PITNEY BOWES INC /DE/ - Quarter Report: 2022 June (Form 10-Q)

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, 2022

☐ 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.

(Exact name of registrant as specified in its charter)

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

Accelerated filer

☐

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 29, 2022, 173,876,935 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

	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2022 and 2021	3

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2022 and 2021	4

	Condensed Consolidated Balance Sheets at June 30, 2022 and December 31, 2021	5

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021	6

	Notes to Condensed Consolidated Financial Statements	7

Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31

Item 3:	Quantitative and Qualitative Disclosures about Market Risk	40

Item 4:	Controls and Procedures	40


Part II - Other Information:

Item 1:	Legal Proceedings	41

Item 1A:	Risk Factors	41

Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	41

Item 6:	Exhibits	42


Signatures		43

PART I. FINANCIAL INFORMATION

Item 1: Financial Statements

PITNEY BOWES INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; in thousands, except per share amounts)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Revenue:
Business services	$	551,478	$	567,022	$	1,148,862	$	1,137,476
Support services	107,625		115,156		217,977		233,853
Financing	67,298		73,453		139,327		151,265
Equipment sales	89,986		86,267		179,282		173,070
Supplies	38,245		38,655		79,306		80,879
Rentals	16,863		18,650		33,683		37,857
Total revenue	871,495		899,203		1,798,437		1,814,400
Costs and expenses:
Cost of business services	477,544		482,814		980,759		982,348
Cost of support services	37,711		37,679		74,845		74,396
Financing interest expense	12,533		11,773		24,135		23,659
Cost of equipment sales	63,815		61,561		127,586		123,401
Cost of supplies	11,028		10,467		22,545		21,678
Cost of rentals	7,473		6,013		12,782		12,460
Selling, general and administrative	226,638		236,190		469,423		474,292
Research and development	11,254		11,059		22,588		22,375
Restructuring charges	4,224		4,844		8,408		7,733

Interest expense, net	21,007		24,346		43,131		49,504
Other components of net pension and postretirement cost	958		312		1,802		662
Other (income) expense	—		(13,646)		(11,901)		37,748
Total costs and expenses	874,185		873,412		1,776,103		1,830,256
(Loss) income from continuing operations before taxes	(2,690)		25,791		22,334		(15,856)
(Benefit) provision for income taxes	(7,026)		4,915		(2,823)		(9,077)
Income (loss) from continuing operations	4,336		20,876		25,157		(6,779)
Loss from discontinued operations, net of tax	—		(1,020)		—		(4,906)
Net income (loss)	$	4,336	$	19,856	$	25,157	$	(11,685)
Basic earnings (loss) per share (1):
Continuing operations	$	0.02	$	0.12	$	0.14	$	(0.04)
Discontinued operations	—		(0.01)		—		(0.03)
Net income (loss)	$	0.02	$	0.11	$	0.14	$	(0.07)
Diluted earnings (loss) per share (1):
Continuing operations	$	0.02	$	0.12	$	0.14	$	(0.04)
Discontinued operations	—		(0.01)		—		(0.03)
Net income (loss)	$	0.02	$	0.11	$	0.14	$	(0.07)

(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)

(Unaudited; in thousands)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net income (loss)	$	4,336	$	19,856	$	25,157	$	(11,685)
Other comprehensive loss (income), net of tax:
Foreign currency translation, net of tax of $(2,907), $309, $(3,074) and $297, respectively	(48,138)		3,509		(65,703)		(10,749)
Net unrealized gain (loss) on cash flow hedges, net of tax of $407, $(466), $2,176 and $1,135, respectively	1,229		(1,406)		6,562		3,424
Net unrealized (loss) gain on investment securities, net of tax of $(3,661), $1,306, $(8,808) and $(1,650), respectively	(11,043)		3,939		(26,565)		(4,977)

Amortization of pension and postretirement costs, net of tax of $1,870, $3,303, $4,331 and $6,511, respectively	8,229		10,193		15,965		20,130
Other comprehensive (loss) income, net of tax	(49,723)		16,235		(69,741)		7,828
Comprehensive (loss) income	$	(45,387)	$	36,091	$	(44,584)	$	(3,857)

See Notes to Condensed Consolidated Financial Statements

PITNEY BOWES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; in thousands, except per share amount)


	June 30, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	570,697	$	732,480
Short-term investments (includes $2,534 and $2,658, respectively, reported at fair value)	11,519		14,440
Accounts and other receivables (net of allowance of $12,176 and $11,168, respectively)	268,722		334,630
Short-term finance receivables (net of allowance of $11,801 and $12,812, respectively)	557,571		560,680
Inventories	82,797		78,588
Current income taxes	15,875		13,894
Other current assets and prepayments	151,090		120,947
Assets held for sale	108,677		36,394

Total current assets	1,766,948		1,892,053
Property, plant and equipment, net	427,438		429,162
Rental property and equipment, net	30,889		34,774
Long-term finance receivables (net of allowance of $12,857 and $13,406 respectively)	592,928		587,427
Goodwill	1,060,452		1,135,103
Intangible assets, net	82,770		132,442
Operating lease assets	242,452		208,428
Noncurrent income taxes	62,849		68,398
Other assets (includes $252,457 and $318,754, respectively, reported at fair value)	410,865		471,084
Total assets	$	4,677,591	$	4,958,871

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	827,639	$	922,543
Customer deposits at Pitney Bowes Bank	616,150		632,062
Current operating lease liabilities	42,253		40,299
Current portion of long-term debt	24,752		24,739
Advance billings	96,573		99,280
Current income taxes	2,865		9,017
Liabilities held for sale	18,700		—

Total current liabilities	1,628,932		1,727,940
Long-term debt	2,194,767		2,299,099
Deferred taxes on income	268,416		286,445
Tax uncertainties and other income tax liabilities	31,643		31,935
Noncurrent operating lease liabilities	227,238		192,092
Other noncurrent liabilities	282,441		308,728
Total liabilities	4,633,437		4,846,239

Commitments and contingencies (See Note 13)

Stockholders’ equity:
Common stock, $1 par value (480,000 shares authorized; 323,338 shares issued)	323,338		323,338
Additional paid-in capital	—		2,485
Retained earnings	5,137,248		5,169,270
Accumulated other comprehensive loss	(850,053)		(780,312)
Treasury stock, at cost (149,753 and 148,607 shares, respectively)	(4,566,379)		(4,602,149)
Total stockholders’ equity	44,154		112,632
Total liabilities and stockholders’ equity	$	4,677,591	$	4,958,871

See Notes to Condensed Consolidated Financial Statements

PITNEY BOWES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in thousands)


	Six Months Ended June 30,
	2022		2021
Cash flows from operating activities:
Net income (loss)	$	25,157	$	(11,685)
Loss from discontinued operations, net of tax	—		4,906
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation and amortization	85,472		79,416
Allowance for credit losses	7,092		4,988
Stock-based compensation	9,866		12,278
Amortization of debt fees	2,985		4,103
Loss on debt redemption/refinancing	4,993		52,383
Restructuring charges	8,408		7,733
Restructuring payments	(8,255)		(8,825)
Pension contributions and retiree medical payments	(18,559)		(18,784)
Gain on sale of assets	(14,372)		(1,434)
Gain on sale of business	(2,522)		(10,201)


Changes in operating assets and liabilities, net of acquisitions/divestitures:
Accounts and other receivables	50,340		72,791
Finance receivables	1,260		30,620
Inventories	(4,078)		(1,884)
Other current assets and prepayments	(33,833)		1,567
Accounts payable and accrued liabilities	(72,101)		(56,038)
Current and noncurrent income taxes	(14,069)		(11,807)
Advance billings	(285)		5,271
Other, net	18,195		(10,669)


Net cash from operating activities	45,694		144,729
Cash flows from investing activities:
Capital expenditures	(64,174)		(83,703)
Purchases of investment securities	(3,988)		(68,143)
Proceeds from sales/maturities of investment securities	18,601		58,870
Net investment in loan receivables	(22,537)		(2,964)
Proceeds from asset sales	50,766		1,840
Proceeds from sale of business	3,284		27,573

Other investing activities	(9,470)		—
Net cash from investing activities - continuing operations	(27,518)		(66,527)
Net cash from investing activities - discontinued operations	—		(1,507)
Net cash from investing activities	(27,518)		(68,034)
Cash flows from financing activities:

Proceeds from the issuance of debt, net of discount	—		1,195,500
Principal payments of debt	(106,779)		(1,339,568)
Premiums and fees paid to redeem/refinance debt	(4,759)		(46,937)
Dividends paid to stockholders	(17,313)		(17,325)
Customer deposits at Pitney Bowes Bank	(15,912)		15,633
Common stock repurchases	(13,446)		—
Other financing activities	(8,295)		(6,327)
Net cash from financing activities	(166,504)		(199,024)
Effect of exchange rate changes on cash and cash equivalents	(13,455)		349
Change in cash and cash equivalents	(161,783)		(121,980)
Cash and cash equivalents at beginning of period	732,480		921,450


Cash and cash equivalents at end of period	$	570,697	$	799,470

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 shipping and mailing company that provides technology, logistics, and financial services to small and medium sized businesses, large enterprises, including more than 90 percent of the Fortune 500, retailers and government clients around the world. These clients rely on us to remove the complexity and increase the efficiency in their sending of mail and parcels. For additional information, visit www.pitneybowes.com.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and the instructions to Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In addition, the December 31, 2021 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, 2022. These statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report to Stockholders on Form 10-K for the year ended December 31, 2021 (2021 Annual Report).

Net income for the six months ended June 30, 2022 benefited by approximately $3 million from adjustments related to prior years. The impact of this adjustment was not material to the consolidated financial statements for any prior quarterly or annual periods, and is not expected to be material to the current annual period.

Risks and Uncertainties

The effects of COVID-19 and the risk of a global recession continues to impact how we and our clients conduct business. The impacts on our business remain unpredictable and accordingly, we are not able to reasonably estimate the full extent of their impact on our operating results, financial position and cash flows.

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 accommodations provided by the ASU are effective through December 31, 2022, and may be applied at the beginning of any interim period within that time frame.

We have matched LIBOR-based debt with LIBOR-based interest rate swaps and have elected to apply the practical expedient related to probability and the assessment of the effectiveness for future LIBOR-indexed cash flows, which assumes that the debt instrument will use the same index rate as its corresponding interest rate swap once a new reference rate is established to replace LIBOR. We may apply other expedients as additional reference rate changes occur. We continue to assess the impact of this standard on our consolidated financial statements.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which requires disclosure of gross write-offs and recoveries of financing receivables by year of origination. The standard is effective for interim and annual periods beginning after December 15, 2022, with early adoption permitted. We are currently assessing the impact this standard will have on our financial statement disclosures.

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 June 30, 2022
	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	$	393,770	$	138,934	$	18,774	$	551,478	$	—	$	551,478
Support services	—		—		107,625		107,625		—		107,625
Financing	—		—		—		—		67,298		67,298
Equipment sales	—		—		21,400		21,400		68,586		89,986
Supplies	—		—		38,245		38,245		—		38,245
Rentals	—		—		—		—		16,863		16,863
Subtotal	393,770		138,934		186,044		718,748		$	152,747	$	871,495

Revenue from leasing transactions and financing	—		—		152,747		152,747


Total revenue	$	393,770	$	138,934	$	338,791	$	871,495

Timing of revenue recognition from products and services
Products/services transferred at a point in time	$	—	$	—	$	76,153	$	76,153
Products/services transferred over time	393,770		138,934		109,891		642,595
Total	$	393,770	$	138,934	$	186,044	$	718,748


	Three Months Ended June 30, 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	$	418,429	$	134,619	$	13,974	$	567,022	$	—	$	567,022
Support services	—		—		115,156		115,156		—		115,156
Financing	—		—		—		—		73,453		73,453
Equipment sales	—		—		22,394		22,394		63,873		86,267
Supplies	—		—		38,655		38,655		—		38,655
Rentals	—		—		—		—		18,650		18,650
Subtotal	418,429		134,619		190,179		743,227		$	155,976	$	899,203

Revenue from leasing transactions and financing	—		—		155,976		155,976


Total revenue	$	418,429	$	134,619	$	346,155	$	899,203

Timing of revenue recognition from products and services
Products/services transferred at a point in time	$	—	$	—	$	77,275	$	77,275
Products/services transferred over time	418,429		134,619		112,904		665,952
Total	$	418,429	$	134,619	$	190,179	$	743,227

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, 2022
	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	$	812,297	$	299,478	$	37,087	$	1,148,862	$	—	$	1,148,862
Support services	—		—		217,977		217,977		—		217,977
Financing	—		—		—		—		139,327		139,327
Equipment sales	—		—		42,699		42,699		136,583		179,282
Supplies	—		—		79,306		79,306		—		79,306
Rentals	—		—		—		—		33,683		33,683
Subtotal	812,297		299,478		377,069		1,488,844		$	309,593	$	1,798,437


Revenue from leasing transactions and financing	—		—		309,593		309,593


Total revenue	$	812,297	$	299,478	$	686,662	$	1,798,437

Timing of revenue recognition from products and services
Products/services transferred at a point in time	$	—	$	—	$	154,526	$	154,526
Products/services transferred over time	812,297		299,478		222,543		1,334,318
Total	$	812,297	$	299,478	$	377,069	$	1,488,844



	Six Months Ended June 30, 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	$	831,515	$	277,745	$	28,216	$	1,137,476	$	—	$	1,137,476
Support services	—		—		233,853		233,853		—		233,853
Financing	—		—		—		—		151,265		151,265
Equipment sales	—		—		41,511		41,511		131,559		173,070
Supplies	—		—		80,879		80,879		—		80,879
Rentals	—		—		—		—		37,857		37,857
Subtotal	831,515		277,745		384,459		1,493,719		$	320,681	$	1,814,400


Revenue from leasing transactions and financing	—		—		320,681		320,681


Total revenue	$	831,515	$	277,745	$	705,140	$	1,814,400

Timing of revenue recognition from products and services
Products/services transferred at a point in time	$	—	$	—	$	154,811	$	154,811
Products/services transferred over time	831,515		277,745		229,648		1,338,908
Total	$	831,515	$	277,745	$	384,459	$	1,493,719

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

Support services includes providing maintenance, professional and subscription services for our equipment and digital mailing and shipping technology solutions. Contract terms range from one to five years, depending on the term of the lease contract for the related equipment. Revenue for maintenance and subscription services is recognized ratably over the contract period and revenue for professional services is recognized when services are provided.

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

Supplies revenue includes revenue from supplies for our mailing equipment and is recognized upon delivery.

Revenue from leasing transactions and financing includes revenue from sales-type and operating leases, finance income, late fees and investment income, gains and losses at the Bank.

Advance Billings from Contracts with Customers


	Balance sheet location	June 30, 2022		December 31, 2021		Increase/ (decrease)
Advance billings, current	Advance billings	$	88,504	$	92,926	$	(4,422)
Advance billings, noncurrent	Other noncurrent liabilities	$	996	$	1,109	$	(113)

Advance billings are recorded when cash payments are due in advance of our performance. Revenue is recognized ratably over the contract term. Items in advance billings primarily relate to support services on mailing equipment. Revenue recognized during the period includes $73 million of advance billings at the beginning of the period. Advance billings, current reported on the condensed consolidated balance sheets at June 30, 2022 and December 31, 2021 also includes $8 million and $6 million, respectively, from leasing transactions.

Future Performance Obligations

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


	Remainder of 2022		2023		2024-2027		Total
SendTech Solutions	$	139,124	$	229,620	$	308,281	$	677,025

The amounts above do not include revenue for performance obligations under contracts with terms less than 12 months or revenue for performance obligations where revenue is recognized based on the amount billable to the customer.

PITNEY BOWES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

3. Segment Information

Our reportable segments are Global Ecommerce, Presort Services and SendTech Solutions. The principal products and services of each reportable segment are as follows:

Global Ecommerce: Includes the revenue and related expenses from business to consumer logistics services for domestic and cross-border delivery, returns and fulfillment.

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

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

Management measures segment profitability and performance using segment earnings before interest and taxes (EBIT). Segment EBIT is calculated by deducting from segment revenue the related costs and expenses attributable to the segment. Segment EBIT excludes interest, taxes, unallocated corporate expenses, restructuring charges, asset and goodwill impairment charges and other items not allocated to a business segment. Costs related to shared assets are allocated to the relevant segments. Management believes that segment EBIT 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 a reconciliation of segment EBIT to net income (loss).


	Revenue
	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Global Ecommerce	$	393,770	$	418,429	$	812,297	$	831,515
Presort Services	138,934		134,619		299,478		277,745
SendTech Solutions	338,791		346,155		686,662		705,140
Total revenue	$	871,495	$	899,203	$	1,798,437	$	1,814,400


	EBIT
	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Global Ecommerce	$	(28,825)	$	(10,831)	$	(42,521)	$	(37,207)
Presort Services	12,851		16,134		32,483		35,185
SendTech Solutions	95,565		107,121		200,140		221,591
Total segment EBIT	79,591		112,424		190,102		219,569
Reconciliation of Segment EBIT to net income (loss):
Unallocated corporate expenses	(40,761)		(56,316)		(98,595)		(113,781)
Restructuring charges	(4,224)		(4,844)		(8,408)		(7,733)
Interest expense, net	(33,540)		(36,119)		(67,266)		(73,163)


Loss on debt redemption/refinancing	—		(989)		(4,993)		(52,383)
Gain on sale of business	—		10,201		2,522		10,201
Gain on sale of assets	—		1,434		14,372		1,434
Transaction costs	(3,756)		—		(5,400)		—
Benefit (provision) for income taxes	7,026		(4,915)		2,823		9,077
Income (loss) from continuing operations	4,336		20,876		25,157		(6,779)
Loss from discontinued operations, net of tax	—		(1,020)		—		(4,906)
Net income (loss)	$	4,336	$	19,856	$	25,157	$	(11,685)

PITNEY BOWES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Effective for 2022, we refined our methodology for allocating transportation costs between Global Ecommerce and Presort Services, resulting in an increase to Global Ecommerce EBIT and a corresponding decrease to Presort Services EBIT of approximately $3 million and $7 million for the three and six months ended June 30, 2022, respectively.

4. Earnings per Share (EPS)

The calculation of basic and diluted earnings per share is presented below. The sum of the earnings per share amounts may not equal the totals due to rounding.


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Numerator:
Income (loss) from continuing operations	$	4,336	$	20,876	$	25,157	$	(6,779)
Loss from discontinued operations, net of tax	—		(1,020)		—		(4,906)


Net income (loss)	$	4,336	$	19,856	$	25,157	$	(11,685)
Denominator:
Weighted-average shares used in basic EPS	173,490		173,970		173,859		173,367
Dilutive effect of common stock equivalents (1)	3,479		5,009		3,814		—
Weighted-average shares used in diluted EPS	176,969		178,979		177,673		173,367
Basic earnings (loss) per share:
Continuing operations	$	0.02	$	0.12	$	0.14	$	(0.04)
Discontinued operations	—		(0.01)		—		(0.03)
Net income (loss)	$	0.02	$	0.11	$	0.14	$	(0.07)
Diluted earnings (loss) per share:
Continuing operations	$	0.02	$	0.12	$	0.14	$	(0.04)
Discontinued operations	—		(0.01)		—		(0.03)
Net income (loss)	$	0.02	$	0.11	$	0.14	$	(0.07)

Common stock equivalents excluded from calculation of diluted earnings per share because their impact would be anti-dilutive:	9,602		6,451		9,602		6,451

(1) Due to the net loss for the six months ended June 30, 2021, common stock equivalents of 5,382 were also excluded from the calculation of diluted earnings per share.

5. Inventories

Inventories are stated at the lower of cost, determined on the first-in, first-out (FIFO) basis, or net realizable value. Inventories consisted of the following:


	June 30, 2022		December 31, 2021
Raw materials	$	22,940	$	22,352
Supplies and service parts	30,049		26,076
Finished products	29,808		30,160


Total inventory, net	$	82,797	$	78,588

PITNEY BOWES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

6. Finance Assets and Lessor Operating Leases

Finance Assets

Finance receivables are comprised of sales-type lease receivables, secured loans and unsecured loans. Sales-type leases and secured loans are from financing options provided to clients for Pitney Bowes equipment or leasing of other manufacturers' equipment and are generally due in installments over periods ranging from three to five years. Unsecured loans comprise revolving credit lines offered to our clients for postage, supplies and working capital purposes. These revolving credit lines are generally due monthly; however, clients may rollover outstanding balances. Interest is recognized on finance receivables using the effective interest method. Annual fees are recognized ratably over the annual period covered and client acquisition costs are expensed as incurred. All finance receivables are in our SendTech Solutions segment and we segregate finance receivables into a North America portfolio and an International portfolio.

Finance receivables consisted of the following:


	June 30, 2022						December 31, 2021
	North America		International		Total		North America		International		Total
Sales-type lease receivables
Gross finance receivables	$	956,365	$	157,740	$	1,114,105	$	958,440	$	187,831	$	1,146,271
Unguaranteed residual values	38,123		9,451		47,574		37,896		10,717		48,613
Unearned income	(237,143)		(48,460)		(285,603)		(246,381)		(56,643)		(303,024)
Allowance for credit losses	(18,438)		(2,522)		(20,960)		(19,546)		(3,246)		(22,792)
Net investment in sales-type lease receivables	738,907		116,209		855,116		730,409		138,659		869,068
Loan receivables
Loan receivables	278,472		20,609		299,081		262,310		20,155		282,465
Allowance for credit losses	(3,528)		(170)		(3,698)		(3,259)		(167)		(3,426)
Net investment in loan receivables	274,944		20,439		295,383		259,051		19,988		279,039
Net investment in finance receivables	$	1,013,851	$	136,648	$	1,150,499	$	989,460	$	158,647	$	1,148,107

Maturities of gross finance receivables at June 30, 2022 were as follows:


	Sales-type Lease Receivables						Loan Receivables
	North America		International		Total		North America		International		Total
Remainder 2022	$	195,735	$	46,071	$	241,806	$	222,590	$	20,609	$	243,199
2023	324,790		49,092		373,882		21,785		—		21,785
2024	224,487		32,113		256,600		16,518		—		16,518
2025	134,494		18,892		153,386		11,345		—		11,345
2026	65,143		8,573		73,716		4,898		—		4,898
Thereafter	11,716		2,999		14,715		1,336		—		1,336
Total	$	956,365	$	157,740	$	1,114,105	$	278,472	$	20,609	$	299,081

PITNEY BOWES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Aging of Receivables

The aging of gross finance receivables was as follows:


	June 30, 2022
	Sales-type Lease Receivables				Loan Receivables
	North America		International		North America		International		Total
Past due amounts 0 - 90 days	$	949,440	$	155,312	$	273,985	$	20,556	$	1,399,293
Past due amounts > 90 days	6,925		2,428		4,487		53		13,893
Total	$	956,365	$	157,740	$	278,472	$	20,609	$	1,413,186
Past due amounts > 90 days
Still accruing interest	$	1,898	$	659	$	—	$	—	$	2,557
Not accruing interest	5,027		1,769		4,487		53		11,336
Total	$	6,925	$	2,428	$	4,487	$	53	$	13,893


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

Allowance for Credit Losses

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

We established credit approval limits based on the credit quality of the client and the type of equipment financed. We cease recognition of financing revenue for lease receivables greater than 120 days past due and for unsecured loan receivables greater than 90 days past due. Revenue recognition is resumed when the client's payments reduce the account aging to less than 60 days past due. Finance receivables are written off against the allowance after all collection efforts have been exhausted and management deems the account to be uncollectible. We believe that our 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, 2022	$	19,546	$	3,246	$	3,259	$	167	$	26,218

Amounts charged to expense	145		73		1,408		186		1,812
Write-offs	(2,806)		(433)		(2,491)		(152)		(5,882)
Recoveries	1,572		—		1,354		—		2,926
Other	(19)		(364)		(2)		(31)		(416)
Balance at June 30, 2022	$	18,438	$	2,522	$	3,528	$	170	$	24,658

	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	1,127		(81)		1,477		(23)		2,500
Write-offs	(2,226)		(631)		(3,392)		(29)		(6,278)
Recoveries	1,500		146		1,862		1		3,509
Other	34		(78)		5		5		(34)
Balance at June 30, 2021	$	23,352	$	5,362	$	6,436	$	416	$	35,566

Credit Quality

The extension of credit and management of credit lines to new and existing clients uses a combination of a client's credit score, where available, a detailed manual review of their financial condition and payment history, or an automated process. Once credit is granted, the payment performance of the client is managed through automated collections processes and is supplemented with direct follow up should an account become delinquent. We have robust automated collections and extensive portfolio management processes to ensure that our global strategy is executed, collection resources are allocated and enhanced tools and processes are implemented as needed.

Over 85% of our finance receivables are within the North American portfolio. We use a third party to score the majority of this portfolio on a quarterly basis using a proprietary commercial credit score. The relative scores are determined based on a number of factors, including financial information, payment history, company type and ownership structure. We stratify the third party's credit scores of our clients into low, medium and high-risk accounts. Due to timing and other issues, our entire portfolio may not be scored at period end. We report these amounts as "Not Scored" however, absence of a score is not indicative of the credit quality of the account. The third-party credit score is used to predict the payment behaviors of our clients and the probability that an account will become greater than 90 days past due during the subsequent 12-month period.

•Low risk accounts are companies with very good credit scores and a predicted delinquency rate of less than 5%.

•Medium risk accounts are companies with average to good credit scores and a predicted delinquency rate between 5% and 10%.

•High risk accounts are companies with poor credit scores, are delinquent or are at risk of becoming delinquent. The predicted delinquency rate would be greater than 10%.

We do not use a third party to score our International portfolio because the cost to do so is prohibitive as there is no single credit score model that covers all countries. Accordingly, the entire International portfolio is reported in the Not Scored category. This portfolio comprises less than 15% of total finance receivables. Most of the International credit applications are small dollar applications (i.e. below $50 thousand) and are subjected to an automated review process. Larger credit applications are manually reviewed, which includes obtaining client financial information, credit reports and other available financial information.

PITNEY BOWES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

The table below shows gross finance receivables by relative risk class and year of origination based on the relative scores of the accounts within each class as of June 30, 2022 and December 31, 2021.


	June 30, 2022
	Sales Type Lease Receivables												Loan Receivables		Total
	2022		2021		2020		2019		2018		Prior
Low	$	149,028	$	239,044	$	168,984	$	131,081	$	64,344	$	25,612	$	201,467	$	979,560
Medium	24,967		40,808		30,332		24,239		11,813		5,657		62,402		200,218
High	3,096		4,588		4,415		3,068		1,520		906		4,974		22,567
Not Scored	34,763		64,173		38,386		28,750		13,150		1,381		30,238		210,841
Total	$	211,854	$	348,613	$	242,117	$	187,138	$	90,827	$	33,556	$	299,081	$	1,413,186

	December 31, 2021
	Sales Type Lease Receivables												Loan Receivables		Total
	2021		2020		2019		2018		2017		Prior
Low	$	274,191	$	195,421	$	162,479	$	95,661	$	33,698	$	14,862	$	192,161	$	968,473
Medium	43,403		34,955		31,038		17,895		6,981		3,619		55,708		193,599
High	5,474		5,017		4,044		2,708		849		889		4,822		23,803
Not Scored	45,644		54,097		47,973		33,998		19,161		12,214		29,774		242,861
Total	$	368,712	$	289,490	$	245,534	$	150,262	$	60,689	$	31,584	$	282,465	$	1,428,736

Lease Income

Lease income from sales-type leases, excluding variable lease payments, was as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Profit recognized at commencement	$	34,337	$	32,057	$	69,378	$	64,365
Interest income	41,021		47,770		83,304		96,266
Total lease income from sales-type leases	$	75,358	$	79,827	$	152,682	$	160,631

Lessor Operating Leases

We also lease mailing equipment under operating leases with terms of one to five years. Maturities of these operating leases are as follows:


Remainder 2022	$	12,021
2023	17,793
2024	16,087
2025	7,914
2026	2,177
Thereafter	453
Total	$	56,445

PITNEY BOWES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

7. Divestiture, Intangible Assets and Goodwill

Divestiture

On June 20, 2022, we entered into a definitive agreement to sell our Borderfree cross-border ecommerce solutions business (Borderfree) for $100 million. This transaction closed on July 1, 2022.

As of June 30, 2022, the assets and liabilities of Borderfree were classified as assets held for sale and liabilities held for sale. The major categories of assets and liabilities of Borderfree included in assets held for sale and liabilities held for sale is shown in the table below.


	June 30, 2022
Cash and cash equivalents	$	5,732
Accounts and other receivables, net	5,021



Property, plant and equipment, net	4,325

Goodwill	55,878
Intangible assets	34,214


All other assets	3,507
Assets held for sale	$	108,677

Accounts payable and accrued liabilities	$	10,338



Deferred taxes on income	5,971
All other liabilities	2,391
Liabilities held for sale	$	18,700

Intangible Assets

Intangible assets consisted of the following:


	June 30, 2022						December 31, 2021
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Customer relationships	$	151,953	$	(72,705)	$	79,248	$	268,187	$	(141,492)	$	126,695
Software & technology	21,894		(18,372)		3,522		21,981		(16,234)		5,747

Total intangible assets	$	173,847	$	(91,077)	$	82,770	$	290,168	$	(157,726)	$	132,442

Amortization expense for both the three months ended June 30, 2022 and 2021 was $8 million and amortization expense for both the six months ended June 30, 2022 and 2021 was $15 million.

PITNEY BOWES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Future amortization expense as of June 30, 2022 is shown in the table below. Actual amortization expense may differ due to, among other things, fluctuations in foreign currency exchange rates, acquisitions, divestitures and impairment charges.


Remainder 2022	$	8,614
2023	15,327
2024	15,327
2025	15,123
2026	14,134
Thereafter	14,245
Total	$	82,770

Goodwill

Goodwill is tested annually for impairment at the reporting unit level during the fourth quarter or sooner if circumstances indicate an impairment may exist. The impairment test for goodwill determines the fair value of each reporting unit and compares it to the reporting unit's carrying value, including goodwill. If the fair value of a reporting unit exceeds the carrying value of the net assets assigned to that reporting unit, goodwill is not impaired and no further testing is required. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, the goodwill impairment loss is calculated as the difference between these amounts, limited to the amount of goodwill allocated to the reporting unit.

We determined that the agreement to sell Borderfree was a triggering event that indicated an impairment may exist. Accordingly, we performed a goodwill impairment test of the Global Ecommerce reporting unit to assess the recoverability of the carrying value of remaining goodwill. We engaged a third-party to assist in the determination of the fair value of the reporting unit.

The results of our test indicated that no impairment existed; however, the estimated fair value of the Global Ecommerce reporting unit exceeded its carrying value by less than 20%. The determination of fair value 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 potentially result in an impairment charge in the future. These estimates and assumptions are considered Level 3 inputs under the fair value hierarchy.

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


	December 31, 2021		Disposition		Currency impact		June 30, 2022
Global Ecommerce	$	395,062	$	(55,878)	$	—	$	339,184
Presort Services	220,992		—		—		220,992
SendTech Solutions	519,049		—		(18,773)		500,276
Total goodwill	$	1,135,103	$	(55,878)	$	(18,773)	$	1,060,452

Global Ecommerce goodwill is net of accumulated goodwill impairment charges of $198 million at June 30, 2022 and December 31, 2021.

PITNEY BOWES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

8. Fair Value Measurements and Derivative Instruments

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

Level 1 – 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.


	June 30, 2022
	Level 1		Level 2		Level 3		Total
Assets:
Investment securities
Money market funds	$	84,636	$	164,238	$	—	$	248,874
Equity securities	—		15,167		—		15,167
Commingled fixed income securities	1,569		13,445		—		15,014
Government and related securities	9,018		19,870		—		28,888
Corporate debt securities	—		54,683		—		54,683
Mortgage-backed / asset-backed securities	—		140,114		—		140,114
Derivatives
Interest rate swap	—		12,030		—		12,030
Foreign exchange contracts	—		675		—		675
Total assets	$	95,223	$	420,222	$	—	$	515,445
Liabilities:
Derivatives

Foreign exchange contracts	$	—	$	(2,505)	$	—	$	(2,505)
Total liabilities	$	—	$	(2,505)	$	—	$	(2,505)

PITNEY BOWES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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


	December 31, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Investment securities
Money market funds	$	88,705	$	338,043	$	—	$	426,748
Equity securities	—		29,356		—		29,356
Commingled fixed income securities	1,692		16,815		—		18,507
Government and related securities	9,790		25,439		—		35,229
Corporate debt securities	—		65,167		—		65,167
Mortgage-backed / asset-backed securities	—		172,018		—		172,018
Derivatives
Interest rate swap	—		3,103		—		3,103
Foreign exchange contracts	—		2,474		—		2,474
Total assets	$	100,187	$	652,415	$	—	$	752,602
Liabilities:
Derivatives

Foreign exchange contracts	$	—	$	(304)	$	—	$	(304)
Total liabilities	$	—	$	(304)	$	—	$	(304)

Investment Securities

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

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

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

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

•Government and Related Securities: Debt securities are classified as Level 1 when unadjusted quoted prices in active markets are available. Debt securities are classified as Level 2 where fair value is determined using quoted market prices for similar securities or benchmarking model derived prices to quoted market prices and trade data for identical or comparable securities.

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

•Mortgage-Backed Securities / Asset-Backed Securities: These securities are valued based on external pricing indices or 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. 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

Investment securities classified as available-for-sale are recorded at fair value with changes in fair value due to market conditions (i.e., interest rates) recorded in accumulated other comprehensive loss (AOCL), and changes in fair value due to credit conditions recorded in earnings. There were no unrealized losses due to credit losses charged to earnings through the six months ended June 30, 2022.

Available-for-sale securities consisted of the following:


	June 30, 2022
	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Government and related securities	$	35,921	$	30	$	(7,063)	$	28,888
Corporate debt securities	67,129		1		(12,447)		54,683
Commingled fixed income securities	1,735		—		(166)		1,569
Mortgage-backed / asset-backed securities	163,527		2		(23,415)		140,114
Total	$	268,312	$	33	$	(43,091)	$	225,254


	December 31, 2021
	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Government and related securities	$	36,160	$	81	$	(1,012)	$	35,229
Corporate debt securities	67,906		259		(2,998)		65,167
Commingled fixed income securities	1,725		—		(33)		1,692
Mortgage-backed / asset-backed securities	176,559		144		(4,685)		172,018
Total	$	282,350	$	484	$	(8,728)	$	274,106

Investment securities in a loss position were as follows:


	June 30, 2022				December 31, 2021
	Fair Value		Gross unrealized losses		Fair Value		Gross unrealized losses
Greater than 12 continuous months
Government and related securities	$	22,325	$	4,823	$	16,018	$	579
Corporate debt securities	46,695		11,501		51,385		2,658
Commingled fixed income securities	1,569		166		—		—
Mortgage-backed / asset-backed securities	129,223		22,339		135,441		4,057
Total	$	199,812	$	38,829	$	202,844	$	7,294

Less than 12 continuous months
Government and related securities	$	6,098	$	2,240	$	15,438	$	433
Corporate debt securities	7,566		946		8,859		340
Commingled fixed income securities	—		—		1,692		33
Mortgage-backed / asset-backed securities	10,684		1,076		30,754		628
Total	$	24,348	$	4,262	$	56,743	$	1,434

At June 30, 2022, 92% of the securities were in a loss position. We believe our allowance for credit losses on available-for-sale investment securities is adequate as our investments are primarily in highly liquid U.S. government and agency securities, high grade corporate bonds and municipal bonds. 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 receive the stated principal and interest at maturity.

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, 2022 were as follows:


	Amortized cost		Estimated fair value
Within 1 year	$	2,449	$	2,281
After 1 year through 5 years	14,501		13,366
After 5 years through 10 years	74,801		62,502
After 10 years	176,561		147,105
Total	$	268,312	$	225,254

The actual maturities may not coincide with the scheduled maturities as certain securities contain early redemption features and/or allow for the prepayment of obligations.

Held-to-Maturity Securities

Held-to-maturity securities at June 30, 2022 and December 31, 2021 totaled $21 million and $20 million, respectively.

Derivative Instruments

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

Foreign Exchange Contracts

We enter into foreign exchange contracts to mitigate the currency risk associated with anticipated inventory purchases between affiliates and from third parties. These contracts are designated as cash flow hedges. The effective portion of the gain or loss on cash flow hedges is included in AOCL in the period that the change in fair value occurs and is reclassified to earnings in the period that the hedged item is recorded in earnings. At June 30, 2022 and December 31, 2021, outstanding contracts associated with these anticipated transactions had a notional value of $2 million and $1 million, respectively. Amounts included in AOCL at June 30, 2022 will be recognized in earnings within the next 12 months. No amount of ineffectiveness was recorded in earnings for these designated cash flow hedges.

Interest Rate Swaps

We have interest rate swap agreements with an aggregate notional value of $200 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 AOCL.

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:


Designation of Derivatives	Balance Sheet Location	June 30, 2022		December 31, 2021
Derivatives designated as hedging instruments
Foreign exchange contracts	Other current assets and prepayments	$	80	$	21
	Accounts payable and accrued liabilities	(9)		(10)

Interest rate swaps	Other assets	12,030		3,103

Derivatives not designated as hedging instruments
Foreign exchange contracts	Other current assets and prepayments	595		2,453
	Accounts payable and accrued liabilities	(2,496)		(294)

	Total derivative assets	$	12,705	$	5,577
	Total derivative liabilities	(2,505)		(304)
	Total net derivative asset	$	10,200	$	5,273

Results of cash flow hedging relationships were as follows:


	Three Months Ended June 30,
	Derivative Gain (Loss) Recognized in AOCL (Effective Portion)				Location of Gain (Loss) (Effective Portion)	Gain (Loss) Reclassified from AOCL to Earnings (Effective Portion)
Derivative Instrument	2022		2021			2022		2021
Foreign exchange contracts	$	100	$	(54)	Revenue	$	—	$	118
					Cost of sales	49		(47)
Interest rate swap	1,717		(3,672)		Interest expense	138		—
	$	1,817	$	(3,726)		$	187	$	71

	Six Months Ended June 30,
	Derivative Gain (Loss) Recognized in AOCL (Effective Portion)				Location of Gain (Loss) (Effective Portion)	Gain (Loss) Reclassified from AOCL to Earnings (Effective Portion)
Derivative Instrument	2022		2021			2022		2021
Foreign exchange contracts	$	123	$	174	Revenue	$	—	$	244
					Cost of sales	63		(105)
Interest rate swap	8,927		2,608		Interest expense	275		—
	$	9,050	$	2,782		$	338	$	139

PITNEY BOWES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Nondesignated Derivative Instruments

We also enter into foreign exchange contracts to minimize the impact of exchange rate fluctuations on short-term intercompany loans and related interest that are denominated in a foreign currency. These foreign exchange contracts are not designated as hedging instruments. Accordingly, the revaluation of intercompany loans and interest and the mark-to-market adjustment on these derivatives are recorded in earnings. All outstanding contracts at June 30, 2022 mature within 3 months.

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)	2022		2021
Foreign exchange contracts	Selling, general and administrative expense	$	(17,769)	$	514

		Six Months Ended June 30,
		Derivative Gain (Loss) Recognized in Earnings
Derivatives Instrument	Location of Derivative Gain (Loss)	2022		2021
Foreign exchange contracts	Selling, general and administrative expense	$	(21,183)	$	1,067

Fair Value of Financial Instruments

Our financial instruments include cash and cash equivalents, available-for-sale and held-to-maturity investment securities, accounts receivable, loan receivables, derivative instruments, accounts payable and debt. The carrying value of cash and cash equivalents, held-to-maturity investment securities, accounts receivable, loans receivable, and accounts payable approximate fair value. The fair value of available-for-sale investment securities and derivative instruments are presented above. The fair value of debt is estimated based on recently executed transactions and market price quotations. The inputs used to determine the fair value of debt were classified as Level 2 in the fair value hierarchy. The carrying value and estimated fair value of debt was as follows:


	June 30, 2022		December 31, 2021
Carrying value	$	2,219,519	$	2,323,838
Fair value	$	1,932,664	$	2,355,894

9. Restructuring Charges

Activity in our restructuring reserves was as follows:


	Severance and other exit costs
Balance at January 1, 2022	$	5,747
Amounts charged to expense	8,408
Cash payments	(8,255)
Noncash activity	(275)
Balance at June 30, 2022	$	5,625

Balance at January 1, 2021	$	10,063
Amounts charged to expense	7,733
Cash payments	(8,825)
Noncash activity	(541)
Balance at June 30, 2021	$	8,430

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

PITNEY BOWES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

10. Debt

Total debt consisted of the following:


	Interest rate	June 30, 2022		December 31, 2021


Notes due April 2023	6.20%	—		90,259
Notes due March 2024	4.625%	238,449		242,603
Term loan due March 2026	LIBOR + 1.75%	361,000		370,500
Notes due March 2027	6.875%	400,000		400,000
Term loan due March 2028	LIBOR + 4.0%	444,375		446,625
Notes due March 2029	7.25%	350,000		350,000
Notes due January 2037	5.25%	35,841		35,841
Notes due March 2043	6.70%	425,000		425,000

Other debt		3,068		3,685
Principal amount		2,257,733		2,364,513
Less: unamortized costs, net		38,214		40,675
Total debt		2,219,519		2,323,838
Less: current portion long-term debt		24,752		24,739
Long-term debt		$	2,194,767	$	2,299,099

During 2022, we redeemed the April 2023 notes and recorded a $5 million pre-tax loss in connection with this redemption. We also made scheduled principal repayments of $12 million on our term loans. At June 30, 2022, the interest rate on the 2026 Term Loan was 3.4% and the interest rate of the 2028 Term Loan was 5.7%.

We have outstanding interest rate swaps that effectively convert $200 million of our variable rate debt to fixed rates. Under the terms of these interest rate swap agreements, we pay fixed-rate interest of 0.56% and receive variable-rate interest based on one-month LIBOR. The variable interest rates under the term loans and the swaps reset monthly.

The credit agreement that governs our $500 million secured revolving credit facility and term loans contains financial and non-financial covenants. At June 30, 2022, we were in compliance with all covenants and there were no outstanding borrowings under the revolving credit facility.

PITNEY BOWES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

11. Pensions and Other Benefit Programs

The components of net periodic benefit cost were as follows:


	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,
	2022		2021		2022		2021		2022		2021
Service cost	$	24	$	105	$	332	$	314	$	179	$	226
Interest cost	11,141		10,744		3,450		3,007		939		964
Expected return on plan assets	(17,862)		(19,478)		(6,809)		(8,107)		—		—

Amortization of prior service (credit) cost	(11)		(15)		64		68		—		33
Amortization of net actuarial loss	8,232		9,639		1,726		2,380		88		1,077
Settlement	—		314		—		—		—		—
Net periodic benefit cost (income)	$	1,524	$	1,309	$	(1,237)	$	(2,338)	$	1,206	$	2,300
Contributions to benefit plans	$	1,148	$	1,845	$	392	$	328	$	3,490	$	3,380

	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,
	2022		2021		2022		2021		2022		2021
Service cost	$	48	$	131	$	687	$	709	$	358	$	450
Interest cost	22,282		21,489		7,084		5,968		1,879		1,925
Expected return on plan assets	(35,725)		(38,956)		(14,014)		(16,091)		—		—

Amortization of prior service (credit) cost	(22)		(30)		132		135		—		65
Amortization of net actuarial loss	16,464		19,277		3,547		4,725		175		2,155
Settlement	—		314		—		—		—		—
Net periodic benefit cost (income)	$	3,047	$	2,225	$	(2,564)	$	(4,554)	$	2,412	$	4,595
Contributions to benefit plans	$	2,298	$	2,860	$	8,613	$	9,024	$	7,648	$	6,900

PITNEY BOWES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

12. Income Taxes

For the three months ended June 30, 2022, we reported a tax benefit of $7 million on a pre-tax loss of $3 million primarily due to the recognition of a tax benefit from a tax basis adjustment related to the sale of Borderfree. This benefit is a one-time tax benefit that was recorded as a result of the Borderfree business classified as assets held for sale. For the six months ended June 30, 2022, we reported a tax benefit of $3 million on pre-tax income of $22 million primarily due to the benefit related to the sale of Borderfree and a $1 million benefit associated with the 2019 sale of a business.

The effective tax rate for the three and six months ended June 30, 2021 was 19.1% and 57.2%, respectively, and includes a tax benefit of $5 million due to tax legislation in the U.K. and a tax charge of $6 million on the pre-tax gain of $10 million from the sale of Tacit as the tax basis was lower than the book basis. The effective tax rate for the six months ended June 30, 2021 also includes benefits of $3 million from an affiliate reorganization.

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 15% of our unrecognized tax benefits.

The Internal Revenue Service examinations of our consolidated U.S. income tax returns for tax years prior to 2018 are closed to audit; however, various post-2016 U.S. state and local tax returns are still subject to examination, with some states in appeals from 2011. For our significant non-U.S. jurisdictions, Canada is closed to examination through 2016 except for a specific issue arising in earlier years, France is closed through 2019, Germany is closed through 2016 and the U.K. is closed through 2019. We also have other less significant tax filings currently subject to examination.

13. Commitments and Contingencies

In the ordinary course of business, we are routinely defendants in, or party to, a number of pending and threatened legal actions. These may involve litigation by or against us relating to, among other things, contractual rights under vendor, insurance or other contracts; intellectual property or patent rights; equipment, service, payment or other disputes with clients; or disputes with employees. Some of these actions may be brought as a purported class action on behalf of a purported class of employees, customers or others. In management's opinion, it is not reasonably possible that the potential liability, if any, that may result from these actions, either individually or collectively, will have a material effect on our financial position, results of operations or cash flows. However, as litigation is inherently unpredictable, there can be no assurances in this regard.

As of June 30, 2022, we have entered into real estate and equipment leases with aggregate payments of $124 million and terms ranging from four to eight years that have not commenced.

PITNEY BOWES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

14. Stockholders’ Equity

Changes in stockholders’ equity were as follows:


	Common stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss		Treasury stock		Total equity
Balance at April 1, 2022	$	323,338	$	—	$	5,141,636	$	(800,330)	$	(4,571,762)	$	92,882

Net income	—		—		4,336		—		—		4,336
Other comprehensive loss	—		—		—		(49,723)		—		(49,723)
Dividends paid ($0.05 per common share)	—		—		(8,625)		—		—		(8,625)
Issuance of common stock	—		(5,371)		(99)		—		5,383		(87)


Stock-based compensation expense	—		5,371		—		—		—		5,371

Balance at June 30, 2022	$	323,338	$	—	$	5,137,248	$	(850,053)	$	(4,566,379)	$	44,154


	Common stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss		Treasury stock		Total equity
Balance at April 1, 2021	$	323,338	$	15,269	$	5,161,029	$	(847,538)	$	(4,632,935)	$	19,163

Net income	—		—		19,856		—		—		19,856
Other comprehensive income	—		—		—		16,235		—		16,235
Dividends paid ($0.05 per common share)	—		—		(8,700)		—		—		(8,700)
Issuance of common stock	—		(16,423)		—		—		16,182		(241)


Stock-based compensation expense	—		7,057		—		—		—		7,057

Balance at June 30, 2021	$	323,338	$	5,903	$	5,172,185	$	(831,303)	$	(4,616,753)	$	53,370



	Common stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss		Treasury stock		Total equity
Balance at January 1, 2022	$	323,338	$	2,485	$	5,169,270	$	(780,312)	$	(4,602,149)	$	112,632

Net income	—		—		25,157		—		—		25,157
Other comprehensive loss	—		—		—		(69,741)		—		(69,741)
Dividends paid ($0.10 per common share)	—		—		(17,313)		—		—		(17,313)
Issuance of common stock	—		(12,351)		(39,866)		—		49,216		(3,001)


Stock-based compensation expense	—		9,866		—		—		—		9,866
Repurchase of common stock	—		—		—		—		(13,446)		(13,446)
Balance at June 30, 2022	$	323,338	$	—	$	5,137,248	$	(850,053)	$	(4,566,379)	$	44,154



	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	—		—		(11,685)		—		—		(11,685)
Other comprehensive income	—		—		—		7,828		—		7,828
Dividends paid ($0.10 per common share)	—		—		(17,325)		—		—		(17,325)
Issuance of common stock	—		(74,877)		—		—		70,756		(4,121)


Stock-based compensation expense	—		12,278		—		—		—		12,278

Balance at June 30, 2021	$	323,338	$	5,903	$	5,172,185	$	(831,303)	$	(4,616,753)	$	53,370

PITNEY BOWES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

15. Accumulated Other Comprehensive Loss

Reclassifications out of AOCL were as follows:


	Gain (Loss) Reclassified from AOCL
	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Cash flow hedges
Revenue	$	—	$	118	$	—	$	244
Cost of sales	49		(47)		63		(105)
Interest expense, net	138		(96)		275		(96)
Total before tax	187		(25)		338		43
Income tax provision	47		(6)		83		11
Net of tax	$	140	$	(19)	$	255	$	32

Available-for-sale securities
Financing revenue	$	(4)	$	1	$	(6)	$	—
Selling, general and administrative expense	35		217		22		259
Total before tax	31		218		16		259
Income tax provision	8		55		5		65
Net of tax	$	23	$	163	$	11	$	194

Pension and postretirement benefit plans

Prior service costs	(53)		(86)		$	(110)	$	(170)
Actuarial losses	(10,046)		(13,096)		(20,186)		(26,157)
Settlement	—		(314)		—		(314)
Total before tax	(10,099)		(13,496)		(20,296)		(26,641)
Income tax benefit	(1,870)		(3,303)		(4,331)		(6,511)
Net of tax	$	(8,229)	$	(10,193)	$	(15,965)	$	(20,130)

Changes in AOCL, net of tax were as follows:


	Cash flow hedges		Available for sale securities		Pension and postretirement benefit plans		Foreign currency adjustments		Total
Balance at January 1, 2022	$	3,803	$	(6,249)	$	(756,639)	$	(21,227)	$	(780,312)
Other comprehensive income (loss) before reclassifications	6,817		(26,554)		—		(65,703)		(85,440)
Reclassifications into earnings	(255)		(11)		15,965		—		15,699
Net other comprehensive income (loss)	6,562		(26,565)		15,965		(65,703)		(69,741)
Balance at June 30, 2022	$	10,365	$	(32,814)	$	(740,674)	$	(86,930)	$	(850,053)


	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	3,456		(4,783)		—		(10,749)		(12,076)
Reclassifications into earnings	(32)		(194)		20,130		—		19,904
Net other comprehensive income (loss)	3,424		(4,977)		20,130		(10,749)		7,828
Balance at June 30, 2021	$	2,013	$	(4,575)	$	(830,933)	$	2,192	$	(831,303)

PITNEY BOWES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

16. Supplemental Financial Statement Information

Activity in the allowance for credit losses on accounts receivables and other assets for the six months ended June 30, 2022 and 2021 is presented below. See Note 7 for additional information regarding finance receivables.


	Six Months Ended June 30,
	2022		2021
Balance at beginning of year	$	29,179	$	35,344

Amounts charged to expense	5,280		2,488
Write-offs, recoveries and other	(21,763)		(7,085)
Balance at end of period	$	12,696	$	30,747

Accounts and other receivables	$	12,176	$	13,959
Other assets	520		16,788
Total	$	12,696	$	30,747

Other (income) expense consisted of the following:


	Three Months Ended June 30,		Six Months Ended June 30,
	2021		2022		2021
Loss on debt redemption/refinancing	$	989	$	4,993	$	52,383
Insurance proceeds	(3,000)		—		(3,000)

Gain on sale of business	(10,201)		(2,522)		(10,201)
Gain on sale of assets	(1,434)		(14,372)		(1,434)
Other (income) expense	$	(13,646)	$	(11,901)	$	37,748

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

Supplemental cash flow information is as follows:


	Six Months Ended June 30,
	2022		2021

Cash interest paid	$	64,511	$	58,501
Cash income tax payments, net of refunds	$	11,164	$	2,180
Noncash activity
Capital assets obtained under capital lease obligations	$	14,017	$	19,568

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 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. Forward-looking statements are based on current expectations and assumptions, which we believe are reasonable; however, such statements are subject to risks and uncertainties, and actual results could differ materially from those projected or assumed in any of our forward-looking statements. Words such as "estimate," "target," "project," "plan," "believe," "expect," "anticipate," "intend" and similar expressions may identify such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Forward-looking statements in this Form 10-Q speak only as of the date hereof, and forward-looking statements in documents that are incorporated by reference speak only as of the date of those documents.

Our results of operations, financial condition and forward-looking statements are subject to change and to inherent risks and uncertainties, such as those disclosed or incorporated by reference in our filings with the Securities and Exchange Commission. In particular, we continue to navigate the impacts of the COVID-19 pandemic as well as the risk of a global recession, and the effects that they may have on our, and our clients' businesses. Other factors which could cause future financial performance to differ materially from expectations, and which may also be exacerbated by COVID-19 or the risk of a global recession or negative change in the economy, include, without limitation:

•declining physical mail volumes

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

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

•our ability to continue to grow and manage unexpected fluctuations in volumes, gain additional economies of scale and improve profitability within our Global Ecommerce segment

•changes in labor and transportation availability and costs

•global supply chain issues adversely impacting our third-party suppliers' ability to provide us products and services

•declines in demand for our ecommerce services resulting from supply chain delays or interruptions affecting our retail clients, or changes in retail consumer behavior or spending patterns

•the impacts of inflation and rising prices on our costs and expenses, and to our clients and retail consumers

•competitive factors, including pricing pressures, 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

•the potential impacts on our cost of debt due to potential interest rate increases

•our success at managing customer credit risk

•changes in foreign currency exchange rates, especially the impact a strengthening U.S. dollar could have on our global operations

•changes in tax laws, rulings or regulations

•capital market disruptions or credit rating downgrades that adversely impact our ability to access capital markets at reasonable costs

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

•the continued availability and security of key information technology systems and the cost to comply with information security requirements and privacy laws

•changes in international trade policies, including the imposition or expansion of trade tariffs, and other geopolitical risks

•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

•increased environmental and climate change requirements or other developments in these areas

•intellectual property infringement claims

•the use of the postal system for transmitting harmful biological agents, illegal substances or other terrorist attacks

•impact of acts of nature on the services and solutions we offer

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

Overview

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


	Revenue
	Three Months Ended June 30,								Six Months Ended June 30,
	2022		2021		Actual % change		Constant Currency % Change		2022		2021		Actual % change		Constant Currency % change
Business services	$	551,478	$	567,022	(3)	%	(2)	%	$	1,148,862	$	1,137,476	1	%	1	%
Support services	107,625		115,156		(7)	%	(5)	%	217,977		233,853		(7)	%	(5)	%
Financing	67,298		73,453		(8)	%	(7)	%	139,327		151,265		(8)	%	(7)	%
Equipment sales	89,986		86,267		4	%	7	%	179,282		173,070		4	%	6	%
Supplies	38,245		38,655		(1)	%	2	%	79,306		80,879		(2)	%	—	%
Rentals	16,863		18,650		(10)	%	(8)	%	33,683		37,857		(11)	%	(10)	%
Total revenue	$	871,495	$	899,203	(3)	%	(2)	%	$	1,798,437	$	1,814,400	(1)	%	—	%


	Revenue
	Three Months Ended June 30,								Six Months Ended June 30,
	2022		2021		Actual % change		Constant currency % change		2022		2021		Actual % change		Constant currency % change
Global Ecommerce	$	393,770	$	418,429	(6)	%	(5)	%	$	812,297	$	831,515	(2)	%	(2)	%
Presort Services	138,934		134,619		3	%	3	%	299,478		277,745		8	%	8	%
SendTech Solutions	338,791		346,155		(2)	%	—	%	686,662		705,140		(3)	%	(1)	%
Total revenue	$	871,495	$	899,203	(3)	%	(2)	%	$	1,798,437	$	1,814,400	(1)	%	—	%


	Segment EBIT
	Three Months Ended June 30,						Six Months Ended June 30,
	2022		2021		% change		2022		2021		% change
Global Ecommerce	$	(28,825)	$	(10,831)	>(100%)		$	(42,521)	$	(37,207)	(14)	%
Presort Services	12,851		16,134		(20)	%	32,483		35,185		(8)	%
SendTech Solutions	95,565		107,121		(11)	%	200,140		221,591		(10)	%
Total Segment EBIT	$	79,591	$	112,424	(29)	%	$	190,102	$	219,569	(13)	%

Revenue decreased 3% (2% at constant currency) in the second quarter of 2022 compared to the prior year primarily driven by a decrease in business services revenue due to lower cross-border volumes, lower support services revenue driven by a declining meter population and a shift to cloud-enabled products and lower financing revenue due to a declining lease portfolio. Global Ecommerce revenue decreased 6% (5% at constant currency), SendTech Solutions revenue declined 2% (flat at constant currency) and Presort Services revenue increased 3%.

Segment EBIT in the quarter decreased 29% compared to the prior year period. Global Ecommerce EBIT decreased $18 million primarily due to the decline in revenue and increased operating expenses. Presort Services EBIT decreased 20% primarily due to increased transportation and labor costs and SendTech Solutions EBIT decreased 11% primarily driven by the decline in revenue. Refer to Results of Operations section for further information.

Outlook

We see market opportunities for our businesses and are making investments in new solutions and services. This includes investments in our physical networks in Global Ecommerce and Presort Services for greater efficiency and economies of scale and upgrading our technologies across all three segments. We are also executing against initiatives to improve efficiencies in each business and in Corporate shared services. Our mix of business continues to shift to higher growth, lower margin markets, and while the investments we are making today may put further near-term downward pressure on our margins, we expect these investments to provide a platform for long-term growth and margin improvements.

On a consolidated basis, we expect revenue growth in 2022 compared to 2021 from a low-single digit percentage decline to low-single digit percentage growth. Although we expect some continued growth in the demand and costs for transportation services and labor, we expect margin improvements in the second half of the year from increased productivity and pricing initiatives. Supply chain delays are slowing our receipt and installation of equipment and technologies designed to increase automation and drive productivity in Global Ecommerce and Presort Services. Supply chain delays are also affecting our ability to receive required parts and components for our SendTech Solutions products on a timely basis. We will continue to take proactive steps to manage our operations and mitigate the financial impacts of these higher costs and supply chain issues; however, some of the factors are not within our control, and the duration and severity of supply chain issues is unknown and unpredictable.

Expectations for the remainder of the year are dependent on several external factors, including no further weakening of the global economy or additional shut-downs related to COVID-19, continued improvement in labor availability, changes in fuel price expectations, and no additional adverse geopolitical developments.

RESULTS OF OPERATIONS

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 from the prior period under comparison. We believe that excluding the impacts of currency exchange rates provides investors with a better understanding of the underlying revenue performance. Constant 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), which is calculated by deducting from segment revenue the related costs and expenses attributable to the segment. Segment EBIT excludes interest, taxes, unallocated corporate expenses, restructuring charges, asset and goodwill impairment charges and other items not allocated to a business segment. Management believes that Segment EBIT 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 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 business to consumer logistics services for domestic and cross-border delivery, returns and fulfillment.


	Revenue								Cost of Revenue				Gross Margin
	Three Months Ended June 30,								Three Months Ended June 30,				Three Months Ended June 30,
	2022		2021		Actual % change		Constant Currency % change		2022		2021		2022		2021
Business services	$	393,770	$	418,429	(6)	%	(5)	%	$	356,025	$	373,347	9.6	%	10.8	%

	Segment EBIT
	Three Months Ended June 30,
	2022		2021		Actual % change
Segment EBIT	$	(28,825)	$	(10,831)	>(100%)

Global Ecommerce revenue decreased 6% (5% at constant currency) in the second quarter of 2022 compared to the prior year period primarily due to cross-border volume declines due in part, to a strengthening U.S. dollar and weakening global economic factors.

Gross margin decreased $7 million and gross margin percentage decreased to 9.6% from 10.8% compared to the prior year period, primarily due to the decline in revenue and higher postal costs of $3 million, partially offset by margin improvements in domestic parcel delivery services and $3 million favorability from the revised transportation cost allocation methodology.

Segment EBIT for the second quarter of 2022 was a loss of $29 million compared to a loss of $11 million in the prior year period. The EBIT degradation was driven by the decline in gross margin of $7 million as well as increased operating expenses of $11 million, driven primarily by higher credit card fees and higher credit loss provision of $4 million and $3 million, respectively.



	Revenue								Cost of Revenue				Gross Margin
	Six Months Ended June 30,								Six Months Ended June 30,				Six Months Ended June 30,
	2022		2021		Actual % change		Constant Currency % change		2022		2021		2022		2021
Business services	$	812,297	$	831,515	(2)	%	(2)	%	$	724,493	$	757,655	10.8	%	8.9	%

	Segment EBIT
	Six Months Ended June 30,
	2022		2021		Actual % change
Segment EBIT	$	(42,521)	$	(37,207)	(14)	%

Global Ecommerce revenue decreased 2% in the first half of 2022 compared to the prior year period due primarily to lower volumes, partially offset by pricing actions. Cross-border and digital delivery volumes contributed revenue declines of 5% and 2%, respectively, which were partially offset by domestic parcel delivery volumes contributing revenue growth of 6%.

Gross margin increased $14 million and gross margin percentage increased to 10.8% from 8.9% compared to the prior year period. The increase was primarily due to pricing actions, improved warehouse productivity, margin improvements in domestic parcel delivery and fulfillment services and a decrease in transportation costs of $7 million, primarily driven by the revised transportation cost allocation methodology. Partially offsetting these increases were lower revenue from cross-border and digital delivery services and higher postal costs of $12 million.

Segment EBIT for the first half of 2022 was a loss of $43 million compared to a loss of $37 million in the prior year period. The EBIT decline was driven primarily by increased operating expenses of $19 million primarily driven by higher credit card fees of $9 million, higher employee-related expenses of $6 million and higher credit loss provision of $4 million, partially offset by the increase in gross margin of $14 million.

Presort Services

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


	Revenue								Cost of Revenue				Gross Margin
	Three Months Ended June 30,								Three Months Ended June 30,				Three Months Ended June 30,
	2022		2021		Actual % change		Constant Currency % change		2022		2021		2022		2021
Business services	$	138,934	$	134,619	3	%	3	%	$	111,305	$	103,175	19.9	%	23.4	%

	Segment EBIT
	Three Months Ended June 30,
	2022		2021		Actual % change
Segment EBIT	$	12,851	$	16,134	(20)	%

Presort Services revenue increased 3% in the second quarter of 2022 compared to the prior year period. The processing of First Class Mail and Marketing Mail contributed revenue growth of 2% and 1%, respectively, primarily due to the impact of pricing actions and product mix.

Gross margin decreased $4 million and gross margin percentage declined to 19.9% from 23.4%. Segment EBIT decreased $3 million, or 20% compared to the prior year period. In the second quarter of 2022, gross margin and segment EBIT were impacted by higher transportation costs of $7 million primarily driven by the revised transportation cost allocation methodology of $3 million and higher fuel costs of $2 million, and increased labor costs of $4 million, primarily due to wage increases. The impact of these higher costs has been partially offset through productivity gains and pricing actions.



	Revenue								Cost of Revenue				Gross Margin
	Six Months Ended June 30,								Six Months Ended June 30,				Six Months Ended June 30,
	2022		2021		Actual % change		Constant Currency % change		2022		2021		2022		2021
Business services	$	299,478	$	277,745	8	%	8	%	$	235,956	$	212,174	21.2	%	23.6	%

	Segment EBIT
	Six Months Ended June 30,
	2022		2021		Actual % change
Segment EBIT	$	32,483	$	35,185	(8)	%

Presort Services revenue increased 8% in the first half of 2022 compared to the prior year period. The processing of First Class Mail, Marketing Mail and Marketing Mail Flats and Bound Printed Matter contributed revenue growth of 5%, 2% and 1%, respectively, primarily due to the impact of pricing actions.

Gross margin decreased $2 million and gross margin percentage declined to 21.2% from 23.6%. Segment EBIT decreased $3 million, or 8% in the first half of 2022 compared to the prior year period. During the first half of the year, gross margin and segment EBIT were impacted by higher transportation costs of $15 million primarily driven by tight demand for these services, higher fuel costs and the revised transportation cost allocation methodology, and higher labor costs of $12 million due to higher demand for labor and wage increases. The impact of these higher costs has been partially offset through pricing actions and productivity improvements.

SendTech Solutions

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


	Revenue								Cost of Revenue				Gross Margin
	Three Months Ended June 30,								Three Months Ended June 30,				Three Months Ended June 30,
	2022		2021		Actual % change		Constant Currency % change		2022		2021		2022		2021
Business services	$	18,774	$	13,974	34	%	35	%	$	9,858	$	6,247	47.5	%	55.3	%
Support services	107,625		115,156		(7)	%	(5)	%	37,365		37,095		65.3	%	67.8	%
Financing	67,298		73,453		(8)	%	(7)	%	12,533		11,773		81.4	%	84.0	%
Equipment sales	89,986		86,267		4	%	7	%	63,232		61,503		29.7	%	28.7	%
Supplies	38,245		38,655		(1)	%	2	%	10,957		10,467		71.4	%	72.9	%
Rentals	16,863		18,650		(10)	%	(8)	%	7,401		6,013		56.1	%	67.8	%
Total revenue	$	338,791	$	346,155	(2)	%	—	%	$	141,346	$	133,098	58.3	%	61.5	%

	Segment EBIT
	Three Months Ended June 30,
	2022		2021		Actual % change
Segment EBIT	$	95,565	$	107,121	(11)	%

SendTech Solutions revenue decreased 2% (flat at constant currency) in the second quarter of 2022 compared to the prior year period. Support services revenue declined 7% (5% at constant currency) primarily due to a declining meter population and shift to cloud-enabled products, which generally require less service. Financing revenue declined 8% (7% at constant currency) primarily due to lower lease extensions as more clients opted to lease new equipment rather than extend leases on existing equipment. Partially offsetting these decreases, business services revenue increased 34% (35% at constant currency) primarily due to growth in subscription services and equipment sales revenue increased 4% (7% at constant currency), due in part, to customers upgrading equipment to comply with new security requirements.

Gross margin decreased $16 million, gross margin percentage decreased to 58.3% from 61.5% and segment EBIT decreased $12 million, or 11%. In the second quarter of 2022, gross margin and segment EBIT were impacted by the decrease in higher margin support services revenue and financing revenue. Segment EBIT in the quarter benefited from lower operating expenses of $4 million, primarily due to cost management.



	Revenue								Cost of Revenue				Gross Margin
	Six Months Ended June 30,								Six Months Ended June 30,				Six Months Ended June 30,
	2022		2021		Actual % change		Constant Currency % change		2022		2021		2022		2021
Business services	$	37,087	$	28,216	31	%	32	%	$	19,740	$	12,315	46.8	%	56.4	%
Support services	217,977		233,853		(7)	%	(5)	%	74,300		73,323		65.9	%	68.6	%
Financing	139,327		151,265		(8)	%	(7)	%	24,135		23,659		82.7	%	84.4	%
Equipment sales	179,282		173,070		4	%	6	%	126,673		123,293		29.3	%	28.8	%
Supplies	79,306		80,879		(2)	%	—	%	22,431		21,678		71.7	%	73.2	%
Rentals	33,683		37,857		(11)	%	(10)	%	12,668		12,460		62.4	%	67.1	%
Total revenue	$	686,662	$	705,140	(3)	%	(1)	%	$	279,947	$	266,728	59.2	%	62.2	%

	Segment EBIT
	Six Months Ended June 30,
	2022		2021		Actual % change
Segment EBIT	$	200,140	$	221,591	(10)	%

SendTech Solutions revenue decreased 3% (1% at constant currency) in the second half of 2022 compared to the prior year period. Support services revenue declined 7% (5% at constant currency) primarily due to a declining meter population and shift to cloud-enabled products. Financing revenue declined 8% (7% at constant currency) primarily due to lower lease extensions as more clients opted to lease new equipment rather than extend leases on existing equipment. Partially offsetting these decreases, business services revenue increased 31% (32% at constant currency) primarily due to growth in subscription services and equipment sales revenue increased 4% (6% at constant currency).

Gross margin for the second half of 2022 decreased $31 million and gross margin percentage decreased to 59.2% from 62.2%. Segment EBIT decreased $21 million, or 10%. For the first half of 2022, gross margin and segment EBIT were impacted by the declines in higher margin support services revenue and financing revenue. Segment EBIT for the first half of 2022 benefited from lower operating expenses of $10 million, due in part, to lower employee-related expenses and other cost savings.

UNALLOCATED CORPORATE EXPENSES

The majority of selling, general and administrative (SG&A) expenses are recorded directly or allocated to our reportable segments. SG&A expenses not recorded directly, or allocated to our reportable segments, are reported as unallocated corporate expenses. Unallocated corporate expenses primarily represents corporate administrative functions such as finance, marketing, human resources, legal, information technology and innovation.


	Three Months Ended June 30,						Six Months Ended June 30,
	2022		2021		Actual % change		2022		2021		Actual % change
Unallocated corporate expenses	$	40,761	$	56,316	(28)	%	$	98,595	$	113,781	(13)	%

Unallocated corporate expenses decreased $16 million and $15 million in the second quarter and first half of 2022, respectively, compared to the prior year periods, primarily due to lower employee-related variable expenses.

CONSOLIDATED EXPENSES

Selling, general and administrative

SG&A expense for the second quarter of 2022 declined $10 million compared to the prior year period, primarily due to lower variable compensation expense of $18 million, partially offset by higher credit loss provision of $4 million and higher professional fees of $2 million. SG&A expense for the first half of 2022 declined $5 million compared to the prior year period, primarily due to lower variable compensation expense of $16 million, partially offset by higher travel costs of $4 million, credit loss provision of $2 million and professional fees of $1 million.

Research and development (R&D)

R&D expense for the second quarter and first half of 2022 was $11 million and $23 million, respectively, and flat compared to the prior year periods.

Restructuring charges

Restructuring charges, consisting of costs for employee severance and facility closures, were $4 million for the second quarter and $8 million for the first half of 2022. See Note 9 to the Condensed Consolidated Financial Statements for further information.

Other (income) expense

Other (income) expense for the first six months of 2022 includes a $14 million gain on the sale of our Shelton, Connecticut office building, a $3 million gain from the 2019 sale of a business and a charge of $5 million from the early redemption of debt. See Notes 10 and 16 to the Condensed Consolidated Financial Statements for further information.

Income taxes

The effective tax rate for the three and six months ended June 30, 2022 was 261.2% and a benefit of 12.6%, respectively. See Note 12 to the Condensed Consolidated Financial Statements for further information.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2022, we had cash, cash equivalents and short-term investments of $582 million, which includes $153 million held at our foreign subsidiaries used to support the liquidity needs of those subsidiaries. Our ability to maintain adequate liquidity for our operations is dependent upon a number of factors, including our revenue and earnings, our clients' ability to pay their balances on a timely basis, the impacts of changing macroeconomic and geopolitical conditions and our ability to manage costs and improve productivity. At this time, we believe that existing cash and investments, cash generated from operations and borrowing capacity under our $500 million revolving credit facility will be sufficient to fund our cash needs for the next 12 months.

Cash Flow Summary

Changes in cash and cash equivalents were as follows:


	2022		2021		Change
Net cash from operating activities	$	45,694	$	144,729	$	(99,035)
Net cash from investing activities	(27,518)		(68,034)		40,516
Net cash from financing activities	(166,504)		(199,024)		32,520
Effect of exchange rate changes on cash and cash equivalents	(13,455)		349		(13,804)
Change in cash and cash equivalents	$	(161,783)	$	(121,980)	$	(39,803)

Operating Activities

Cash flows from operating activities in 2022 declined $99 million compared to the prior year period primarily due to the timing of collections of receivables, lower customer deposits, the timing of insurance premium payments and other working capital changes.

Investing Activities

Cash flows from investing activities for 2022 increased $41 million compared to the prior year, primarily due to higher proceeds from the sale of businesses and assets of $25 million, lower capital expenditures of $20 million and net proceeds of $4 million from other investment activities.

Cash flows from investing activities in 2022 include proceeds of $51 million from the sale of our Shelton facility and $9 million related to the 2019 sale of a business. Cash flows from investing activities in 2021 include net proceeds of $28 million from the sale of Tacit and $2 million for other asset sales.

Financing Activities

Cash flows from financing activities for 2022 improved $33 million compared to the prior year primarily due to lower net repayments of debt of $37 million and lower premiums and fees paid to refinance debt of $42 million. These improvements were partially offset by lower cash flow from changes in customer deposits at the PB Bank of $32 million and $13 million of common stock repurchases.

Financings and Capitalization

In March 2022, we redeemed the April 2023 notes and recorded a $5 million pre-tax loss in connection with this redemption.

Each quarter, our Board of Directors considers whether to approve the payment, as well as the amount, of a dividend. There are no material restrictions on our ability to declare dividends. We expect to continue to pay a quarterly dividend; however, no assurances can be given.

Contractual Obligations and Off-Balance Sheet Arrangements

As of June 30, 2022, we have entered into real estate and equipment leases with aggregate payments of $124 million and terms ranging from four to eight years that have not commenced. Most of these leases are expected to commence throughout the second half of 2022 and some into 2023.

At June 30, 2022, there are no off-balance sheet arrangements that have, or are reasonably likely to have, a material effect on our financial condition, results of operations or liquidity.

Critical Accounting Estimates

Goodwill

The results of our test indicated that no impairment existed; however, the estimated fair value of the Global Ecommerce reporting unit exceeded its carrying value by less than 20%. The determination of fair value 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 assessment. Potential events and circumstances that could have an adverse effect on our estimates and assumptions include, but are not limited to, declining revenue, our inability to grow volumes, gain additional economies of scale and improve profitability, continued increases in costs and rising interest rates.

The goodwill balance related to the Global Ecommerce reporting unit at June 30, 2022 was $339 million. We will continue to monitor and evaluate the carrying value of goodwill for this reporting unit, and should facts and circumstances change, a non-cash impairment charge could be recorded in the future.

Regulatory Matters

There have been no significant changes to the regulatory matters disclosed in our 2021 Annual Report.

Item 3: Quantitative and Qualitative Disclosures About Market Risk

There were no material changes to the disclosures made in our 2021 Annual Report.

Item 4: Controls and Procedures

Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures are also designed to reasonably ensure that such information is accumulated and communicated to management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), to allow timely decisions regarding disclosures.

With the participation of our CEO and CFO, management evaluated our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) and internal controls over financial reporting as of the end of the period covered by this report. Our CEO and CFO concluded that, as of the end of the period covered by this report, such disclosure controls and procedures were effective to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the required time periods. In addition, no changes in internal control over financial reporting occurred during the quarter covered by this report that materially affected, or are reasonably likely to materially affect, such internal control over financial reporting. Further, we have not experienced any material impact to our internal controls over financial reporting given that most of our employees are working remotely due to COVID-19.

It should be noted that any system of controls is based in part upon certain assumptions designed to obtain reasonable (and not absolute) assurance as to its effectiveness, and there can be no assurance that any design will succeed in achieving its stated goals. Notwithstanding this caution, the CEO and CFO have reasonable assurance that the disclosure controls and procedures were effective as of June 30, 2022.

PART II. OTHER INFORMATION

Item 1: Legal Proceedings

See Note 13 to the Condensed Consolidated Financial Statements.

Item 1A: Risk Factors

There were no material changes to the risk factors identified in our 2021 Annual Report.

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

Repurchases of Equity Securities

We periodically repurchase shares of our common stock in the open market to manage the dilution created by shares issued under employee stock plans and for other purposes. There were no purchases of our common stock during the three months ended June 30, 2022. We have remaining authorization to purchase up to $3 million of our common stock.

Item 6: Exhibits


Exhibit Number	Description	Exhibit Number in this Form 10-Q
2.1	Equity Purchase Agreement, dated as of June 20, 2022, among Pitney Bowes International Holdings, Inc., Pitney Bowes Holdings Limited, Global-e UK LTD., Global-e US Inc. and Global-E Online Ltd (incorporated by reference to Exhibit 2.1 to the Form 8-K filed with the Commission on June 21, 2022)	2.1
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





10.1	Second Amendment to the Credit Agreement, dated as of May 11, 2022, among Pitney Bowes Inc., the lenders and issuing banks party thereto and JPMorgan Chase Bank, N.A., as administrative agent	10.1
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
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350	32.1
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350	32.2
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Label 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, 2022, formatted in Inline XBRL. (included as Exhibit 101).

* Pursuant to Item 601(a)(5) of Regulation S-K, certain exhibits and schedules have been omitted. The registrant hereby agrees to furnish

supplementally a copy of any omitted attachment to the SEC upon request.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		PITNEY BOWES INC.

Date:	August 2, 2022

		/s/ Ana Maria Chadwick

		Ana Maria Chadwick
		Executive Vice President and Chief Financial Officer

		(Duly Authorized Officer and Principal Financial Officer)

		/s/ Joseph R. Catapano

		Joseph R. Catapano
		Vice President and Chief Accounting Officer
		(Duly Authorized Officer and Principal Accounting Officer)