual results could differ materially.materially from those projected or assumed in any of our forward-looking statements. 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. Factorsotherwise, except as required by law. Forward-looking statements in this Form 10-Q speak only as of the date hereof, and forward-looking statements in documents that are incorporated by reference speak only as of the date of those documents.
Our results of operations, financial condition and forward-looking statements are subject to change and to inherent risks and uncertainties, such as those disclosed or incorporated by reference in our filings with the Securities and Exchange Commission. In particular, we continue to navigate the impacts of the COVID-19 pandemic and the effect that its unpredictability is having on our, and our clients' businesses. Other factors which could cause future financial performance to differ materially from expectations, and which may also be exacerbated by COVID-19 or a negative change in the expectations as expressed in any forward-looking statement made by or on our behalfeconomy, include, without limitation:
the announcement that the Board of Directors of the Company is conducting a review of strategic alternatives and the potential impact of such announcement on the Company's current or potential customers, partners and personnel
the cost of the review process with respect to strategic alternatives and the disruption the process may have on the Company's operations, including the diversion of the attention of the Company's management and employees
•declining physical mail volumes
•changes in postal regulations or the operations and financial health of posts in the U.S. or other major markets, or changes to the broader postal or shipping markets
•the loss of, or significant changes to, our contractual relationships with the United States Postal Service (USPS) or USPS' performance under those contracts
•our ability to continue to grow and manage unexpected fluctuations in volumes, gain additional economies of scale and improve profitability within our Global Ecommerce segment
•changes in labor and transportation availability and costs
•global supply chain issues adversely impacting our third-party suppliers' ability to provide us products and services
•declines in demand for our ecommerce services resulting from supply chain delays or interruptions affecting our retail clients, or changes in retail consumer behavior or spending patterns
•the impacts of inflation and rising prices on our costs and expenses, and to our clients and retail consumers
•competitive factors, including pricing pressures;pressures, technological developments;developments and the introduction of new products and services by competitors
•the loss of some of our larger clients in our Global Ecommerce and fuel pricesPresort Services segments
•expenses and potential impacts resulting from a breach of security, including cyber-attacks or other comparable events
•the potential impacts on our cost of debt due to potential interest rate increases
•our success at managing customer credit risk
•capital market disruptions or credit rating downgrades that adversely impact our ability to access capital markets at reasonable costs
•our success in developing and marketing new products and services including digital-based products and services, obtaining regulatory approvalapprovals, if required and the market’s acceptance of these new products and services
our ability to fully utilize the enterprise business platform in North America, implemented in 2016, and successfully deploy it in major international markets without significant disruption to existing operations
•the continued availability and security of key information technology systems and the cost to comply with information security requirements and privacy laws
a breach of security, including a cyberattack or other comparable event
capital market disruptions or credit rating downgrades that adversely impact our ability to access capital markets at reasonable costs
•changes in postal or banking regulations
integrating newly acquired businesses, including operations and product and service offerings
the loss of some of our larger clients in the Global Ecommerce segment
macroeconomic factors, including global and regional business conditions that adversely impact customer demand, foreign currency exchange rates, interest rates and labor conditions
third-party suppliers' ability to provide product components, assemblies or inventories
our success at managing the relationships with our outsource providers,international trade policies, including the costsimposition or expansion of outsourcing functionstrade tariffs, and operations not central to our businessother geopolitical risks
intellectual property infringement claims
our success at managing customer credit risk
significant changes in pension, health care and retiree medical costs
income tax adjustments or other regulatory levies for prior audit years and •changes in tax laws, rulings or regulations
a disruption•our success at managing relationships and costs with outsource providers of certain functions and operations
•changes in banking regulations or the loss of our businesses due to Industrial Bank charter
•changes in internationalforeign currency exchange rates
•increased environmental and climate change requirements or national political conditions, including other developments in these areas
•intellectual property infringement claims
•the use of the mailpostal system for transmitting harmful biological agents, illegal substances or other terrorist attacks
•impact of acts of nature on the services and solutions we offer



Further information about factors that could materially affect us, including our results of operations and financial condition, is contained in Item 1A. "Risk Factors" in our 2021 Annual Report, as supplemented by Part II, Item 1A in this Quarterly Report on Form 10-Q.



28






Overview
We made progress against our strategic initiatives to stabilize and reinvent our mail business, drive operational excellence and grow our business through digital commerce. We invested in new product development to increase our digital and web-enabled capabilities, bring our digital capabilities to market and better serve our clients.
In Small and Medium Business (SMB) Solutions, late in the third quarter of 2017, we introduced the SendPro C-series in the U.S. This product leverages the latest cloud technology to securely deliver a digital multi-carrier shipping platform, as well as mailing functionality. The SendPro C-series enables offices of all sizes to select the best sending option for parcels, letters and flats, delivering potential savings across carriers, and providing full package tracking capabilities. The introduction of the SendPro C-series was a significant step in our plan to stabilize and reinvent our mail business.
In Enterprise Business Solutions (EBS), we made investments to expand our Presort Services parcel sortation services and our network.
In Digital Commerce Solutions (DCS), we invested in our products and capabilities to bring innovation to our customers. Within Software Solutions, we saw growth in our indirect channel, both in the number of partners in the channel and the revenue generated by these partners. Within Global Ecommerce, we invested in our cross-border solutions, domestic shipping and carrier services capabilities. Our domestic shipping solutions include end-to-end carrier services enabled by our shipping APIs. Shipping APIs allow our clients to integrate shipping functionality into their website or business system. During the third quarter, we added new shipping API features; however, we experienced some stability issues which delayed client adoption.
Financial Results Summary - Three Months Ended September 30:March 31:
Revenue
Three Months Ended March 31,
20222021Actual % changeConstant Currency % change
Business services$597,384 $570,454 5 %5 %
Support services110,352 118,697 (7)%(6)%
Financing72,029 77,812 (7)%(7)%
Equipment sales89,296 86,803 3 %4 %
Supplies41,061 42,224 (3)%(1)%
Rentals16,820 19,207 (12)%(12)%
Total revenue$926,942 $915,197 1 %2 %
 20172016Change
Revenue$842,820
$839,031
— %
Income from continuing operations$57,358
$70,396
(19)%
Loss from discontinued operations, net of tax$—
$(291)100 %
Net income$57,358
$70,105
(18)%
Earnings per share from continuing operations - diluted$0.31
$0.35
(11)%
Revenue
Three Months Ended March 31,
20222021Actual % changeConstant currency % change
Global Ecommerce$418,527 $413,086 1 %1 %
Presort Services160,544 143,126 12 %12 %
SendTech Solutions347,871 358,985 (3)%(2)%
Total revenue$926,942 $915,197 1 %2 %
Revenue
Segment EBIT
Three Months Ended March 31,
20222021% change
Global Ecommerce$(13,696)$(26,376)48 %
Presort Services19,632 19,051 3 %
SendTech Solutions104,575 114,470 (9)%
Total Segment EBIT$110,511 $107,145 3 %

Revenue was flat.
The results reflect growthincreased 1% (2% at constant currency) in the first quarter of 2022 compared to the prior year primarily driven by a 5% increase in business services revenue and software revenue and declines in equipment sales, financing, support services, supplies and rentals revenues.
SMB revenue declined 7% as reported and 8% on a constant currency basis. North America Mailing revenue declined 9% driven by a decline in equipment sales and declines in recurring revenue streams. International Mailing revenue declined 3% as reported and 5% on a constant currency basis due to lower recurring revenue streams.
EBS revenue increased 1%. Presort Services revenue grew 4% driven by higher standard mail and parcel volumes processed and higher revenue per piece. Production Mail revenue declined 2% as reported and 3% on a constant currency basis driven by declines in equipment sales and supplies revenue.
DCS revenue grew 19%. Global Ecommerce revenue grew 28% driven by growth in domestic shipping and the UK outbound marketplace. Software Solutions revenue increased 12% as reported and 11% on a constant currency basis due to increased licensing revenue in North America, driven in part, by a large Location Intelligence deal in the quarter.
Net Income
Net income declined 18% driven largely by a decline in gross margins, particularly in SMB Solutions, additional investmentspricing actions in Global Ecommerce and higher interest expensePresort Services, and was partially offset by lower restructuring charges and benefits from productivity initiatives.
Debt activity
In September 2017, we issued $1,050 million of new debt consisting of $700 million of fixed rate notes and $350 million of variable rate term loans. We used the proceeds from these borrowings, along with existing cash, to repay $385 million of fixed rate notes that were due in September 2017, and in October 2017, to redeem $350 million of fixed rate notes that were originally due in May 2018 and to fund the Newgistics acquisition for $475 million.


Financial Results Summary - Nine Months Ended September 30:
 20172016Change
Revenue$2,500,831
$2,519,506
(1)%
Income from continuing operations$171,392
$192,880
(11)%
Loss from discontinued operations, net of tax$—
$(1,951)100 %
Net income$171,392
$190,929
(10)%
Earnings per share from continuing operations - diluted$0.92
$0.94
(2)%
Net Cash Provided by Operations$330,577
$296,359
12 %

Revenue
Revenue declined 1% as reported and was flat on a constant currency basis.
The results reflect growth in businesssupport services revenue driven by a declining meter population and softwarea shift to cloud-enabled products and lower financing revenue due to a decline in the number of lease extensions. Global Ecommerce revenue increased 1%, Presort Services revenue increased 12% and declines in equipment sales, financing, support services, supplies and rentals revenues.
SMBSendTech Solutions revenue declined 5%. North America Mailing revenue declined 4% as reported and 5% on a3% (2% at constant currency basis driven by declinescurrency).
Segment EBIT in recurring revenue streams. International Mailing revenue declined 9% as reported and 6% on a constant currency basisthe quarter increased 3% compared to the prior year period. Global Ecommerce EBIT increased 48% primarily due to lower equipment sales and recurring revenue streams.
EBS revenue was flat as reported and declined 1% on a constant currency basis.operational efficiencies. Presort Services EBIT increased 3% primarily due to the increase in revenue grew 4% driven by higher standard mail and parcel volumes processed and higher revenue per piece. Production Mail revenue declined 4% as reported and 3% on a constant currency basisSendTech Solutions EBIT decreased 9% primarily driven by lower support services revenues and equipment sales.
DCS revenue grew 11% as reported and 12% on a constant currency basis. Global Ecommerce revenue grew 20% as reported and 21% on a constant currency basis driven by growth in domestic shipping and the UK outbound marketplace. Software Solutions revenue increased 3% as reported and 4% on a constant currency basis, primarily due to an increase in licensing revenue.

Net Income
Net income declined 10% driven largely by a decline in gross margins, continued investment in our Global Ecommerce business, higher bad debt and credit losses provisions and higher interest expense, partially offset by lower restructuring charges and a lower effective tax rate. Additionally, the first nine monthsrevenue. Refer to Results of 2016 included $15 million of benefits from the forgiveness of a loan and a favorable state sales tax adjustment.Operations section for further information.

Cash Flows
Net cash provided by operations was $331 million compared to $296 million in the prior year. The timing of vendor payments and lower variable compensation payments in 2017 primarily drove the increase. During the first nine months of 2017, we used cash to:
increase investments by $27 million;
pay dividends of $105 million to our common stockholders; and
invest $120 million in capital expenditures.




Outlook

We continue to see a shift inmarket opportunities for each of our overall portfolio to higher growth, digital and shipping solutions. However, these opportunities have different margin structures than our legacy businesses and are impacting our financial performance. We also expect the normalization of variable compensation, higher marketing and increased spending on innovation will affect full year earnings in 2017. Over the last five years, we have developed a simpler and more digital operating model and reduced our cost structure by $300 million and we now see an opportunity to reduce our overall cost structure by an additional $200 million over the next 24 months. These savings will come from across the organization, including people and programs.

Within SMB Solutions, we expect trends in recurring revenue streams to stabilize with the introduction of the next generation of our SendPro family of products in the U.S. and a refresh of our asset base with new products that combine our mailing offerings with new shipping and parcel capabilities.

Within EBS, we anticipate additional network and parcel services expansion in Presort Services. Production Mail revenue growth is expected to continue to invest in new solutions and services and initiatives to improve our efficiencies. For 2022, our investment focus will be challenged by consolidationon gaining further network efficiencies and outsourcing, the timingeconomies of deals and pricing pressures on services revenue.

Within DCS, we expect to continue to make investments to growscale within our indirect channel within Software Solutions and build relationships with additional go-to-market partners. We anticipate continued financial investments in Global Ecommerce that will contribute to future growth from expansion of our marketplace sites (sites where multiple sellers provide their offerings), individual retail clients, new client acquisition and expanded service offerings. We will also continue to expand and globalize our cross-border ecommerce offerings by adding new retail clients in multiple outbound markets, which diversifies the business and helps to mitigate foreign currency risk.

We closed our acquisition of Newgistics in October 2017. Newgistics provides parcel delivery, returns, fulfillment and digital commerce solutions for retailers and ecommerce brands. This acquisition provides for expansion into the domestic market for our Global Ecommerce segment while complementing our cross-border offerings. It also aligns with our Presort Services network and builds on strengths of both Global Ecommerce and Presort Services. We planServices operations and in new solutions and services across all our businesses. Our mix of business continues to leverage Newgistics' existing networkshift to higher growth, lower margin markets, and volumesas we continue to driveinvest with a view to, and ahead of, our expectations for long-term growth, it is possible that near term margins will be under pressure. However, we expect margins to improve as we build scale acrossand realize the full benefits of our parcel platforminvestments and provide integrationoptimizations.

The impacts of COVID-19 remain uncertain and unpredictable. Supply chain issues continue to pose challenges for us and our clients' ability to meet their customers' demand. These supply chain issues could continue to impact customer behaviors as well as that of end consumers, which could impact our shipping and delivery volumes. The duration and severity of these supply chain issues is unknown
29



and unpredictable, and some factors are not within our control. However, we will continue to take proactive steps to manage our operations and mitigate related financial impacts.
On a consolidated basis, we expect revenue growth in the low to mid-single digit range in 2022 compared to 2021. Within Global Ecommerce, we anticipate revenue growth and Presort Services. Wemargin and profit improvements from pricing initiatives and increased productivity from the benefits of investments made in our facilities and network. However, we also expect continued growth in the demand for transportation services and labor to achieve significant synergies in this transaction and further anticipate cross-sell opportunities across the clients of Newgistics,generate increased costs. Within Presort Services, we expect revenue growth and Global Ecommerce.profit improvements as productivity initiatives, increased automation and facilities consolidation and optimization will more than offset expected higher labor and transportation costs. Within SendTech Solutions, although we expect overall revenue to decline, we expect margins to remain strong and growth in our cloud-enabled shipping solutions.


The Company's Board of Directors, together with management, announced on November 1, 2017 that it is conducting a process to explore and evaluate strategic alternatives to further enhance shareholder value. The Board of Directors has not set a timetable for the process nor has it made any decisions related to any strategic alternatives at this time. There can be no assurance that the exploration of strategic alternatives will result in any particular outcome.

30





RESULTS OF OPERATIONS
Revenue by source and the related cost ofIn our revenue are shown in the following tables:
 Three Months Ended September 30, Nine Months Ended September 30,  
 2017 2016 Actual % change Constant Currency % change 2017 2016 Actual % change Constant Currency % change
Equipment sales$157,649
 $173,143
 (9)% (10)% $479,248
 $485,145
 (1)% (1)%
Supplies58,296
 61,306
 (5)% (6)% 188,342
 198,631
 (5)% (4)%
Software99,600
 89,087
 12 % 11 % 264,131
 257,760
 2 % 4 %
Rentals95,901
 102,747
 (7)% (7)% 291,770
 309,706
 (6)% (6)%
Financing81,184
 87,883
 (8)% (8)% 250,582
 276,915
 (10)% (9)%
Support services120,479
 123,954
 (3)% (4)% 354,625
 383,632
 (8)% (7)%
Business services229,711
 200,911
 14 % 14 % 672,133
 607,717
 11 % 11 %
Total revenue$842,820
 $839,031
 — % — % $2,500,831
 $2,519,506
 (1)% — %
 Three Months Ended September 30, Nine Months Ended September 30,
     Percentage of Revenue     Percentage of Revenue
 2017 2016 2017 2016 2017 2016 2017 2016
Cost of equipment sales$85,647
 $86,147
 54.3% 49.8% $232,398
 $235,741
 48.5% 48.6%
Cost of supplies18,827
 20,348
 32.3% 33.2% 60,207
 60,662
 32.0% 30.5%
Cost of software25,713
 25,698
 25.8% 28.8% 75,816
 79,496
 28.7% 30.8%
Cost of rentals20,818
 16,041
 21.7% 15.6% 63,056
 54,951
 21.6% 17.7%
Financing interest expense12,629
 12,965
 15.6% 14.8% 38,446
 41,375
 15.3% 14.9%
Cost of support services70,688
 74,799
 58.7% 60.3% 217,232
 224,790
 61.3% 58.6%
Cost of business services166,984
 140,989
 72.7% 70.2% 470,890
 417,357
 70.1% 68.7%
Total cost of revenue$401,306
 $376,987
 47.6% 44.9% $1,158,045
 $1,114,372
 46.3% 44.2%

The discussion, below referswe may refer to the change in revenue growth on a constant currency basis tobasis. Constant currency measures exclude the impact of changes in foreign currency exchange rates onfrom the change in revenue.prior period under comparison. We believe that excluding the useimpacts of a constant currency revenue measureexchange rates provides investors with a better understanding of the underlying revenue performance. Constant currency change is calculated by converting ourthe current period reportednon-U.S. dollar denominated revenue atusing the prior year'syear’s exchange rates.
Revenue and Cost of Revenues - 2017 compared to 2016
Equipment sales
Equipment sales revenue decreased 9% in the quarter. On arate. Where constant currency basis, equipment sales decreased 10%, primarily due to:
8% from lower equipment sales in North America Mailing due to timing of salesmeasures are not provided, the actual change and product mix; and
1% from lower equipment sales in Production Mail, primarily from a difficult year-over-year comparison, resulting from a large sorter deal in the third quarter of 2016.
Cost of equipment sales as a percentage of equipment sales increased to 54.3% in the quarter, primarily due to lower margins in North America driven by mix of sales.

Equipment sales revenue decreased 1% in the first nine months of 2017, primarily due to:
2% from lower equipment sales in International Mailing particularly in Italy and Germany;
1% from lower equipment sales in Production Mail; partially offset by
2% from higher equipment sales in North America Mailing, reflecting a favorable comparison to prior year, which was impacted by the enterprise business platform implementation in the second quarter of 2016.
Cost of equipment sales as a percentage of equipment sales was flat in the first nine months of 2017 compared to the first nine months of 2016.






Supplies
Supplies revenue decreased 5% in the quarter. On a constant currency basis, supplies revenue decreased 6% primarily due to:change are the same.  
3% from lower supplies revenue in North America Mailing primarily due to a decline in installed mailing equipmentManagement measures segment profitability and postage volumes;
2% from lower supplies revenue in Production Mail primarily from a difficult year-over-year comparison resulting from a large transaction in the prior year;performance using segment earnings before interest and
1% from lower supplies revenue in International Mailing.
Cost of supplies as a percentage of supplies revenue decreased to 32.3% in the quarter primarily due to mix of products sold.

Supplies revenue decreased 5% in the first nine months of 2017. On a constant currency basis, supplies revenue decreased 4% primarily due to:
3% from lower supplies revenue in North America Mailing primarily due to a decline in installed mailing equipment and postage volumes; and
1% from a decline in International Mailing revenue.
Cost of supplies as a percentage of supplies revenue increased to 32.0% in the first nine months of 2017 due to higher mix of lower margin products.

Software
Software revenue increased 12% in the quarter. On a constant currency basis, revenue increased 11% primarily due to higher licensing fees in North America, driven, in part, by improvements in our indirect channel and a large Location Intelligence deal in the quarter.
Software revenue increased 2% in first nine months of 2017. On a constant currency basis, revenue increased 4% primarily due to:
3% from higher licensing revenue; and
1% from higher data revenue.
Cost of software as a percentage of software revenue decreased to 25.8% in the quarter and 28.7% in the first nine months of 2017 due to the increase in high margin licensing revenue and cost reduction initiatives.

Rentals
Rentals revenue decreased 7% in the quarter and 6% in the first nine months of 2017 primarily due to a declining meter population. Cost of rentals as a percentage of rentals revenue increased to 21.7% for the quarter and 21.6% in the first nine months of 2017 primarily due to higher scrapping costs associated with retiring aging meters.

Financing
Financing revenue decreased 8% in the quarter and 10% in the first nine months of 2017. On a constant currency basis, financing revenue decreased 8% in the quarter and 9% in the first nine months of 2017 primarily due to a declining portfolio and lower fees.
We allocate a portion of our total cost of borrowing to financing interest expense. In computing financing interest expense, we assume an 8:1 debt to equity leverage ratio and apply our overall effective interest rate to the average outstanding finance receivables. Financing interest expense as a percentage of financing revenue increased to 15.6% for the quarter and 15.3% in the first nine months of 2017 primarily due to a higher effective interest rate.

Support Services
Support services revenue decreased 3% in the quarter. On a constant currency basis, support services revenue decreased 4% primarily due to a decline in installed mailing equipment worldwide. Cost of support services as a percentage of support services revenue decreased to 58.7% for the quarter due to improved margins in North America Mailing and Production Mail.
Support services revenue decreased 8% in the first nine months of 2017. On a constant currency basis, support services revenue decreased 7% primarily due to:
6% from a decline in installed mailing equipment worldwide; and
1% from lower maintenance revenue on Production Mail equipment as some in-house mailers moved their mail processing to third-party service bureaus who service their own equipment.
Cost of support services as a percentage of support services revenue increased to 61.3% in the first nine months of 2017 as support services margins were impacted by lower services revenue without corresponding cost reduction.



Business Services
Business services revenue increased 14% in the quarter primarily due to:
11% from growth in Global Ecommerce due to higher cross-border and retail volumes across all lines of business; and
3% from higher volumes of mail processed in Presort Services.
Business services revenue increased 11% in the first nine months of 2017 primarily due to:
8% from growth in Global Ecommerce due to higher cross-border and retail volumes; and
2% from higher volumes of mail processed in Presort Services.
Cost of business services as a percentage of business services revenue increased to 72.7% in the quarter and 70.1% in the first nine months of 2017 primarily due to continued investment in our Global Ecommerce business.
Selling, general and administrative (SG&A)
SG&A expense increased 1% to $304 million in the quarter primarily due to higher expenses in Global Ecommerce of $9 million for investments in growth opportunities and the settlement of a vendor contract dispute, $5 million of higher bad debt and credit loss provisions, $5 million of acquisition/disposition related expenses, and $4 million of higher residual losses on leased equipment due to the timing of trade-up activity, partially offset by approximately $18 million of benefits from productivity initiatives.

SG&A expense decreased 1% to $908 million in the first nine months of 2017 primarily due to approximately $49 million of benefits from productivity initiatives and a $6 million pre-tax gain from the sale of technology in the second quarter of 2017, partially offset by $14 million of higher expenses in Global Ecommerce, $11 million of higher marketing expenses and $10 million of higher bad debt and credit loss provisions. Additionally, the first nine months of 2016 included a $10 million benefit from the forgiveness of a loan by the State of Connecticut and a $5 million favorable state sales tax adjustment.

Research and development (R&D)
R&D expense increased 12% to $32 million in the quarter primarily due to project timing. R&D expense increased 8% to $97 million for the first nine months of 2017, primarily due to investments in Global Ecommerce and Software Solutions.

Income taxes
See Note 11 to the Condensed Consolidated Financial Statements.











Business segment results - 2017 compared to 2016
The principal products and services of each of our reportable segments are as follows:

Small & Medium Business Solutions:
North America Mailing: Includes the revenue and related expenses from mailing and office shipping solutions, financing services, and supplies for small and medium businesses to efficiently create physical and digital mail, evidence postage and help simplify and save on the sending, tracking and receiving of letters, parcels and flats in the U.S. and Canada.
International Mailing: Includes the revenue and related expenses from mailing and office shipping solutions, financing services, and supplies for small and medium businesses to efficiently create physical and digital mail, evidence postage and help simplify and save on the sending, tracking and receiving of letters, parcels and flats in areas outside the U.S. and Canada.

Enterprise Business Solutions:
Production Mail: Includes the worldwide revenue and related expenses from the sale of production mail inserting and sortation equipment, high-speed production print systems, supplies and related support services to large enterprise clients to process inbound and outbound mail.
Presort Services: Includes revenue and related expenses from presort mail and parcel services for our large enterprise clients to qualify large mail volumes for postal worksharing discounts.

Digital Commerce Solutions:
Software Solutions: Includes the worldwide revenue and related expenses from the licensing of customer engagement, customer information and location intelligence software solutions and related support services.
Global Ecommerce: Includes the worldwide revenue and related expenses from cross-border ecommerce transactions and domestic retail and ecommerce shipping solutions.

We determine EBIT (EBIT), which is calculated by deducting from segment revenue the related costs and expenses attributable to the segment. Segment EBIT excludes interest, taxes, generalunallocated corporate expenses, and restructuring charges, that areasset and goodwill impairment charges and other items not allocated to a particular business segment. Management uses segmentbelieves that Segment EBIT to measure profitability and performance at the segment level. Management believes segment EBIT provides investors a useful measure to ourof operating performance and underlying trends of the businesses.business. Segment EBIT may not be indicative of our overall consolidated performance and therefore, should be read in conjunction with our consolidated results of operations. See Note 2
Effective for 2022, we refined our methodology for allocating transportation costs between Global Ecommerce and Presort Services, resulting in an increase to Global Ecommerce EBIT and a corresponding decrease to Presort Services EBIT of approximately $3 million for the three months ended March 31, 2022.

REVENUE AND SEGMENT EBIT
Global Ecommerce
Global Ecommerce includes the revenue and related expenses from business to consumer logistics services for domestic and cross-border delivery, returns and fulfillment.
RevenueCost of RevenueGross Margin
Three Months Ended March 31,Three Months Ended March 31,Three Months Ended March 31,
20222021Actual % changeConstant Currency % change2022202120222021
Business services$418,527 $413,086 1 %1 %$368,468 $384,308 12.0 %7.0 %
Segment EBIT
Three Months Ended March 31,
20222021Actual % change
Segment EBIT$(13,696)$(26,376)48 %
Global Ecommerce revenue increased 1% in the first quarter of 2022 compared to the Condensed Consolidated Financial Statements for a reconciliationprior year period due to pricing actions that more than offset the impact on revenue from lower volumes in the first quarter compared to the prior year period. Domestic parcel delivery and fulfillment volumes contributed revenue growth of segment EBIT9%, but cross-border and digital delivery volumes contributed revenue declines of 5% and 2%, respectively.
Gross margin increased $21 million and gross margin percentage increased to net income.12% from 7% compared to the prior year period, primarily due to pricing actions, improved warehouse productivity and margin improvements in domestic parcel delivery and fulfillment services, partially offset by the impact of lower volumes from cross-border and digital delivery services, and higher postal costs of $9 million and transportation costs of $7 million.
Revenue andSegment EBIT for the three and nine months ended September 30, 2017 and 2016 by reportable segment are presented below:
 Revenue
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 Actual % change Constant Currency % change 2017 2016 Actual % change Constant Currency % change
North America Mailing$319,966
 $349,785
 (9)% (9)% $1,016,640
 $1,064,456
 (4)% (5)%
International Mailing93,770
 96,730
 (3)% (5)% 282,150
 309,297
 (9)% (6)%
Small & Medium Business Solutions413,736
 446,515
 (7)% (8)% 1,298,790
 1,373,753
 (5)% (5)%
Production Mail104,387
 106,350
 (2)% (3)% 278,912
 289,649
 (4)% (3)%
Presort Services119,074
 114,053
 4 % 4 % 370,203
 357,214
 4 % 4 %
Enterprise Business Solutions223,461
 220,403
 1 % 1 % 649,115
 646,863
 — % 1 %
Software Solutions99,442
 89,031
 12 % 11 % 264,087
 257,417
 3 % 4 %
Global Ecommerce106,181
 83,082
 28 % 28 % 288,839
 241,473
 20 % 21 %
Digital Commerce Solutions205,623
 172,113
 19 % 19 % 552,926
 498,890
 11 % 12 %
Total$842,820
 $839,031
 — % — % $2,500,831
 $2,519,506
 (1)% — %


 EBIT
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 % change 2017 2016 % change
North America Mailing$107,777
 $141,968
 (24)% $369,662
 $449,696
 (18)%
International Mailing8,729
 9,198
 (5)% 35,967
 32,842
 10 %
Small & Medium Business Solutions116,506
 151,166
 (23)% 405,629
 482,538
 (16)%
Production Mail14,920
 15,696
 (5)% 31,515
 35,434
 (11)%
Presort Services19,474
 19,181
 2 % 69,461
 69,305
 — %
Enterprise Business Solutions34,394
 34,877
 (1)% 100,976
 104,739
 (4)%
Software Solutions20,912
 10,329
 > 100 %
 31,216
 17,908
 74 %
Global Ecommerce(9,594) 1,544
 > (100)%
 (17,894) (2,608) > (100)%
Digital Commerce Solutions11,318
 11,873
 (5)% 13,322
 15,300
 (13)%
Total$162,218
 $197,916
 (18)% $519,927
 $602,577
 (14)%
Small & Medium Business Solutions
North America Mailing
North America Mailing revenue decreased 9% in thefirst quarter primarily due to:
4% from lower equipment sales due to timing of sales and product mix;
3% from declines in rentals and support services revenue due2022 was a loss of $14 million compared to a decline in installed mailing equipment and lower postage volumes; and
2% from lower financing revenue primarily due to a declining lease portfolio and lower fees.

North America Mailing revenue decreased 4% in the first nine monthsloss of 2017. On a constant currency basis, revenue decreased 5% primarily due to:
3% from declines in rentals and support services revenue due to a decline in installed mailing equipment and lower postage volumes; and
2% from lower financing revenue primarily due to a declining lease portfolio and lower fees.
EBIT decreased 24% in the quarter and 18% in the first nine months of 2017, primarily due to the decline in revenue and equipment margins.

International Mailing
International Mailing revenue decreased 3% in the quarter. On a constant currency basis, revenue decreased 5% primarily due to:
4% from declines in rentals, financing and support services revenue resulting from a decline in installed mailing equipment and the lease portfolio; and
1% from lower equipment sales, primarily in Italy and Japan.
EBIT decreased 5% in the quarter primarily due to the decline in revenue.
International Mailing revenue decreased 9% in the first nine months of 2017. On a constant currency basis, revenue decreased 6% primarily due to:
3% from lower equipment sales particularly in Italy and Germany; and
3% from declines in rentals, financing and support services revenue resulting from a decline in installed mailing equipment and the lease portfolio.
EBIT increased 10% in the first nine months of 2017, primarily due to lower expenses.


Enterprise Business Solutions
Production Mail
Production Mail revenue decreased 2% in the quarter. On a constant currency basis, revenue decreased 3% primarily due to:
2% from lower equipment sales due primarily to lower inserter equipment placements and a large sorter sale in the third quarter of 2016; and
1% from lower supplies revenue primarily from a difficult year-over-year comparison resulting from a large transaction$26 million in the prior year.
Production Mail revenue decreased 4%year period. The EBIT improvement was driven primarily by the increase in the first nine monthsgross margin of 2017. On a constant currency basis, revenue decreased 3%$21 million, partially offset by increased operating expenses of $9 million, driven primarily due to:
2% from lower support services revenue as a result of some in-house mailers shifting their mail processing to third-party outsourcers who service their own equipment and;
1% from lower equipment sales primarily due to lower sorter placements offset partially by higher inserter equipment sales.employee-related expenses and higher depreciation expense.

EBIT decreased 5% in the quarter and 11% in the first nine months of 2017, primarily due to the decline in revenue and lower equipment sales margins due to the mix of equipment sales.





31



Presort Services
Presort Services includes revenue increased 4% in both the quarter and the first nine months of 2017 primarily duerelated expenses from sortation services to higher revenue per piece of mail processed and higherqualify large volumes of StandardFirst Class Mail, Marketing Mail, Marketing Mail Flats and parcels processed, partially offset by lower First Class mail volumes. EBIT increased 2% in the quarter primarily due to higher revenue. EBIT was flat in the first nine months of 2017 compared to the first nine months of 2016, as higher revenue was offset by increased mail processing costs and investments in our new parcel sortation capabilities.Bound Printed Matter for postal worksharing discounts.

RevenueCost of RevenueGross Margin
Three Months Ended March 31,Three Months Ended March 31,Three Months Ended March 31,
20222021Actual % changeConstant Currency % change2022202120222021
Business services$160,544 $143,126 12 %12 %$124,652 $108,998 22.4 %23.8 %
Segment EBIT
Three Months Ended March 31,
20222021Actual % change
Segment EBIT$19,632 $19,051 3 %
Digital Commerce Solutions
Software Solutions
SoftwarePresort Services revenue increased 12% in the quarter. Onfirst quarter of 2022 compared to the prior year period. The processing of Marketing Mail, First Class Mail and Bound Printed Matter contributed revenue growth of 8%, 3% and 1%, respectively, primarily due to the impact of pricing actions.
Gross margin increased $2 million, primarily driven by higher revenue; however, gross margin percentage declined to 22.4% from 23.8% primarily due to increased labor and transportation costs of $8 million and $7 million, respectively
Segment EBIT increased $1 million, or 3% in the first quarter of 2022, due to the $2 million increase in gross margin, partially offset by a $1 million increase in operating expenses.
SendTech Solutions
SendTech Solutions includes the revenue and related expenses from physical and digital mailing and shipping technology solutions, financing, services, supplies and other applications to help simplify and save on the sending, tracking and receiving of letters, parcels and flats.
RevenueCost of RevenueGross Margin
Three Months Ended March 31,Three Months Ended March 31,Three Months Ended March 31,
20222021Actual % changeConstant Currency % change2022202120222021
Business services$18,313 $14,242 29 %29 %$9,882 $6,069 46.0 %57.4 %
Support services110,352 118,697 (7)%(6)%36,935 36,228 66.5 %69.5 %
Financing72,029 77,812 (7)%(7)%11,602 11,886 83.9 %84.7 %
Equipment sales89,296 86,803 3 %4 %63,441 61,790 29.0 %28.8 %
Supplies41,061 42,224 (3)%(1)%11,475 11,211 72.1 %73.4 %
Rentals16,820 19,207 (12)%(12)%5,267 6,447 68.7 %66.4 %
Total revenue$347,871 $358,985 (3)%(2)%$138,602 $133,631 60.2 %62.8 %
Segment EBIT
Three Months Ended March 31,
20222021Actual % change
Segment EBIT$104,575 $114,470 (9)%
SendTech Solutions revenue decreased 3% (2% at constant currency basis,currency) in the first quarter of 2022 compared to the prior year period. Support services revenue declined 7% (6% at constant currency) primarily due to a declining meter population and shift to cloud-enabled products, which generally require less service. Financing revenue declined 7% primarily due to lower lease extensions of $6
32



million as more clients opted to lease new equipment rather than extend leases on existing equipment. Partially offsetting these decreases, business services revenue increased 11%29% primarily due to growth in our subscription services.
Gross margin for the first quarter of 2022 decreased $16 million compared to the prior year period and gross margin percentage decreased to 60.2% from 62.8% in the prior year period. The decline in gross margin and gross margin percentage was primarily driven by the decrease in support services and financing revenue and the relative high margins from these revenues.
Segment EBIT decreased $10 million, or 9% in the first quarter of 2022 compared to the prior year period, primarily driven by the decline in gross margin of $16 million, partially offset by lower operating expenses of $6 million.

UNALLOCATED CORPORATE EXPENSES

The majority of selling, general and administrative (SG&A) expenses are recorded directly or allocated to our reportable segments. SG&A expenses not recorded directly, or allocated to our reportable segments, are reported as unallocated corporate expenses. Unallocated corporate expenses primarily represents corporate administrative functions such as finance, marketing, human resources, legal, information technology and innovation.
Three Months Ended March 31,
20222021Actual % change
Unallocated corporate expenses$57,834 $57,465 1 %

Unallocated corporate expenses were consistent with the prior year, increasing only $0.4 million and less than 1%.

CONSOLIDATED EXPENSES

Selling, general and administrative
SG&A expense for the quarter increased $5 million, or 2% compared to the prior year period to $243 million, primarily due to higher licensing fees in North America, driven in part, by growth inemployee-related expenses of $3 million, higher depreciation expense of $1 million and higher travel expenses of $1 million.
Research and development (R&D)
R&D expense for the indirect channelquarter was $11 million and flat compared to the prior year period.
Restructuring charges
Restructuring charges, consisting of costs for employee severance and facility closures, were $4 million for the quarter. See Note 9 to the Condensed Consolidated Financial Statements for further information.
Other (income) expense
Other (income) expense for the first three months of 2022 includes a $14 million gain on the sale of our Shelton, Connecticut office building, a $3 million gain from the 2019 sale of a business and a large Location Intelligence deal incharge of $5 million from the quarter.early redemption of debt. See Notes 10 and 16 to the Condensed Consolidated Financial Statements for further information.
Software revenue increased 3% in first nineIncome taxes
The effective tax rate for the three months of 2017. On a constant currency basis, revenue increased 4% primarily due to:ended March 31, 2022 was 16.8%. See Note 12 to the Condensed Consolidated Financial Statements for further information.
3% from higher licensing revenue; and
1% from higher data revenue.
33
EBIT increased more than 100% in the quarter and 74% in the first nine months of 2017 primarily due to an increase in high margin licensing revenue.



Global Ecommerce
Global Ecommerce revenue increased 28% in the quarter primarily due to:
15% from higher domestic ecommerce shipping revenues primarily from carrier services, which are enabled by our Shipping APIs;
10% from higher cross-border marketplace volumes, particularly in the UK; and
3% from higher retail volumes.
Global Ecommerce revenue increased 20% in the first nine months of 2017. On a constant currency basis, revenue increased 21% primarily due to:
11% from higher domestic ecommerce shipping revenues;
6% from higher cross-border marketplace volumes, particularly in the UK; and
2% from higher retail volumes.
EBIT was a loss of $10 million in the quarter and a loss of $18 million in the first nine months of 2017 primarily due to investments in market growth opportunities, the resolution of a vendor contractual dispute and a specific marketing program with a cross-border client.


LIQUIDITY AND CAPITAL RESOURCES
WeAt March 31, 2022, we had cash, cash equivalents and short-term investments of $634 million, which includes $180 million held at our foreign subsidiaries used to support the liquidity needs of those subsidiaries. Our ability to maintain adequate liquidity for our operations is dependent upon a number of factors, including our revenue and earnings, our clients' ability to pay their balances on a timely basis, the impacts of changing macroeconomic and geopolitical conditions and our ability to manage costs and improve productivity. At this time, we believe that existing cash and investments, cash generated from operations and borrowing capacity under our commercial paper program$500 million revolving credit facility will be sufficient to supportfund our current cash needs including discretionary uses such as capital investments, dividends, strategic acquisitions and share repurchases. Cash and cash equivalents and short-term investments were $1,742 million at September 30, 2017 and $803 million at December 31, 2016.We continuously review our credit profile through published credit ratings andfor the credit default swap market. We also monitor the creditworthiness of those banks acting as derivative counterparties, depository banks or credit providers.next 12 months.

Cash and cash equivalents held by our foreign subsidiaries were $601 million at September 30, 2017 and $475 million at December 31, 2016. Cash and cash equivalents held by our foreign subsidiaries are generally used to support the liquidity needs of these subsidiaries. Most of these amounts could be repatriated to the U.S. but would be subject to additional taxes. Repatriation of some foreign balances is restricted by local laws.
Cash Flow Summary
Changes in cash and cash equivalents for the nine months ended September 30, 2017 and 2016 were as follows:
 2017 2016 Change
Net cash provided by operating activities$330,577
 $296,359
 $34,218
Net cash used in investing activities(155,715) (71,795) (83,920)
Net cash provided by financing activities715,062
 116,061
 599,001
Effect of exchange rate changes on cash and cash equivalents42,457
 3,933
 38,524
Change in cash and cash equivalents$932,381
 $344,558
 $587,823
20222021Change
Net cash from operating activities$10,562 $65,923 $(55,361)
Net cash from investing activities28,029 (87,109)115,138 
Net cash from financing activities(145,858)(218,300)72,442 
Effect of exchange rate changes on cash and cash equivalents(2,638)(1,238)(1,400)
Change in cash and cash equivalents$(109,905)$(240,724)$130,819 
Cash from operations increased $34 million, primarily due to:
Lower variable compensation payments in 2017 attributable to 2016 performance;
Timing of payments associated with payroll, and the launch of our enterprise business platform and advertising campaigns in 2016;
Lower restructuring and tax payments; and
A special UK pension contribution of $37 million in 2016.

Operating Activities
Cash flows usedfrom operating activities in investing activities increased $842022 declined $55 million primarily due to:
Higher investment activities of $96 million,compared to the prior year period primarily due to the investmenttiming of residualcollections of receivables and higher inventory purchases.
Investing Activities
Cash flows from investing activities for 2022 increased $115 million compared to the prior year, primarily due to proceeds from the issuance of debt;
Lower proceeds$51 million from the sale of assetsour Shelton facility and $9 million related to the 2019 sale of $12 million;
Decrease in reserve depositsa business, a benefit of $4 million;$43 million from investment activities and
Higher lower capital expenditures of $4 million;$11 million.
Financing Activities
Cash flows from financing activities for 2022 improved $72 million compared to the prior year primarily due to lower net repayments of debt of $31 million, lower premiums and fees paid to refinance debt of $40 million and lower decline in customer deposits of $15 million, partially offset by
Lower acquisition spending of $30 million.

Cash flows provided by financing activities increased $599 million, primarily due to:
a net increase of $389 million from debt activity;
$197 $13 million of share repurchases in 2016; andcommon stock repurchases.
$9 million of dividends paid to non-controlling interests in 2016.


Financings and Capitalization
We areIn March 2022, we redeemed the April 2023 notes and recorded a "Well-Known Seasoned Issuer" within the meaning of Rule 405 under the Securities Act, which allows us to issue debt securities, preferred stock, preference stock, common stock, purchase contracts, depositary shares, warrants and units$5 million pre-tax loss in an expedited fashion. We have a commercial paper programconnection with this redemption.
The credit agreement that is an important source of liquidity for us and a committedgoverns our $500 million secured revolving credit facility of $1 billion to support our commercial paper issuances. During the second quarter of 2017,and term loans contains financial and non-financial covenants. At March 31, 2022, we extended the expiration of the credit facility to 2021 under the same termswere in compliance with all covenants and conditions. We have not drawn upon the credit facility.
At September 30, 2017 and December 31, 2016, there were no outstanding commercial paper borrowings. Duringborrowings under the quarter, commercial paper borrowings averaged less than $1 million at a weighted average interest rate of 1.7% and the maximum amount of commercial paper outstanding at any point during the quarter was $10 million.revolving credit facility.
In September 2017, we issued $700 million of fixed rate notes and borrowed an additional $350 million under new term loan agreements. The fixed rate notes consisted of a $300 million of 3.625% notes due September 2020 and $400 million of 4.7% notes due April 2023. Interest is payable semi-annually and are subject to adjustment from time to time based on changes in our credit ratings.


Both of these notes may be redeemed, at our option, in whole or in part, at any time at par plus accrued, unpaid interest and a make-whole amount, if any.
The new term loans consist of a $200 million term loan that bears interest at the applicable Eurodollar Rate plus 1.5% and matures in September 2020 and a $150 million term loan that bears interest at the applicable Eurodollar Rate plus 1.125% and matures in August 2018, but includes an option to extend the maturity by one year. For the third quarter of 2017, the effective interest rate for the $200 million term loan was 3.1% and the effective interest rate for the $150 million term loan was 2.4%. The interest rates on these term loans are subject to adjustment from time to time based on changes in our credit ratings.
In May 2017, we issued $400 million of 3.875% Notes. Interest is payable semi-annually and is subject to adjustment based on changes in our credit ratings. The notes mature in May 2022, but may be redeemed, at our option, in whole or in part, at any time at par plus accrued, unpaid interest and a make-whole amount, if any.
The net proceeds from these borrowings were used to repay a $150 million term loan in June 2017 and the $385 million 5.75% Notes in September 2017. Additionally, in October 2017, we redeemed the $350 million 4.75% Notes that were due in May 2018 and funded the Newgistics acquisition (see Note 6).
In January 2017, bondholders of the 5.25% Notes due 2037 caused us to redeem $79 million of the debt outstanding.

Dividends and Share Repurchases
During the nine months ended September 30, 2017, we paid dividends to our stockholders of $105 million. Each quarter, our Board of Directors considers our recent and projected earnings and other capital needs and priorities in deciding whether to approve the payment, as well as the amount, of a dividend. There are no material restrictions on our ability to declare dividends. We expect to continue to pay a quarterly dividend; however, no assurances can be given.
We did not repurchase any of our common shares during the quarter. We have a remaining board of directors authorization of $21 million to repurchase shares.

Contractual Obligations and Off-Balance Sheet Arrangements
As of March 31, 2022, we have entered into real estate and equipment leases with aggregate payments of $107 million and terms ranging from four to eight years that have not commenced. These leases are expected to commence in 2022.
At September 30, 2017, we hadMarch 31, 2022, there are no off-balance sheet arrangements that have, or are reasonably likely to have, a material current or future effect on our financial condition, results of operations or liquidity.


Critical Accounting Estimates
Finance Receivables and Allowance for Credit Losses
Finance receivables are composed of sales-type lease receivables and unsecured revolving loan receivables. We provide an allowance for probable credit losses based on historical loss experience, the nature and volume of our portfolios, adverse situations that may affect a client's ability to pay, prevailing economic conditions and our ability to manage the collateral. At September 30, 2017, gross finance receivables aged greater than 90 days have grown since the implementation of our North America enterprise business platform in the third quarter of 2016. We believe the majority of the increased delinquency is administrative in nature and the result of a change in our billing format and process under our new enterprise business platform. The billing format under the platform is different and we are continuing to work with clients to reconcile amounts billed under the new format and thus such clients have not made payments. These accounts are considered delinquent in our analysis, but we continue to expect that payment in full will be received. The aging disclosed in Note 5 of the Condensed Consolidated Financial Statements represents full contract value while a smaller portion (approximately 25%) has been billed and recognized in income as of September 30, 2017.
As of September 30, 2017, we had North America sales-type lease receivables aged greater than 90 days with a contract value of $52 million. As of October 31, 2017, we received payments with a contract value of approximately $23 million related to these receivables.
The quality of the portfolio has not changed. Our loan portfolio delinquency has remained fairly constant when compared to loan delinquency in our legacy platform and there has been no significant changes in customers within the portfolio. Also, we use a third party to credit score our lease and loan portfolios. The credit quality of our portfolio as determined by this third party has shown no signs of deterioration suggesting that the increase in delinquency is not a result of our customer's ability to pay, but instead is a result of changes to invoice format and presentation. Accordingly, we do not believe that an increase in the allowance for credit losses as a result of the increase in delinquencies is necessary.

Regulatory Matters
There have been no significant changes to the regulatory matters disclosed in our 20162021 Annual Report.



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Item 3: Quantitative and Qualitative Disclosures aboutAbout Market Risk
There were no material changes to the disclosures made in the 2016our 2021 Annual Report.
Item 4: Controls and Procedures
Disclosure controls and procedures are designed to reasonably assureensure that information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934, as amended (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 assureensure that such information is accumulated and communicated to management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), as appropriate to allow timely decisions regarding required disclosure.disclosures.
UnderWith the directionparticipation of our CEO and CFO, wemanagement evaluated our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) and internal controlcontrols over financial reporting.reporting as of the end of the period covered by this report. 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 disclosebe disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the required time periods specified in the Exchange Act.periods. 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. Further, we have not experienced any material impact to our internal controls over financial reporting given that most of our employees are working remotely due to COVID-19.
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 CEO and CFO have reasonable assurance that the disclosure controls and procedures were effective as of September 30, 2017.March 31, 2022.

PART II. OTHER INFORMATION
Item 1: Legal Proceedings
See Note 1213 to the Condensed Consolidated Financial Statements.
Item 1A: Risk Factors
There were no material changes to the risk factors identified in our 20162021 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 in the open market to manage the dilution created by shares issued under employee stock plans and for other purposes. The following table provides information about purchases of our common stock during the three months ended September 30, 2017:March 31, 2022:
Total number of
shares purchased		Average price
paid per share		Total number of
shares purchased
as part of
publicly
announced plans or programs		Approximate
dollar value of
shares that may
yet be purchased
under the plans or programs (in
thousands)
Beginning balance   $16,022
January 2022— $— — $16,022
February 20222,354,432 $4.88 2,354,432 $4,533
March 2022395,568 $4.95 395,568 $2,576
 2,750,000 $4.89 2,750,000 
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Total number of
shares purchased		Average price
paid per share		Total number of
shares purchased
as part of
publicly
announced plans or programs		Approximate
dollar value of
shares that may
be purchased
under the plans or programs (in
thousands)
Beginning balance$21,022
July 1, 2017 - July 31, 2017—
—
—
$21,022
August 1, 2017 - August 31, 2017—
—
—
$21,022
September 1, 2017 - September 30, 2017—
—
—
$21,022
—
—
—





Item 6: Exhibits
Exhibit
Number
Description Exhibit Number in this Form 10-Q
2.1
Agreement and Plan of Merger, dated as of September 6, 2017, among Pitney Bowes Inc., Neutron Acquisition Corp., NGS Holdings, Inc. and Littlejohn Fund IV, L.P., solely in its capacity as stockholder representative (incorporated by reference to Exhibit 2.1 to Form 8-K filed on September 7, 2017).*
 2.1
4.1
Officer's Certificate establishing the terms of the 3.625% Notes due 2020, dated September 15, 2017 (incorporated by reference to Exhibit 4.1 to Form 8-K filed September 15, 2017)
 4.1
4.2
Specimen of 3.625% Notes due 2020 (incorporated by reference to exhibit 4.2 to Form 8-K filed September 15, 2017)
 4.2
4.3
Officer's Certificate establishing the terms of the 4.700% Notes due 2023, dated September 15, 2017 (incorporated by reference to Exhibit 4.3 to Form 8-K filed September 15, 2017)
 4.3
4.4
Specimen of 4.700% Notes due 2023 (incorporated by reference to exhibit 4.4 to Form 8-K filed September 15, 2017)
 4.4
10.1
Credit Agreement $1,000,000,000, dated as of January 6, 2015, by and among the company, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto (the “Revolving Credit Agreement”).
 10.1
10.2
First Amendment to the Revolving Credit Agreement, dated as of May 31, 2017, by and among the company, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto.

 10.2
10.3
Second Amendment to the Revolving Credit Agreement, dated as of September 12, 2017, by and among the company, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto.
 10.3
10.4
Credit Agreement $300,000,000, dated as of January 6, 2015, by and among the company, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto (the “$300M Term Loan”).
 10.4
10.5
First Amendment to the $300M Term Loan, dated as of September 12, 2017, by and among the company, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto.

 10.5
10.6
Credit Agreement $200,000,000, dated as of September 12, 2017, by and among the company, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto.

 10.6
10.7
Term Loan Facility $150,000,000, dated as of August 30, 2017, by and between the company and The Bank of Tokyo-Mitsubishi-UFJ, Ltd.
 10.7
12
Computation of ratio of earnings to fixed charges
 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
 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
 31.2
32.1
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350
 32.1
32.2
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350
 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
  
Exhibit
Number		Description Exhibit Number in this Form 10-Q
3(i)(a)3(i)(a)
33
31.1 31.1
31.2 31.2
32.1 32.1
32.2 32.2
101.SCHInline XBRL Taxonomy Extension Schema Document  
101.CALInline XBRL Taxonomy Calculation Linkbase Document  
101.DEFInline XBRL Taxonomy Definition Linkbase Document  
101.LABInline XBRL Taxonomy Label Linkbase Document  
101.PREInline XBRL Taxonomy Presentation Linkbase Document  
104The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, formatted in Inline XBRL. (included as Exhibit 101).
* Pursuant to Item 601(b)(2)601(a)(5) of Regulation S-K, certain exhibits and schedules have been omitted. The registrant hereby agrees to furnish
supplementally a copy of any omitted attachment to the SEC upon request.




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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
PITNEY BOWES INC.
Date:May 5, 2022
/s/ Ana Maria Chadwick
PITNEY BOWES INC.Ana Maria Chadwick
Date:November 2, 2017
/s/ Stanley J. Sutula III
Stanley J. Sutula III
Executive Vice President and Chief Financial Officer (Principal
(Duly Authorized Officer and Principal Financial Officer)
/s/ Joseph R. Catapano
Joseph R. Catapano
Vice President and Chief Accounting Officer
(Duly Authorized Officer and Principal Accounting Officer)



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