Good evening and welcome to the Pitney Bowes 2008 fourth quarter earnings conference call. Your lines have been placed in a listen-only mode during the conference call until the question-and-answer segment. Today’s call is also being recorded. If you have any objections, please disconnect your lines at this time. I would now like to introduce your speakers for today’s conference call, Mr. Murray Martin, Chairman, President and Chief Executive Officer; Mr. Michael Monahan, Executive Vice President and Chief Financial Officer, and Mr. Charles McBride, Vice President of Investor Relations. Mr. McBride will begin the call with a Safe Harbor overview. Please go ahead.

Thank you and good afternoon. Let me remind you, you can find today’s earnings press release in the attached schedules on our website at www.pb.com/investor relations. The forward-looking statements contained in this presentation involve risks and uncertainties and are subject to change based on various supporting factors including changes in international or national, political or economic conditions, timely development and acceptance of new products, timing of potential acquisitions, mergers or restructurings, gaining product approval, successful entry into new markets, changes in interest rates, changes in currency and changes in postal regulations as more fully outlined in the company’s Form 10-K Annual Report filed with the Securities and Exchange Commission. Additionally, if there are any non-GAAP measures discussed during this call, such as adjusted earnings per share, earnings before interest and taxes or EBIT, free cash flow and organic revenue, there will be a reconciliation of those measures to GAAP measures located on our website. Now, our Chairman, President and Chief Executive Officer, Murray Martin, will start with an overview of the quarter and the year. Murray?

Good afternoon. Thank you for joining us for today’s discussion of our fourth quarter and our 2008 full-year results. I’ll share a few thoughts on our performance and Mike will follow with a financial overview of the quarterly and full-year results. I will conclude with our outlook for 2009 and then will open the line for questions. I’m very pleased with our performance in 2008 given the challenges that we faced. On a full-year basis, we generated robust cash flow, increased revenue, and we grew adjusted earnings per share in line with current guidance. All of this, against the backdrop of one of the most turbulent economic environments in recent history. This performance is even more notable when you factor in the impact of currency, particularly the strengthening of the US dollar. Significant currency fluctuations reduced our earnings by $0.05 per share for the year, when compared with the guidance we provided at the beginning of 2008. On that basis, our adjusted earnings per share for the year would have been $2.83, which was within our original guidance for adjusted earnings of $2.80 to $2.90. Our results highlight the resiliency of our business model, our disciplined focus on cash generation, and our early and ongoing actions to optimize our cost structure and enhance our operating efficiency. On this call, one year ago, I characterized it as the time of continued of progress in transformation. We had recently announced a restructuring program based on changes we were seeing in the environment and in order to enhance our long-term positioning for growth. Little did we know at that time how valuable our actions would be in successfully navigating an increasingly volatile and unpredictable economic environment in 2008. During the year, we improved our operating efficiency and reduced our cost structure in a…

Thank you, Murray. Revenue was $1.6 billion for the quarter, a decline of just 2% from the prior year on a constant currency basis, and a 7% decline as reported. Foreign currency, particularly, the strengthening of the US dollar against the Pounds Sterling, the Canadian dollar and the Euro, reduced revenue growth by almost 5%. For the quarter, revenue in the US declined by 3% while revenue outside the US was essentially flat versus the prior year on constant currency basis. Revenue outside the US was down 16% on a reported basis, reflecting the dramatic currency swings in the quarter. Our revenue for the year was $6.3 billion which represents more than a 2% increase from the prior year, and within our current guidance range of 2% to 4%. On a full-year basis, favorable currency movement in the first half of the year was substantially offset by the dollar strengthening, particularly in the fourth quarter. Therefore, full-year revenue grew about 2% year-over-year on both a constant currency and a reported basis. For the year, non-US operations represented about 31% of total revenue. Adjusted earnings before interest and taxes or EBIT for the quarter which excludes charges related to restructuring and asset impairments was $297 million. EBIT margin improved year-over-year to 19.1% and was substantially higher than the 18.1% margin in the third quarter, despite the decline in revenue. The improvement in the EBIT margin for the quarter was a direct result of the benefits we achieved from our restructuring initiatives started late in 2007. We focused on reducing both our product and service costs, as well as our selling, general and administrative expenses. In fact, we achieved gross margin improvement in nearly all revenue streams compared to the prior year’s fourth quarter. Our SG&A expense ratio improved this quarter by…

Near the end of this call a year ago, I stated my belief that we were taking the right actions to successfully manage the lingering conditions that we had identified at the end of 2007. We were right about the timing and appropriateness of our actions. Unfortunately, we were also right about the lingering nature of the conditions which were unfolding. With a lower cost structure, increased liquidity and reduced debt, we are better positioned to successfully navigate an uncertain environment today than we were one year ago. Yet, prolonged economic weakness, unanticipated currency fluctuations and the significant increase in pension costs related to recent changes in financial markets and interest rates will continue to offset the benefits from our actions and impact the 2009 reported results. That is why we are providing a wider range of guidance than we have historically. On a constant currency basis, we expect 2009 revenues in the range of 1% growth to a decline of 2%. On a reported basis, we expect revenue in the range of a decline of 4% to 7%. This range includes an estimated negative 5% impact from currency when compared with 2008. We expect adjusted earnings per diluted share from continuing operations for the year will be in the range of $2.55 to $2.75. Adjusted earnings per share would grow in the middle single-digit range compared with 2008 if we excluded an estimated negative impact of $0.30 to $0.35 per diluted share for currency and incremental pension expense. On a GAAP basis, we expect earnings per diluted share from continuing operations for the year to be in the range of $2.49 to $2.69. GAAP EPS from continuing operations will include approximately $0.06 per share, related to a non-cash tax charge associated with out-of-the-money stock options that expire principally in…

(Operator instructions) And our first question comes from Shannon Cross with Cross Research. Please go ahead, your line is open. Shannon Cross – Cross Research: Thank you. Good afternoon. My question – I’ve got a few, but the first one I’d start with is just can you talk a little bit about what you’re seeing in terms equipment sales? I mean, they were relatively solid versus others on a constant currency basis. Obviously, some pressure, but what are people buying? Are you seeing a mix shift down in terms of the ticket items? Can you talk about your sale cycles, just maybe on a geographic basis, and anything you can give us to give us some idea of where the sales are happening on the equipment side?

Thanks, Shannon. I think this is something we’ve talked about for the last couple of quarters particularly in the US, where we talked about the change in availability of trade-up leases in our cycle and the cycle that we went through over the last two years. We did see in the fourth quarter equipment sales grow by 6% in the US and that was really primarily focused around that change in the lease space, which we had predicted a year ago would begin in the third quarter and then accelerate in the fourth quarter, and then continue through 2009. So, overall, we’re seeing our equipment sales in the metering mail business to be strong. In Europe, we saw very strong sales in our production mail equipment sales with a more of a negative impact in the US in that regard, as there was a slowdown in the financial services on large ticket items. So, I think that is generally the mix overall. We saw pretty good results on equipment sales. Shannon Cross – Cross Research: Okay. And then, can you talk a little bit about supplies? It was a bit weaker. What I’m curious about is how much of this do you think is end use? We’ve seen from channel contraction out there in terms of supplies. Just any color you can give us in terms of what you think is happening in that revenue line item.

Sure. When we look at supplies, I think there are really two things that we see. Number one, people are delaying the procurement of their supplies as long as possible. They are storing less supplies, so their order size is smaller to begin with, so we have a little more frequency on smaller size; and then, there is a slight decline in the actual consumption of supplies. But we think that the biggest effect is people buying less and having less on their shelf, which should create some leveling as we go forward. Shannon Cross – Cross Research: Okay. And then, I don’t know, Mike, if you want to take this. I’m just curious when we look at your capital structure, you paid back $220 million -- you didn’t renew the commercial paper this quarter. Is there a level of commercial paper you’re comfortable with? Is there – obviously, you’ve got a very strong balance sheet, so I’m just curious as to how you think about it with the $700 million to $800 million in cash coming in 2009 and how you would be comfortable maybe exiting the year.

Sure. Of the free cash flow that we will have next year, obviously, if we look at the dividend payments over the course of a year, that’s about $300 million. We will have need for use of cash around our restructuring activities that will be about another $100 million. And then, the other items that obviously is the working capital of the business, if we see growth in our equipment sales that obviously creates the opportunity for increases in finance receivables, which is a very good use of our cash in terms of long-term return on the business. But clearly, we will have excess free cash flow and we’ll look at, obviously, our options around that to either reduce our debt outstanding or look at other options for deploying the cash. But on a net basis, we think there’s an opportunity obviously, if we don’t do something with that cash, to further reduce our commercial paper. But today, we’re around $600 million in commercial paper outstanding and plus or minus a few hundred of that we think is a reasonable range. Shannon Cross – Cross Research: Okay. And then, one final question. Can you talk a little bit about the split between the pension cost and the currency hit on the $0.30, $0.35, whatever it was you provided that would be in apples-to-apples? Can you give us some idea?

Sure. The pension is obviously one that’s easier to identify because of the assumption set around it. So, pension represents about $0.07 of that number based on our calculations as of the end of the year. The rest of the range is really related to currency based on, obviously, the results over the course of the year. Shannon Cross – Cross Research: Okay, thank you.

Thank you, Ms. Cross. Our next question comes from the line of Julio Quinteros from Goldman Sachs. Please go ahead, your line is open. Vincent Lin – Goldman Sachs: Hi. This is actually Vincent speaking on behalf of Julio. Just wanted to make sure on year 2009 EPS guidance, is there any buyback assumed in the EPS guidance?

We have not assumed any buyback inside of that guidance. Vincent Lin – Goldman Sachs: Got it. Great. And then, just on the – and how about debt repayment? So, there’s no debt repayment implied in that guidance either?

Not in a significant way. Vincent Lin – Goldman Sachs: Okay. Thanks.

We do have a question coming from the line of Chris Whitmore with Deutsche Bank. Please go ahead, your line is open. Chris Whitmore – Deutsche Bank: Hi. Thanks very much. Wanted to follow-up on the currency question. To what extent does Pitney hedge? I’m trying to understand how the currency impact can be so large in this year versus last year. I don’t recall when the dollar was working for you, such a large impact being discussed on the EPS line.

Yes. There is really a couple of issues here. There are obviously two components to currency; one is the translation effect and the other is transaction effect. And in terms of your question, our hedging strategy, we generally try to hedge about 50% of our transactions. The issue we have is a bit of the absolutes in terms of the currencies and the relationships to the currencies. Obviously, in terms of foreign currencies, the mix of countries we do business in, the Euro, the Pound, and the Canadian dollar are the largest; and so, obviously, the big change in the Pound Sterling to the dollar is a significant, as well as the movement in the Canadian dollar. The other side of it on the transaction side, a significant portion of what we sell in our international operations, particularly around our DNP businesses sourced in the US in US dollars, so there are some meaningful exposure there. And the other significant purchases for us are in Yen and, obviously, the Yen-dollar relationship is one that’s significantly different today than it was a year ago. So, it’s the combination of those factors that really drive it. Chris Whitmore – Deutsche Bank: How would you split it between the transaction and the translation impact?

It’d be difficult for me to give you a clean break on that because it’s obviously based on a mix of purchases over the course of the year. Chris Whitmore – Deutsche Bank: Presumably, that transaction impact will come through in gross margins? Is that correct?

(inaudible). Chris Whitmore – Deutsche Bank: What is cooked into your guidance with respect to gross margins for 2009 on a year-over-year basis? Can you talk to the sustainability of the gross margin strength you saw in Q4 given the pressure on organic growth?

Obviously, we’ve seen gross margin improvement on an operating basis without currency. The currency, obviously, would have a depressing impact on the gross margins. That’s particularly true in our production mail, international production mail business, and then in our international mailing business where we’re purchasing in Yen. Chris Whitmore – Deutsche Bank: In terms of expectations for gross margins?

We haven’t really given the full breakdown of the P&L at this point, so I think our guidance is going to stay at the revenue and EPS level at this point. Chris Whitmore – Deutsche Bank: Okay, thank you.

Thank you. We do have our next question coming from the line of Lloyd Zeitman from Bernstein. Please go ahead, your line is open. Lloyd Zeitman – Bernstein: All right, folks. First of all, could you tell us what percentage of your revenues are recurring, let’s say, into the full-year ’08 and fourth quarter?

Sure. In terms of full year, about 72% of our revenues are recurring in nature and it’s similar for the fourth quarter. I don’t have the exact numbers at the top of my head, but I think it’s very much in the same range. Lloyd Zeitman – Bernstein: Okay. And I guess having so much of your revenue base coming in on a recurring basis makes it a little easier to forecast. Lot of companies have been shy about doing that in their fourth quarter reports. I was just wondering what your underlying expectations are for the global economy, for the US economy, that get you to the forecast that you’ve given us for ’09?

Yes. I would say that we have assumed a continuation of the environment that we see today and, obviously, I think the fourth quarter reflects very much the mix of those impacts. Obviously, the currency impacts that we described, the large ticket tends to be impacted a bit more. Even within the recurring revenue streams, there are some elements of that that are more volume-oriented. We talked a little bit about supplies as one and some of our services businesses that have some volume elements might be impacted as well to some degree, but that high-recurring revenue ratio is what gives us the confidence in our guidance. Lloyd Zeitman – Bernstein: Okay. And I was just wondering, over the course of the fourth quarter, overall, it seems the business environment really took a tumble as we went through. What did you folks see -- what did you see over the course of the quarter in terms of the reception you got from your customers when you presented your value proposition to them?

I think there are a couple of things. If you go to the very beginning of the quarter when there was significant dislocation, there was a lot of delay and uncertainty. However, as we’ve discussed with the high-recurring nature of the business and the leases that come due as they come due, they either are renewed which is good for us from a cash flow and an EBIT perspective but less positive on top line revenue, or they renew them. As we talked about the 6% growth in equipment sales in the quarter, we actually saw that recover as we continued through the quarter and people, although maybe having more people involved in decisions, a higher level of decision-making came back into a more traditional flow. We did, however, see a continuing uptake in the extensions of leases rather than pure renewals with new equipments. So there was a combination of the two across the portfolio. Lloyd Zeitman – Bernstein: And any issues as far as pricing?

No. I think, as you can see from our margins, our pricing has held very stable throughout this time. Lloyd Zeitman – Bernstein: Okay, very good. Thanks very much.

Thank you. We do have a follow-up coming from the line of Shannon Cross with Cross Research. Please go ahead, your line is open. Shannon Cross – Cross Research: Thanks. I was just curious, Murray, do you have any thoughts on the current issues facing the post office and how it might either benefit or impact Pitney, maybe perhaps more outsourcing from the post office? And then, just my second question is are there any rate changes, anything year-over-year we should think about other than, obviously, what’s benefiting you on the equipment side just as you look at 2009 and 2010 to make sure we’re prepared for any changes in leases or anything like that? Thanks.

Starting with the rate change, there is a change in rates in the US and around a number of countries in the world. They generally happen in the first quarter and are becoming more regular. Historically, they were spread every two or three years, but most posts around the world now have come to realize that more frequent, smaller increases are more tolerable for business. They’re more predictable and people can budget accordingly. So, we’re seeing that and we see that as a positive and that is why, if you recall, in 2007, we said we were changing our technology and moving to connected and downloadable devices because it makes it easier, quicker, and simpler for our customers and for us to support that. So, we see that as a very positive direction. On your first question around the results of the postal service, I’d make a couple of comments. One, we are not immune to volume, but most of our equipment is really for access rather than on pure volume. So, the supply side has a volume effect, but the access, which is the device itself, is really not as directly affected by volume. When we look at our mail services business, we have continued to see more and more outsourcing there. And therefore, continued organic growth in both first class and standard mail even during this time when you could say the theoretical volume in total has become less because more people are interested in it, they’re seeing the value and with the changes that are coming with the barcode, the IMB that will come in place in 2009, we can provide those facilities without them having to make the investment. So we’re seeing certainly at something you see, you feel, but it has not had a direct one-on-one impact with us. So I’m still fairly optimistic that at some point later in the year, we’ll see some recovery on those volumes in the postal service and that that will be a particular value in the high-volume mail segment which has been a little slower. Shannon Cross – Cross Research: Okay, great. Thank you.

Thank you. And we do have a follow-up coming from the line of Julio Quinteros. Please go ahead. Your line is open. Vincent Lin – Goldman Sachs: Hi, this is Vincent again, two follow-up questions. The first being implied in your 2009 guidance, what is your current expectation in terms of contribution from the software segment? And then, secondly, if you can update us in terms of revenue concentration from the financial services vertical and whether you’re seeing any stabilization in terms of activities from the financial services vertical?

In the financial services vertical, it’s about 23% in total. However, mailing itself, it is actually less. It’s around 15%. So that doesn’t really affect the traditional mailing business. It does affect the higher end production mail and the software business. We have seen some recoveries starting to occur in some accounts, but still there is delay there. I guess the way I look at it from a positive point of view is large equipment ages and will need to be replaced. And so, from our side, it is really a matter of timing. And if people are stretching the lives of the equipment, we will see that it’s just a matter of when we will see it. As to the other question –

Yes, in terms of software, I think Murray touched on one element of it, is that we have large licensing agreements within the software business and similar to the production mail environment. Those will be, in many cases, a good number of our customers are in financial services and the retail sectors. So, we would expect some challenges around those sectors, around software. But on the other side, there is a good bit of compliance software requirements in there and we expect that customers need to stay compliant with those products. So, that and obviously it’s a much more global mix of business in our software business, so there will be some currency impacts but we do expect to see some improving performance in some of the markets outside the US. Vincent Lin – Goldman Sachs: Okay, thanks.

(Operator instructions) And there are no further at this time, please continue.

Okay. I want to thank you very much for your questions this afternoon. We are pleased with our 2008 performance. Certainly, very pleased given the turbulent economic environment and the impact of the significant currency swings that we saw, particularly in the fourth quarter. We have generated robust cash flow, increased revenue, and we grew our adjusted earnings per share in line with our 2008 guidance. Our results highlight the resiliency of our business model, our disciplined focus on cash generation, and our early and ongoing actions to optimize our cost structure and to enhance our operating efficiency. Thanks for joining us and have a great day.

Thank you. Ladies and gentlemen, this conference would be available for replay after 7:00 PM today until February 19, 2009, at midnight. You may access the AT&T Executive Playback Service at any time by dialing 1-800-475-6701, entering the access code 981107. International participants may dial 1-302-365-3844. Again, those numbers are 1-800-475-6701, using the access code 981107. And international participants may dial-in by using 1-302-365-3844. That does conclude our conference for today. Thank you for your participation and for using AT&T teleconference service. You may now disconnect.