Welcome to the Pitney Bowes Third Quarter 2014 Results Conference Call. (Operator Instructions). I would now like to introduce your speakers for today's conference call, Mr. Marc Lautenbach, President and Chief Executive Officer; Mr. Michael Monahan, Executive Vice President and Chief Financial Officer and Mr. Charles McBride, Vice President, Investor Relations. Mr. McBride will now begin the call with a Safe Harbor overview.

Good morning. Included in this presentation are forward-looking statements about our expected future business and financial performance. Forward-looking statements involve risks and uncertainties that could cause actual results to be materially different from our projections. More information about these risks and uncertainties can be found in our 2013 Form 10-K annual report and other reports filed with the SEC that are located on our website at www.pb.com and by clicking on Investor Relations. Please keep in mind that we do not undertake any other obligation to update any forward-looking statements as a result of new information or developments. Also for non-GAAP measures used in the press release or discussed in this presentation, you can find reconciliations to the appropriate GAAP measures in the tables attached to our press release and also on our investor relations website. Additionally, we are providing slides that summarize most of the points we will discuss during the call. These slides can also be found on our investor relations website. Now our President and Chief Executive Officer, Marc Lautenbach will start with a few opening remarks. Marc?

Good morning and thank you for joining us. By now, I hope you have had a chance to review our third quarter earnings press release. I am pleased with our performance in third quarter and the solid financial results we achieved. This marks the fourth consecutive quarter of year-over-year revenue growth, a clear sign of the steady and continuous progress we are making to execute successfully against our long-term strategy to unlock greater shareholder value. While we are still in the early phases of a multi-year journey to transform Pitney Bowes, we’re confident in our ability to continue to meet our financial objectives and deliver sustained value for clients, our shareholders and our employees. One year ago I began our investor call by placing our quarterly performance into the longer term strategy that we first detailed in May of 2013. I have continued this narrative every quarter, since I believe it is important to view our results through the lens of our multi-year strategic transformation. Given the steady progress we have made in implementing our strategy so far in 2014, we are even more confident and even more committed to staying the course and taking the disciplined actions necessary to reach our objectives. Once again our third quarter results are indicative of how we are advancing against the three strategic initiatives in our transformation, stabilizing our mail businesses, driving operational excellence and growing our business through expansion in digital commerce. Let's start with stabilizing our mail businesses, in the third quarter, we saw a revenue decline of 3% for our physical mail businesses in aggregate which includes small and medium businesses solutions, presort and production mail. Revenue for these mail-related businesses in the third quarter was impacted 1% by our decision to exit noncore product lines in Norway and to…

Thank you, Marc and good morning. As Marc indicated, our third quarter results are further evidence that we are making progress against our multi-year strategy. The business segment revenue contributions are shifting steadily towards the mix that we outlined at our May Analyst Day, with digital commerce solutions now representing nearly one quarter of total revenues this quarter. Also during the quarter, the revenue growth rates for each segment group were in line with our long-term market growth rate expectations, laying the groundwork for longer term revenue growth and continued EBIT margin improvement. EBIT improved in all three of our segment groups this quarter. Our core businesses again generated strong cash flow, which allowed us to continue to invest in our growth areas. As part of our objectives to stabilize our mail business and achieve operational excellence, we continued to take actions to improve our go-to-market processes around the world. We are experiencing some immediate benefits through a lower, more variablized cost structure and expect to generate additional benefits through improved sales, as our inside sales and dealer networks mature and become more productive. Revenue grew more than 2%, which was the fourth consecutive quarter of year-over-year positive revenue growth. Revenue growth would have been 3% during the quarter when you factor in the actions we took as part of our broader strategy, which included the exit of noncore product lines in Norway and the transition from a direct sales model to a dealer sales network through the international mailing and production mail segments in six smaller European markets. During the quarter, we increased investment in our ERP system development, as well as our R&D in support of our e-commerce platform expansion and other product initiatives. Even with these incremental investments, we were able to reduce SG&A versus prior year…

(Operator Instructions). And our first question will come from Kartik Mehta with Northcoast Research. Kartik Mehta – Northcoast Research: I wanted to ask you about the sustainability of North America mailing margins. You've obviously been able to improve those margins, even though revenue hasn't been growing and I'm wondering how long is that sustainable or are you anticipating that we should start seeing a reverse in the North American revenue?

Well, there is two different questions there; one is on revenue and one is on margins. Obviously, margins have benefited over the last 18 months, as we have gone to a different go-to-market. I still think there is headroom there. We've made a significant shift from a go-to-market that was oriented towards face-to-face sales to inside sales. And that has given us a more efficient coverage model and, candidly, a more effective coverage model from a client perspective. Still in front of us is further use of the web, which will, again, provide another benefit. So I think there's more headroom there, whether there is the same level that we have seen over the last 18 months, probably not. In terms of revenue, our models have always been predicated on low single-digit declines, that's kind of where we are and that's how we are thinking about it going forward.

I would add to Marc's comments on the margin side. Obviously, we laid out in May our plans around ERP and the benefits that we will continue to accrue in '16 and '17 in particular. So we do see opportunity for continued improvement. Kartik Mehta – Northcoast Research: And then Mike, share buyback, that was really good to see this quarter. Are you in a phase now where you see yourself consistently buying back shares or was this more of a onetime just an opportunity that you wanted to take advantage of?

Yes, I would say I would go back to what we said again in May, around having more options around capital allocation. We saw an opportunity here to bring some shares in. It does help a little bit with normal dilution. We will continue to look at it going forward. We'll obviously consult with the Board as part of our overall capital allocation strategy.

And our next question comes from Ananda Baruah with Brean Capital. Ananda Baruah – Brean Capital: The first is on North America mailing, as well in the press release and in your prepared remarks, you guys made reference to the shift to the non-direct sales method continuing to impact the growth. So I was hoping to just get a sense of to what degree that's continuing to happen and when you think it may stop being a headwind to growth and when growth could actually improve. Marc, I believe on the last call you made mention that you expected that to normalize in the second half of the year to March quarter levels. So I wanted to get thoughts on that and then I have a couple of follow-ups. Thanks.

I would go back to what we said in the third quarter. As we exited the second quarter, what we said was the shift from face-to-face sales to inside sales was largely behind us and we expected to get back to a trend that looked more like the first quarter in the second half and that's still our view. So I don't see anything that's really changed at all from what we saw in the second quarter.

I think the broader context as well is that we've seen improving trends in the recurring revenue streams in the third quarter as well, so we continue to see the overall model working. As Marc said, we are fine tuning on the inside sales and are looking to bring more web based capability online as well in the near future. Ananda Baruah – Brean Capital: And then, moving to the net impact of your efficiency initiatives, the cost pass-through to the bottom line continues to be really impressive. The rate was essentially unchanged on a quarterly basis and that's with investment in the ERP. It seems like you guys are at $110 million now, ex-ERP $100 million, so you're tracking the plan for year end. As you continue the next few quarters to get into the heart of the ERP investment, can you continue that same pass-through. Are you gaining those kinds of efficiencies internally to be able to do that? Or should we begin to think differently about the pass-through on a quarterly basis until you get through that at any point in time here? And then I have one last one. Thanks.

Sure, in terms of that we sort of bifurcated this into two distinct pieces; there was the initiatives that were principally led by the go-to-market as Marc had described and that's a lot of the benefit that we are seeing in the current results. Obviously, we are continuing that in the rest of the mailing business around the world and there are some additional benefits to be gained from that. In terms of ERP, that is a timing question and while we've seen some spending increase over the last couple of quarters, as we noted in the fourth quarter, our guidance includes the expectations that that will increase somewhat more. We’re in the build stage of that process, so there will be timing from quarter to quarter, but we believe that we've layered in both the opportunity for continued cost reduction, along with investment and then we believe the second wave of cost benefits will come as we begin to deploy the ERP system around the world. Ananda Baruah – Brean Capital: And then the last one from me, I'm going to wrap it in clarification for Marc as well. Marc just a quick clarification on the first question with regards to North American mailing growth, is that to say that you expect to get to that down 1%, 2% range in the fourth quarter? I guess that would be baked into the guidance, that's the clarification. And then the question for Mike is, you mentioned that you have a benefit from other baked into the increase in the fiscal year guidance. Is that the tax benefit that you realized this quarter or is that something else? And if it's something else, how is the tax benefit this quarter reflected in the guide? Thanks.

I believe in the second quarter as well in terms of the specific number for North American SMB. I resisted the temptation of giving a specific number in the second quarter and I will continue to resist that temptation. I will only say that we expect it to get – as inside sales continues to mature and that go-to-market stabilizes, a trend that looks more like the first quarter is what we're expecting to see.

In terms of the guidance, the other is the benefit from the divestiture of an investment that's baked into there. The overall guidance does include the tax because that was in the base-adjusted earnings number. As you can see, we moved our guidance range up to reflect the changes we've seen both in the business to date as well as is our outlook for the fourth quarter.

And our next question will come from Shannon Cross with Cross Research. Shannon Cross – Cross Research: I wanted to start on the e-commerce business. Marc, can you talk a bit about the 12 new customers? I assume they're relatively small, but how are you thinking about growing that business? And then from a timing perspective, how should we think about the opportunity to expand, you know how the UK is selling into Europe, so to expand the international capabilities of that platform?

Let me just start with the market opportunity, because I think it bears repeating. The market opportunity for e-commerce is plus or minus $7 billion. So we've made great strides over the last couple of years growing that business, but we still have tremendous headroom. And we think of that market opportunity in two dimensions; the first, as you mentioned, the smaller merchants, not that – I think we added 10, not 12, in the release. But we think that's an important add as we go forward. So the way we're thinking about the market opportunities in terms of anchored clients, which we think of eBay as and then these smaller merchants and smaller is relative to eBay, but not small in absolute sizes. So we’re adding salespeople to pursue that opportunity and we are excited about what we're able to achieve in the third quarter, but I think we are just scratching the surface as it relates to the merchants. As it relates to the anchor clients, as you rightly noted, so far our business has been U.S. out. And while the U.S. is a substantial economy, it's certainly not the preponderance of the economy around the world. So we saw the move into UK as a very important step forward for that business as we continue to keep our eye on that $7-billion opportunity. And I would just parenthetically add that business has ramped in the UK fairly quickly, relative to what we had seen in the United States, so we're very excited. Our focus continues to be on providing great client service there, so we won't scale faster than we think we can provide a level of service that we're proud of. But it is a remarkable business in terms of the opportunity as well as the level of growth that we've been able to achieve in the last two years. Shannon Cross – Cross Research: And what level of investment is required to go into the UK? I'm just curious what you had to put in place. Did you put a distribution facility in place there, or are you leveraging out other people to ship the product? I'm just curious as to what – as you grow around the world, what is required?

Our model is a fairly asset-light model, so we use partners as much as possible in terms of the distribution elements and even some of the package reparation elements of that. We have really focused our investments in the technology and now increasingly in building out the channel and the infrastructure support for customers in the form of certainly dealing with the merchant direct or the smaller accounts and all. So we have tried to focus our investments in the areas where we bring unique value and differentiation and leverage third party service providers in more of the physical aspects of it. Shannon Cross – Cross Research: And then can you just provide a more detail in terms of the ERP implementation? What was the level of investment this quarter? And then if we think about timing as we go through 2015 where are you at in terms of the planning stages versus implementation? And are you planning on doing this, I would assume, country-by-country, starting smaller countries, maybe? Any color you can give us on where you’re at and more specifics on ERP.

Sure, in terms of the spend around ERP it was another $0.02 in the quarter investment in ERP. We had said at the beginning of the year that we thought we would spend upwards of $0.10 against this investment. I think we'll stay certainly within that level in terms of P&L impact. We did also say we expected to invest $30 million to $50 million of capital in 2014 associated with it and that's a capitalization of some of the technology and hardware associated with deployment. To date, we're right – just a little bit below $30 million, so I would expect we'll finish the year again right in the zone of what we originally suggested, '14 and '15 are the two big investment years, in terms of both the design and now the build. And then ultimately, as we go into '15 and into '16 beginning the deployments to your point, it will be a deployment on a geographic basis. We will start in a small market, make sure we've got everything the way we want it to be and then roll out from there. So we're on track as we defined the program and managing it within that spend that we originally outlined. Shannon Cross – Cross Research: And just one clarification, corporate and other expense, was there anything special or onetime in that this quarter?

We just talked about it. That's where the ERP expense is being approved.

And our next question comes from George Tong with Piper Jaffray. George Tong – Piper Jaffray: Starting with e-commerce, can you discuss your opportunity to add what you would call anchor clients on top of eBay? And maybe provide some additional details on your current penetration with e-Bay and what additional runway you have?

In terms of large clients, we look at clients both from – in the case of an eBay, they're obviously a large community of buyers and sellers' platform providers are also potential opportunities. And then obviously, we’re building out a base of merchant direct. And the way that we look at it is focus on the expansion globally, that's initially with eBay and initially into the UK. Continue to work other larger customers who may have potential to benefit from our program by being able to broaden their market and then continue to add the smaller direct merchants that we do business directly with; I think Marc noted we added 10 in the quarter. We’ve over 30 now in that space and they will build volume over time, but I think it helps reinforce the value of the solution we have to have those types of clients joining the portfolio. George Tong – Piper Jaffray: With your recent new progress in further scaling e-commerce, have you rethought about what your longer term target is for run-rate revenues for that business whether you're still on track to that $300 million over the next two to three years?

Yes, I think it's safe to say we believe we are well on track to do that and as Marc mentioned, with a $7-billion market opportunity, we continue to look at ways of making that a more substantial business than that. George Tong – Piper Jaffray: And then switching gears to margins within digital commerce, how do you expect margin trends to play out over the next several quarters? And do you continue to feel comfortable that you can take margins there to 20% longer term? And maybe discuss what initiatives you have to take that margin run-rate higher.

A little bit of where we’re in the journey there, we’ve over the last several quarters, a couple of years for that matter, made substantial investments in our sales channel. You are seeing that begin to pay off, specifically if you look at the software license line item. That said, we’re still in early stages of the maturity of that business. So what I would say is we still see no reason that longer term that business wouldn't have the kinds of margins you would see in other software businesses and that's 20%, plus or minus. While we'll continue to invest over the next several quarters, I think the third quarter was an important inflection point, in terms of – a stair step function in terms of margins in that business. So we're getting to the point where I think you may not see it evenly every quarter, but you will see continued revenue growth along with the opportunity for margin expansion. George Tong – Piper Jaffray: And then lastly in North America SMB, in past quarters you've seen some pretty good product-driven catalysts in terms of contributing to revenue performance. Do you see in your upcoming pipeline of products any potential catalysts that can further drive stability and/or improvement in your equipment sales and recurring revenue trends?

I would say it this way, in every of our businesses, we continue to look at how we innovate. That business is no different. I would say we've got some exciting things that we're thinking about, but those are still, I would say, in the planning stages, so probably a little early to talk a lot about those. In terms of equipment sales in that business, I would only comment that that's becoming a smaller and smaller percentage of the total. So while it's something that we continue to think of as important, if you look at that relative to the total mix. It is a lot less important now than it was a couple of quarters ago. It begins to – I think reveal how the model works, with software license revenue growth increasing at a fairly healthy rate and equipment sales in SMB moderating and balancing those two gives you the arbitrage in margins that you would want.

And the next question will come from Scott Wipperman with Goldman Sachs. Scott Wipperman – Goldman Sachs: Maybe just to jump back to capital allocation and the balance sheet. Mike just curious, any early thoughts on how you plan to deal with the March 2015 debt maturities? I know there is also some – I think a term loan still in 2015 as well. Any thoughts in how you are looking at '15 and '16 in particular would be helpful and then I have a follow-up.

Sure. In terms of '15, I think we really have options on how we deal with that, whether we were to go back to refinance it. Obviously, we’ve sufficient cash and cash flow that we could manage it that way. So as always and as everyone does, we will continue to look at the markets and what they look like and what options we’ve in the business at that point in time and make a decision closer to the time that that matures, but I think we do have options around that. In terms of '16 as you're aware, we have some debt come due, a little bit of term loan and then some preferred stock, which is related to our Pitney owes International Holding business, it's about $300 million and similarly, we’re investigating options around each one of those. But again, I think both from a free cash flow as well as an option to go to the market, we really are, I think, positioned pretty will to deal with maturities in '15 and '16. Scott Wipperman – Goldman Sachs: Then on the noncore asset sales in Europe, I know the divestiture in Norway I think was fairly small, but you have taken a number of actions in the last 18 months. I'm just curious, are there any more ancillary noncore businesses in Europe or do you think the portfolio is you want it to be there? Any expectation of further transition to dealer networks in anymore markets there?

I would say this, you are never done looking at the portfolio and that's because value continues to shift in the market and as value continues to shift in the market we will continue to reallocate our resources to where we think the best returns are. That being said, I don't see anything of the magnitude that we've done over the last 18 months in front of us in the near term, but we will continue to tidy up the portfolio. We'll continue to look at our geographic footprint to ensure that our resources are best allocated and that we can serve clients in a way that we would be proud of, so that stuff is never done. It's just part of running a business.

(Operator Instructions). And no further questions in queue.

Great. So let me close. First of all, thank you everyone, for your time this morning. I would like to close on a couple of points. First of all, I'm very pleased with the third quarter and I'm pleased for lots of different reasons. One is it really was an instantiation, again of our overall model and that is moderate declines in our core business, more than offset from a revenue and profit perspective through productivity, as well as our growth in digital commerce. The second point that I would make again is that we’re ahead of the schedule that we had set out for ourselves a couple years ago. There is a lot of work that we've done, a lot is in front of us, but I could not have envisioned in May of 2013 that would be in the place that we are right now. The final point that I would make is I've had the opportunity to work on lots of transformations in my previous career. It is unusual to find a transformation where you are increasing revenue and increasing profit, while at the same time you're making substantial investments in the business. So, the past is not a prologue, I think it's a fairly unique transformation in what we have been able to accomplish and where we are. So lot's to do, but I think it's a pretty unique transformation and a great opportunity for the company as well as our investors. So with that we will close the call and look forward to speaking to you in January. Thank you.