The Company's financial results are reported in accordance with generally accepted accounting principles (GAAP); however, in our disclosures we use certain non-GAAP measures, such as adjusted earnings before interest and taxes, Adjusted EPS, revenue growth on a constant currency basis, revenue excluding the impact of currency and market exits, free cash flow and Segment EBIT.

The Company reports measures such as adjusted earnings before interest and taxes (EBIT) and Adjusted EPS and adjusted income from continuing operations to exclude the impact of special items like restructuring charges, tax adjustments, goodwill and asset write-downs, and costs related to recent dispositions and market exits. While these are actual Company expenses, they can mask underlying trends associated with its business. Such items are often inconsistent in amount and frequency and as such, the adjustments allow an investor greater insight into the current underlying operating trends of the business.

In addition, revenue growth is presented on a constant currency basis to exclude the impact of changes in foreign currency exchange rates since the prior period under comparison. Constant currency measures are intended to help investors better understand the underlying operational performance of the business excluding the impacts of shifts in currency exchange rates over the period. Constant currency is calculated by converting our current quarter reported results using the prior year’s exchange rate for the comparable quarter. In addition, this quarter the Company reported the comparison of “revenue excluding the impact of currency and market exits” to prior year, which excludes the impact of changes in foreign currency exchange rates since the prior period and also excludes the revenues associated with the recent market exits in several smaller markets. This comparison allows an investor insight into the underlying revenue performance of the business and true operational performance from a comparable basis to prior period. A reconciliation of reported revenue to constant currency revenue, as well as reported revenue to “revenue excluding the impact of currency and market exits” can be found in the Company’s attached financial schedules.

The Company reports free cash flow in order to provide investors insight into the amount of cash that management could have available for other discretionary uses. Free cash flow adjusts GAAP cash from operations for capital expenditures, restructuring payments, unusual tax settlements, contributions to the Company’s pension fund and cash used for other special items. A reconciliation of GAAP cash from operations to free cash flow can be found in the Company’s attached financial schedules.

In addition, Management uses segment EBIT to measure profitability and performance at the segment level. Segment EBIT is determined by deducting from 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 and goodwill and asset impairments, which are recognized on a consolidated basis. A reconciliation of Segment EBIT to the Company’s total Net Income can be found in the Company’s attached financial schedules.

Pitney Bowes has provided a quantitative reconciliation to GAAP in supplemental schedules. This information may also be found at the Company's web site www.pb.com/investorrelations.

This document contains “forward-looking statements” about the Company’s expected or potential future business and financial performance. Forward-looking statements include, but are not limited to, statements about its future revenue and earnings guidance and other statements about future events or conditions. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that could cause actual results to differ materially from those projected. These risks and uncertainties include, but are not limited to: mail volumes; the uncertain economic environment; timely development, market acceptance and regulatory approvals, if needed, of new products; fluctuations in customer demand; changes in postal regulations; interrupted use of key information systems; the ability to protect the Company’s information technology systems against service interruptions, misappropriation of data, or breaches of security resulting from cyber-attacks or other events; management of outsourcing arrangements; the implementation of a new enterprise business platform; changes in business portfolio; the success of our investment in rebranding the Company; the risk of losing some of the Company’s larger clients in the Global Ecommerce segment; integrating newly acquired businesses, including operations and product and service offerings; foreign currency exchange rates; changes in our credit ratings; management of credit risk; changes in interest rates; the financial health of national posts; increased customs and regulatory risks associated with cross-border transactions; and other factors beyond its control as more fully outlined in the Company's 2015 Form 10-K Annual Report and other reports filed with the Securities and Exchange Commission. Pitney Bowes assumes no obligation to update any forward-looking statements contained in this document as a result of new information, events or developments.

Note: Consolidated statements of income; revenue and EBIT by business segment; and reconciliation of GAAP to non-GAAP measures for the three and nine months ended September 30, 2016 and 2015, and consolidated balance sheets at September 30, 2016 and December 31, 2015 are attached.

Pitney Bowes Inc.
Consolidated Statements of Income
(Unaudited; in thousands, except share and per share amounts)
		Three months ended September 30,								Nine months ended September 30,
		2016				2015				2016				2015
Revenue:
Equipment sales		$	173,143			$	163,857			$	485,145			$	495,328
Supplies			61,306				71,174				198,631				215,178
Software			89,087				97,700				257,760				283,241
Rentals			102,747				108,420				309,706				333,729
Financing			87,883				99,925				276,915				306,992
Support services			123,954				136,820				383,632				415,615
Business services			200,911				191,645				607,717				591,030
Total revenue			839,031				869,541				2,519,506				2,641,113
Costs and expenses:
Cost of equipment sales			86,147				78,650				235,741				232,706
Cost of supplies			20,348				21,629				60,662				65,912
Cost of software			25,698				27,219				79,496				85,584
Cost of rentals			16,041				21,423				54,951				63,127
Financing interest expense			12,965				17,533				41,375				54,171
Cost of support services			74,799				79,747				224,790				244,853
Cost of business services			140,989				130,004				417,357				405,559
Selling, general and administrative			300,983				309,211				916,445				939,318
Research and development			28,680				29,153				89,761				83,693
Restructuring charges and asset impairments, net			16,494				36				49,503				14,305
Interest expense, net			22,294				20,165				62,394				65,200
Other (income) expense, net			-				(1,781	)			536				(94,916	)
Total costs and expenses			745,438				732,989				2,233,011				2,159,512
Income from continuing operations before income taxes			93,593				136,552				286,495				481,601
Provision for income taxes			23,197				42,676				93,615				145,574
Income from continuing operations			70,396				93,876				192,880				336,027
Loss from discontinued operations, net of tax			(291	)			-				(1,951	)			(582	)
Net income			70,105				93,876				190,929				335,445
Less: Preferred stock dividends attributable to noncontrolling interests			4,593				4,594				13,781				13,781
Net income - Pitney Bowes Inc.		$	65,512			$	89,282			$	177,148			$	321,664
Amounts attributable to common stockholders:
Net income from continuing operations		$	65,803			$	89,282			$	179,099			$	322,246
Loss from discontinued operations, net of tax			(291	)			-				(1,951	)			(582	)
Net income - Pitney Bowes Inc.		$	65,512			$	89,282			$	177,148			$	321,664
Basic earnings per share attributable to common stockholders (1) :
Continuing operations		$	0.35			$	0.45			$	0.95			$	1.60
Discontinued operations			0.00				-				(0.01	)			-
Net income - Pitney Bowes Inc.		$	0.35			$	0.45			$	0.94			$	1.60
Diluted earnings per share attributable to common stockholders (1) :
Continuing operations		$	0.35			$	0.44			$	0.94			$	1.60
Discontinued operations			0.00				-				(0.01	)			-
Net income - Pitney Bowes Inc.		$	0.35			$	0.44			$	0.93			$	1.59
Weighted-average shares used in diluted earnings per share			186,682,575				201,016,809				189,592,489				201,884,967

(1)

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

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