10-Q



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2015
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
Commission file number: 1-3579
PITNEY BOWES INC.
(Exact name of registrant as specified in its charter)

Delaware
 
06-0495050
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
 
 
3001 Summer Street, Stamford, Connecticut
 
06926
(Address of principal executive offices)
 
(Zip Code)
(203) 356-5000
(Registrant’s telephone number, including area code)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
 
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o
 
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer þ
Accelerated filer o
Non-accelerated filer o
Smaller reporting company o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
 
 
As of November 3, 2015, 197,050,227 shares of common stock, par value $1 per share, of the registrant were outstanding.
 
 
 




PITNEY BOWES INC.
INDEX

 
 
Page Number
 
 
 
 
 
 
 
 
 
 
 
 
Condensed Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2015 and 2014
 
 
 
 
Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2015 and 2014
 
 
 
 
Condensed Consolidated Balance Sheets at September 30, 2015 and December 31, 2014
 
 
 
 
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2015 and 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

2




PART I. FINANCIAL INFORMATION
Item 1: Financial Statements
PITNEY BOWES INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited; in thousands, except per share data)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2015
 
2014
 
2015
 
2014
Revenue:
 

 
 

 
 

 
 

Equipment sales
$
163,857

 
$
177,458

 
$
495,328

 
$
558,032

Supplies
71,174

 
72,548

 
215,178

 
228,349

Software
97,700

 
112,271

 
283,241

 
312,891

Rentals
108,420

 
119,047

 
333,729

 
365,069

Financing
99,925

 
107,835

 
306,992

 
325,529

Support services
136,820

 
154,321

 
415,615

 
470,763

Business services
191,645

 
198,164

 
591,030

 
576,958

Total revenue
869,541

 
941,644

 
2,641,113

 
2,837,591

Costs and expenses:
 

 
 

 
 

 
 

Cost of equipment sales
78,650

 
90,984

 
232,706

 
262,336

Cost of supplies
21,629

 
22,470

 
65,912

 
70,129

Cost of software
27,219

 
29,775

 
85,584

 
93,423

Cost of rentals
21,423

 
23,636

 
63,127

 
74,273

Financing interest expense
17,533

 
19,667

 
54,171

 
59,733

Cost of support services
79,747

 
92,500

 
244,853

 
288,203

Cost of business services
130,004

 
142,512

 
405,559

 
406,472

Selling, general and administrative
309,211

 
341,738

 
939,318

 
1,031,497

Research and development
29,153

 
26,060

 
83,693

 
80,901

Restructuring charges and asset impairments, net
36

 
4,526

 
14,305

 
22,666

Interest expense, net
20,165

 
22,158

 
65,200

 
67,704

Other (income) expense, net
(1,781
)
 
(15,919
)
 
(94,916
)
 
45,738

Total costs and expenses
732,989

 
800,107

 
2,159,512

 
2,503,075

Income from continuing operations before income taxes
136,552

 
141,537

 
481,601

 
334,516

Provision for income taxes
42,676

 
25,310

 
145,574

 
79,681

Income from continuing operations
93,876

 
116,227

 
336,027

 
254,835

Income (loss) from discontinued operations, net of tax
—

 
20,655

 
(582
)
 
30,173

Net income
93,876

 
136,882

 
335,445

 
285,008

Less: Preferred stock dividends attributable to noncontrolling interests
4,594

 
4,593

 
13,781

 
13,781

Net income attributable to Pitney Bowes Inc.
$
89,282

 
$
132,289

 
$
321,664

 
$
271,227

Amounts attributable to common stockholders:
 

 
 

 
 

 
 

Net income from continuing operations
$
89,282

 
$
111,634

 
$
322,246

 
$
241,054

Income (loss) from discontinued operations, net of tax
—

 
20,655

 
(582
)
 
30,173

Net income attributable to Pitney Bowes Inc.
$
89,282

 
$
132,289

 
$
321,664

 
$
271,227

Basic earnings per share attributable to common stockholders (1):
 

 
 

 
 

 
 

Continuing operations
$
0.45

 
$
0.55

 
$
1.60

 
$
1.19

Discontinued operations
—

 
0.10

 
—

 
0.15

Net income attributable to Pitney Bowes Inc.
$
0.45

 
$
0.65

 
$
1.60

 
$
1.34

Diluted earnings per share attributable to common stockholders (1):
 

 
 

 
 

 
 

Continuing operations
$
0.44

 
$
0.55

 
$
1.60

 
$
1.18

Discontinued operations
—

 
0.10

 
—

 
0.15

Net income attributable to Pitney Bowes Inc.
$
0.44

 
$
0.65

 
$
1.59

 
$
1.33

 
 
 
 
 
 
 
 
Dividends declared per share of common stock
$
0.1875

 
$
0.1875

 
$
0.5625

 
$
0.5625


(1) The sum of earnings per share amounts may not equal the totals due to rounding.
See Notes to Condensed Consolidated Financial Statements

3

PITNEY BOWES INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited; in thousands)



 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2015
 
2014
 
2015
 
2014
Net income
$
93,876

 
$
136,882

 
$
335,445

 
$
285,008

Less: Preferred stock dividends attributable to noncontrolling interests
4,594

 
4,593

 
13,781

 
13,781

Net income attributable to Pitney Bowes Inc.
89,282

 
132,289

 
321,664

 
271,227

Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
Foreign currency translations
(17,131
)
 
(61,809
)
 
(76,153
)
 
(64,011
)
Net unrealized gain on cash flow hedges, net of tax of $79, $420, $219 and $925, respectively
119

 
658

 
335

 
1,448

Net unrealized gain (loss) on investment securities, net of tax of $721, $(546), $(142) and $1,908, respectively
1,231

 
(933
)
 
(242
)
 
3,262

Amortization of pension and postretirement costs, net of tax of $4,219, $3,355, $12,001 and $10,609, respectively
7,435

 
6,694

 
21,364

 
19,116

Other comprehensive loss, net of tax
(8,346
)
 
(55,390
)
 
(54,696
)
 
(40,185
)
Comprehensive income attributable to Pitney Bowes Inc.
$
80,936

 
$
76,899

 
$
266,968

 
$
231,042





































See Notes to Condensed Consolidated Financial Statements

4

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


 
September 30, 2015
 
December 31, 2014
ASSETS
 

 
 

Current assets:
 

 
 

Cash and cash equivalents
$
715,976

 
$
1,079,145

Short-term investments
34,318

 
32,121

Accounts receivable (net of allowance of $12,680 and $10,742, respectively)
399,124

 
437,275

Short-term finance receivables (net of allowance of $16,143 and $19,108, respectively)
940,624

 
1,000,304

Inventories
103,195

 
84,827

Current income taxes
33,057

 
40,542

Other current assets and prepayments
71,454

 
57,173

Assets held for sale
—

 
52,271

Total current assets
2,297,748

 
2,783,658

Property, plant and equipment, net
317,005

 
285,091

Rental property and equipment, net
188,485

 
200,380

Long-term finance receivables (net of allowance of $6,551 and $9,002, respectively)
768,139

 
819,721

Goodwill
1,753,888

 
1,672,721

Intangible assets, net
192,318

 
82,173

Non-current income taxes
70,731

 
96,377

Other assets
553,467

 
569,110

Total assets
$
6,141,781

 
$
6,509,231

 
 
 
 
LIABILITIES, NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY
 
 

Current liabilities:
 

 
 

Accounts payable and accrued liabilities
$
1,379,337

 
$
1,572,971

Current income taxes
79,689

 
90,167

Current portion of long-term debt and notes payable
521,091

 
324,879

Advance billings
353,467

 
386,846

Total current liabilities
2,333,584

 
2,374,863

Deferred taxes on income
131,416

 
64,839

Tax uncertainties and other income tax liabilities
94,822

 
86,127

Long-term debt
2,471,055

 
2,927,127

Other non-current liabilities
672,507

 
682,646

Total liabilities
5,703,384

 
6,135,602

 
 
 
 
Noncontrolling interests (Preferred stockholders’ equity in subsidiaries)
296,370

 
296,370

Commitments and contingencies (See Note 15)


 


 
 
 
 
Stockholders’ equity:
 
 
 
Cumulative preferred stock, $50 par value, 4% convertible
1

 
1

Cumulative preference stock, no par value, $2.12 convertible
519

 
548

Common stock, $1 par value (480,000,000 shares authorized; 323,337,912 shares issued)
323,338

 
323,338

Additional paid-in capital
156,195

 
178,852

Retained earnings
5,106,214

 
4,897,708

Accumulated other comprehensive loss
(900,852
)
 
(846,156
)
Treasury stock, at cost (126,300,691 and 122,309,948 shares, respectively)
(4,543,388
)
 
(4,477,032
)
Total stockholders’ equity
142,027

 
77,259

Total liabilities, noncontrolling interests and stockholders’ equity
$
6,141,781

 
$
6,509,231



See Notes to Condensed Consolidated Financial Statements

5

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


 
Nine Months Ended September 30,
 
2015
 
2014
Cash flows from operating activities:
 

 
 

Net income
$
335,445

 
$
285,008

Restructuring payments
(46,056
)
 
(42,151
)
Tax payments related to other investments
(20,602
)
 
(53,738
)
Adjustments to reconcile net income to net cash provided by operating activities:
 

 
 

Gain on disposal of businesses
(109,069
)
 
(29,104
)
Depreciation and amortization
127,486

 
143,360

Stock-based compensation
14,921

 
12,658

Restructuring charges and asset impairments, net
14,305

 
21,572

Changes in operating assets and liabilities, net of acquisitions/divestitures:
 

 
 

Decrease in accounts receivable
27,100

 
68,140

Decrease in finance receivables
92,684

 
107,027

(Increase) decrease in inventories
(20,850
)
 
854

Increase in other current assets and prepayments
(16,854
)
 
(30,914
)
Decrease in accounts payable and accrued liabilities
(138,481
)
 
(120,329
)
Increase in current and non-current income taxes
68,894

 
24,218

Decrease in advance billings
(535
)
 
(15,793
)
Other, net
22,327

 
26,624

Net cash provided by operating activities
350,715

 
397,432

Cash flows from investing activities:
 

 
 

Purchases of available-for-sale securities
(142,563
)
 
(644,396
)
Proceeds from sales/maturities of available-for-sale securities
149,436

 
601,296

Capital expenditures
(129,643
)
 
(121,270
)
Proceeds from sale of former corporate world headquarters building
38,640

 
—

Acquisition of businesses, net of cash acquired
(387,391
)
 
—

Divestiture of businesses, net of cash transferred
290,543

 
101,179

Change in reserve account deposits
(25,630
)
 
(15,919
)
Other investing activities
2,911

 
(2,539
)
Net cash used in investing activities
(203,697
)
 
(81,649
)
Cash flows from financing activities:
 

 
 

Proceeds from the issuance of debt, net of fees and discounts of $7,475 in 2014
950

 
492,525

Principal payments of long-term debt
(404,952
)
 
(599,850
)
Increase in notes payable, net
150,000

 
—

Dividends paid to stockholders
(113,158
)
 
(113,963
)
Proceeds from the issuance of common stock under employee stock-based compensation plans
4,531

 
5,869

Purchase of subsidiary shares from noncontrolling interest
—

 
(7,718
)
Common stock repurchases
(100,000
)
 
(50,003
)
Dividends paid to noncontrolling interests
(9,188
)
 
(9,188
)
Net cash used in financing activities
(471,817
)
 
(282,328
)
Effect of exchange rate changes on cash and cash equivalents
(38,370
)
 
(17,585
)
(Decrease) increase in cash and cash equivalents
(363,169
)
 
15,870

Cash and cash equivalents at beginning of period
1,079,145

 
907,806

Cash and cash equivalents at end of period
$
715,976

 
$
923,676

Cash interest paid
$
146,838

 
$
161,628

Cash income tax payments, net of refunds
$
95,770

 
$
116,682

See Notes to Condensed Consolidated Financial Statements

6

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


1. Description of Business and Basis of Presentation
Pitney Bowes Inc. and its subsidiaries (we, us, our or the Company) is a global technology company offering innovative products and solutions that enable commerce in the areas of customer information management, location intelligence, customer engagement, shipping and mailing, and global ecommerce. 
We have prepared the accompanying unaudited Condensed Consolidated Financial Statements 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, 2014 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, 2015.
During the second quarter, we determined that at December 31, 2014, certain customer deposits within current liabilities should have been classified as a current asset and certain customer deposits within current liabilities should have been classified as a non-current liability. Accordingly, the Condensed Consolidated Balance Sheet at December 31, 2014 has been revised by increasing accounts receivable, accounts payable and accrued liabilities, and other non-current liabilities by $23 million, $14 million and $9 million, respectively. This revision was not material to any of our previously issued financial statements. Previously issued financial statements will be revised to reflect this revision in future filings.

In the fourth quarter of 2014, we noted that certain purchases and sales of available-for-sale securities were reported net in our Condensed Consolidated Statements of Cash Flows. Accordingly, the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2014 has been revised by increasing purchases of available-for-sale securities and proceeds from sales/maturities of available-for-sale securities by $422 million. This revision did not have any impact on the reported net cash flow from investing activities or overall change in cash in any of our previously issued financial statements.

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, 2014 (2014 Annual Report).
New Accounting Pronouncements
In September 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2015-16, Business Combinations - Simplifying the Accounting for Measurement-Period Adjustments, which eliminates the requirement to restate prior period financial statements for measurement period adjustments. The new guidance requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. Consistent with existing guidance, the new guidance requires an acquirer to disclose the nature and amount of measurement period adjustments. The ASU should be applied prospectively to measurement period adjustments that occur after the effective date. The ASU is effective for interim and annual periods beginning after December 15, 2015. Early adoption is permitted. We do not believe this standard will have a significant impact on our consolidated financial statements or disclosures.

In July 2015, the FASB issued ASU 2015-11, Inventory - Simplifying the Measurement of Inventory, which requires inventory to be measured at the lower of cost and net realizable value (estimated selling price less reasonably predictable costs of completion, disposal and transportation). Prior to this guidance, inventory was measured at the lower of cost or market (where market was defined as replacement cost, with a ceiling of net realizable value and a floor of net realizable value of inventory, less a normal profit margin). Inventory measured using LIFO is not impacted by the new guidance. The ASU is effective for fiscal years beginning after December 15, 2016 and interim periods therein. Early adoption is permitted. We do not believe this standard will have a significant impact on our consolidated financial statements or disclosures.

In April 2015, the FASB issued ASU 2015-05, Intangibles - Goodwill and Other - Internal-Use Software, Customer's Accounting for Fees Paid in a Cloud Computing Arrangement, which provides guidance on fees paid by an entity in a cloud computing arrangement and whether an arrangement includes a license to the underlying software. This standard is effective for fiscal periods beginning after December 15, 2015. Early adoption is permitted. We are currently assessing the impact this standard will have on our consolidated financial statements and disclosures.

In April 2015, the FASB issued Accounting Standard Update (ASU) 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability. This standard is

7

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

effective for fiscal periods beginning after December 15, 2015. Early adoption is permitted. We do not believe this standard will have a significant impact on our consolidated financial statements or disclosures.

In January 2015, the FASB issued ASU 2015-01, Income Statement - Extraordinary and Unusual Items, which removes the concept of extraordinary items, thereby eliminating the need for companies to assess transactions for extraordinary treatment. The standard retained the presentation and disclosure requirements for items that are unusual in nature and/or infrequent in occurrence. The standard is effective for fiscal periods beginning after December 15, 2015. Early adoption is permitted. We do not believe this standard will have a significant impact on our consolidated financial statements or disclosures.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. The standard requires companies to recognize revenue for the transfer of goods and services to customers in amounts that reflect the consideration the company expects to receive in exchange for those goods and services. The standard will also result in enhanced disclosures about revenue. In July 2015, the FASB approved a one-year deferral of the effective date. This standard is now effective for fiscal periods beginning after December 15, 2017. The standard can be adopted either retrospectively or as a cumulative-effect adjustment. Companies are permitted to adopt the standard as early as the original public entity effective date (fiscal periods beginning after December 15, 2016). Early adoption prior to that date is prohibited. We are currently assessing the impact this standard will have on our consolidated financial statements and disclosures.

2. Segment Information
As a result of the acquisition of Borderfree, Inc. (Borderfree) and the sale of Imagitas (see Note 3), we realigned our segment reporting to conform to the way we now manage our segments and recast prior period amounts to conform to the current year presentation. Our business continues to be organized around three distinct sets of solutions – Small and Medium Business (SMB) Solutions, Enterprise Business Solutions and Digital Commerce Solutions (DCS). Under the new segment reporting, there are no changes to SMB Solutions or Enterprise Business Solutions; however, within DCS, we now report Software Solutions and Global Ecommerce as reportable segments. The Other segment is comprised of our Marketing Services business, Imagitas, which was sold in May 2015. Imagitas was previously reported in DCS. The principal products and services of each of our reportable segments are as follows:

Small & Medium Business Solutions:
North America Mailing: Includes the revenue and related expenses from the sale, rental, financing and servicing of mailing equipment and supplies for small and medium businesses to efficiently create mail and evidence postage in the U.S. and Canada.
International Mailing: Includes the revenue and related expenses from the sale, rental, financing and servicing of mailing equipment and supplies for small and medium businesses to efficiently create mail and evidence postage in areas outside the U.S. and Canada.

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

Digital Commerce Solutions:
Software Solutions: Includes the worldwide revenue and related expenses from the sale of non-equipment-based mailing, customer information management, location intelligence and customer engagement solutions and related support services.
Global Ecommerce: Includes the worldwide revenue and related expenses from global ecommerce and shipping solutions.

We determine segment earnings before interest and taxes (EBIT) by deducting the related costs and expenses attributable to the segment from segment revenue. Segment EBIT excludes interest, taxes, general corporate expenses, restructuring charges and other items, which are not allocated to a particular business segment. Management uses segment EBIT to measure profitability and performance at the segment level. Management believes segment EBIT provides a useful measure of our operating performance and underlying trends of the businesses. Segment EBIT may not be indicative of our overall consolidated performance and therefore, should be read in conjunction with our consolidated results of operations.

8

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

Revenue and EBIT by business segment is presented below:
 
Revenue
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2015
 
2014
 
2015
 
2014
North America Mailing
$
353,159

 
$
363,285

 
$
1,071,824

 
$
1,115,507

International Mailing
104,615

 
132,291

 
331,398

 
438,819

Small & Medium Business Solutions
457,774

 
495,576

 
1,403,222

 
1,554,326

Production Mail
101,646

 
113,497

 
298,880

 
330,469

Presort Services
115,912

 
111,434

 
351,365

 
339,205

Enterprise Business Solutions
217,558

 
224,931

 
650,245

 
669,674

Software Solutions
97,638

 
112,006

 
282,916

 
312,200

Global Ecommerce
96,571

 
71,870

 
249,923

 
204,399

Digital Commerce Solutions
194,209

 
183,876

 
532,839

 
516,599

Other
—

 
37,261

 
54,807

 
96,992

Total revenue
$
869,541

 
$
941,644

 
$
2,641,113

 
$
2,837,591

 
EBIT
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2015
 
2014
 
2015
 
2014
North America Mailing
$
159,319

 
$
159,638

 
$
482,376

 
$
476,757

International Mailing
10,739

 
16,079

 
36,585

 
67,347

Small & Medium Business Solutions
170,058

 
175,717

 
518,961

 
544,104

Production Mail
12,401

 
9,570

 
31,461

 
27,865

Presort Services
25,908

 
21,927

 
76,946

 
68,235

Enterprise Business Solutions
38,309

 
31,497

 
108,407

 
96,100

Software Solutions
14,613

 
18,921

 
34,904

 
30,620

Global Ecommerce
(1,240
)
 
(676
)
 
9,962

 
9,100

Digital Commerce Solutions
13,373

 
18,245

 
44,866

 
39,720

Other
—

 
7,980

 
10,569

 
13,965

Total EBIT
221,740

 
233,439

 
682,803

 
693,889

Reconciling items:
 

 
 

 
 

 
 

Interest, net
(37,698
)
 
(41,825
)
 
(119,371
)
 
(127,437
)
Unallocated corporate expenses
(49,235
)
 
(61,470
)
 
(151,959
)
 
(163,532
)
Restructuring charges and asset impairments, net
(36
)
 
(4,526
)
 
(14,305
)
 
(22,666
)
Acquisition-related compensation expense
—

 
—

 
(10,483
)
 
—

Other income (expense), net
1,781

 
15,919

 
94,916

 
(45,738
)
Income from continuing operations before income taxes
$
136,552

 
$
141,537

 
$
481,601

 
$
334,516

 
 
 
 

9

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

3. Business Combinations and Divestiture
Business Combinations
Borderfree
On June 10, 2015, we acquired 100% of the outstanding shares of Borderfree. Borderfree provides cross-border ecommerce solutions through a proprietary technology and services platform that enables retailers to transact with consumers around the world. Borderfree is reported within our Global Ecommerce segment (see Note 2). The purchase price was $381 million, net of $92 million of cash acquired. In addition, we also paid $10 million for the accelerated vesting and settlement of Borderfree stock-based compensation awards and $8 million of transaction costs. The $10 million of expense related to Borderfree stock-based compensation awards was recognized as selling, general and administrative expenses and the $8 million of transaction costs was recognized within other (income) expense, net in the Condensed Consolidated Statements of Income.

The preliminary allocation of the purchase price to the fair values of assets acquired and liabilities assumed was as follows:
Accounts receivable
$
13,860

Fixed assets
7,329

Goodwill
299,966

Intangible assets
137,500

Accounts payable and other current liabilities
(35,693
)
Deferred taxes, net
(40,836
)
Other assets and liabilities, net
(677
)
 
$
381,449

Goodwill represents the excess of the purchase price over the fair values of assets acquired and liabilities assumed. Goodwill is primarily attributable to expected growth opportunities, synergies and other benefits that we believe will result from combining the operations of Borderfree with our operations. Goodwill is not deductible for tax purposes.

Intangible assets acquired consisted of the following:
 
Value
 
Amortization period
Customer Relationships
$
116,200

 
10 years
Developed Technology
12,600

 
5 years
Trade Names
8,700

 
5 years
 
$
137,500

 
 

The allocation of the purchase price to the fair values of assets acquired and liabilities assumed may be subject to further adjustments as we obtain additional information during the measurement period, which will not exceed 12 months from the acquisition date.

The results of operations of Borderfree are included in our consolidated results from the date of acquisition. Our consolidated operating results for the three and nine months ended September 30, 2015 include revenue of $25 million and $31 million, respectively. On a supplemental pro forma basis, had we acquired Borderfree on January 1, 2014, our revenues would have been $47 million higher for the nine months ended September 30, 2015 and $31 million and $89 million higher for the three and nine months ended September 30, 2014, respectively. The impact on our earnings would not have been material.

Real Time Content, Inc.
On May 1, 2015, we acquired Real Time Content, Inc. (RTC) for $6 million, net of cash acquired. RTC provides technology that enables clients to provide personalized interactive video communications to their customers. RTC is reported within our Software Solutions segment.
  
Divestiture
On May 29, 2015, we sold Imagitas, for net proceeds of $292 million and recognized a pre-tax gain of $111 million, which was reported within other (income) expense, net in the Condensed Consolidated Statements of Income.


10

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

 
 
 
 
 
 
 
 
 
 
4. Discontinued Operations and Assets Held For Sale
Discontinued Operations
Loss from discontinued operations, net of tax for the nine months ended September 30, 2015 consisted of post-closing adjustments in connection with the sale of our Management Services business in 2014.
The table below shows selected financial information for discontinued operations for the three and nine months ended September 30, 2014:
 
Three Months Ended September 30, 2014
 
PBMS
 
IMS
 
Nordic furniture business
 
DIS
 
Total
Revenue
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
 
 
 
 
 
 
 
 
 
Income from operations before taxes
$
(858
)
 
$
—

 
$
—

 
$
(297
)
 
$
(1,155
)
Gain (loss) on sale
2,971

 
—

 
—

 
(19
)
 
2,952

Income (loss) before taxes
2,113

 
—

 
—

 
(316
)
 
1,797

Tax (benefit) provision
(5,149
)
 
—

 
—

 
85

 
(5,064
)
Net income (loss)
$
7,262

 
$
—

 
$
—

 
$
(401
)
 
$
6,861

Capital Services, net of tax
 
 
 
 
 
 
 
 
13,794

Income from discontinued operations
 
 
 
 
 
 
 
 
$
20,655

 
 
 
Nine Months Ended September 30, 2014
 
PBMS
 
IMS
 
Nordic furniture business
 
DIS
 
Total
Revenue
$
—

 
$
—

 
$
—

 
$
19,858

 
$
19,858

 
 
 
 
 
 
 
 
 
 
(Loss) income before taxes
$
(524
)
 
$
308

 
$
345

 
$
3,132

 
$
3,261

Gain on sale
3,101

 
1,994

 
—

 
25,179

 
30,274

Income before taxes
2,577

 
2,302

 
345

 
28,311

 
33,535

Tax (benefit) provision
(4,953
)
 
851

 
97

 
21,161

 
17,156

Net income
$
7,530

 
$
1,451

 
$
248

 
$
7,150

 
$
16,379

Capital Services, net of tax
 
 
 
 
 
 
 
 
13,794

Income from discontinued operations
 
 
 
 
 
 
 
 
$
30,173


Assets Held for Sale
Assets held for sale at December 31, 2014 included the fair value of our former corporate headquarters building and the value of a lease portfolio. The lease portfolio was sold in January 2015 and the corporate headquarters building was sold in June 2015 (see Note 10 for further details).
 
 


11

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

5. Earnings per Share
The calculations of basic and diluted earnings per share are presented below:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2015
 
2014
 
2015
 
2014
Numerator:
 

 
 

 
 

 
 

Net income from continuing operations
$
89,282

 
$
111,634

 
$
322,246

 
$
241,054

Income (loss) from discontinued operations, net of tax
—

 
20,655

 
(582
)
 
30,173

Net income - Pitney Bowes Inc. (numerator for diluted EPS)
89,282

 
132,289

 
321,664

 
271,227

Less: Preference stock dividend
10

 
11

 
31

 
33

Income attributable to common stockholders (numerator for basic EPS)
$
89,272

 
$
132,278

 
$
321,633

 
$
271,194

Denominator:
 

 
 

 
 

 
 

Weighted-average shares used in basic EPS
199,874

 
202,057

 
200,825

 
202,288

Effect of dilutive shares:
 

 
 

 
 

 
 

Conversion of Preferred stock and Preference stock
318

 
343

 
326

 
347

Employee stock plans
825

 
1,569

 
734

 
1,325

Weighted-average shares used in diluted EPS
201,017

 
203,969

 
201,885

 
203,960

Basic earnings per share (1):
 

 
 

 
 

 
 

Continuing operations
$
0.45

 
$
0.55

 
$
1.60

 
$
1.19

Discontinued operations
—

 
0.10

 
—

 
0.15

Net income
$
0.45

 
$
0.65

 
$
1.60

 
$
1.34

Diluted earnings per share (1):
 

 
 

 
 

 
 

Continuing operations
$
0.44

 
$
0.55

 
$
1.60

 
$
1.18

Discontinued operations
—

 
0.10

 
—

 
0.15

Net income
$
0.44

 
$
0.65

 
$
1.59

 
$
1.33

Anti-dilutive shares not used in calculating diluted weighted-average shares:
7,934

 
6,009

 
8,609

 
7,394

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

6. Inventories
Inventories are stated at the lower of cost or market. Cost is determined on the last-in, first-out (LIFO) basis for most U.S. inventories and on the first-in, first-out (FIFO) basis for most non-U.S. inventories. Inventories at September 30, 2015 and December 31, 2014 consisted of the following:
 
September 30,
2015
 
December 31,
2014
Raw materials and work in process
$
40,410

 
$
37,175

Supplies and service parts
45,950

 
33,760

Finished products
30,191

 
26,992

Inventory at FIFO cost
116,551

 
97,927

Excess of FIFO cost over LIFO cost
(13,356
)
 
(13,100
)
Total inventory, net
$
103,195

 
$
84,827



12

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

7. Finance Assets
Finance Receivables
Finance receivables are comprised of sales-type lease receivables and unsecured revolving loan receivables. Sales-type lease receivables are generally due in monthly, quarterly or semi-annual installments over periods ranging from three to five years. Loan receivables arise primarily from financing services offered to our customers for postage and supplies. Loan receivables are generally due each month; however, customers may rollover outstanding balances. Interest is recognized on loan receivables using the effective interest method and related annual fees are initially deferred and recognized ratably over the annual period covered. Customer acquisition costs are expensed as incurred.
Finance receivables at September 30, 2015 and December 31, 2014 consisted of the following:
 
September 30, 2015
 
December 31, 2014
 
North America
 
International
 
Total
 
North America
 
International
 
Total
Sales-type lease receivables
 

 
 

 
 

 
 

 
 

 
 

Gross finance receivables
$
1,219,242

 
$
318,369

 
$
1,537,611

 
$
1,286,624

 
$
366,669

 
$
1,653,293

Unguaranteed residual values
100,210

 
16,319

 
116,529

 
105,205

 
18,291

 
123,496

Unearned income
(255,747
)
 
(70,496
)
 
(326,243
)
 
(270,196
)
 
(83,110
)
 
(353,306
)
Allowance for credit losses
(7,531
)
 
(3,660
)
 
(11,191
)
 
(10,281
)
 
(5,129
)
 
(15,410
)
Net investment in sales-type lease receivables
1,056,174

 
260,532

 
1,316,706

 
1,111,352

 
296,721

 
1,408,073

Loan receivables
 

 
 

 
 

 
 

 
 

 
 

Loan receivables
355,106

 
48,454

 
403,560

 
376,987

 
47,665

 
424,652

Allowance for credit losses
(9,853
)
 
(1,650
)
 
(11,503
)
 
(10,912
)
 
(1,788
)
 
(12,700
)
Net investment in loan receivables
345,253

 
46,804

 
392,057

 
366,075

 
45,877

 
411,952

Net investment in finance receivables
$
1,401,427

 
$
307,336

 
$
1,708,763

 
$
1,477,427

 
$
342,598

 
$
1,820,025


Allowance for Credit Losses and Aging of Receivables
We estimate our finance receivable risks and provide an allowance for credit losses accordingly. We evaluate the adequacy of the allowance for credit losses based on historical loss experience, the nature and volume of our portfolios, adverse situations that may affect a client's ability to pay, prevailing economic conditions and our ability to manage the collateral and make adjustments to the allowance as necessary. This evaluation is inherently subjective and actual results may differ significantly from estimated reserves.

We establish credit approval limits based on the credit quality of the client and the type of equipment financed. Our policy is to discontinue revenue recognition for lease receivables that are more than 120 days past due and for unsecured loan receivables that are more than 90 days past due. We resume revenue recognition when payments reduce the account balance aging to 60 days or less past due. Finance receivables deemed uncollectible are written off against the allowance after all collection efforts have been exhausted and management deems the account to be uncollectible. We believe that our finance receivable credit risk is limited because of our large number of clients, small account balances for most of our clients, and geographic and industry diversification.


13

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

Activity in the allowance for credit losses for the nine months ended September 30, 2015 and 2014 was as follows:
 
Sales-type Lease Receivables
 
Loan Receivables
 
 
 
North
America
 
International
 
North
America
 
International
 
Total
Balance at January 1, 2015
$
10,281

 
$
5,129

 
$
10,912

 
$
1,788

 
$
28,110

Amounts charged to expense
802

 
183

 
6,171

 
867

 
8,023

Write-offs and other
(3,552
)
 
(1,652
)
 
(7,230
)
 
(1,005
)
 
(13,439
)
Balance at September 30, 2015
$
7,531

 
$
3,660

 
$
9,853

 
$
1,650

 
$
22,694

 
 
 
 
 
 
 
 
 
 
 
Sales-type Lease Receivables
 
Loan Receivables
 
 
 
North
America
 
International
 
North
America
 
International
 
Total
Balance at January 1, 2014
$
14,165

 
$
9,703

 
$
11,165

 
$
1,916

 
$
36,949

Amounts charged to expense
3,232

 
35

 
7,759

 
1,366

 
12,392

Write-offs and other
(4,491
)
 
(4,252
)
 
(7,980
)
 
(1,381
)
 
(18,104
)
Balance at September 30, 2014
$
12,906

 
$
5,486

 
$
10,944

 
$
1,901

 
$
31,237


Aging of Receivables
The aging of gross finance receivables at September 30, 2015 and December 31, 2014 was as follows:
 
September 30, 2015
 
Sales-type Lease Receivables
 
Loan Receivables
 
 
 
North
America
 
International
 
North
America
 
International
 
Total
1 - 30 days
$
1,153,935

 
$
301,527

 
$
340,106

 
$
46,409

 
$
1,841,977

31 - 60 days
26,887

 
5,635

 
8,565

 
1,167

 
42,254

61 - 90 days
19,165

 
3,543

 
2,978

 
370

 
26,056

> 90 days
19,255

 
7,664

 
3,457

 
508

 
30,884

Total
$
1,219,242

 
$
318,369

 
$
355,106

 
$
48,454

 
$
1,941,171

Past due amounts > 90 days
 

 
 

 
 

 
 

 
 

Still accruing interest
$
5,356

 
$
2,258

 
$
—

 
$
—

 
$
7,614

Not accruing interest
13,899

 
5,406

 
3,457

 
508

 
23,270

Total
$
19,255

 
$
7,664

 
$
3,457

 
$
508

 
$
30,884


 
December 31, 2014
 
Sales-type Lease Receivables
 
Loan Receivables
 
 
 
North
America
 
International
 
North
America
 
International
 
Total
1 - 30 days
$
1,217,623

 
$
347,236

 
$
359,672

 
$
45,678

 
$
1,970,209

31 - 60 days
23,242

 
6,207

 
9,245

 
1,201

 
39,895

61 - 90 days
24,198

 
4,494

 
3,498

 
413

 
32,603

> 90 days
21,561

 
8,732

 
4,572

 
373

 
35,238

Total
$
1,286,624

 
$
366,669

 
$
376,987

 
$
47,665

 
$
2,077,945

Past due amounts > 90 days
 

 
 

 
 

 
 

 
 

Still accruing interest
$
5,931

 
$
2,517

 
$
—

 
$
—

 
$
8,448

Not accruing interest
15,630

 
6,215

 
4,572

 
373

 
26,790

Total
$
21,561

 
$
8,732

 
$
4,572

 
$
373

 
$
35,238


14

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

Credit Quality
The extension of credit and management of credit lines to new and existing clients uses a combination of an automated credit score, where available, and a detailed manual review of the client’s financial condition and, when applicable, payment history. Once credit is granted, the payment performance of the client is managed through automated collections processes and is supplemented with direct follow up should an account become delinquent. We have robust automated collections and extensive portfolio management processes. The portfolio management processes ensure that our global strategy is executed, collection resources are allocated appropriately and enhanced tools and processes are implemented as needed.
We use a third party to score the majority of the North America portfolio on a quarterly basis using a commercial credit score. We do not use a third party to score our international portfolio because the cost to do so is prohibitive, given that it is a localized process and there is no single credit score model that covers all countries.
The table below shows the North America portfolio at September 30, 2015 and December 31, 2014 by relative risk class (low, medium, high) based on the relative scores of the accounts within each class. The relative scores are determined based on a number of factors, including the company type, ownership structure, payment history and financial information. A fourth class is shown for accounts that are not scored. Absence of a score is not indicative of the credit quality of the account. The degree of risk, as defined by the third party, refers to the relative risk that an account in the next 12 month period may become delinquent.
•
Low risk accounts are companies with very good credit scores and are considered to approximate the top 30% of all commercial borrowers.
•
Medium risk accounts are companies with average to good credit scores and are considered to approximate the middle 40% of all commercial borrowers.
•
High risk accounts are companies with poor credit scores, are delinquent or are at risk of becoming delinquent and are considered to approximate the bottom 30% of all commercial borrowers.
 
September 30,
2015
 
December 31,
2014
Sales-type lease receivables
 

 
 

Low
$
924,814

 
$
936,979

Medium
207,186

 
230,799

High
39,595

 
45,202

Not Scored
47,647

 
73,644

Total
$
1,219,242

 
$
1,286,624

Loan receivables
 

 
 

Low
$
248,542

 
$
259,436

Medium
85,716

 
96,243

High
10,445

 
10,913

Not Scored
10,403

 
10,395

Total
$
355,106

 
$
376,987



15

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

8. Intangible Assets and Goodwill
Intangible Assets
Intangible assets consisted of the following:
 
September 30, 2015
 
December 31, 2014
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
Customer relationships
$
433,475

 
$
(265,371
)
 
$
168,104

 
$
337,438

 
$
(263,121
)
 
$
74,317

Supplier relationships
—

 
—

 
—

 
29,000

 
(27,913
)
 
1,087

Software & technology
150,373

 
(134,530
)
 
15,843

 
160,825

 
(154,610
)
 
6,215

Trademarks & other
35,548

 
(27,177
)
 
8,371

 
33,079

 
(32,525
)
 
554

Total intangible assets
$
619,396

 
$
(427,078
)
 
$
192,318

 
$
560,342

 
$
(478,169
)
 
$
82,173


Amortization expense was $11 million and $9 million for the three months ended September 30, 2015 and 2014, respectively, and $27 million and $26 million, for the nine months ended September 30, 2015 and 2014, respectively.

In 2015, we acquired certain intangible assets in connection with the acquisition of Borderfree (see Note 3). The change in supplier relationships is the result of the sale of Imagitas.

Future amortization expense for intangible assets as of September 30, 2015 was as follows:
Remaining for year ending December 31, 2015
$
10,520

Year ending December 31, 2016
37,696

Year ending December 31, 2017
26,857

Year ending December 31, 2018
24,251

Year ending December 31, 2019
21,193

Thereafter
71,801

Total
$
192,318

Actual amortization expense may differ from the amounts above due to, among other things, fluctuations in foreign currency exchange rates, impairments, acquisitions and accelerated amortization.
Goodwill
The changes in the carrying value of goodwill for the nine months ended September 30, 2015 were as follows:
 
December 31, 2014
 
Acquisitions
 
Divestiture
 
Foreign currency translation
 
September 30,
2015
North America Mailing
$
309,448

 
$
—

 
$
—

 
$
(10,241
)
 
$
299,207

International Mailing
162,146

 
—

 
—

 
(10,894
)
 
151,252

Small & Medium Business Solutions
471,594

 
—

 
—

 
(21,135
)
 
450,459

Production Mail
110,837

 
—

 
—

 
(3,621
)
 
107,216

Presort Services
195,140

 
—

 
—

 
—

 
195,140

Enterprise Business Solutions
305,977

 
—

 
—

 
(3,621
)
 
302,356

Software Solutions
677,008

 
5,792

 
—

 
(5,603
)
 
677,197

Global Ecommerce
23,910

 
299,966

 
—

 
—

 
323,876

Digital Commerce Solutions
700,918

 
305,758

 
—

 
(5,603
)
 
1,001,073

Other
194,232

 
—

 
(194,232
)
 
—

 
—

Total goodwill
$
1,672,721

 
$
305,758

 
$
(194,232
)
 
$
(30,359
)
 
$
1,753,888


16

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

9. Fair Value Measurements and Derivative Instruments
We measure certain financial assets and liabilities at fair value on a recurring basis. Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure. An entity is required to classify certain assets and liabilities measured at fair value based on the following fair value hierarchy that prioritizes the inputs used to measure fair value:
Level 1 –
Unadjusted quoted prices in active markets for identical assets and liabilities.
Level 2 –
Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 –
Unobservable inputs that are supported by little or no market activity, may be derived from internally developed methodologies based on management’s best estimate of fair value and that are significant to the fair value of the asset or liability.
The following tables show, by level within the fair value hierarchy, our financial assets and liabilities that are accounted for at fair value on a recurring basis at September 30, 2015 and December 31, 2014. 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.
 
September 30, 2015
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets:
 

 
 

 
 

 
 

Investment securities
 

 
 

 
 

 
 

Money market funds / commercial paper
$
11,181

 
$
289,062

 
$
—

 
$
300,243

Equity securities
—

 
23,376

 
—

 
23,376

Commingled fixed income securities
—

 
22,668

 
—

 
22,668

U.S. Government, federal agencies and municipalities
100,482

 
19,277

 
—

 
119,759

Corporate notes and bonds
—

 
67,128

 
—

 
67,128

Mortgage-backed / asset-backed securities
—

 
169,601

 
—

 
169,601

Derivatives
 
 
 
 
 

 


Foreign exchange contracts
—

 
2,056

 
—

 
2,056

Total assets
$
111,663

 
$
593,168

 
$
—

 
$
704,831

Liabilities:
 

 
 

 
 

 
 

Derivatives
 

 
 

 
 

 
 

Foreign exchange contracts
$
—

 
$
(4,948
)
 
$
—

 
$
(4,948
)
Total liabilities
$
—

 
$
(4,948
)
 
$
—

 
$
(4,948
)


17

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

 
December 31, 2014
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets:
 

 
 

 
 

 
 

Investment securities
 

 
 

 
 

 
 

Money market funds / commercial paper
$
505,643

 
$
193,986

 
$
—

 
$
699,629

Equity securities
—

 
27,409

 
—

 
27,409

Commingled fixed income securities
—

 
24,077

 
—

 
24,077

U.S. Government, federal agencies and municipalities
113,974

 
24,006

 
—

 
137,980

Corporate notes and bonds
—

 
67,448

 
—

 
67,448

Mortgage-backed / asset-backed securities
—

 
156,614

 
—

 
156,614

Derivatives
 

 
 

 
 

 


Foreign exchange contracts
—

 
1,386

 
—

 
1,386

Total assets
$
619,617

 
$
494,926

 
$
—

 
$
1,114,543

Liabilities:
 

 
 

 
 

 
 

Derivatives
 

 
 

 
 

 
 

Foreign exchange contracts
$
—

 
$
(2,988
)
 
$
—

 
$
(2,988
)
Total liabilities
$
—

 
$
(2,988
)
 
$
—

 
$
(2,988