Pitney Bowes Exits Management Services Business (...and the MPS business?)

Pitney Bowes Completes Sale of its Management Services Business to Apollo Funds for $400 Million

Wednesday, October 02, 2013

Press release from the issuing company

STAMFORD, Conn. - Pitney Bowes Inc. (NYSE:PBI) today announced the successful completion of the sale of Pitney Bowes Management Services for $400 million in cash to funds affiliated with Apollo Global Management, LLC (NYSE:APO) (together with its consolidated subsidiaries, “Apollo”). Proceeds from the sale of the business will be used principally to pay down debt.

Pitney Bowes Management Services becomes a standalone company which will operate under a new name to be determined by Apollo.

The sale of the Pitney Bowes Management Services business to funds affiliated with Apollo, which was announced July 30, 2013, allows Pitney Bowes to focus attention and resources on developing and delivering the highest value technology, innovative software and differentiated services in high value segments of the market, where the Company has distinctive advantage.

ADDITIONAL INFORMATION:

Pitney Bowes Management Services (PBMS) has become Novitex Enterprise Solutions, a stand-alone company. As an independent company, Novitex Enterprise Solutions is committed to serving your business by delivering innovative services and solutions that optimize business processes and drive value. For more information on how Novitex Enterprise Solutions can serve your business, please visit us at www.novitex.com.

So, you might ask, what did Appolo get for the $400 mil it paid to Pitney Bowes for the PBMS business?

To answer that question, I took a quick look at the PBI’s 2012 10K report, filed in early 2013, and, within that report, took a look at PBI’s business segment reporting breakdown.  First, you’ll see what PBI says about its “business segments.”  Below that, you’ll see PMBS’s Revenue and EBIT for 2012, 2011, and 2010. 

Business Segments

We conduct our business activities in seven reporting segments within two business groups, Small & Medium Business Solutions and Enterprise Business Solutions. The following tables show revenue and EBIT by business segment for 2012 , 2011 and 2010 . The IMS business, now reported as a discontinued operation, was previously included in our Mail Services segment. Segment EBIT, a non-GAAP measure, is determined by deducting from segment revenue the related costs and expenses attributable to the segment. Segment EBIT excludes interest, taxes, general corporate expenses not allocated to a particular business segment, restructuring charges, asset impairments and goodwill charges, which are recognized on a consolidated basis. Management uses segment EBIT to measure profitability and performance at the segment level. Segment EBIT may not be indicative of our overall consolidated performance and therefore, should be read in conjunction with our consolidated results of operations. Refer to Note 16 to the Consolidated Financial Statements for a reconciliation of segment EBIT to income from continuing operations before income taxes.

(BUSINESS SEGMENT): Management Services:

Amounts stated are “millions”

	Y/E Dec 31	Y/E Dec 31	Y/E Dec 31
	2012	2011	2010
Revenue	$921	$949	$999
EBIT	$55	$76	$93

Management Services revenue decreased 3% in 2012 to $921 million compared to $949 million in 2011 and EBIT decreased 28% to $55 million compared to $76 million in 2011 . The decline in revenue and EBIT was primarily due to lower document volumes, account contractions and reduced pricing on new business and contract renewals. Foreign currency translation had an unfavorable impact on revenue of 1%.

Management Services revenue in 2011 decreased 5% to $949 million compared to $999 million in 2010 . Foreign currency translation had a positive impact of 1% on revenue. EBIT decreased 18% to $76 million compared to $93 million in 2010 . The decrease in revenue and EBIT was primarily due to the full year impact of account contractions and terminations in the U.S. during 2010 and pricing pressure on new business and contract renewals.