UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June 30, 2020~~March 31, 2021

☐ 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: 1-03579

PITNEY BOWES ~~INC~~.INC.

(Exact name of registrant as specified in its charter)



~~State of incorporation:~~	~~Delaware~~	~~I.R.S. Employer Identification No.~~	~~06-0495050~~

~~Address:~~State of incorporation:

Delaware

I.R.S. Employer Identification No.

06-0495050

Address of Principal Executive Offices:

3001 Summer Street,

Stamford,

Connecticut

06926

Telephone Number:

(203)

356-5000

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Common Stock, $1 par value per share

PBI

New York Stock Exchange

6.7% Notes due 2043

PBI.PRB

New 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 every Interactive Data File required to be submitted 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 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,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

þ☐

Accelerated filer

oþ

Non-accelerated filer

Smaller reporting company

☐

Emerging growth company

☐

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 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

As of ~~July 31, 2020~~, ~~173,082,121~~April 30, 2021, 175,493,000 shares of common stock, par value $1 per share, of the registrant were outstanding.

PITNEY BOWES INC.

INDEX


				Page Number

Part I - Financial Information:

Item 1:			Financial Statements	~~Page Number~~

~~Part I - Financial Information:~~

~~Item 1:~~	~~Financial Statements~~

	Condensed Consolidated Statements of ~~Income (Loss)~~Loss for the Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~	3

			Condensed Consolidated Statements of Comprehensive ~~Income (Loss)~~Loss for the Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~	4

			Condensed Consolidated Balance Sheets at ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020	5

			Condensed Consolidated Statements of Cash Flows for the ~~Six~~Three Months Ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~	6

			Notes to Condensed Consolidated Financial Statements	7

Item 2:			Management’s Discussion and Analysis of Financial Condition and Results of Operations	3128

Item 3:			Quantitative and Qualitative Disclosures about Market Risk	4235

Item 4:			Controls and Procedures	4235


Part II - Other Information:

Item 1:			Legal Proceedings	4336

Item 1A:			Risk Factors	4336

Item 2:			Unregistered Sales of Equity Securities and Use of Proceeds	4436

Item 6:			Exhibits	37


~~Item 6:~~Signatures				~~Exhibits~~38	45


~~Signatures~~		46

PART I. FINANCIAL INFORMATION

Item 1: Financial Statements

PITNEY BOWES INC.

CONDENSED CONSOLIDATED STATEMENTS OF ~~INCOME (LOSS)~~LOSS

(Unaudited; in thousands, except per share amounts)


	Three Months Ended March 31,
		2021		2020
Revenue:
Business services		$	570,454	$	444,379
Support services		118,697		122,015
Financing		77,812		89,078
Equipment sales		86,803		76,273
Supplies		42,224		45,709
Rentals		19,207		18,814
Total revenue		915,197		796,268
Costs and expenses:
Cost of business services		499,534		374,665
Cost of support services		36,717		39,760
Financing interest expense		11,886		12,489
Cost of equipment sales		61,840		57,359
Cost of supplies		11,211		12,240
Cost of rentals		6,447		6,378
Selling, general and administrative		238,102		248,633
Research and development		11,316		12,116
Restructuring charges		2,889		3,817
Goodwill impairment		0		198,169
Interest expense, net		25,158		25,883
Other components of net pension and postretirement expense (income)		350		(151)
Other expense, net		51,394		33,487
Total costs and expenses		956,844		1,024,845
Loss from continuing operations before taxes		(41,647)		(228,577)
Benefit for income taxes		(13,992)		(10,030)
Loss from continuing operations		(27,655)		(218,547)
(Loss) income from discontinued operations, net of tax		(3,886)		10,064
Net loss		$	(31,541)	$	(208,483)
Basic loss per share (1):
Continuing operations		$	(0.16)	$	(1.28)
Discontinued operations		(0.02)		0.06
Net loss		$	(0.18)	$	(1.22)
Diluted loss per share (1):
Continuing operations		$	(0.16)	$	(1.28)
Discontinued operations		(0.02)		0.06
Net loss		$	(0.18)	$	(1.22)

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Revenue:

Business services $ 528,990
$ 417,963
$ 973,369
$ 824,508
Support services 113,786
127,705
235,801
256,304
Financing 85,462
92,419
174,540
189,462
Equipment sales 57,837
85,551
134,110
175,338
Supplies 32,773
46,490
78,482
97,443
Rentals 18,644
18,445
37,458
40,602
Total revenue 837,492
788,573
1,633,760
1,583,657
Costs and expenses:
Cost of business services 454,311
337,918
828,976
664,964
Cost of support services 36,725
40,520
76,485
82,367
Financing interest expense 11,939
11,043
24,428
22,407
Cost of equipment sales 47,920
58,570
105,279
122,235
Cost of supplies 8,379
11,758
20,619
25,308
Cost of rentals 6,022
8,418
12,400
18,133
Selling, general and administrative 233,631
241,467
482,264
503,136
Research and development 7,467
13,572
19,583
26,149
Restructuring charges and asset impairments 4,922
5,899
8,739
9,599
Goodwill impairment —
—
198,169
—
Interest expense, net 26,446
28,019
52,329
55,621
Other components of net pension and postretirement cost (income) 386
(1,618 ) 235
(2,256 )
Other (income) expense (17,375 ) (27 ) 16,112
17,683
Total costs and expenses 820,773
755,539
1,845,618
1,545,346
Income (loss) from continuing operations before taxes 16,719
33,034
(211,858 ) 38,311
Provision for income taxes 17,016
3,724
6,986
11,544
(Loss) income from continuing operations (297 ) 29,310
(218,844 ) 26,767
(Loss) income from discontinued operations, net of tax (3,032 ) (5,613 ) 7,032
(5,729 )
Net (loss) income $ (3,329 ) $ 23,697
$ (211,812 ) $ 21,038
Basic (loss) earnings per share ⁽¹⁾:

Continuing operations $ —
$ 0.17
$ (1.28 ) $ 0.15
Discontinued operations (0.02 ) (0.03 ) 0.04
(0.03 )
Net (loss) income $ (0.02 ) $ 0.13
$ (1.24 ) $ 0.12
Diluted (loss) earnings per share ⁽¹⁾:

Continuing operations $ —
$ 0.16
$ (1.28 ) $ 0.15
Discontinued operations (0.02 ) (0.03 ) 0.04
(0.03 )
Net (loss) income $ (0.02 ) $ 0.13
$ (1.24 ) $ 0.12

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

See Notes to Condensed Consolidated Financial Statements

PITNEY BOWES INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE ~~INCOME (LOSS)~~LOSS

(Unaudited; in thousands)


	Three Months Ended March 31,
		2021		2020
Net loss		$	(31,541)	$	(208,483)
Other comprehensive loss, net of tax:
Foreign currency translation, net of tax of $(13) and $(2,817), respectively		(14,258)		(27,735)
Net unrealized gain (loss) on cash flow hedges, net of tax of $1,601 and $(58), respectively		4,830		(174)
Net unrealized (loss) gain on investment securities, net of tax of $(2,956) and $434, respectively		(8,916)		1,308

Amortization of pension and postretirement costs, net of tax of $3,208 and $2,650, respectively		9,937		8,870
Other comprehensive loss, net of tax		(8,407)		(17,731)
Comprehensive loss		$	(39,948)	$	(226,214)

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Net (loss) income $ (3,329 ) $ 23,697
$ (211,812 ) $ 21,038
Other comprehensive income, net of tax:
Foreign currency translation, net of tax of $1,105, $(1,347), $(1,712) and $(423), respectively 10,099
10
(17,636 ) 21,378
Net unrealized loss on cash flow hedges, net of tax of $(421), $(80), $(479) and $(24), respectively (1,271 ) (234 ) (1,445 ) (71 )
Net unrealized gain on investment securities, net of tax of $467, $1,100, $900 and $2,064, respectively 1,407
3,213
2,715
6,029
Amortization of pension and postretirement costs, net of tax benefits of $3,502, $2,124, $6,152 and $4,773, respectively 11,377
7,311
20,247
13,947
Other comprehensive income, net of tax 21,612
10,300
3,881
41,283
Comprehensive income (loss) $ 18,283
$ 33,997
$ (207,931 ) $ 62,321

See Notes to Condensed Consolidated Financial Statements

PITNEY BOWES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; in thousands, except share and per share amounts)


	March 31, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	680,727	$	921,450
Short-term investments, reported at fair value	16,200		18,974
Accounts and other receivables (net of allowance of $20,480 and $18,899, respectively)	327,755		389,240
Short-term finance receivables (net of allowance of $17,866 and $18,012, respectively)	551,061		568,050
Inventories	63,680		65,845
Current income taxes	44,288		23,219
Other current assets and prepayments	124,394		120,145


Total current assets	1,808,105		2,106,923
Property, plant and equipment, net	405,226		391,280
Rental property and equipment, net	37,708		38,435
Long-term finance receivables (net of allowance of $17,608 and $17,857 respectively)	597,012		605,292
Goodwill	1,144,064		1,152,285
Intangible assets, net	152,265		159,839
Operating lease assets	196,843		201,916
Noncurrent income taxes	68,732		72,653
Other assets (includes $383,214 and $355,799, respectively, reported at fair value)	531,226		491,514
Total assets	$	4,941,181	$	5,220,137

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	820,286	$	880,616
Customer deposits at Pitney Bowes Bank	589,406		617,200
Current operating lease liabilities	39,587		39,182
Current portion of long-term debt	19,972		216,032
Advance billings	118,166		114,550
Current income taxes	6,839		2,880


Total current liabilities	1,594,256		1,870,460
Long-term debt	2,418,885		2,348,361
Deferred taxes on income	282,192		279,451
Tax uncertainties and other income tax liabilities	37,936		38,163
Noncurrent operating lease liabilities	174,798		180,292
Other noncurrent liabilities	413,951		437,015
Total liabilities	4,922,018		5,153,742

Commitments and contingencies (See Note 14)	0		0

Stockholders’ equity:
Common stock, $1 par value (480,000,000 shares authorized; 323,337,912 shares issued)	323,338		323,338
Additional paid-in capital	15,269		68,502
Retained earnings	5,161,029		5,201,195
Accumulated other comprehensive loss	(847,538)		(839,131)
Treasury stock, at cost (149,600,577 and 151,362,724 shares, respectively)	(4,632,935)		(4,687,509)
Total stockholders’ equity	19,163		66,395
Total liabilities and stockholders’ equity	$	4,941,181	$	5,220,137

June 30, 2020 December 31, 2019
ASSETS

Current assets:

Cash and cash equivalents $ 862,897
$ 924,442
Short-term investments (includes $28,221 and $35,879, respectively, reported at fair value) 153,221
115,879
Accounts and other receivables (net of allowance of $32,474 and $17,830, respectively) 391,748
373,471
Short-term finance receivables (net of allowance of $20,999 and $12,556, respectively) 555,196
629,643
Inventories 73,653
68,251
Current income taxes 1,893
5,565
Other current assets and prepayments 121,924
101,601
Assets of discontinued operations —
17,229
Total current assets 2,160,532
2,236,081
Property, plant and equipment, net 375,465
376,177
Rental property and equipment, net 40,875
41,225
Long-term finance receivables (net of allowance of $17,115 and $7,095 respectively) 583,839
625,487
Goodwill 1,132,785
1,324,179
Intangible assets, net 175,460
190,640
Operating lease assets 199,162
200,752
Noncurrent income taxes 68,449
71,903
Other assets (includes $264,500 and $230,442, respectively, reported at fair value) 379,611
400,456
Total assets $ 5,116,178
$ 5,466,900

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:

Accounts payable and accrued liabilities $ 732,048
$ 793,690
Customer deposits at Pitney Bowes Bank 613,449
591,118
Current operating lease liabilities 35,432
36,060
Current portion of long-term debt 163,257
20,108
Advance billings 122,606
101,920
Current income taxes 11,723
17,083
Liabilities of discontinued operations —
9,713
Total current liabilities 1,678,515
1,569,692
Long-term debt 2,553,490
2,719,614
Deferred taxes on income 270,376
274,435
Tax uncertainties and other income tax liabilities 35,928
38,834
Noncurrent operating lease liabilities 177,901
177,711
Other noncurrent liabilities 355,388
400,518
Total liabilities 5,071,598
5,180,804

Commitments and contingencies (See Note 14)

Stockholders’ equity:
Common stock, $1 par value (480,000,000 shares authorized; 323,337,912 shares issued) 323,338
323,338
Additional paid-in capital 68,498
98,748
Retained earnings 5,188,119
5,438,930
Accumulated other comprehensive loss (836,262 ) (840,143 )
Treasury stock, at cost (151,737,399 and 152,888,969 shares, respectively) (4,699,113 ) (4,734,777 )
Total stockholders’ equity 44,580
286,096
Total liabilities and stockholders’ equity $ 5,116,178
$ 5,466,900

See Notes to Condensed Consolidated Financial Statements

PITNEY BOWES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in thousands)


	Three Months Ended March 31,
	2021		2020
Cash flows from operating activities:
Net loss	$	(31,541)	$	(208,483)
Loss (income) from discontinued operations, net of tax	3,886		(10,064)
Restructuring payments	(3,955)		(6,047)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation and amortization	39,594		40,719
Allowance for credit losses	3,992		15,926
Stock-based compensation	5,221		1,521
Restructuring charges	2,889		3,817
Amortization of debt fees	2,644		2,300
Goodwill impairment	0		198,169
Loss on debt refinancing	51,394		36,987



Changes in operating assets and liabilities, net of acquisitions/divestitures:
Accounts and other receivables	57,642		7,182
Finance receivables	27,714		17,772
Inventories	1,900		(4,815)
Other current assets and prepayments	(7,153)		(7,969)
Accounts payable and accrued liabilities	(54,022)		(104,556)
Current and noncurrent income taxes	(17,291)		10,797
Advance billings	4,267		(4,148)
Pension and retiree medical liabilities	(24,775)		(28,961)
Other, net	3,518		10,303
Net cash from operating activities - continuing operations	65,924		(29,550)
Net cash from operating activities - discontinued operations	0		(37,805)
Net cash from operating activities	65,924		(67,355)
Cash flows from investing activities:
Capital expenditures	(43,328)		(25,778)
Purchases of investment securities	(64,473)		(107,312)
Proceeds from sales/maturities of investment securities	28,008		104,222
Net investment in loan receivables	(7,316)		1,071

Acquisitions, net of cash acquired	0		(1,281)
Other investing activities	0		8,081
Net cash from investing activities - continuing operations	(87,109)		(20,997)
Net cash from investing activities - discontinued operations	0		(2,502)
Net cash from investing activities	(87,109)		(23,499)
Cash flows from financing activities:

Proceeds from the issuance of debt, net of discount	1,195,500		816,544
Principal payments of debt	(1,327,315)		(932,600)
Premiums and fees paid to refinance debt	(44,418)		(32,645)
Dividends paid to stockholders	(8,625)		(8,523)
Decrease in customer deposits at Pitney Bowes Bank	(27,794)		(888)

Other financing activities	(5,648)		(2,372)
Net cash from financing activities	(218,300)		(160,484)
Effect of exchange rate changes on cash and cash equivalents	(1,238)		(10,032)
Change in cash and cash equivalents	(240,723)		(261,370)
Cash and cash equivalents at beginning of period	921,450		924,442


Cash and cash equivalents at end of period	$	680,727	$	663,072

Six Months Ended June 30,
2020 2019
Cash flows from operating activities:

Net (loss) income $ (211,812 ) $ 21,038
(Income) loss from discontinued operations, net of tax (7,032 ) 5,729
Restructuring payments (11,365 ) (13,005 )
Adjustments to reconcile net loss to net cash provided by operating activities:

Restructuring charges and asset impairments 8,739
9,599
Loss on disposition of businesses —
17,683
Gain on sale of equity investment (11,908 ) —
Loss on extinguishment of debt 36,987
—
Depreciation and amortization 81,787
77,977
Goodwill impairment 198,169
—
Stock-based compensation 6,950
9,165
Allowance for credit losses 27,941
14,707
Amortization of debt fees 5,054
4,924
Changes in operating assets and liabilities, net of acquisitions/divestitures:

(Increase) decrease in accounts receivable (49,403 ) 18,565
Decrease in finance receivables 84,342
34,984
Increase in inventories (6,306 ) (10,881 )
Increase in other current assets and prepayments (24,067 ) (33,476 )
Decrease in accounts payable and accrued liabilities (25,168 ) (53,885 )
Increase in current and noncurrent income taxes 29,959
663
Increase (decrease) in advance billings 21,402
(941 )
Decrease in pension and retiree medical liabilities (24,164 ) (22,772 )
Other, net (4,873 ) 1,174
   Net cash provided by operating activities - continuing operations 125,232
81,248
   Net cash (used in) provided by operating activities - discontinued operations (38,423 ) 5,534
   Net cash provided by operating activities 86,809
86,782
Cash flows from investing activities:

Purchases of available-for-sale securities (115,565 ) (6,391 )
Proceeds from sales/maturities of available-for-sale securities 94,425
54,964
Net activity from short-term and other investments (44,035 ) (1,608 )
Capital expenditures (59,954 ) (59,187 )
Acquisitions, net of cash acquired (6,608 ) (4,882 )
Sale of other investments (See Note 8) 58,248
—
Increase (decrease) in customer deposits at Pitney Bowes Bank 22,331
(8,316 )
Other investing activities (885 ) (8,591 )
   Net cash used in investing activities - continuing operations (52,043 ) (34,011 )
   Net cash used in investing activities - discontinued operations (2,502 ) (2,140 )
   Net cash used in investing activities (54,545 ) (36,151 )
Cash flows from financing activities:

Increase in short-term borrowings 100,000
—
Proceeds from the issuance of long-term debt 816,544
—
Principal payments of long-term debt (948,224 ) (25,087 )
Premiums and fees paid to extinguish debt (32,645 ) —
Dividends paid to stockholders (17,099 ) (18,346 )
Common stock repurchases —
(100,000 )
Other financing activities (3,174 ) (3,337 )
   Net cash used in financing activities (84,598 ) (146,770 )
Effect of exchange rate changes on cash and cash equivalents (9,211 ) (81 )
Change in cash and cash equivalents (61,545 ) (96,220 )
Cash and cash equivalents at beginning of period 924,442
867,262
Cash and cash equivalents at end of period $ 862,897
$ 771,042

Cash interest paid $ 82,732
$ 78,280
Cash income tax payments, net of refunds $ 12,176
$ 17,348

See Notes to Condensed Consolidated Financial Statements

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) is a global technology company providing commerce solutions that power billions of transactions. Clients around the world rely on the accuracy and precision delivered by our equipment, solutions, analytics, and application programming interface technology in the areas of ecommerce fulfillment, shipping and returns, cross-border ecommerce, office mailing and shipping, presort services and financing. ~~Pitney Bowes Inc. was incorporated in the state of Delaware in 1920.~~ For more information about us, our products, services and solutions, visit www.pitneybowes.com.

Basis of Presentation

The accompanying unaudited ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and the instructions to Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In addition, the December 31, ~~2019~~2020 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, ~~2020~~,2021, particularly in light of the ~~novel~~ coronavirus pandemic (COVID-19) and its ~~effects~~effect on ~~domestic and~~ global businesses and economies. 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, ~~2019 (2019~~2020 (2020 Annual Report). ~~Certain prior year amounts~~

In the fourth quarter 2020, we determined that based on their nature, certain cash flows from loan receivables classified as cash flows from operating activities should have been ~~reclassified to conform~~classified as investment in loans receivables within cash flows from investing activities. It was also determined that certain investment purchases and maturities that were previously reported on a net basis should have been reported on a gross basis. Finally, previously reported cash flows from investing activities resulting from changes in customer deposits at the Pitney Bowes Bank (the Bank) are now reported as cash flows from financing activities. These adjustments were not material to the ~~current year presentation.~~previously issued 2020 interim financial statements; however, the cash flow statement for the period ended March 31, 2020 has been revised and the impact on our previously issued interim Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2020 is as follows:


	Three Months Ended March 31, 2020
(unaudited)	As Previously Reported		Adjustments		As Revised
Cash flows from operating activities
Changes in finance receivables	$	18,843	$	(1,071)	$	17,772
Net cash from operating activities: continuing operations	$	(28,479)	$	(1,071)	$	(29,550)
Net cash from operating activities	$	(66,284)	$	(1,071)	$	(67,355)

Cash flows from investing activities
Purchases of investment securities	$	(67,312)	$	(40,000)	$	(107,312)
Proceeds from sales/maturities of investment securities	$	24,102	$	80,120	$	104,222
Net change in short-term and other investing activities	$	48,431	$	(48,431)	$	—
Net investment in loan receivables	$	—	$	1,071	$	1,071
Customer deposits at the Bank	$	(888)	$	888	$	—
Other investing activities	$	(230)	$	8,311	$	8,081
Net cash from investing activities: continuing operations	$	(22,956)	$	1,959	$	(20,997)
Net cash from investing activities	$	(25,458)	$	1,959	$	(23,499)

Cash flows from financing activities
Customer deposits at the Bank	$	—	$	(888)	$	(888)
Net cash from financing activities	$	(159,596)	$	(888)	$	(160,484)

In August 2019, we entered into a definitive agreement to sell our Software Solutions business and recast prior periods to reflect the operating results of the Software Solutions business as discontinued operations. The sale was completedPITNEY BOWES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited; table amounts in ~~December 2019, with the exception of the software business in Australia, which closed in January 2020. See Note 4 for additional information.~~thousands unless otherwise noted, except per share amounts)

Accounts and other receivables includes other receivables of $61 million at June 30, 2020 and $91 million at December 31, 2019. In January 2019, we sold the direct operations and moved to a dealer model in 6 smaller international markets within Sending Technology Solutions (SendTech Solutions). Other receivables includes gross receivables of $24 million related to these direct operations.

Risks and Uncertainties

The effects of COVID-19 on global economies and businesses continues to impact how we conduct business and our operating results, financial position and cash flows. ~~There still~~Its impact on our business remains ~~uncertainty around the severity, duration~~unpredictable and governments' responses to COVID-19, particularly in the United States as parts of the country are experiencing a resurgence in COVID-19 cases and taking actions to modify re-opening plans. Accordingly,accordingly, we are not able to reasonably estimate the full extent of the impact of ~~the pandemic~~COVID-19 on our operating results, financial position and liquidity for the remainder of the year. Actual results could differ significantly from our estimates and assumptions, possibly resulting in additional impairments or other charges in future reporting periods.

We assessed certain accounting matters that require the use of estimates, assumptions and consideration of forecasted financial information in context with the known and projected future impacts of COVID-19. The most significant impacts are included below.

The determination of our provision for credit losses is now impacted by changes in forecasted economic conditions (see Accounting Pronouncements Adopted in 2020 below). The impact of COVID-19 on global economies and businesses resulted in an increased probability of recessionary conditions, delinquency rates and business bankruptcy. As a result, our credit loss provision for the three and six months ended June 30, 2020 was $12 million and $28 million compared to $4 million and $15 million for the three and six months ended June 30, 2019.

At December 31, 2019, the fair value of our Global Ecommerce business exceeded its carrying value by less than 20%. The determination of fair value is based on a number of estimates and assumptions, including, but not limed to, projected revenue growth, profitability and cash flows. During the first quarter of 2020, our Global Ecommerce business experienced weaker than expected performance in part due to the macroeconomic conditions resulting from COVID-19. As a result, we evaluated the Global Ecommerce goodwill for impairment and recorded a non-cash, pre-tax goodwill impairment charge of $198 million in the first quarter of 2020 (see Note 8 for additional information).

~~PITNEY BOWES INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)~~

Accounting Pronouncements Adopted in ~~2020~~

~~Effective January 1, 2020, we adopted Accounting Standards Update (ASU) 2016-13,~~ ~~Financial Instruments - Credit Losses~~. We adopted this standard using the modified retrospective transition approach with a cumulative effect adjustment to retained earnings. The adoption of the standard resulted in an increase in the opening reserve balance for Accounts and other receivables of $15 million and the opening reserve balance for finance receivables of $10 million and a net reduction to retained earnings of $22 million. The ASU applies to financial assets measured at amortized cost, including finance receivables, trade and other receivables and investments in debt securities classified as available-for-sale and held-to-maturity. The ASU replaces the current incurred loss impairment model that recognizes losses when a probable threshold is met with a requirement to recognize lifetime expected credit losses immediately when a financial asset is originated or purchased. The models to estimate credit losses are required to be based on historical loss experience, current conditions, reasonable and supportable forecasts and current economic outlook.

Activity in the allowance for credit losses for accounts and other receivables for the six months ended June 30, 2020 is presented below. See Note 7 for additional information pertaining to our finance receivables.

Balance at December 31, 2019 Cumulative effect of accounting change Amounts charged to expense Write-offs, recoveries and currency impact
Balance at
June 30, 2020
Allowance for credit losses $ 17,830
$ 15,336
$ 12,692
$ (13,384 ) $ 32,474

~~Accounts receivable greater than 365 days past due, subject to certain exceptions, are written off against the allowance, although collection efforts may continue.~~

~~Accounting Pronouncements Not Yet Adopted~~2021

In ~~December 2019, the FASB issued~~January 2021 we adopted ASU 2019-12, Simplifying the Accounting for Income Taxes. The ASU simplifies the accounting for income taxes by removing certain exceptions to the general principles and also clarifies and amends existing guidance. ~~This standard is effective beginning January 1, 2021, with early~~The adoption ~~permitted. We do not expect~~of this standard todid not have a material impact on our consolidated financial statements.

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 the ASU is intended to provide temporary optional expedients and exceptions to U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. The ~~transition to new reference interest rates will require certain contracts to be modified and the ASU is intended to mitigate the effects of this transition. The~~ accommodations provided by the ASU are effective ~~as of March 12, 2020~~ through December 31, 2022 and may be applied at the beginning of any interim period within that time frame. We are currently assessing the impact this standard will have on our consolidated financial statements.

PITNEY BOWES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)

2. Revenue

Disaggregated Revenue

The following tables disaggregate our revenue by source and timing of recognition:


	Three Months Ended March 31, 2021
	Global Ecommerce		Presort Services		SendTech Solutions		Revenue from products and services		Revenue from leasing transactions and financing		Total consolidated revenue
Major products/service lines
Business services	$	413,086	$	143,126	$	14,242	$	570,454	$	0	$	570,454
Support services	0		0		118,697		118,697		0		118,697
Financing	0		0		0		0		77,812		77,812
Equipment sales	0		0		19,118		19,118		67,685		86,803
Supplies	0		0		42,224		42,224		0		42,224
Rentals	0		0		0		0		19,207		19,207
Subtotal	413,086		143,126		194,281		750,493		$	164,704	$	915,197

Revenue from leasing transactions and financing
Financing	0		0		77,812		77,812
Equipment sales	0		0		67,685		67,685
Rentals	0		0		19,207		19,207
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	$	0	$	0	$	77,538	$	77,538
Products/services transferred over time	413,086		143,126		116,743		672,955
Total	$	413,086	$	143,126	$	194,281	$	750,493

Three Months Ended June 30, 2020
Global Ecommerce Presort Services SendTech Solutions Revenue from products and services Revenue from leasing transactions and financing Total consolidated revenue
Major products/service lines
Business services $ 398,453
$ 118,127
$ 12,410
$ 528,990
$ —
$ 528,990
Support services —
—
113,786
113,786
—
113,786
Financing —
—
—
—
85,462
85,462
Equipment sales —
—
14,492
14,492
43,345
57,837
Supplies —
—
32,773
32,773
—
32,773
Rentals —
—
—
—
18,644
18,644
Subtotal 398,453
118,127
173,461
690,041
$ 147,451
$ 837,492

Revenue from leasing transactions and financing
Financing —
—
85,462
85,462

Equipment sales —
—
43,345
43,345

Rentals —
—
18,644
18,644

Total revenue $ 398,453
$ 118,127
$ 320,912
$ 837,492

Timing of revenue recognition from products and services
Products/services transferred at a point in time $ —
$ —
$ 58,750
$ 58,750

Products/services transferred over time 398,453
118,127
114,711
631,291

Total $ 398,453
$ 118,127
$ 173,461
$ 690,041


	Three Months Ended March 31, 2020
	Global Ecommerce		Presort Services		SendTech Solutions		Revenue from products and services		Revenue from leasing transactions and financing		Total consolidated revenue
Major products/service lines
Business services	$	292,323	$	140,720	$	11,336	$	444,379	$	0	$	444,379
Support services	0		0		122,015		122,015		0		122,015
Financing	0		0		0		0		89,078		89,078
Equipment sales	0		0		17,130		17,130		59,143		76,273
Supplies	0		0		45,709		45,709		0		45,709
Rentals	0		0		0		0		18,814		18,814
Subtotal	292,323		140,720		196,190		629,233		$	167,035	$	796,268

Revenue from leasing transactions and financing
Financing	0		0		89,078		89,078
Equipment sales	0		0		59,143		59,143
Rentals	0		0		18,814		18,814
Total revenue	$	292,323	$	140,720	$	363,225	$	796,268

Timing of revenue recognition from products and services
Products/services transferred at a point in time	$	0	$	0	$	78,374	$	78,374
Products/services transferred over time	292,323		140,720		117,816		550,859
Total	$	292,323	$	140,720	$	196,190	$	629,233

Three Months Ended June 30, 2019
Global Ecommerce Presort Services SendTech Solutions Revenue from products and services Revenue from leasing transactions and financing Total consolidated revenue
Major products/service lines
Business services $ 282,319
$ 128,138
$ 7,506
$ 417,963
$ —
$ 417,963
Support services —
—
127,705
127,705
—
127,705
Financing —
—
—
—
92,419
92,419
Equipment sales —
—
19,384
19,384
66,167
85,551
Supplies —
—
46,490
46,490
—
46,490
Rentals —
—
—
—
18,445
18,445
Subtotal 282,319
128,138
201,085
611,542
$ 177,031
$ 788,573

Revenue from leasing transactions and financing
Financing —
—
92,419
92,419

Equipment sales —
—
66,167
66,167

Rentals —
—
18,445
18,445

Total revenue $ 282,319
$ 128,138
$ 378,116
$ 788,573

Timing of revenue recognition from products and services
Products/services transferred at a point in time $ —
$ —
$ 82,790
$ 82,790

Products/services transferred over time 282,319
128,138
118,295
528,752

Total $ 282,319
$ 128,138
$ 201,085
$ 611,542

PITNEY BOWES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)

Six Months Ended June 30, 2020
Global Ecommerce Presort Services SendTech Solutions Revenue from products and services Revenue from leasing transactions and financing Total consolidated revenue
Major products/service lines
Business services $ 690,776
$ 258,847
$ 23,746
$ 973,369
$ —
$ 973,369
Support services —
—
235,801
235,801
—
235,801
Financing —
—
—
—
174,540
174,540
Equipment sales —
—
31,621
31,621
102,489
134,110
Supplies —
—
78,482
78,482
—
78,482
Rentals —
—
—
—
37,458
37,458
Subtotal 690,776
258,847
369,650
1,319,273
$ 314,487
$ 1,633,760

Revenue from leasing transactions and financing
Financing —
—
174,540
174,540

Equipment sales —
—
102,489
102,489

Rentals —
—
37,458
37,458

Total revenue $ 690,776
$ 258,847
$ 684,137
$ 1,633,760

Timing of revenue recognition from products and services
Products/services transferred at a point in time $ —
$ —
$ 137,124
$ 137,124

Products/services transferred over time 690,776
258,847
232,526
1,182,149

Total $ 690,776
$ 258,847
$ 369,650
$ 1,319,273

Six Months Ended June 30, 2019
Global Ecommerce Presort Services SendTech Solutions Revenue from products and services Revenue from leasing transactions and financing Total consolidated revenue
Major products/service lines
Business services $ 548,573
$ 262,985
$ 12,950
$ 824,508
$ —
$ 824,508
Support services —
—
256,304
256,304
—
256,304
Financing —
—
—
—
189,462
189,462
Equipment sales —
—
40,677
40,677
134,661
175,338
Supplies —
—
97,443
97,443
—
97,443
Rentals —
—
—
—
40,602
40,602
Subtotal 548,573
262,985
407,374
1,218,932
$ 364,725
$ 1,583,657

Revenue from leasing transactions and financing
Financing —
—
189,462
189,462

Equipment sales —
—
134,661
134,661

Rentals —
—
40,602
40,602

Total revenue $ 548,573
$ 262,985
$ 772,099
$ 1,583,657

Timing of revenue recognition from products and services
Products/services transferred at a point in time $ —
$ —
$ 169,666
$ 169,666

Products/services transferred over time 548,573
262,985
237,708
1,049,266

Total $ 548,573
$ 262,985
$ 407,374
$ 1,218,932

~~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:

Business services includes providing mail processing services, shipping subscription solutions, fulfillment, delivery and return services and cross-border solutions. Revenue for shipping subscription solutions is recognized ratably over the contract period as the client obtains equal benefit from these services through the period. Revenue for mail processing services, fulfillment, delivery and return services and cross-border solutions is recognized over time asusing an output method based on the number of parcels or mail pieces either processed or delivered, depending on the service type, since that measure best depicts the value of goods and services ~~are provided and revenue for shipping subscription solutions is recognized ratably~~transferred to the client over the contract period. Contract terms for these services range from one to five years followed by annual renewal periods.

Support services includes providing maintenance, professional and subscription services for our mailing equipment and professional services for our ~~shipping solutions.~~digital delivery services. 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, excluding sales-type leases, generally includes the sale of mailing and shipping ~~equipment, excluding sales-type leases.~~equipment. We recognize revenue upon delivery for self-install equipment and upon acceptance or installation for other equipment. We provide a warranty that our equipment is free of defects and meets stated specifications. The warranty is not considered a separate performance obligation.

Supplies revenue is recognized upon delivery.

Revenue from leasing transactions and financing includes revenue from sales-type ~~leases,~~and operating leases, finance income, late fees and ~~late fees.~~

investment income, gains and losses at Pitney Bowes Bank.

Advance Billings from Contracts with Customers


	Balance sheet location	June 30, 2020		December 31, 2019		Increase/ (decrease)				Balance sheet location	March 31, 2021		December 31, 2020		Increase/ (decrease)
Advance billings, current	Advance billings	$	113,799	$	92,464	$	21,335		Advance billings, current	Advance billings	$	110,786	$	106,498	$	4,288
Advance billings, noncurrent	Other noncurrent liabilities	$	1,102	$	1,245	$	(143	)	Advance billings, noncurrent	Other noncurrent liabilities	$	1,341	$	1,277	$	64

Advance billings are recorded when cash payments are due in advance of our performance. Revenue is recognized ratably over the contract term. Items in advance billings primarily relate to support services on mailing equipment. ~~Advance billings at both June 30, 2020 and December 31, 2019 also includes $9 million from leasing transactions.~~

~~The net increase in advance billings at June 30, 2020 is due to new advance billings recognized during the period in excess of revenue recognized.~~ Revenue recognized during the period includes ~~$75~~$74 million of advance billings at the beginning of the period. Advance billings, current at March 31, 2021 and December 31, 2020 also includes $7 million and $8 million, respectively, from leasing transactions.

Future Performance Obligations

Future performance obligations include revenue streams bundled with our leasing contracts, primarily maintenance and subscription services. The transaction prices allocated to future performance obligations will be recognized as follows:

Remainder of 2020 2021 2022-2025 Total
SendTech Solutions $ 146,357
$ 252,289
$ 346,874
$ 745,520


	Remainder of 2021		2022		2023-2026		Total
SendTech Solutions	$	215,628	$	227,979	$	272,008	$	715,615

The table above does not include revenue related to performance obligations for contracts with terms less than 12 months and expected consideration for those performance obligations where revenue is recognized based on the amount billable to the customer.

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. Global Ecommerce and Presort Services comprise the Commerce Services reporting group.~~Sending Technology Solutions (SendTech Solutions). The principal products and services of each reportable segment are as follows:

Global Ecommerce: Includes the revenue and related expenses from ~~products~~domestic parcel services, cross-border solutions and ~~services that facilitate domestic retail and ecommerce shipping solutions, including fulfillment and returns, and global cross-border ecommerce transactions.~~digital delivery services.

Presort Services: Includes revenue and related expenses from sortation services to qualify large volumes of First Class Mail, Marketing Mail, ~~and~~ Marketing Mail Flats and Bound Printed Matter for postal worksharing discounts.

SendTech Solutions: Includes the revenue and related expenses from physical and digital mailing and shipping technology solutions, financing, services, supplies and other applications to help simplify and save on the sending, tracking and receiving of letters, parcels and flats.

Management measures segment profitability and performance using 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, general corporate expenses, restructuring charges, asset impairment charges and other items not allocated to a particular business segment. Management believes that it provides investors a useful measure of operating performance and underlying trends of the 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 ~~(loss) income.~~loss.

Revenue
Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Global Ecommerce $ 398,453
$ 282,319
$ 690,776
$ 548,573
Presort Services 118,127
128,138
258,847
262,985
Commerce Services 516,580
410,457
949,623
811,558
SendTech Solutions 320,912
378,116
684,137
772,099
Total revenue $ 837,492
$ 788,573
$ 1,633,760
$ 1,583,657


		Revenue
	Three Months Ended March 31,
		2021		2020
Global Ecommerce		$	413,086	$	292,323
Presort Services		143,126		140,720
SendTech Solutions		358,985		363,225
Total revenue		$	915,197	$	796,268


		EBIT
	Three Months Ended March 31,
		2021		2020
Global Ecommerce		$	(26,376)	$	(29,475)
Presort Services		19,051		15,695
SendTech Solutions		114,470		106,562
Total segment EBIT		107,145		92,782
Reconciliation of Segment EBIT to net loss:
Unallocated corporate expenses		(57,465)		(43,722)
Restructuring charges		(2,889)		(3,817)
Interest expense, net		(37,044)		(38,372)

Goodwill impairment		0		(198,169)
Loss on debt refinancing		(51,394)		(36,987)

Transaction costs		0		(292)
Benefit for income taxes		13,992		10,030
Loss from continuing operations		(27,655)		(218,547)
(Loss) income from discontinued operations, net of tax		(3,886)		10,064
Net loss		$	(31,541)	$	(208,483)

PITNEY BOWES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)

EBIT
Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Global Ecommerce $ (18,894 ) $ (15,576 ) $ (48,369 ) $ (30,176 )
Presort Services 12,582
15,462
28,277
30,528
Commerce Services (6,312 ) (114 ) (20,092 ) 352
SendTech Solutions 104,268
124,738
210,830
247,141
Total segment EBIT 97,956
124,624
190,738
247,493
Reconciliation of Segment EBIT to net (loss) income:

Unallocated corporate expenses (49,489 ) (45,048 ) (93,211 ) (102,006 )
Restructuring charges and asset impairments (4,922 ) (5,899 ) (8,739 ) (9,599 )
Interest expense, net (38,385 ) (39,062 ) (76,757 ) (78,028 )
Gain on sale of equity investment 11,908
—
11,908
—
Goodwill impairment —
—
(198,169 ) —
Loss on extinguishment of debt —
—
(36,987 ) —
Loss on dispositions and transaction costs (349 ) (1,581 ) (641 ) (19,549 )
Provision for income taxes (17,016 ) (3,724 ) (6,986 ) (11,544 )
(Loss) income from continuing operations (297 ) 29,310
(218,844 ) 26,767
(Loss) income from discontinued operations, net of tax (3,032 ) (5,613 ) 7,032
(5,729 )
Net (loss) income $ (3,329 ) $ 23,697
$ (211,812 ) $ 21,038

During the three and six months ended June 30, 2020, we received insurance proceeds of $5 million and $9 million, respectively, related to the October 2019 malware attack, a portion of which has been allocated to the business segments.

4. Discontinued Operations

Discontinued operations for the quarter ended March 31, 2021 includes a tax charge related to the sale of our Production Mail business in 2018. Discontinued operations for the quarter ended March 31, 2020 primarily includes the ~~Software Solutions business, sold in December 2019, with~~gain on the ~~exception~~sale of ~~the~~our software business in ~~Australia, which closed in January~~Australia.

5. Earnings per Share (EPS)


	Three Months Ended March 31,
		2021		2020
Numerator:
Loss from continuing operations		$	(27,655)	$	(218,547)
(Loss) income from discontinued operations, net of tax		(3,886)		10,064


Net loss		$	(31,541)	$	(208,483)
Denominator:
Weighted-average shares used in basic EPS		172,856		170,912
Dilutive effect of common stock equivalents (1)		0		0
Weighted-average shares used in diluted EPS		172,856		170,912
Basic loss per share (2):
Continuing operations		$	(0.16)	$	(1.28)
Discontinued operations		(0.02)		0.06
Net loss		$	(0.18)	$	(1.22)
Diluted loss per share (2):
Continuing operations		$	(0.16)	$	(1.28)
Discontinued operations		(0.02)		0.06
Net loss		$	(0.18)	$	(1.22)

Common stock equivalents excluded from calculation of diluted earnings per share because their impact would be anti-dilutive:		6,440		17,617

(1) Due to the net loss for the three months ended March 31, 2021 and 2020, common stock equivalents of 5,804 and 1,554, respectively, were also excluded from the ~~Production Mail business, sold in July 2018. Selected financial information~~calculation of ~~discontinued operations~~diluted earnings per share as the impact would have been anti-dilutive.

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

6. Inventories

Inventories are stated at the lower of cost or market. Cost is ~~as follows:~~determined on the last-in, first-out (LIFO) basis, the first-in, first-out (FIFO) basis or average cost. Inventories consisted of the following:


	March 31, 2021		December 31, 2020
Raw materials	$	17,879	$	16,570
Supplies and service parts	25,749		24,061
Finished products	25,687		30,849
Inventory at FIFO cost	69,315		71,480
Excess of FIFO cost over LIFO cost	(5,635)		(5,635)
Total inventory, net	$	63,680	$	65,845

Three Months Ended June 30, 2020 Three Months Ended June 30, 2019
Software Solutions Production Mail Total Software Solutions Production Mail Total
Revenue $ —
$ —
$ —
$ 72,206
$ —
$ 72,206

Earnings from discontinued operations $ —
$ —
$ —
$ 1,342
$ —
$ 1,342
(Loss) gain on sale (3,416 ) 245
(3,171 ) —
(8,589 ) (8,589 )
(Loss) income from discontinued operations before taxes $ (3,416 ) $ 245
(3,171 ) $ 1,342
$ (8,589 ) (7,247 )
Tax benefit (139 ) (1,634 )
Loss from discontinued operations, net of tax $ (3,032 ) $ (5,613 )

PITNEY BOWES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)

7. Finance Assets and Lessor Operating Leases

Finance Assets

Six Months Ended June 30, 2020 Six Months Ended June 30, 2019
Software Solutions Production Mail Total Software Solutions Production Mail Total
Revenue $ —
$ —
$ —
$ 145,524
$ —
$ 145,524

Earnings (loss) from discontinued operations $ —
$ —
$ —
$ 2,938
$ (663 ) $ 2,275
Gain (loss) on sale 6,869
(167 ) 6,702
—
(9,257 ) (9,257 )
Income (loss) from discontinued operations before taxes $ 6,869
$ (167 ) 6,702
$ 2,938
$ (9,920 ) (6,982 )
Tax benefit (330 ) (1,253 )
Income (loss) from discontinued operations, net of tax $ 7,032
$ (5,729 )
Finance receivables are comprised of sales-type lease receivables and unsecured revolving loan receivables. Sales-type lease receivables are generally due in installments over periods ranging from three to five years. Loan receivables arise primarily from financing services offered to our clients for postage and supplies and are generally due monthly; however, clients may rollover outstanding balances. Interest is recognized on loan receivables using the effective interest method. Annual fees are recognized ratably over the annual period covered and client acquisition costs are expensed as incurred.

~~Assets of discontinued operations and liabilities of discontinued operations at December 31, 2019 includes the assets and liabilities~~Finance receivables consisted of the ~~software business in Australia.~~following:


	March 31, 2021						December 31, 2020
	North America		International		Total		North America		International		Total
Sales-type lease receivables
Gross finance receivables	$	975,272	$	192,273	$	1,167,545	$	994,985	$	211,944	$	1,206,929
Unguaranteed residual values	37,463		11,667		49,130		36,405		12,140		48,545
Unearned income	(265,497)		(60,413)		(325,910)		(275,359)		(61,686)		(337,045)
Allowance for credit losses	(22,998)		(5,606)		(28,604)		(22,917)		(6,006)		(28,923)
Net investment in sales-type lease receivables	724,240		137,921		862,161		733,114		156,392		889,506
Loan receivables
Loan receivables	269,797		22,985		292,782		268,690		22,092		290,782
Allowance for credit losses	(6,407)		(463)		(6,870)		(6,484)		(462)		(6,946)
Net investment in loan receivables	263,390		22,522		285,912		262,206		21,630		283,836
Net investment in finance receivables	$	987,630	$	160,443	$	1,148,073	$	995,320	$	178,022	$	1,173,342

~~5. Earnings per Share (EPS)~~

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Numerator:

(Loss) income from continuing operations $ (297 ) $ 29,310
$ (218,844 ) $ 26,767
(Loss) income from discontinued operations, net of tax (3,032 ) (5,613 ) 7,032
(5,729 )
Net (loss) income (numerator for diluted EPS) (3,329 ) 23,697
(211,812 ) 21,038
Less: Preference stock dividend —
—
—
8
(Loss) income attributable to common stockholders (numerator for basic EPS) $ (3,329 ) $ 23,697
$ (211,812 ) $ 21,030
Denominator:

Weighted-average shares used in basic EPS 171,478
177,192
171,167
181,446
Dilutive effect of common stock equivalents ⁽¹⁾
—
1,089
—
1,192
Weighted-average shares used in diluted EPS 171,478
178,281
171,167
182,638
Basic earnings (loss) per share ⁽²⁾:

Continuing operations $ —
$ 0.17
$ (1.28 ) $ 0.15
Discontinued operations (0.02 ) (0.03 ) 0.04
(0.03 )
Net (loss) income $ (0.02 ) $ 0.13
$ (1.24 ) $ 0.12
Diluted earnings (loss) per share ⁽²⁾:

Continuing operations $ —
$ 0.16
$ (1.28 ) $ 0.15
Discontinued operations (0.02 ) (0.03 ) 0.04
(0.03 )
Net (loss) income $ (0.02 ) $ 0.13
$ (1.24 ) $ 0.12

Common stock equivalents excluded from calculation of diluted earnings per share because their impact would be anti-dilutive: 19,963
16,297
18,297
16,077


⁽¹⁾	Dilutive effect of common stock equivalents for the three and six months ended June 30, 2020 was 1,019 and 1,190, respectively; however, is not included in the calculation of diluted earnings per share as the Company is reporting a net loss for both periods.


⁽²⁾	~~The sum of the earnings per share amounts may not equal the totals due to rounding.~~

Maturities of gross sales-type lease receivables and gross loan receivables at March 31, 2021 were as follows:


	Sales-type Lease Receivables						Loan Receivables
	North America		International		Total		North America		International		Total
Remaining for year ending December 31, 2021	$	297,596	$	47,488	$	345,084	$	219,009	$	22,985	$	241,994
Year ending December 31, 2022	308,902		65,636		374,538		16,057		0		16,057
Year ending December 31, 2023	204,090		42,223		246,313		10,325		0		10,325
Year ending December 31, 2024	110,774		22,887		133,661		12,722		0		12,722
Year ending December 31, 2025	46,934		10,250		57,184		9,470		0		9,470
Thereafter	6,976		3,789		10,765		2,214		0		2,214
Total	$	975,272	$	192,273	$	1,167,545	$	269,797	$	22,985	$	292,782

PITNEY BOWES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)

~~6. 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. Inventories consisted of the following:

June 30,
2020 December 31,
2019
Raw materials $ 20,021
$ 13,514
Supplies and service parts 22,787
21,840
Finished products 34,681
36,969
Inventory at FIFO cost 77,489
72,323
Excess of FIFO cost over LIFO cost (3,836 ) (4,072 )
Total inventory, net $ 73,653
$ 68,251

~~7. Finance Assets and Lessor Operating Leases~~

~~Finance Assets~~

Finance receivables are comprised of sales-type lease receivables and unsecured revolving loan receivables. Sales-type lease receivables are generally due in monthly, quarterly or semi-annual installments over periods ranging from three to five years. Loan receivables arise primarily from financing services offered to our clients for postage and supplies. Most loan receivables are generally due each month; however, clients may rollover outstanding balances. Interest is recognized on loan receivables using the effective interest method and related annual fees are initially deferred and recognized ratably over the annual period covered. Client acquisition costs are expensed as incurred.

~~Finance receivables consisted of the following:~~

June 30, 2020 December 31, 2019
North America International Total North America International Total
Sales-type lease receivables

Gross finance receivables $ 998,450
$ 196,767
$ 1,195,217
$ 1,055,852
$ 224,202
$ 1,280,054
Unguaranteed residual values 37,742
11,283
49,025
41,934
11,789
53,723
Unearned income (282,027 ) (58,487 ) (340,514 ) (319,281 ) (65,888 ) (385,169 )
Allowance for credit losses (26,603 ) (4,743 ) (31,346 ) (10,920 ) (2,085 ) (13,005 )
Net investment in sales-type lease receivables 727,562
144,820
872,382
767,585
168,018
935,603
Loan receivables

Loan receivables 254,786
18,635
273,421
298,247
27,926
326,173
Allowance for credit losses (6,482 ) (286 ) (6,768 ) (5,906 ) (740 ) (6,646 )
Net investment in loan receivables 248,304
18,349
266,653
292,341
27,186
319,527
Net investment in finance receivables $ 975,866
$ 163,169
$ 1,139,035
$ 1,059,926
$ 195,204
$ 1,255,130

~~PITNEY BOWES INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)~~

~~Maturities of gross sales-type lease receivables and gross loan receivables at June 30, 2020 were as follows:~~

Sales-type Lease Receivables Loan Receivables
North America International Total North America International Total
Remaining for year ending December 31, 2020 $ 220,405
$ 41,451
$ 261,856
$ 216,777
$ 18,635
$ 235,412
Year ending December 31, 2021 336,863
68,465
405,328
12,032
—
12,032
Year ending December 31, 2022 234,552
47,971
282,523
10,414
—
10,414
Year ending December 31, 2023 138,308
26,324
164,632
5,582
—
5,582
Year ending December 31, 2024 58,803
10,403
69,206
6,807
—
6,807
Thereafter 9,519
2,153
11,672
3,174
—
3,174
Total $ 998,450
$ 196,767
$ 1,195,217
$ 254,786
$ 18,635
$ 273,421

Aging of Receivables

The aging of gross finance receivables was as follows:


	March 31, 2021
	Sales-type Lease Receivables				Loan Receivables
	North America		International		North America		International		Total
Past due amounts 0 - 90 days	$	956,358	$	191,298	$	265,004	$	22,812	$	1,435,472
Past due amounts > 90 days	18,914		975		4,793		173		24,855
Total	$	975,272	$	192,273	$	269,797	$	22,985	$	1,460,327
Past due amounts > 90 days
Still accruing interest	$	3,853	$	189	$	1,466	$	66	$	5,574
Not accruing interest	15,061		786		3,327		107		19,281
Total	$	18,914	$	975	$	4,793	$	173	$	24,855

June 30, 2020
Sales-type Lease Receivables Loan Receivables

North
America
International
North
America
International Total
Past due amounts 0 - 90 days $ 974,864
$ 194,055
$ 246,491
$ 18,288
$ 1,433,698
Past due amounts > 90 days 23,586
2,712
8,295
347
34,940
Total $ 998,450
$ 196,767
$ 254,786
$ 18,635
$ 1,468,638
Past due amounts > 90 days

Still accruing interest $ 4,982
$ 1,091
$ 5,205
$ 191
$ 11,469
Not accruing interest 18,604
1,621
3,090
156
23,471
Total $ 23,586
$ 2,712
$ 8,295
$ 347
$ 34,940

December 31, 2019
Sales-type Lease Receivables Loan Receivables

North
America
International
North
America
International Total
Past due amounts 0 - 90 days $ 1,032,912
$ 220,819
$ 294,001
$ 27,697
$ 1,575,429
Past due amounts > 90 days 22,940
3,383
4,246
229
30,798
Total $ 1,055,852
$ 224,202
$ 298,247
$ 27,926
$ 1,606,227
Past due amounts > 90 days

Still accruing interest $ 4,835
$ 1,081
$ 2,094
$ 121
$ 8,131
Not accruing interest 18,105
2,302
2,152
108
22,667
Total $ 22,940
$ 3,383
$ 4,246
$ 229
$ 30,798


	December 31, 2020
	Sales-type Lease Receivables				Loan Receivables
	North America		International		North America		International		Total
Past due amounts 0 - 90 days	$	972,266	$	208,968	$	264,484	$	21,932	$	1,467,650
Past due amounts > 90 days	22,719		2,976		4,206		160		30,061
Total	$	994,985	$	211,944	$	268,690	$	22,092	$	1,497,711
Past due amounts > 90 days
Still accruing interest	$	5,128	$	463	$	1,797	$	59	$	7,447
Not accruing interest	17,591		2,513		2,409		101		22,614
Total	$	22,719	$	2,976	$	4,206	$	160	$	30,061

Allowance for Credit Losses

We estimate an allowance for credit losses based on historical loss experience, the nature of our portfolios, adverse situations that may affect a client's ability to pay, current conditions, ~~reasonable and supportable~~management forecasts and ~~current~~independent economic ~~outlook.~~forecasts. Credit losses are estimated at the portfolio level based on asset type and geographic market. Historical loss experience ~~was~~is based on actual loss rates over the average term of the asset of five years for sales-type lease receivables and three years for loan receivables (including accrued interest). ~~Additionally, we evaluate current conditions and review third-party economic forecasts on a quarterly basis to determine the impact on the allowance for credit losses.~~ The assumptions used in determining an estimate of credit losses are inherently subjective and actual results may differ significantly from estimated reserves. ~~The allowance for credit losses for the six months ended June 30, 2020 considers the current economic conditions and resulting impact on a client's future ability to pay amounts due.~~

~~PITNEY BOWES INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)~~

We establish credit approval limits based on the credit quality of the client and the type of equipment financed. Our policy is to discontinue revenue recognition for lease receivables that are more than 120 days past due and for loan receivables that are more than 90 days past due. We resume revenue recognition 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 monitor delinquency rates and have experienced a slight increase in our delinquencies during this current economic situation.~~ However, 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.

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 finance receivables was as follows:


	Sales-type Lease Receivables				Loan Receivables
	North America		International		North America		International		Total
Balance at January 1, 2021	$	22,917	$	6,006	$	6,484	$	462	$	35,869

Amounts charged to expense	154		61		763		4		982
Write-offs	(1,024)		(371)		(1,833)		(3)		(3,231)
Recoveries	935		29		991		0		1,955
Other	16		(119)		2		0		(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 December 31, 2019	$	10,920	$	2,085	$	5,906	$	740	$	19,651
Cumulative effect of accounting change	9,271		1,750		(1,116)		(402)		9,503
Amounts charged to expense	6,892		1,345		4,006		403		12,646
Write-offs	(1,618)		(248)		(2,058)		(104)		(4,028)
Recoveries	592		31		691		0		1,314
Other	(124)		(80)		(7)		(7)		(218)
Balance at March 31, 2020	$	25,933	$	4,883	$	7,422	$	630	$	38,868

Sales-type Lease Receivables Loan Receivables

North
America
International
North
America
International Total
Balance at December 31, 2019 $ 10,920
$ 2,085
$ 5,906
$ 740
$ 19,651
Cumulative effect of accounting change 9,271
1,750
(1,116 ) (402 ) 9,503
Amounts charged to expense 9,025
1,257
4,758
208
15,248
Write-offs (3,536 ) (386 ) (4,542 ) (297 ) (8,761 )
Recoveries 946
44
1,386
1
2,377
Other (23 ) (7 ) 90
36
96
Balance at June 30, 2020 $ 26,603
$ 4,743
$ 6,482
$ 286
$ 38,114

Sales-type Lease Receivables Loan Receivables

North
America
International
North
America
International Total
Balance at January 1, 2019 $ 10,253
$ 2,355
$ 6,777
$ 837
$ 20,222
Amounts charged to expense 3,660
455
2,329
315
6,759
Write-offs (3,452 ) (533 ) (4,649 ) (451 ) (9,085 )
Recoveries 813
167
1,909
4
2,893
Other 48
(182 ) 8
54
(72 )
Balance at June 30, 2019 $ 11,322
$ 2,262
$ 6,374
$ 759
$ 20,717

The extension of credit and management of credit lines to new and existing clients uses a combination of a client's credit score, where available, and a detailed manual review of their financial condition and payment history or an automated process for certain small dollar applications. 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 ~~in place track~~to ensure that our global strategy is executed, collection resources are allocated appropriately and enhanced tools and processes are implemented as needed.

We use a third party to score the majority of the North America portfolio on a quarterly basis using a 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. ~~A fourth class is shown for accounts that are~~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 ~~scored. Absence~~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 ~~degree~~third-party credit score is used to predict the payment behaviors of ~~risk (low, medium, high), as defined by~~our clients and the ~~third party, refers to the relative risk~~probability that an account ~~may~~will become ~~delinquent in~~greater than 90 days past due during the ~~next 12 months.~~subsequent 12-month period.

•Low risk accounts are companies with very good credit scores and ~~are considered to approximate the top 30%~~a predicted delinquency rate of ~~all commercial borrowers.~~less than 5%.

•Medium risk accounts are companies with average to good credit scores and ~~are considered to approximate the middle 40% of all commercial borrowers.~~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 and are considered to approximate the bottom 30% of all commercial borrowers.~~delinquent. The predicted delinquency rate would be greater than 10%.

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 the gross sales-type lease receivable and loan receivable balances by relative risk class and year of origination based on the relative scores of the accounts within each ~~class.~~class as of March 31, 2021 and December 30, 2020.

Sales Type Lease Receivables Loan Receivables Total
2020 2019 2018 2017 2016 Prior
Low $ 136,197
$ 252,315
$ 199,078
$ 118,201
$ 49,013
$ 19,906
$ 187,311
$ 962,021
Medium 25,754
57,452
45,269
28,693
10,886
5,688
53,748
227,490
High 3,249
6,342
5,295
3,380
1,802
323
4,210
24,601
Not Scored 35,880
82,099
56,596
33,466
15,450
2,883
28,152
254,526
Total $ 201,080
$ 398,208
$ 306,238
$ 183,740
$ 77,151
$ 28,800
$ 273,421
$ 1,468,638

The majority of the Not Scored amounts above is within our International portfolio. 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, and~~as there is no single credit score model that covers all countries. International credit applications below $50 thousand are subjected to an automated review process. All other credit applications are manually reviewed. A manual review includes obtaining client financial information, credit reports and other available financial information. Approximately 80% of credit applications are approved or denied through the automated review process. All other credit applications are manually reviewed by obtaining client financial information, credit reports and other available financial information.

Lease income from sales-type leases was as follows:

Profit recognized at commencement ⁽¹⁾

Profit recognized at commencement (1)

⁽¹⁾ Lease contracts do not include variable lease payments.

The disclosure of total lease income from sales-type leases for the three months ended March 31, 2020 has been revised from $63 million to $84 million. The revision did not have any impact on our Condensed Consolidated Statement of Loss.

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:

Remaining for year ending December 31, 2020 $ 20,222
Year ending December 31, 2021 27,899
Year ending December 31, 2022 10,881
Year ending December 31, 2023 4,899
Year ending December 31, 2024 1,528
Thereafter 200
Total $ 65,629

PITNEY BOWES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)

8. Intangible Assets ~~Goodwill~~ and ~~Other Assets~~Goodwill

Intangible assets consisted of the following:

June 30, 2020 December 31, 2019

Gross
Carrying
Amount

Accumulated
Amortization

Net
Carrying
Amount

Gross
Carrying
Amount

Accumulated
Amortization

Net
Carrying
Amount
Customer relationships $ 268,178
$ (101,688 ) $ 166,490
$ 265,665
$ (88,550 ) $ 177,115
Software & technology 31,600
(23,012 ) 8,588
31,600
(19,999 ) 11,601
Trademarks & other 13,324
(12,942 ) 382
13,324
(11,400 ) 1,924
Total intangible assets $ 313,102
$ (137,642 ) $ 175,460
$ 310,589
$ (119,949 ) $ 190,640

Amortization expense ~~was $9 million~~ for ~~both~~ the three months ended ~~June 30,~~March 31, 2021 and 2020 was $8 million and ~~2019, and $18~~$9 million, ~~for both the six months ended June 30, 2020 and 2019.~~respectively.

Future amortization expense as of ~~June 30, 2020~~March 31, 2021 is shown in the table below. Actual amortization expense may differ due to, among other things, fluctuations in foreign currency exchange rates, impairments, acquisitions and accelerated amortization.

Remaining for year ending December 31, 2020 $ 15,699
Year ending December 31, 2021 30,227
Year ending December 31, 2022 29,281
Year ending December 31, 2023 26,443
Year ending December 31, 2024 26,443
Thereafter 47,367
Total $ 175,460

Changes in the carrying value of goodwill, by reporting segment, are shown in the table below.

December 31, 2019 Impairment Acquisition Currency impact June 30,
2020
Global Ecommerce $ 609,431
$ (198,169 ) $ —
$ —
$ 411,262
Presort Services 212,529
—
8,463
—
220,992
Commerce Services 821,960
(198,169 ) 8,463
—
632,254
SendTech Solutions 502,219
—
—
(1,688 ) 500,531
Total goodwill $ 1,324,179
$ (198,169 ) $ 8,463
$ (1,688 ) $ 1,132,785

During the first quarter of 2020, our Global Ecommerce reporting unit experienced weaker than expected performance, in part due to the macroeconomic conditions resulting from COVID-19. At December 31, 2019, the fair value of our Global Ecommerce business exceeded its carrying value by less than 20%, and the deteriorating macroeconomic conditions and uncertainty brought on by COVID-19 caused us to evaluate the Global Ecommerce goodwill for impairment.

To test the Global Ecommerce goodwill for impairment, we determined the fair value of the Global Ecommerce reporting unit and compared it to the reporting unit's carrying value, including goodwill. We engaged a third-party to assist in the determination of the fair value of the reporting unit. The determination of fair value, and the resulting impairment charge, relied on internal projections developed using numerous estimates and assumptions that are inherently subject to significant uncertainties. These estimates and assumptions included revenue growth, profitability, cash flows, capital spending and other available information. The determination of fair value also incorporated a risk-adjusted discount rate, terminal growth rates and other assumptions that market participants may use. Changes in any of these estimates or assumptions could materially affect the determination of fair value and the associated goodwill impairment charge and could result in an additional impairment charge in the future. These estimates and assumptions are considered Level 3 inputs under the fair value hierarchy.

PITNEY BOWES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)

We determined that the reporting unit's estimated fair value was less than its carrying value and recorded a non-cash, pre-tax goodwill impairment charge of $198 million in the first quarter to reduce the carrying value of the Global Ecommerce reporting unit to its estimated fair value.

During the second quarter of 2020, we surrendered certain company owned life insurance policies and received proceeds of $46 million. We did not record a gain or loss on the surrender; however, the surrender resulted in a tax expense of $12 million (see Note 13 for further information). Also, during the second quarter of 2020, we sold our interest in an equity investment for $12 million and recognized a gain of $12 million.

9. Fair Value Measurements and Derivative Instruments

We measure certain financial assets and liabilities at fair value on a recurring basis. Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure. An entity is required to classify certain assets and liabilities measured at fair value based on the following fair value hierarchy that prioritizes the inputs used to measure fair value:

Level 1 – Unadjusted quoted prices in active markets for identical assets and liabilities.

Level 2 – Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity, may be derived from internally developed methodologies based on management’s best estimate of fair value and that are significant to the fair value of the asset or liability.

Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect its placement within the fair value hierarchy. The following tables show, by level within the fair value hierarchy, our financial assets and liabilities that are accounted for at fair value on a recurring basis.

PITNEY BOWES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)

Investment Securities

The valuation of investment securities is based on the market approach using inputs that are observable, or can be corroborated by observable data, in an active marketplace. The following information relates to our classification ~~into~~within the fair value hierarchy:

•Money Market Funds: Money market funds typically invest in government securities, certificates of deposit, commercial paper and other highly liquid, low risk securities. Money market funds are principally used for overnight deposits and are classified as Level 1 when unadjusted quoted prices in active markets are available and as Level 2 when they are not actively traded on an exchange.

•Equity Securities: Equity securities are comprised of mutual funds investing in U.S. and foreign stocks. These mutual funds are classified as Level 2.

•Commingled Fixed Income Securities: Commingled fixed income securities are comprised of mutual funds that invest in a variety of fixed income securities, including securities of the U.S. government and its agencies, corporate debt, mortgage-backed securities and asset-backed securities. Fair value is based on the value of the underlying investments owned by each fund, minus its liabilities, divided by the number of shares outstanding, as reported by the fund manager. These mutual funds are classified as Level 1 when unadjusted quoted prices in active markets are available and as Level 2 when they are not actively traded on an exchange.

•Government and Related Securities: Debt securities are classified as Level 1 where active, high volume trades for identical securities exist. Valuation adjustments are not applied to these securities. Debt securities are classified as Level 2 where fair value is determined using quoted market prices for similar securities or benchmarking model derived prices to quoted market prices and trade data for identical or comparable securities.

•Corporate Debt Securities: Corporate debt securities are valued using recently executed comparable transactions, market price quotations or bond spreads for the same maturity as the security. These securities are classified as Level 2.

•Mortgage-Backed Securities / Asset-Backed Securities: These securities are valued based on external pricing indices or external price/spread data. These securities are classified as Level 2.

Money market funds typically invest in government securities, certificates of deposit, commercial paper and other highly liquid, low risk securities. Money market funds are principally used for overnight deposits and are classified as Level 1 when unadjusted quoted prices in active markets are available and as Level 2 when they are not actively traded on an exchange.

~~Equity Securities:~~ ~~Equity securities are comprised of mutual funds investing in U.S. and foreign stocks. These mutual funds are classified as Level 2.~~

~~Commingled Fixed Income Securities:~~ Commingled fixed income securities are comprised of mutual funds that invest in a variety of fixed income securities, including securities of the U.S. government and its agencies, corporate debt, mortgage-backed securities and asset-backed securities. Fair value is based on the value of the underlying investments owned by each fund, minus its liabilities, divided by the number of shares outstanding, as reported by the fund manager. These mutual funds are classified as Level 1 when unadjusted quoted prices in active markets are available and as Level 2 when they are not actively traded on an exchange.

~~Government and Related Securities:~~ Debt securities are classified as Level 1 where active, high volume trades for identical securities exist. Valuation adjustments are not applied to these securities. Debt securities are classified as Level 2 where fair value is determined using quoted market prices for similar securities or benchmarking model derived prices to quoted market prices and trade data for identical or comparable securities.

~~Corporate Debt Securities:~~ Corporate debt securities are valued using recently executed comparable transactions, market price quotations or bond spreads for the same maturity as the security. These securities are classified as Level 2.

~~Mortgage-Backed Securities / Asset-Backed Securities:~~ ~~These securities are valued based on external pricing indices or external price/spread data. These securities are classified as Level 2.~~

Derivative Securities

•Foreign Exchange Contracts: The valuation of foreign exchange derivatives is based on 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. These securities are classified as Level 2.

• 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. These securities are classified as Level 2.

Interest Rate Swaps: The valuation of interest rate swaps is based on an income approach using inputs that are observable or that can be derived from, or corroborated by, observable market data. These securities are classified as Level 2.

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

Available-for-sale securities are predominantly held at the Pitney Bowes ~~Bank, whose primary business is to provide financing solutions to clients that rent postage meters and purchase supplies.~~Bank. Investment securities classified as available-for-sale are recorded at fair value with changes in fair value due to market conditions (i.e., interest rates) recorded in accumulated other comprehensive ~~income (AOCI)~~loss (AOCL), and changes in fair value due to credit conditions recorded in earnings. ~~Individual securities are considered impaired when the fair value declines below amortized cost. We use a discounted cash flow model to determine the amount of~~There were no unrealized losses due to credit ~~losses. Unrealized~~ losses ~~recorded during~~charged to earnings through the ~~period due to credit conditions were immaterial.~~three months ended March 31, 2021.

Available-for-sale securities consisted of the following:


	March 31, 2021
	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Government and related securities	$	51,411	$	42	$	(1,377)	$	50,076
Corporate debt securities	69,913		300		(4,263)		65,950
Commingled fixed income securities	1,712		0		(14)		1,698
Mortgage-backed / asset-backed securities	237,827		303		(6,267)		231,863
Total	$	360,863	$	645	$	(11,921)	$	349,587

December 31, 2019
Amortized cost Gross unrealized gains Gross unrealized losses Estimated fair value
Government and related securities $ 80,732
$ 1,358
$ (114 ) $ 81,976
Corporate debt securities 70,426
2,009
(286 ) 72,149
Commingled fixed income securities 1,675
—
(19 ) 1,656
Mortgage-backed / asset-backed securities 65,679
960
(300 ) 66,339
Total $ 218,512
$ 4,327
$ (719 ) $ 222,120

Investment securities in a loss position were as follows:

June 30, 2020 December 31, 2019
Fair Value Gross unrealized losses Fair Value Gross unrealized losses
Less than 12 continuous months $ 46,650
$ 1,192
$ 52,521
$ 583
Greater than 12 continuous months 4,441
111
9,227
136
Total $ 51,091
$ 1,303
$ 61,748
$ 719


	March 31, 2021				December 31, 2020
	Fair Value		Gross unrealized losses		Fair Value		Gross unrealized losses
Less than 12 continuous months	$	312,002	$	11,850	$	132,267	$	1,072
Greater than 12 continuous months	2,294		71		2,369		76
Total	$	314,296	$	11,921	$	134,636	$	1,148

~~Our allowance for credit losses on available-for-sale investment securities was not significant at June 30, 2020.~~ At ~~June 30, 2020, approximately 10%~~March 31, 2021, 34% of ~~total~~the securities in the investment portfolio were in a ~~net~~ loss position. We believe our allowance for credit losses on available-for-sale investment securities is adequate as ~~the~~our investments are primarily in highly liquid U.S. government and agency securities, high grade corporate bonds and municipal bonds. The majority of our ~~investments~~mortgage-backed securities are ~~in short-term, highly liquid investments, high grade corporate securities and~~either guaranteed or supported by the U.S. ~~government securities.~~Government. We have not recognized an impairment on investment securities in an unrealized loss position because we have the ability and intent to hold these securities until recovery of the unrealized losses or ~~expect to~~we receive the stated principal and interest at maturity.

Scheduled maturities of available-for-sale securities at March 31, 2021 were as follows:


	Amortized cost		Estimated fair value
Within 1 year	$	14,398	$	14,401
After 1 year through 5 years	15,241		15,266
After 5 years through 10 years	66,618		63,185
After 10 years	264,606		256,735
Total	$	360,863	$	349,587

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 June 30, 2020 were as follows:~~

We have not experienced any significant write-offs in our investment portfolio. The majority of our mortgage-backed 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.

Held-to-Maturity Securities

Held-to-maturity securities at ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, include ~~$257~~$25 million and ~~$383~~$75 million, respectively, of short-term, highly liquid time deposits. Due to the short-term nature of these securities, the carrying value approximates fair value.

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 mitigate these exposures by following established risk management policies and procedures, including the use of derivatives. We use derivative instruments to limit the effects of exchange rate fluctuations on financial results and manage the cost of debt. We do not use derivatives for trading or speculative purposes. We record derivative instruments 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 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 ~~AOCI~~AOCL in the period that the change in fair value occurs and is reclassified to earnings in the period that the hedged item is recorded in earnings. No amount of ineffectiveness was recorded in earnings for these designated cash flow hedges. At ~~both June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, we had outstanding contracts associated with these anticipated transactions with notional amounts of ~~$7 million.~~$6 million and $8 million, respectively. Amounts included in ~~AOCI~~AOCL at ~~June 30, 2020~~March 31, 2021 will be recognized in earnings within the next 12 months.

~~During the quarter, we entered into~~We have interest rate swap agreements with an aggregate notional amount of $500 million that are designated as cash flow hedges. The fair value of the interest rate swaps is recorded as a derivative asset or liability at the end of each reporting period with the change in fair value reflected in ~~AOCI.~~AOCL.

The fair value of derivative instruments was as follows:

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 was as follows:~~

Results of cash flow hedging relationships were as follows:

Three Months Ended June 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 2020 2019 2020 2019
Foreign exchange contracts $ (121 ) $ (320 ) Revenue $ (64 ) $ (36 )

Cost of sales 32
29
Interest rate swap (1,605 ) —
Interest expense —
—
$ (1,726 ) $ (320 ) $ (32 ) $ (7 )

Six Months Ended June 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 2020 2019 2020 2019
Foreign exchange contracts $ (281 ) $ 25
Revenue $ (3 ) $ 75

Cost of sales 42
45
Interest rate swap (1,605 ) —
Interest expense —
—
$ (1,886 ) $ 25
$ 39
$ 120


	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 Instrument	2021		2020			2021		2020
Foreign exchange contracts	$	228	$	(160)	Revenue	$	126	$	61
					Cost of sales	(58)		10
Interest rate swap	6,280		0		Interest expense	0		0
	$	6,508	$	(160)		$	68	$	71

We 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 intercompany loans and interest and the corresponding mark-to-market adjustment on derivatives are recorded in earnings. All outstanding contracts at ~~June 30, 2020~~March 31, 2021 mature within 12 months.

~~PITNEY BOWES INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)~~

The mark-to-market adjustments of non-designated derivative instruments were as follows:

Three Months Ended June 30,
Derivative Gain (Loss) Recognized in Earnings
Derivatives Instrument Location of Derivative Gain (Loss) 2020 2019
Foreign exchange contracts Selling, general and administrative expense $ 1,200
$ (65 )

Six Months Ended June 30,
Derivative Gain (Loss) Recognized in Earnings
Derivatives Instrument Location of Derivative Gain (Loss) 2020 2019
Foreign exchange contracts Selling, general and administrative expense $ (3,667 ) $ 5,205

Fair Value of Financial Instruments

Financial instruments not reported at fair value on a recurring basis include cash and cash equivalents, accounts receivable, loan receivables, accounts payable and debt. The carrying value for cash and cash equivalents, accounts receivable, loans receivable and accounts payable approximate fair value. 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 debt are classified as Level 2 in the fair value hierarchy. The carrying value and estimated fair value of debt was as follows:

June 30, 2020 December 31, 2019
Carrying value $ 2,716,747
$ 2,739,722
Fair value $ 2,156,837
$ 2,572,794

10. ~~Restructuring Charges and Asset Impairments~~

Restructuring Charges

Activity in our restructuring reserves was as follows:

The majority of the restructuring reserves are expected to be paid over the next 12 to 24 months.

Restructuring charges and asset impairments for the six months ended June 30, 2020 and 2019 also includes $2 million of non-cash charges related to asset impairments, pension settlements and facilities abandonment.

~~Total debt consisted of the following:~~

Interest rate June 30, 2020 December 31, 2019
Notes due October 2021 4.625% $ 172,456
$ 600,000
Notes due May 2022 5.375% 150,000
400,000
Notes due April 2023 5.70% 275,000
400,000
Notes due March 2024 4.625% 375,000
500,000
Notes due January 2037 5.25% 35,841
35,841
Notes due March 2043 6.70% 425,000
425,000
Term loan due November 2024 Variable 390,000
400,000
Term loan due January 2025 Variable 839,375
—
Credit Facility Variable 100,000
—
Other debt 5,052
5,108
Principal amount 2,767,724
2,765,949
Less: unamortized costs, net 50,977
26,227
Total debt 2,716,747
2,739,722
Less: current portion long-term debt 163,257
20,108
Long-term debt $ 2,553,490
$ 2,719,614

Interest rates on certain notes are subject to adjustment based on changes in our credit ratings. As a result of credit rating downgrades in November 2019 and May 2020, the interest rates on the October 2021 notes and April 2023 notes increased 0.50% and the interest rate on the May 2022 notes increased 0.75%. Further, the interest rates on the October 2021 notes and April 2023 notes will increase an additional 0.25% in the fourth quarter of 2020.

In February 2020, we secured a five-year $850 million term loan maturing January 2025 (the 2025 Term Loan). The 2025 Term Loan bears interest at LIBOR plus 5.5% and resets monthly. In May 2020, we entered into interest rate swap agreements with an aggregate notional amount of $500 million to mitigate the interest rate risk associated with $500 million of our variable-rate term loans. Under the terms of the swap agreements, we pay fixed-rate interest of 0.4443% and receive variable-rate interest based on one-month LIBOR. The variable interest rate under the term loans and the swaps reset monthly.

In March 2020, we purchased under a tender offer $428 million of the October 2021 notes, $250 million of the May 2022 notes, $125 million of the April 2023 notes and $125 million of the March 2024 notes. A $37 million loss was incurred on the early redemption of debt.

~~During the first half of 2020, we repaid $21 million of principal related to our term loans.~~

We have a $500 million secured revolving credit facility that expires in November 2024 and contains financial and non-financial covenants. In April 2020, in light of the current macroeconomic environment, we drew down $100 million under the credit facility as a precautionary measure. This borrowing is considered short-term as the amount is due and interest resets monthly. At June 30, 2020, we were in compliance with all covenants.

PITNEY BOWES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)

~~12. Pensions and Other Benefit Programs~~Total debt consisted of the following:

Defined Benefit Pension Plans Nonpension Postretirement Benefit Plans
United States Foreign
Three Months Ended Three Months Ended Three Months Ended
June 30, June 30, June 30,
2020 2019 2020 2019 2020 2019
Service cost $ 27
$ 21
$ 399
$ 388
$ 217
$ 228
Interest cost 13,179
15,708
3,407
4,308
1,242
1,637
Expected return on plan assets (21,303 ) (23,184 ) (7,969 ) (8,505 ) —
—
Amortization of transition credit —
—
(1 ) (1 ) —
—
Amortization of prior service (credit) cost (15 ) (15 ) 59
60
94
81
Amortization of net actuarial loss 8,197
6,037
2,005
1,572
738
503
Settlement ⁽¹⁾
612
801
3,190
397
—
—
Net periodic benefit cost (income) $ 697
$ (632 ) $ 1,090
$ (1,781 ) $ 2,291
$ 2,449
Contributions to benefit plans $ 1,969
$ 2,423
$ 580
$ 878
$ 3,616
$ 4,457

Defined Benefit Pension Plans Nonpension Postretirement Benefit Plans
United States Foreign
Six Months Ended Six Months Ended Six Months Ended
June 30, June 30, June 30,
2020 2019 2020 2019 2020 2019
Service cost $ 53
$ 42
$ 798
$ 772
$ 434
$ 483
Interest cost 26,358
31,586
6,925
8,796
2,487
3,291
Expected return on plan assets (42,607 ) (46,363 ) (16,177 ) (17,269 ) —
—
Amortization of transition credit —
—
(2 ) (3 ) —
—
Amortization of prior service (credit) cost (30 ) (30 ) 120
123
187
161
Amortization of net actuarial loss 16,395
13,073
4,064
3,184
1,474
1,014
Settlement ⁽¹⁾
1,001
801
3,190
397
—
—
Net periodic benefit cost (income) $ 1,170
$ (891 ) $ (1,082 ) $ (4,000 ) $ 4,582
$ 4,949
Contributions to benefit plans $ 3,898
$ 4,051
$ 8,568
$ 9,088
$ 8,071
$ 9,213

~~(1) Approximately $2.6~~During the first quarter of 2021, we issued a $400 million 6.875% unsecured note due March 2027 and ~~$0.5~~a $350 million 7.25% unsecured note due March 2029. We also entered into a new seven-year $450 million secured term loan maturing March 2028.

We redeemed the remaining $153 million balance of the October 2021 notes and, under a tender offer, redeemed an aggregate $356 million of ~~total settlement charges~~the May 2022 notes, April 2023 notes and March 2024 notes. We also repaid the remaining $818 million balance of our term loan that was scheduled to mature in January 2025.

We also amended our $500 million secured revolving credit facility and our March 2026 secured term loan to extend their maturities from November 2024 to March 2026. The credit agreement that governs the revolving credit facility and term loans contains financial and non-financial covenants. At March 31, 2021, we were ~~recorded~~ in ~~discontinued operations~~compliance with all covenants and ~~restructuring charges, respectively, for~~there were 0 outstanding borrowings under the ~~three~~revolving credit facility.

A $51 million pre-tax loss was incurred on the refinancing of debt.

Interest rates on certain notes are subject to adjustment based on changes in our credit ratings. Due to a credit downgrade in February 2021, the interest rates on the May 2022 notes and ~~six months ended June 30, 2020~~the April 2023 notes will increase 0.25% in the second quarter of 2021.

At March 31, 2021, the interest rate of the 2028 Term Loan was 4.1% and ~~approximately $0.3 million and $0.7 million of total settlement charges were recorded in discontinued operations and restructuring charges, respectively, for~~ the ~~three and six months ended June 30, 2019.~~interest rate on the 2026 Term Loan was 1.9%.

PITNEY BOWES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)

12. Pensions and Other Benefit Programs

The components of net periodic benefit cost (income) were as follows:


	Defined Benefit Pension Plans								Nonpension Postretirement Benefit Plans
	United States				Foreign
	Three Months Ended				Three Months Ended				Three Months Ended
	March 31,				March 31,				March 31,
	2021		2020		2021		2020		2021		2020
Service cost	$	26	$	26	$	395	$	399	$	224	$	217
Interest cost	10,745		13,179		2,961		3,518		961		1,245
Expected return on plan assets	(19,478)		(21,304)		(7,984)		(8,208)		0		0
Amortization of transition credit	0		0		0		(1)		0		0
Amortization of prior service (credit) cost	(15)		(15)		67		61		32		93
Amortization of net actuarial loss	9,638		8,198		2,345		2,059		1,078		736
Settlement	0		389		0		0		0		0
Net periodic benefit cost (income)	$	916	$	473	$	(2,216)	$	(2,172)	$	2,295	$	2,291
Contributions to benefit plans	$	1,015	$	1,929	$	8,696	$	7,988	$	3,519	$	4,455

The effective tax rate for the three ~~and six~~ months ended ~~June 30, 2020~~March 31, 2021 was ~~101.8% and (3.3)%, respectively~~a benefit of 33.6% and includes benefits of $3 million from an affiliate reorganization and $2 million from the vesting of restricted stock, partially offset by a ~~$12~~charge of $1 million ~~charge~~ for the ~~surrender~~write-off of ~~company owned life insurance policies (see Note 8).~~ deferred tax assets associated with the expiration of out-of-the-money stock options.

The effective tax rate for the ~~six~~three months ended ~~June 30,~~March 31, 2020 ~~also~~was a benefit of 4.4% and includes a benefit of $2 million on the $198 million goodwill impairment charge as the majority of this charge is nondeductible, a benefit of $2 million from the resolution of certain tax examinations and a charge of $3 million for the write-off of deferred tax assets associated with the expiration of ~~out-of-money vested stock options and the vesting of restricted stock.~~

The effective tax rate for the three and six months ended June 30, 2019 was 11.3% and 30.1%, respectively, and includes benefits from the resolution of certain tax examinations of $3 million and $6 million, respectively. The effective tax rate for the six months ended June 30, 2019 also includes a $2 million tax on the $18 million book loss incurred from the disposition of operations in certain international markets, primarily due to nondeductible basis differences and a charge of $2 million for the write-off of deferred tax assets associated with the expiration of out-of-money vestedout-of-the-money stock options and the vesting of restricted stock.

As is the case with other large corporations, our tax returns are examined 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 unrecognized tax benefits will decrease in the next 12 months, and this decrease could be up to 10% of our unrecognized tax benefits.

The Internal Revenue Service examinations of our consolidated U.S. income tax returns for tax years prior to 2017 are closed to audit; however, various ~~post-2011~~post-2014 U.S. state and local tax returns are still subject to ~~examination. In~~examination, with some states in appeals from 2011. For our significant non-U.S. jurisdictions, Canada ~~the examination of our tax filings prior to 2015 are~~is closed to ~~audit. Other significant jurisdictions include~~examination through 2014, France ~~(closed~~is closed through ~~2016),~~2013, Germany ~~(closed~~is closed through ~~2016)~~2016 and the U.K. ~~(closed~~is closed through ~~2017).~~2018. We also have other less significant tax filings currently subject to examination.

PITNEY BOWES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)

14. 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, as of March 31, 2021, the potential liability, if any, that may result from these actions, either individually or collectively, is not reasonably expected to have a material effect on our financial position, results of operations or cash ~~flows as of June 30, 2020.~~flows. However, as litigation is inherently unpredictable, there can be no assurances in this regard.

In December 2018 and then in February 2019, certain of the Company’s officers and directors were named as defendants in 2 virtually identical derivative actions purportedly brought on behalf of the Company, Clem v. Lautenbach et al. and Devolin v. Lautenbach et al. These two actions, both filed by the same counsel in Connecticut state court, allege, among other things, breaches of fiduciary duty relating to these same disclosures, and seek compensatory damages and other relief derivatively for the benefit of the Company. Both of these are derivative claims related to a prior action filed in Connecticut state court, City of Livonia Retiree Health and Disability Benefits Plan v. Pitney Bowes Inc. et al. (“Livonia”). On October 24, 2019, the court had granted the defendants’ motions to dismiss the Livonia case, and that judgment is now final. Given that the defendants prevailed in the Livonia action, the plaintiffs in the Clem and Devolin actions moved to withdraw their complaints, and on February 20, 2020 the court granted the motions. Both cases have now been dismissed.

WeAt March 31, 2021, we have entered into ~~3 equipment~~ leases ~~for our Commerce Services operations that will commence in the fourth quarter~~ with aggregate lease payments of approximately $41 million and terms ranging from ~~seven~~three to ~~nine years. Aggregate lease payments for the three leases will approximate $30 million.~~eight years, that have not commenced.

15. Stockholders’ Equity

Changes in stockholders’ equity were as follows:

PITNEY BOWES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)

~~15. Stockholders’ Equity~~

16. Accumulated Other Comprehensive Loss

~~Changes in stockholders’ equity~~Reclassifications out of AOCL were as follows:

Common stock Additional paid-in capital Retained earnings Accumulated other comprehensive loss Treasury stock Total equity
Balance at April 1, 2020 $ 323,338
$ 69,553
$ 5,200,024
$ (857,874 ) $ (4,705,611 ) $ 29,430
Net loss —
—
(3,329 ) —
—
(3,329 )
Other comprehensive income —
—
—
21,612
—
21,612
Dividends paid ($0.05 per common share) —
—
(8,576 ) —
—
(8,576 )
Issuance of common stock —
(6,484 ) —
—
6,498
14
Stock-based compensation expense —
5,429
—
—
—
5,429
Balance at June 30, 2020 $ 323,338
$ 68,498
$ 5,188,119
$ (836,262 ) $ (4,699,113 ) $ 44,580

Changes in AOCL were as follows:

Reclassifications into earnings (1)

Common stock Additional paid-in capital Retained earnings Accumulated other comprehensive loss Treasury stock Total equity
Balance at January 1, 2020 $ 323,338
$ 98,748
$ 5,438,930
$ (840,143 ) $ (4,734,777 ) $ 286,096
Cumulative effect of accounting changes —
—
(21,900 ) —
—
(21,900 )
Net loss —
—
(211,812 ) —
—
(211,812 )
Other comprehensive income —
—
—
3,881
—
3,881
Dividends paid ($0.10 per common share) —
—
(17,099 ) —
—
(17,099 )
Issuance of common stock —
(37,200 ) —
—
35,664
(1,536 )
Stock-based compensation expense —
6,950
—
—
—
6,950
Balance at June 30, 2020 $ 323,338
$ 68,498
$ 5,188,119
$ (836,262 ) $ (4,699,113 ) $ 44,580

PITNEY BOWES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)

17. Supplemental Financial Statement Information

Preferred
stock

Preference
stock
Common stock Additional paid-in capital Retained earnings Accumulated other comprehensive loss Treasury stock Total equity
Balance at January 1, 2019 $ 1
$ 396
$ 323,338
$ 121,475
$ 5,279,682
$ (948,961 ) $ (4,674,089 ) $ 101,842
Net income —
—
—
—
21,038
—
—
21,038
Other comprehensive income —
—
—
—
—
41,283
—
41,283
Dividends paid ($0.10 per common share) —
—
—
—
(18,346 ) —
—
(18,346 )
Issuance of common stock —
—
—
(22,731 ) —
—
20,998
(1,733 )
Conversion to common stock —
(130 ) —
(2,558 ) —
—
2,688
—
Redemption of preferred/preference stock (1 ) (266 ) —
(10 ) —
—
—
(277 )
Stock-based compensation expense —
—
—
9,165
—
—
—
9,165
Repurchase of common stock —
—
—
—
—
—
(100,000 ) (100,000 )
Balance at June 30, 2019 $ —
$ —
$ 323,338
$ 105,341
$ 5,282,374
$ (907,678 ) $ (4,750,403 ) $ 52,972

Activity in the allowance for credit losses on accounts receivables for the three months ended March 31, 2021 and 2020 is presented below. See Note 7 for additional information pertaining to our finance receivables.

Other ~~Comprehensive Loss (AOCL)~~expense, net consisted of the following:

~~Reclassifications out of AOCL were~~


	Three Months Ended March 31,
	2021		2020
Loss on debt refinancing	$	51,394	$	36,987
Insurance proceeds	0		(3,500)


Other expense, net	$	51,394	$	33,487

Supplemental cash flow information is as follows:


	Three Months Ended March 31,
	2021		2020

Cash interest paid	$	39,658	$	44,891
Cash income tax payments, net of refunds	$	2,641	$	13,270
Finance leased assets obtained in exchange for new lease obligations	$	9,477	$	2,399

Gain (Loss) Reclassified from AOCL
Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Cash flow hedges
Revenue $ (64 ) $ (36 ) $ (3 ) $ 75
Cost of sales 32
29
42
45
Total before tax (32 ) (7 ) 39
120
Income tax (benefit) provision (8 ) (1 ) 10
31
Net of tax $ (24 ) $ (6 ) $ 29
$ 89

Available-for-sale securities
Interest expense, net $ 3,233
$ (81 ) $ 3,517
$ (104 )
Income tax provision (benefit) 805
(21 ) 876
(27 )
Net of tax $ 2,428
$ (60 ) $ 2,641
$ (77 )

Pension and postretirement benefit plans
Transition credit $ 1
$ 1
$ 2
$ 3
Prior service costs (138 ) (126 ) (277 ) (254 )
Actuarial losses (10,940 ) (8,112 ) (21,933 ) (17,271 )
Settlement (3,802 ) (1,198 ) (4,191 ) (1,198 )
Total before tax (14,879 ) (9,435 ) (26,399 ) (18,720 )
Income tax benefit (3,502 ) (2,124 ) (6,152 ) (4,773 )
Net of tax $ (11,377 ) $ (7,311 ) $ (20,247 ) $ (13,947 )

~~PITNEY BOWES INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)~~

⁽¹⁾ ~~Amounts are net of tax.~~

Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains statements that are forward-looking. We want to caution readers that any forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 (Securities Act) and Section 21E of the Securities Exchange Act of 1934 (Exchange Act) may change based on various factors. These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, and actual results could differ materially. Words such as "estimate," "target," "project," "plan," "believe," "expect," "anticipate," "intend" and similar expressions may identify such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, 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 attached that are incorporated by reference speak only as of the date of those documents.

Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any 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, the uncertainty around the severity, magnitude and duration of the COVID-19 pandemic (COVID-19), including governments' responses to COVID-19, the efficacy and availability of vaccines, its continuing impact on our operations, employees, the availability and cost of labor and transportation, global supply chain and demand across our and our clients' businesses, as well as any deterioration or instability in global macroeconomic conditions, could cause our actual results to differ than those expressed in any forward-looking statement. Other factors which could cause future financial performance to differ materially from the expectations, and which may also be exacerbated by COVID-19 or a negative change in the economy, include, without limitation:

•declining physical mail volumes

•changes in postal regulations or operations, or the financial health of posts, in the U.S. or other major markets, or significant changes to the broader postal or shipping industry

•the loss of, or significant changes to, our contractual ~~relationship~~relationships with the United States Postal Service (USPS) or USPS' performance under those contracts

•our ability to continue to grow and manage volumes, gain additional economies of scale and improve profitability within our Global Ecommerce and Presort Services segments

•changes in labor and transportation availability and costs

•third-party suppliers' ability to provide products and services required by us and our clients

•competitive factors, including pricing pressures, technological developments and the introduction of new products and services by competitors

•the loss of some of our larger clients in our Global Ecommerce and Presort Services segments

•expenses and potential impacts resulting from a breach of security, including cyber-attacks or other comparable events

~~our ability to continue to grow volumes, gain additional economies of scale and improve profitability within our Commerce Services group~~

~~third-party suppliers' ability to provide products and services required by our clients~~

•our success in developing and marketing new products and services and obtaining regulatory approvals, if required

~~competitive factors, including pricing pressures, technological developments and the introduction of new products and services by competitors~~

•changes in ~~global political conditions and~~ international trade policies, including the imposition or expansion of trade tariffs

•changes in tax laws, rulings or regulations, including the impact of potential U.S. tax reform

•our success at managing relationships and costs with outsource providers of certain functions and operations

•changes in banking regulations or the loss of our Industrial Bank charter or changes in foreign currency exchange rates and interest rates

•the United Kingdom's exit from the European Union

•intellectual property infringement claims

•the use of the postal 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 ~~2019~~2020 Annual Report, as supplemented by Part II, Item 1A in this Quarterly Report on Form 10-Q.

Financial Results Summary - Three ~~and Six~~ Months Ended ~~June 30:~~March 31:


	Revenue
	Three Months Ended March 31,
	2021		2020		Actual % change		Constant Currency % Change
Business services	$	570,454	$	444,379	28	%	28	%
Support services	118,697		122,015		(3)	%	(4)	%
Financing	77,812		89,078		(13)	%	(14)	%
Equipment sales	86,803		76,273		14	%	12	%
Supplies	42,224		45,709		(8)	%	(10)	%
Rentals	19,207		18,814		2	%	—	%
Total revenue	$	915,197	$	796,268	15	%	14	%

Revenue
Three Months Ended June 30, Six Months Ended June 30,
2020 2019 Actual % change Constant Currency % Change 2020 2019 Actual % change Constant Currency % change
Business services $ 528,990
$ 417,963
27 % 27 % $ 973,369
$ 824,508
18 % 18 %
Support services 113,786
127,705
(11 )% (10 )% 235,801
256,304
(8 )% (8 )%
Financing 85,462
92,419
(8 )% (7 )% 174,540
189,462
(8 )% (7 )%
Equipment sales 57,837
85,551
(32 )% (32 )% 134,110
175,338
(24 )% (23 )%
Supplies 32,773
46,490
(30 )% (29 )% 78,482
97,443
(19 )% (19 )%
Rentals 18,644
18,445
1 % 2 % 37,458
40,602
(8 )% (7 )%
Total revenue $ 837,492
$ 788,573
6 % 7 % $ 1,633,760
$ 1,583,657
3 % 3 %


	Revenue
	Three Months Ended March 31,
	2021		2020		Actual % change		Constant currency % change
Global Ecommerce	$	413,086	$	292,323	41	%	40	%
Presort Services	143,126		140,720		2	%	2	%
SendTech Solutions	358,985		363,225		(1)	%	(3)	%
Total	$	915,197	$	796,268	15	%	14	%

Revenue increased 6%15% as reported and 7%14% at constant currency ~~for~~in the first quarter of 2021 compared to the prior ~~year. Business~~year, primarily driven by higher business services revenue resulting from increased ~~27% driven by significantly higher~~ volumes in our Global Ecommerce ~~business, which more than offset double digit declines in equipment sales, supplies and support services driven in part by the continuing impacts of COVID-19. In~~segment. Within our business segments, Global Ecommerce revenue grew 41% as reported and 40% at constant currency due to increased volumes, Presort Services revenue ~~declined 8%~~increased 2% primarily due to ~~lower First Class and~~higher Marketing Mail volumes and SendTech Solutions revenue declined 1% as reported and 3% at constant currency primarily due to lower financing, supplies and support services revenue, partially offset by higher equipment sales and business services revenue. Segment EBIT in the quarter increased 15%, primarily due to ~~lower equipment sales and supplies revenue. Segment EBIT decreased 21%, primarily due to lower revenue~~a prior year credit loss charge of $10 million in SendTech Solutions ~~higher credit losses~~due to the then-current economic recessionary conditions caused by COVID-19, increased volumes in Global Ecommerce and ~~increased costs attributed to COVID-19.~~

~~Revenue increased 3% for the first half of 2020 compared to the prior year. Business services revenue increased 18% due to higher Global Ecommerce volumes but was partially offset by declines~~lower operating expenses in ~~other revenue line items. In our business segments, Global Ecommerce revenue grew 26% due to increased volumes,~~ Presort Services revenue declined 2% and SendTech Solutions revenue declined 11%. Segment EBIT decreased 23%, primarily due to lower revenue in SendTech Solutions, higher credit losses and the mix of business in Global Ecommerce and increased costs attributed to COVID-19.Services. Refer to Results of Operations section for further information.

~~Commerce Services EBIT margins in~~During the quarter, we completed a series of transactions to refinance our debt portfolio to decrease our refinancing risk and ~~year-to-date periods were adversely impacted by increased labor~~create strategic flexibility. Refer to Liquidity and postal costs at Global Ecommerce due to the sudden and significant increase in volumes, higher credit losses at Global Ecommerce, lower volumes at Presort Services and increased costs and reduced productivity driven by COVID-19. However, the Global Ecommerce EBIT margin

in the second quarter was improved from the first quarter 2020 and prior year period reflecting scale-related benefits in per unit transportation and warehousing costs. SendTech Solutions EBIT margins in the quarter and year-to-date periods were relatively unchanged compared to the prior year periods despite double-digit declines in revenue, primarily due to lower operating expenses from cost savings initiatives.

~~We drew down $100 million under our revolving credit facility as a precautionary measure and invested these proceeds in highly liquid, short-term investments.~~

~~We surrendered certain company owned life insurance (COLI) policies and sold our interest in an equity investment~~Capital Resources section for aggregate proceeds of $58 million. We recognized a gain of $12 million on the sale of the equity investment and while the surrender of the COLI policies did not result in a pre-tax gain or loss, the surrender resulted in a $12 million tax charge.

~~We also received insurance proceeds of $5 million related to the October 2019 malware attack that temporarily disrupted customer access to some services.~~

In May 2020, we were affected by a Maze ransomware attack. Although the Maze attackers were able to exfiltrate a small amount of our confidential data, working with our third-party security consultants, we were able to successfully thwart the attack before any of our operations could be disrupted or any data encrypted. The attempted attack did not have any impact on our financial results, and we satisfied all regulatory obligations arising out of the attack.further information.

~~The global spread of~~Beginning in 2020, COVID-19 and the efforts to contain it adversely affected ~~the U.S.~~global economies and ~~international economies, impacting~~ demand for a broad variety of goods and services ~~creating~~and created disruptions and shortages in ~~global~~ supply ~~chains and causing significant volatility~~chains. We implemented measures in ~~financial markets. Our employees worldwide that have the ability to work remotely are doing so. Our~~our facilities ~~continue to operate, and many employees continue to report to work at these facilities. We have implemented additional measures~~ to protect the health and safety of our employees and contractors, including staggering shifts and breaks to enhance social distancing, providing personal protection equipment, conducting temperature checks and sanitizing equipment and facilities multiple times a day. Employees that have the ability to work remotely continue to do so and management continues to assess conditions to determine when, and how, these employees should return to their office locations. We continue to manage through supply chain shortages and disruptions and provide enhanced proactive measures in our facilities to protect the health and safety of our employees and contractors.

Beginning primarily in the second quarter of 2020, COVID-19 ~~has~~ impacted our financial results in different ways in each of our businesses. In Global Ecommerce ~~we saw significantly higher~~experienced a significant increase in volumes ~~in the quarter~~and revenue due to the demand for ecommerce ~~solutions~~solutions; however, the increase in ~~the current environment. In~~volumes resulted in higher postal costs driven by capacity constraints and higher labor and transportation costs as many companies competed for these resources. Presort Services experienced a decline in both First Class and Marketing Mail ~~volumes have declined due to~~and higher labor costs. Global Ecommerce and Presort Services incurred additional costs and experienced lower ~~market demand and changing client behaviors in the current environment. As~~productivity as a result of the ~~additional~~ health and safety measures implemented in ~~all our Commerce Services facilities, we have incurred, and will continue to incur, additional costs and reduced productivity.~~their facilities.

In SendTech Solutions, the ~~global shut-down of businesses and~~ increase in the number of clients working remotely ~~significantly~~ adversely impacted demand for and usage of our mailing equipment and supplies, ~~as well as~~and our ability to ~~contact and service clients and~~ perform on-site ~~installations. Despite the negative impacts of COVID-19, we saw improving trends in equipment sales~~service and ~~supplies revenues as we exited the quarter. Also, as businesses continue to operate remotely, we are seeing improvement in our cloud-enabled shipping and mailing solutions.~~

In March 2020, the Coronavirus Aid, Relief and Economic Security (CARES) Act was passed into law in response to market volatility and instability resulting from COVID-19. The CARES Act includes provisions relating to the deferment of the employer portion of certain payroll taxes, net operating loss carryback periods and modifications to the net interest deduction limitations. We continue to assess the impact of these provisions; which we believe could affect the timing of certain cash paymentsinstallations, but ~~not materially impact our financial position or results of operations.~~

~~The severity, duration and governmental responses of COVID-19 are~~ uncertain, and we are not able to reasonably estimate the full extent of the impact on our operating results, liquidity, cash flows or financial position for the remainder of the year. As COVID-19 continues to affect global economies and how businesses operate, we will continue to take proactive measures to protect the health and safety of our employees, clients, partners and suppliers. These additional safety measures will result in additional expenses and reduced productivity. Corporate and local management will continue to assess conditions to determine when, or how, employees currently working remotely should return to office locations.

Our Commerce Services businesses are more demand-driven and it is difficult to predict how demand and volumes will trend and the impact to productivity throughout the duration of COVID-19. Within Global Ecommerce, domestic parcel delivery volumes have increased significantly due to a global market shift to ecommerce solutions. While we cannot predict the magnitude of volume increases, we expect

this shift to continue throughout the remainder of the year. We signed on over 100 new clients in the second quarter and volumes from these clients will benefit the second half of the year. Cross-border volumes are still experiencing declines and we expect this to continue as long as there are restrictions on international shipments. The sudden and significant increase in volumes resulted in higher labor and postal costs in the second quarter as we needed to react quickly to process and deliver these parcels. However, the higher volumes resulted in scale-related benefits in per unit transportation and warehousing costs. We expect continued improvements in per unit transportation and warehousing costs as volumes increase and improvements in per unit labor costs as the business sizes itself to handle the higher volumes.

In Presort Services, approximately 80% of mail volumes processed are First Class Mail with the remaining 20% primarily Marketing Mail. There were declines in mail volumes from the onset of COVID-19; however, these volume declines started to moderate as we exited the second quarter. For the remainder of the year, we expect volumes of First Class Mail and Marketing Mail to be lower compared to the prior year. As businesses begin to re-open and clients return to their normal behaviors, we expect volumes to improve from current levels; however, the timing and magnitude of this improvement would be contingent on the severity and duration of COVID-19. While currently a small part of total volumes, volumes in Marketing Mail Flats and Bound Printed Matter grew over 30% in the second quarter and we anticipate these volumes will continue to grow throughout the remainder of the year.

Within SendTech Solutions, approximately two-thirds of revenue is recurring in nature and materially contributes to our cash flows. Nonrecurring revenues, primarily equipment sales and to a lesser extent, supplies, will continue to be adversely impacted by COVID-19 due to declining demand and usage. We are unable to predict the duration and magnitude of these declines or determine when, or if, demand and usage will return to normal levels; however, we would expect to see improving trends as more businesses start to re-open. As a result of clients working remotely and the necessity of alternate solutions, we saw an improvement in our cloud-enabled shipping and mailing ~~solutions during~~solutions.

Given the ~~second quarter~~continuing unpredictability of the severity, magnitude and ~~expect this shift~~duration of the COVID-19 pandemic, especially in ~~market preference to continue as clients realize~~light of the ~~value~~increasingly widespread outbreak in India, where a majority of our ~~digital capabilities. We continue to monitor cash collections from~~research and development activities are located, the impact of the pandemic on our ~~recurring revenue streams. There was an increase~~business, operations and financial performance remains uncertain. The developing global semiconductor chip shortage may also adversely affect our needed supply for SendTech equipment for the remainder of 2021. The extent of that impact will depend upon the duration and severity of the shortage, as well as our success in ~~delinquency rates during the second quarter~~mitigating against its impact. Accordingly, there are some unique factors not within our control that ~~was in-line with~~could affect our ~~expectations, but~~business and current outlook for 2021. However, we believe we are starting to see an improvement in delinquency rates and positive changes in customer payment behaviors. There are no assurances that this improvement in delinquency rates and payment behaviors will continue, or that the impacts of COVID-19 will not result in higher client bankruptcies or account write-offs.

~~Before the onset of COVID-19 and the resulting economic decline, we had taken steps to reduce and refinance debt, improve liquidity and strengthen our balance sheet that we believe will enable us~~well positioned to manage through the current ~~economic downturn. We are taking further actions~~conditions and will continue to take proactive steps to manage ~~cash flows~~our operations and ~~maintain liquidity, including, but~~related financial impacts.

Despite some of the ongoing uncertainty, we do not ~~limited~~expect the global economy or our individual businesses to prioritizing our capital expenditures to essential and necessary investments and reducing targeted loan originations at Wheeler Financial. We estimate that these actions alone will benefit annual cash flows by approximately $75 million. Referbe affected to the ~~Liquidity~~same extent in 2021 as in 2020, which will result in an impact to the comparison of our results to the prior year. Within Global Ecommerce, we expect continued market growth in ecommerce and ~~Capital Resources section~~anticipate revenue growth in 2021, although not at the growth rates experienced throughout 2020. Although we expect margin and profit improvements in 2021 from pricing initiatives and operational improvements within our facilities and network designed to drive efficiencies and increased productivity, we also expect the continued growth of the overall market's needs for ~~further information.~~both transportation services and labor will create cost challenges. Within Presort Services, we expect the improving volume trends in the second half of 2020 to continue throughout 2021. We anticipate that Presort Services margins will improve in 2021 as a result of productivity initiatives, increased automation and facilities consolidation and optimization. Within SendTech Solutions, we expect revenue to continue to decline, but growth in our cloud-enabled shipping solutions and sales of our multi-purpose devices to partially offset these declines. On a consolidated basis, we expect modest revenue growth in 2021 compared to 2020.

RESULTS OF OPERATIONS

In our Results of Operations discussion, we present and discuss revenue and cost of revenue at the segment level since our revenue and related costs of revenue sources are predominantly specific to the segments. Operating and other expenses are presented and discussed on a consolidated basis as this basis provides a better understanding of the underlying drivers of change in these expense line items or they are not allocated to a specific segment.

In our revenue discussion, we may refer to revenue growth on a constant currency basis. Constant currency measures exclude the impact of changes in currency exchange rates since the prior period under comparison. We believe that excluding the impacts of currency exchange rates provides investors with a better understanding of the underlying revenue performance. Constant currency change is calculated by converting the current period non-U.S. dollar denominated revenue using the prior year’s exchange rate. Where constant currency measures are not provided, the actual change and constant currency change are the same.

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, general corporate expenses, restructuring charges, asset impairment charges, goodwill impairment charges and other items not allocated to a particular business segment. Management believes that it provides investors a useful measure of operating performance and underlying trends of the 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.

REVENUE AND SEGMENT EBIT

Global Ecommerce

Global Ecommerce includes the revenue and related expenses from ~~products~~domestic parcel services, cross-border solutions and ~~services that enable domestic and cross-border ecommerce transactions, including shipping, fulfillment and returns.~~digital delivery services.


	Revenue										Cost of Revenue				Gross Margin					Revenue								Cost of Revenue				Gross Margin
	Three Months Ended June 30,										Three Months Ended June 30,				Three Months Ended June 30,					Three Months Ended March 31,								Three Months Ended March 31,				Three Months Ended March 31,
	2020			2019			Actual % change		Constant Currency % change		2020		2019		2020		2019			2021		2020		Actual % change		Constant Currency % change		2021		2020		2021		2020
Business services	$	398,453		$	282,319		41	%	41	%	$	355,861	$	238,854	10.7	%	15.4	%	Business services	$	413,086	$	292,323	41	%	40	%	$	384,308	$	265,221	7.0	%	9.3	%

	Segment EBIT																			Segment EBIT
	Three Months Ended June 30,																			Three Months Ended March 31,
	2020			2019			Actual % change													2021		2020		Actual % change
Segment EBIT	$	(18,894	)	$	(15,576	)	(21	)%											Segment EBIT	$	(26,376)	$	(29,475)	11	%

Global Ecommerce revenue increased 41% as reported and 40% at constant currency in the ~~second~~first quarter of ~~2020~~2021 compared to the prior year period due to the significant ~~growth~~increase in ~~domestic~~volumes caused by the onset of COVID-19. Domestic parcel delivery volumes, ~~driven in part, by the market shift to ecommerce solutions as a result of COVID-19,~~cross-border volumes and ~~higher~~ digital ~~domestic and fulfillment services volumes. This volume growth~~delivery volumes contributed revenue growth of ~~47%~~22%, ~~while~~15% and 4%, respectively.

Despite a decline in ~~domestic returns and cross-border volumes contributed a 6% decline in revenue.~~


	Sales Type Lease Receivables												Loan Receivables		Total
	2021		2020		2019		2018		2017		Prior
Low	$	78,458	$	235,018	$	207,236	$	144,994	$	70,678	$	31,481	$	180,586	$	948,451
Medium	13,409		46,999		46,899		31,959		16,268		7,235		74,966		237,735
High	1,497		5,248		5,142		3,402		1,792		1,024		5,127		23,232
Not Scored	23,202		61,983		58,732		38,207		23,214		13,468		32,103		250,909
Total	$	116,566	$	349,248	$	318,009	$	218,562	$	111,952	$	53,208	$	292,782	$	1,460,327

	Sales Type Lease Receivables												Loan Receivables		Total
	2020		2019		2018		2017		2016		Prior
Low	$	256,573	$	228,344	$	165,244	$	87,346	$	30,518	$	12,249	$	192,971	$	973,245
Medium	50,785		49,946		37,168		21,388		6,470		2,375		61,625		229,757
High	6,182		5,396		3,782		1,974		1,051		143		4,518		23,046
Not Scored	80,854		77,362		48,704		24,291		7,813		971		31,668		271,663
Total	$	394,394	$	361,048	$	254,898	$	134,999	$	45,852	$	15,738	$	290,782	$	1,497,711


	Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
	2020		2019		2020		2019				2021		2020
Profit recognized at commencement ⁽¹⁾	$	21,271	$	36,508	$	51,166	$	73,112	Profit recognized at commencement (1)		$	32,265	$	29,908
Interest income	34,055		58,045		68,315		117,523		Interest income		48,496		53,806
Total lease income from sales-type leases	$	55,326	$	94,553	$	119,481	$	190,635	Total lease income from sales-type leases		$	80,761	$	83,714


	March 31, 2021						December 31, 2020
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Customer relationships	$	268,199	$	(121,634)	$	146,565	$	268,199	$	(115,010)	$	153,189
Software & technology	19,000		(13,300)		5,700		19,000		(12,350)		6,650

Total intangible assets	$	287,199	$	(134,934)	$	152,265	$	287,199	$	(127,360)	$	159,839



	Three Months Ended June 30, 2020
	Global Ecommerce		Presort Services		SendTech Solutions		Revenue from products and services		Revenue from leasing transactions and financing		Total consolidated revenue
Major products/service lines
Business services	$	398,453	$	118,127	$	12,410	$	528,990	$	—	$	528,990
Support services	—		—		113,786		113,786		—		113,786
Financing	—		—		—		—		85,462		85,462
Equipment sales	—		—		14,492		14,492		43,345		57,837
Supplies	—		—		32,773		32,773		—		32,773
Rentals	—		—		—		—		18,644		18,644
Subtotal	398,453		118,127		173,461		690,041		$	147,451	$	837,492

Revenue from leasing transactions and financing
Financing	—		—		85,462		85,462
Equipment sales	—		—		43,345		43,345
Rentals	—		—		18,644		18,644
Total revenue	$	398,453	$	118,127	$	320,912	$	837,492

Timing of revenue recognition from products and services
Products/services transferred at a point in time	$	—	$	—	$	58,750	$	58,750
Products/services transferred over time	398,453		118,127		114,711		631,291
Total	$	398,453	$	118,127	$	173,461	$	690,041



	Three Months Ended June 30, 2019
	Global Ecommerce		Presort Services		SendTech Solutions		Revenue from products and services		Revenue from leasing transactions and financing		Total consolidated revenue
Major products/service lines
Business services	$	282,319	$	128,138	$	7,506	$	417,963	$	—	$	417,963
Support services	—		—		127,705		127,705		—		127,705
Financing	—		—		—		—		92,419		92,419
Equipment sales	—		—		19,384		19,384		66,167		85,551
Supplies	—		—		46,490		46,490		—		46,490
Rentals	—		—		—		—		18,445		18,445
Subtotal	282,319		128,138		201,085		611,542		$	177,031	$	788,573

Revenue from leasing transactions and financing
Financing	—		—		92,419		92,419
Equipment sales	—		—		66,167		66,167
Rentals	—		—		18,445		18,445
Total revenue	$	282,319	$	128,138	$	378,116	$	788,573

Timing of revenue recognition from products and services
Products/services transferred at a point in time	$	—	$	—	$	82,790	$	82,790
Products/services transferred over time	282,319		128,138		118,295		528,752
Total	$	282,319	$	128,138	$	201,085	$	611,542



	Six Months Ended June 30, 2020
	Global Ecommerce		Presort Services		SendTech Solutions		Revenue from products and services		Revenue from leasing transactions and financing		Total consolidated revenue
Major products/service lines
Business services	$	690,776	$	258,847	$	23,746	$	973,369	$	—	$	973,369
Support services	—		—		235,801		235,801		—		235,801
Financing	—		—		—		—		174,540		174,540
Equipment sales	—		—		31,621		31,621		102,489		134,110
Supplies	—		—		78,482		78,482		—		78,482
Rentals	—		—		—		—		37,458		37,458
Subtotal	690,776		258,847		369,650		1,319,273		$	314,487	$	1,633,760

Revenue from leasing transactions and financing
Financing	—		—		174,540		174,540
Equipment sales	—		—		102,489		102,489
Rentals	—		—		37,458		37,458
Total revenue	$	690,776	$	258,847	$	684,137	$	1,633,760

Timing of revenue recognition from products and services
Products/services transferred at a point in time	$	—	$	—	$	137,124	$	137,124
Products/services transferred over time	690,776		258,847		232,526		1,182,149
Total	$	690,776	$	258,847	$	369,650	$	1,319,273



	Six Months Ended June 30, 2019
	Global Ecommerce		Presort Services		SendTech Solutions		Revenue from products and services		Revenue from leasing transactions and financing		Total consolidated revenue
Major products/service lines
Business services	$	548,573	$	262,985	$	12,950	$	824,508	$	—	$	824,508
Support services	—		—		256,304		256,304		—		256,304
Financing	—		—		—		—		189,462		189,462
Equipment sales	—		—		40,677		40,677		134,661		175,338
Supplies	—		—		97,443		97,443		—		97,443
Rentals	—		—		—		—		40,602		40,602
Subtotal	548,573		262,985		407,374		1,218,932		$	364,725	$	1,583,657

Revenue from leasing transactions and financing
Financing	—		—		189,462		189,462
Equipment sales	—		—		134,661		134,661
Rentals	—		—		40,602		40,602
Total revenue	$	548,573	$	262,985	$	772,099	$	1,583,657

Timing of revenue recognition from products and services
Products/services transferred at a point in time	$	—	$	—	$	169,666	$	169,666
Products/services transferred over time	548,573		262,985		237,708		1,049,266
Total	$	548,573	$	262,985	$	407,374	$	1,218,932



	Remainder of 2020		2021		2022-2025		Total
SendTech Solutions	$	146,357	$	252,289	$	346,874	$	745,520



	Three Months Ended June 30, 2020								Three Months Ended June 30, 2019
	Software Solutions			Production Mail		Total			Software Solutions		Production Mail			Total
Revenue	$	—		$	—	$	—		$	72,206	$	—		$	72,206

Earnings from discontinued operations	$	—		$	—	$	—		$	1,342	$	—		$	1,342
(Loss) gain on sale	(3,416		)	245		(3,171		)	—		(8,589		)	(8,589		)
(Loss) income from discontinued operations before taxes	$	(3,416	)	$	245	(3,171		)	$	1,342	$	(8,589	)	(7,247		)
Tax benefit						(139		)						(1,634		)
Loss from discontinued operations, net of tax						$	(3,032	)						$	(5,613	)



	June 30, 2020			December 31, 2019
Raw materials	$	20,021		$	13,514
Supplies and service parts	22,787			21,840
Finished products	34,681			36,969
Inventory at FIFO cost	77,489			72,323
Excess of FIFO cost over LIFO cost	(3,836		)	(4,072		)
Total inventory, net	$	73,653		$	68,251


Remaining for year ending December 31, 2021	$	25,005
Year ending December 31, 2022	20,449
Year ending December 31, 2023	9,175
Year ending December 31, 2024	7,692
Year ending December 31, 2025	2,499
Thereafter	37
Total	$	64,857



Remaining for year ending December 31, 2020	$	20,222
Year ending December 31, 2021	27,899
Year ending December 31, 2022	10,881
Year ending December 31, 2023	4,899
Year ending December 31, 2024	1,528
Thereafter	200
Total	$	65,629


Remaining for year ending December 31, 2021	$	22,721
Year ending December 31, 2022	29,315
Year ending December 31, 2023	26,465
Year ending December 31, 2024	26,465
Year ending December 31, 2025	19,805
Thereafter	27,494
Total	$	152,265



Remaining for year ending December 31, 2020	$	15,699
Year ending December 31, 2021	30,227
Year ending December 31, 2022	29,281
Year ending December 31, 2023	26,443
Year ending December 31, 2024	26,443
Thereafter	47,367
Total	$	175,460


	Gross value before accumulated impairment		Accumulated impairment		December 31, 2020		Currency impact		March 31, 2021
Global Ecommerce	$	609,431	$	(198,169)	$	411,262	$	0	$	411,262
Presort Services	220,992		0		220,992		0		220,992
SendTech Solutions	520,031		0		520,031		(8,221)		511,810
Total goodwill	$	1,350,454	$	(198,169)	$	1,152,285	$	(8,221)	$	1,144,064



	December 31, 2019		Impairment			Acquisition		Currency impact			June 30, 2020
Global Ecommerce	$	609,431	$	(198,169	)	$	—	$	—		$	411,262
Presort Services	212,529		—			8,463		—			220,992
Commerce Services	821,960		(198,169		)	8,463		—			632,254
SendTech Solutions	502,219		—			—		(1,688		)	500,531
Total goodwill	$	1,324,179	$	(198,169	)	$	8,463	$	(1,688	)	$	1,132,785


~~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.


	June 30, 2020											March 31, 2021
	Level 1		Level 2			Level 3		Total				Level 1		Level 2		Level 3		Total
Assets:											Assets:
Investment securities											Investment securities
Money market funds	$	85,243	$	441,600		$	—	$	526,843		Money market funds	$	39,573	$	250,390	$	0	$	289,963
Equity securities	—		20,822			—		20,822			Equity securities	0		28,100		0		28,100
Commingled fixed income securities	1,713		19,376			—		21,089			Commingled fixed income securities	1,698		19,027		0		20,725
Government and related securities	39,525		18,583			—		58,108			Government and related securities	26,228		25,396		0		51,624
Corporate debt securities	—		75,557			—		75,557			Corporate debt securities	0		65,950		0		65,950
Mortgage-backed / asset-backed securities	—		115,742			—		115,742			Mortgage-backed / asset-backed securities	0		231,863		0		231,863
Derivatives											Derivatives
Interest rate swap											Interest rate swap	0		4,117		0		4,117
Foreign exchange contracts	—		308			—		308			Foreign exchange contracts	0		1,117		0		1,117
Total assets	$	126,481	$	691,988		$	—	$	818,469		Total assets	$	67,499	$	625,960	$	0	$	693,459
Liabilities:											Liabilities:
Derivatives											Derivatives
Interest rate swaps	$	—	$	(1,605	)	$	—	$	(1,605	)

Foreign exchange contracts	—		(1,106		)	—		(1,106		)	Foreign exchange contracts	$	0	$	(786)	$	0	$	(786)
Total liabilities	$	—	$	(2,711	)	$	—	$	(2,711	)	Total liabilities	$	0	$	(786)	$	0	$	(786)


Designation of Derivatives	Balance Sheet Location	March 31, 2021		December 31, 2020
Derivatives designated as hedging instruments
Foreign exchange contracts	Other current assets and prepayments	$	214	$	96
	Accounts payable and accrued liabilities	(71)		(112)

Interest rate swaps	Other assets (Other noncurrent liabilities)	4,117		(2,163)

Derivatives not designated as hedging instruments
Foreign exchange contracts	Other current assets and prepayments	903		3,680
	Accounts payable and accrued liabilities	(715)		(1,848)

	Total derivative assets	$	5,234	$	3,776
	Total derivative liabilities	(786)		(4,123)
	Total net derivative asset (liability)	$	4,448	$	(347)


		Three Months Ended March 31,
		Derivative Gain (Loss) Recognized in Earnings
Derivatives Instrument	Location of Derivative Gain (Loss)	2021		2020
Foreign exchange contracts	Selling, general and administrative expense	$	553	$	(4,867)


	March 31, 2021		December 31, 2020
Carrying value	$	2,438,857	$	2,564,393
Fair value	$	2,426,062	$	2,479,895



	Severance and benefits costs			Other exit costs			Total
Balance at January 1, 2020	$	11,937		$	69		$	12,006
Expenses, net	6,357			546			6,903
Cash payments	(10,772		)	(593		)	(11,365		)
Balance at June 30, 2020	$	7,522		$	22		$	7,544

Balance at January 1, 2019	$	13,641		$	1,808		$	15,449
Expenses, net	7,101			707			7,808
Cash payments	(10,786		)	(2,219		)	(13,005		)
Balance at June 30, 2019	$	9,956		$	296		$	10,252


	Severance and other exit costs
Balance at January 1, 2021	$	10,063
Expenses, net	2,889
Cash payments	(3,955)
Noncash activity	(227)
Balance at March 31, 2021	$	8,770

Balance at January 1, 2020	$	12,006
Expenses, net	3,817
Cash payments	(6,047)
Noncash activity	(763)
Balance at March 31, 2020	$	9,013



	Interest rate	June 30, 2020		December 31, 2019
Notes due October 2021	4.625%	$	172,456	$	600,000
Notes due May 2022	5.375%	150,000		400,000
Notes due April 2023	5.70%	275,000		400,000
Notes due March 2024	4.625%	375,000		500,000
Notes due January 2037	5.25%	35,841		35,841
Notes due March 2043	6.70%	425,000		425,000
Term loan due November 2024	Variable	390,000		400,000
Term loan due January 2025	Variable	839,375		—
Credit Facility	Variable	100,000		—
Other debt		5,052		5,108
Principal amount		2,767,724		2,765,949
Less: unamortized costs, net		50,977		26,227
Total debt		2,716,747		2,739,722
Less: current portion long-term debt		163,257		20,108
Long-term debt		$	2,553,490	$	2,719,614


	Common stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss		Treasury stock		Total equity
Balance at January 1, 2021	$	323,338	$	68,502	$	5,201,195	$	(839,131)	$	(4,687,509)	$	66,395

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	$	5,161,029	$	(847,538)	$	(4,632,935)	$	19,163


		Gain (Loss) Reclassified from AOCL
	Three Months Ended March 31,
		2021		2020
Cash flow hedges
Revenue		$	126	$	61
Cost of sales		(58)		10

Total before tax		68		71
Income tax provision		17		17
Net of tax		$	51	$	54

Available-for-sale securities
Financing revenue		$	(1)	$	284
Selling, general and administrative expense		42		0
Total before tax		41		284
Income tax provision		10		71
Net of tax		$	31	$	213

Pension and postretirement benefit plans
Transition credit		$	0	$	1
Prior service costs		(84)		(139)
Actuarial losses		(13,061)		(10,993)
Settlement		0		(389)
Total before tax		(13,145)		(11,520)
Income tax benefit		(3,208)		(2,650)
Net of tax		$	(9,937)	$	(8,870)



	Preferred stock			Preference stock			Common stock		Additional paid-in capital			Retained earnings			Accumulated other comprehensive loss			Treasury stock			Total equity
Balance at April 1, 2019	$	1		$	388		$	323,338	$	109,166		$	5,267,615		$	(917,978	)	$	(4,696,080	)	$	86,450
Net income	—			—			—		—			23,697			—			—			23,697
Other comprehensive income	—			—			—		—			—			10,300			—			10,300
Dividends paid ($0.05 per common share)	—			—			—		—			(8,938		)	—			—			(8,938		)
Issuance of common stock	—			—			—		(3,807		)	—			—			4,024			217
Conversion to common stock	—			(122		)	—		(2,389		)	—			—			2,511			—
Redemption of preferred/preference stock	(1		)	(266		)	—		(10		)	—			—			—			(277		)
Stock-based compensation expense	—			—			—		2,381			—			—			—			2,381
Repurchase of common stock	—			—			—		—			—			—			(60,858		)	(60,858		)
Balance at June 30, 2019	$	—		$	—		$	323,338	$	105,341		$	5,282,374		$	(907,678	)	$	(4,750,403	)	$	52,972


	Cash flow hedges		Available for sale securities		Pension and postretirement benefit plans		Foreign currency adjustments		Total
Balance at January 1, 2021	$	(1,411)	$	402	$	(851,063)	$	12,941	$	(839,131)
Other comprehensive income (loss) before reclassifications (1)	4,881		(8,885)		0		(14,258)		(18,262)
Reclassifications into earnings (1)	(51)		(31)		9,937		0		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)


	Balance at beginning of year		Cumulative effect of accounting change		Amounts charged to expense		Write-offs, recoveries and other		Balance at end of period		Accounts and other receivables		Other assets
March 31, 2021	$	35,344	$	0	$	3,011	$	(1,314)	$	37,041	$	20,480	$	16,561
March 31, 2020	$	17,830	$	15,336	$	3,280	$	(7,002)	$	29,444	$	29,444	$	0


											2021		2020		Change
	2020			2019			Change
Net cash provided by operating activities	$	86,809		$	86,782		$	27
Net cash provided by (used in) operating activities										Net cash provided by (used in) operating activities	$	65,924	$	(67,355)	$	133,279
Net cash used in investing activities	(54,545		)	(36,151		)	(18,394		)	Net cash used in investing activities	(87,109)		(23,499)		(63,610)
Net cash used in financing activities	(84,598		)	(146,770		)	62,172			Net cash used in financing activities	(218,300)		(160,484)		(57,816)
Effect of exchange rate changes on cash and cash equivalents	(9,211		)	(81		)	(9,130		)	Effect of exchange rate changes on cash and cash equivalents	(1,238)		(10,032)		8,794
Change in cash and cash equivalents	$	(61,545	)	$	(96,220	)	$	34,675		Change in cash and cash equivalents	$	(240,723)	$	(261,370)	$	20,647


•	A prolonged period of generating lower earnings or cash from operations could result in additional credit rating downgrades, higher costs of borrowing, or limit our access to additional debt. Further detail on this risk is described in the risk factor in our 2019 Annual Report related to ~~“Future Credit Rating Downgrades or Capital Market Disruptions”~~.


Exhibit Number			Exhibit Number	Description	Exhibit Number in this Form 10-Q

3(i)(a)			3(i)(a)	Amended and Restated Certificate of Incorporation of Pitney Bowes Inc. (incorporated by reference to Exhibit 3(i)(a) to the Form 8-K filed with the Commission on September 30, 2019)	3(i)(a)
3			3	Pitney Bowes Inc. Amended and Restated By-laws effective May 13, 2013 (incorporated by reference to Exhibit 3 to the Form 8-K filed with the Commission on May 15, 2013)	3

Exhibit Number	Description	Exhibit Number in this Form 10-Q
3(i)(a)	Amended and Restated Certificate of Incorporation of Pitney Bowes Inc. (incorporated by reference to Exhibit 3(i)(a) to the Form 8-K filed with the Commission on September 30, 2019)	3(i)(a)
3	Pitney Bowes Inc. Amended and Restated By-laws effective May 13, 2013 (incorporated by reference to Exhibit 3 to the Form 8-K filed with the Commission on May 15, 2013)	3
4.1			4.1	Indenture, dated March 19, 2021, among Pitney Bowes Inc., the guarantors party thereto and Truist Bank, as trustee, with respect to Pitney Bowes Inc.'s 6.875% Senior Notes due 2027. (incorporate by reference to Exhibit 4.1 to the Form 8-K filed with the Commission on March 23, 2021)	4.1
4.2			4.2	Indenture, dated March 19, 2021, among Pitney Bowes Inc., the guarantors party thereto and Truist Bank, as trustee, with respect to Pitney Bowes Inc.'s 7.250% Senior Notes due 2029. (incorporate by reference to Exhibit 4.1 to the Form 8-K filed with the Commission on March 23, 2021)	4.2
10.1			10.1	First Amendment, dated as of March 19, 2021, among Pitney Bowes Inc., the subsidiaries of Pitney Bowes Inc. party thereto, the lenders and issuing banks party thereto, and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the Commission on March 23, 2021)	10.1
10.2			10.2	First Refinancing Agreement, dated as of March 19, 2021, among Pitney Bowes Inc., the subsidiaries of Pitney Bowes Inc. party thereto and JPMorgan Chase Bank, N.A., as administrative agent and refinancing tranche B term lender. (incorporated by reference to Exhibit 10.2 to the Form 8-K filed with the Commission on March 23, 2021)	10.2
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	31.1	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	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	32.1	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	32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350	32.2
101.SCH	Inline XBRL Taxonomy Extension Schema Document		101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Calculation Linkbase Document		101.CAL	Inline XBRL Taxonomy Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Definition Linkbase Document		101.DEF	Inline XBRL Taxonomy Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Label Linkbase Document		101.LAB	Inline XBRL Taxonomy Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Presentation Linkbase Document		101.PRE	Inline XBRL Taxonomy Presentation Linkbase Document
104	The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, formatted in Inline XBRL. (included as Exhibit 101).		104	The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, formatted in Inline XBRL. (included as Exhibit 101).