Good morning, and welcome to the Pitney Bowes First Quarter 2014 Results Conference Call. Your lines have been placed in a listen-only mode today 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. 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 the 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 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 have provided 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.

Thank you Charlie and good morning everyone. Thank you for joining our first quarter 2014 earnings conference call. By now, hopefully you have had the chance to review our first quarter financial earnings press release, which we distributed this morning. Mike and I will provide additional information on our first quarter results answer any questions that you may have at the end of our prepared remarks We have a lot to cover this morning, so let's begin. For those of you who regularly participate on our quarterly conference calls know that I tend to focus primarily on providing an update on the progress we're making to transform Pitney Bowes against the three strategic initiatives; stabilizing our Mail business, driving operational excellence, and growing our overall business, especially through our participation and investment in Digital Commerce. While I will continue to offer my perspective against these strategic initiatives, given our performance in the first quarter, I thought I would first provide some additional context and color around our result and why we are even more confident about our strategy going forward. To my way of thinking, our first quarter performance was remarkable in four ways. First, we delivered a very strong quarter the old-fashioned way, by growing revenue and expanded margins. Secondly, typically during a quarter, you will see some businesses meet expectations or over perform, while other businesses will underperform. In our first quarter, every one of our businesses performed and we accomplished this in what is generally thought to be a challenging quarter. Third, as a result of our actions over the last 12 months, we are ahead of schedule and our multiyear plan to transform the company and unlock the inherent value within Pitney Bowes. Finally, our results are consistent with the long-term economic model we laid out…

Thank you, Mark, and good morning. Our positive results this quarter reflect our balanced approach to implementing our long-term strategy and further demonstrate the company's commitment to create incremental value for its clients and shareholders. We saw a solid revenue growth in the quarter, flat SG&A expenses and improved EBIT margin despite our investment growth initiatives and infrastructure. During the quarter, we took additional steps toward our strategic goal of achieving operational excellence. We continue to implement our go-to-market strategy in our global core mailing and software businesses. We began to invest in our new ERP system and we continue to implement additional cost savings initiatives throughout the organization through the expansion of global shared services. We also took steps to improve our capital structure. During the quarter, we issued $500 million in 10-year bonds with a very competitive coupon of 4.625% and use the proceeds to retire $500 million of debt. This will provide us with a more manageable debt structure in future years and flexibility with our balance sheet. Additionally, earlier this month, we announced the sale of the DIS business in Canada. The sale of this business is consistent with our strategy to align our business portfolio to provide focus on our core businesses in areas with the greatest growth potential. Using principally the net after-tax proceeds from the sale of DIS business and related finance receivables, we reduced our bank term loans due in 2016 by $100 million. The DIS business has been reclassified as a discontinued operation in the current quarter and prior periods and we have posted reclassified financial statement for the quarters of 2012 and 2013 on our pb.com website under the Investor Relations section. Also, as we indicated previously, we have shifted the reporting of our shipping solutions from our SMB Mailing…

(Operator Instructions) And our first question comes from Ananda Baruah with Brean Capital. Please go ahead. Ananda P. Baruah – Brean Capital LLC: Hi, guys, thanks for taking the question. Congratulations on a really solid quarter. I just have a few things if I could just a clarification. So the reiteration of the guidance includes the – I think, it is the $0.07 impact from the sale of DIS, is that correct?

That's correct. So the guidance range is despite the fact the DIS business will be out in 2014. Ananda P. Baruah – Brean Capital LLC: Got it, fantastic, thanks and I guess the second question is as regards to the cost savings and OpEx. Marc, you commented that you are ahead of schedule, and I was just wondering if you could put some context around that since you guys also commented that you've been finding additional areas to drive cost savings. Are you ahead of schedule with regards to – well, I guess, you both of ahead of schedule with regards to the pace of driving the savings or are you – and are you also have schedule in dropping savings to the bottom line, sort of incremental to what you originally intended to do?

Yes, the short answer is yes and yes. and yes. Let me elaborate, so if you look at where we were through the end of last year, we have taken a little over $70 million of expense out if you compare that to the $100 million to $125 million that we committed to, I think the exact quote that we said was, we were kind of at or above where we had anticipated, just reaffirming that continues to be true. Importantly, as we find more opportunities to continue to optimize the structure of the business, which we'll elaborate on next week. The other dimension, candidly we're ahead of my schedule in the growth of our Digital Commerce business. Candidly if I would have envisioned a year ago, when we read out those three chapters, that 12 month later, the Digital Commerce, I guess less than 12 month later. The Digital Commerce business is growing at the rate that it did in the first quarter, but certainly exceeding any expectations that my math had and then I think when you put all that together, we are achieving 3% growth in what is a pretty choppy economy is – I won't saw far, but certainly ahead of where I anticipated we would be. Ananda P. Baruah – Brean Capital LLC: I guess, joining down some of the segment margins, sort of both U.S. and international, particularly you have some sort of – found new recent highs and when I look at them on a year-over-year basis, the improvement over the last couple of quarters has been about equivalent, now we continue to look further out, I guess, we need to start setting new highs and if I do that as back of the envelope in the model, I'd start to move kind of towards the higher end of the range I guess. I know you guys aren't going to update guidance on this call and the Analyst Day coming up and we're still early in the year, but I guess, could you give us – I mean I guess any context around what we might expect or what you guys are expecting sort of from the segment margins, maybe some of the dynamics here going on sort of specifically through the geos will be helpful for us to continue develop our mosaic going into the Analyst Day.

You know what I would tell is that the North American Mailing business has benefited most in terms of the earliest implementation of the go-to-market strategy and we just did the essentially what's the final piece of that, the beginning of this quarter, beginning of April and so a lot of what you've seen is benefits in the margin have come through that go-to-market strategy. We're earlier in the process in the international markets and actually in the software business, I would say, we're more in an investment mode, where we've been expanding our sales coverage on a global basis. So those are some of the factors in that and what we'll talk to going forward is how other activities beyond just go-to-market, including ERP, will ultimately affect our ability to achieve operational excellence as we go forward. Ananda P. Baruah – Brean Capital LLC: That's really helpful, Mike. Just last one for me. Free cash flow was very strong and sort of, I think 25% of the total for the year of your guidance at the midpoint. So could you just speak to maybe some of the dynamics that are going on there, that are a little bit longer if there are any, then would have been anticipated in the March quarter. And what are some of the forces that will be influencing the cash flow or how should we be thinking about the influences in your move through the year in the context of your guidance?

Yes, as far as cash flow is concerned, it was a good solid quarter for cash flow. I would say, we benefited from adjusted income growth. Obviously, over the long-term that's going to be key driver for cash flow. The other, quite frankly, is timing of some tax payment. So that's a driver that's embedded in there as well. I guess I would look at it and say that where we have ended the first quarter puts us in good shape relative to our annual guidance. Ananda P. Baruah – Brean Capital LLC: Okay, thanks a lot guys.

: Kartik Mehta – Northcoast Research Partners LLC: Hey good morning Marc and Mike. Marc I wanted to ask you a little bit about the Digital Commerce business and trying to get a feel for when you say dollars invested, maybe how much you are investing and what kind of drag that's putting on margins right now?

Kartik, I will take that one. In terms of investment, if you look at the margin profile of the Digital Commerce business, obviously it is composed of a number of different businesses. The software business would typically have a higher margin profile typically in the teens, so even 20%. Obviously, the overall margins in this segment right now is being impacted by the fact that we are building out both from an IT perspective, the software capabilities, as well as the physical infrastructure for ecommerce, and when you scale a business as we are today, obviously you want to invest ahead of that. And we are confident we will reap the benefits of that as we go forward. The other thing embedded in there is what I've mentioned before, which is the investment in our go-to-market strategy in our software business, where we believe the third quarter in a row that we saw a software revenue growth. So we're beginning to see the early benefits of some of that specialization, but we still have a ways to go in terms of your building pipeline and getting productivity out of that channel investment. Kartik Mehta – Northcoast Research Partners LLC: So Mike, since that business is doing – the Digital Commerce business is doing obviously better than you anticipated and better than we anticipated, could this be that there's going to be investment needed for the next 12 months to 18 months, so it might take a little while before you really start reaping the benefits on the margin side for the business?

Yes, I mean our goals around that business are to grow across the couple of different vectors, not – obviously, we'd love to continue to expand our domestic U.S. outbound would eBay. We've been bringing in additional third-party direct merchants that we are doing work with and we believe that this is a global business. So we'll make investments along those lines to gain scale and build the capabilities we need. We believe the market opportunity here is big enough and fast-growing that it's the right time to make investments in the cycle. Kartik Mehta – Northcoast Research Partners LLC: Then finally, Mike, you talked about paying down, I believe, $100 million worth of debt under bank line, any type of goals as to where you'd like to be from a debt perspective by the end of year?

Yes, that was really related to the fact that part of what we sold within the document imaging solutions business in Canada was a portion of the lease space that was associated with that business. So the pay down of the debt was pretty much keeping that debt profile in line with the exit of that. So, we feel good about where we are from a maturity profile, from a credit ratio perspective, and we'll continue to monitor that mainly around how our lease asset base changes. Kartik Mehta – Northcoast Research Partners LLC: So I guess, will the pay downs just reflect lease asset base rather than paying down other debt?

I think we'll continue to look at it and evolve it, but quite frankly the maturities we have right now are very manageable either with refinancing or with cash that we have on the balance sheet that we'll generate. So I think we have options around how we deal with that. Kartik Mehta – Northcoast Research Partners LLC: Thank you very much.

Thank you.

: Shannon S. Cross – Cross Research LLC: Thank you very much. My first question is just a clarification to make sure we've got it right. With regard to the sale of the Canadian DIS business and then your guidance, should we assume that your guidance, you're reiterating it even though you're going to be down $22 million on sort of – I don't know – normalized basis I get or a reclassified basis given the sale? So the $0.01 of EPS that you did this quarter, if we assume $0.04 for the year, you're effectively raising guidance or at least making this more comfortable at the high-end.

I would say that's certainly what you can interpret it. We're obviously losing the benefit of that business contributing to the EBIT, but maintaining our guidance range. Shannon S. Cross – Cross Research LLC: Got it, just wanted to confirm. Okay and then can you talk a little bit about production mailing a bit weaker, I think that it can be lumpy. How do we think about production mailing as we go through the year? Is it – are there any product launches that could drive bigger deals or how do we think about this year with regard to that business?

: So this quarter reflected some of the lower print revenue – printer revenue placements than we had last year, there was actually an increase in inserter and sortation placements on a year-over-year basis, but ultimately the difference in revenue was around printers. Really the second quarter compare is tough. The second half of the year, I think, will be a more normalized comparisons for the business. Shannon S. Cross – Cross Research LLC: Okay that’s helpful. And then with the locational data deals that you did obviously, the IBM deal during this quarter. How do we think about the revenue and profit contribution? I assume these are sort of one-time licensing deals. And obviously, it is a good testament to be working with these companies. I am just trying to get an idea – I guess your idea of the potential addressable market for these services or is there something that you expect will continue to see through the year or how do you sort of find the low-hanging fruit and the big guys at this point?

So the way I think of that relationship, Shannon, is as a channel partner deal. So it's not a license deal; per se it is more of a general agreement and the technology agreement. The reason that that's important is if you think about one of the secret sauces in that business in that technology is the integration technologies. And I think what you see with IBM is they sell the same think we do. Those integration technologies, specifically and in general, location intelligence is an important space as it relates to commerce. So that's kind of the color that I would add around that. In terms of your second question or other question about other partnerships to come, I would just tell you that the IBM partnership was a very important one, but we are in many other meaningful conversations. So I will not lead you to believe that that will be the last, but certainly a very important one. Shannon S. Cross – Cross Research LLC: Okay great and then my final question. I'm just kind of curious, because it's been in a lot of the talks recently in terms of digital payments. Is there a place for Pitney Bowes within this business? You've got encryption technology, you've got a number of different technologies, is that something where we might look at you know, perhaps entering at some point or a point of roll in because I'm just curious it's definitely that the interest from an investor standpoint and just a general technology industry is growing in digital payments?

Well, listen, as I said last year, I like the hand we've got. I think we are in spaces that make a lot of sense for us. I would comment that our relationship with eBay affords us also a relationship with PayPal, which we think is a very important asset in the mix, but we'll continue to evolve our portfolios, we see the markets evolve. Shannon S. Cross – Cross Research LLC: Okay great. Look forward to seeing you at the analyst day.

Thanks.

And our next question comes from the line of George Tong with Piper Jaffray. Please go ahead. George K. F. Tong – Piper Jaffray & Co: Good morning and thanks for taking my questions. So first question is, could you give us a sense of what your ecommerce revenues were for the quarter and provide some color on what your ecommerce growth expectations are based on what you are expecting from extension for eBay as well as growth in capacity from our sortation facilities?

Yes, George, in terms of ecommerce, we don't break it out separately, but clearly it was a key driver of the growth on a year-over-year basis in total dollars within the Digital Commerce segment. It's been ramping nicely; we saw growth even on a sequential quarterly basis in addition to obviously significant growth on a year-over-year basis. In terms of capacity, we have a combination of processes we run and partner processes, we have what we believe is a fair amount of capacity right now that would enable us to manage through the upcoming holiday season, so – and then the opportunity to expand capacity if need be. So we feel good about where we're positioned in the business. We're now able to deliver into 55 countries around the world, which is an expansion over last couple of months as well. So we feel good about where we are in that business.

I would also add, George. I mean if you look at eBay's announcement last night. They talked about $58 billion of commerce that they enabled now certainly and all of that was global commerce, but we think we're just scratching the surface of what we can do there. So as Mike said, we're in 52 countries, but we've got a lot of opportunity to enable more listings and drive that business much deeper. George K. F. Tong – Piper Jaffray & Co: That’s helpful. And do you think about capacity utilization at your sortation facilities? Where would you place that from a percentage perspective?

Yes, in terms of that I'd say we have a fair amount of capacity. We're probably under two-thirds utilize, but there is the ability to flex capacity within that. We partner for some other capabilities within that, so that will not be a limiting factor for us. George K. F. Tong – Piper Jaffray & Co: Got you. Could you give us some details on what actions you have in place to help manage some of the gross margin trends that you're seeing?

Well, I would say, overall gross margins for the business on a business-by-business basis are relatively good. Often those are influenced by the mix of the revenue that we see. So we saw, for example, equipment sales. Margins improved nicely in the quarter; that was in part due to the fact that we had less Production Mail printer placements than the prior year. So we look at each business as part of the operational excellence initiatives that we have in place. We look at both SG&A as well as product related costs, and look at optimizing that on a business-by-business basis. George K. F. Tong – Piper Jaffray & Co: Great, and then, lastly, I’m just revisiting some of the comments you made on delevering. Where would you like to see your leverage ratios by the end of this year and by the end of 2015?

Yes. I think, obviously, where we are today with our credit ratios we are comfortable with. We think that we will continue to monitor those relative to performance in the business, but we think as we continue to expand and grow the business, that's going to give us improved ratios, because of the growth in earnings on a debt level that we see is being sort of consistent or shrinking over time, depending upon what happens with the finance receivables portfolio. George K. F. Tong – Piper Jaffray & Co: Great, very helpful. Thank you.

And our next question comes from the line of Scott Wipperman with Goldman Sachs. Please go ahead. Scott R. Wipperman – Goldman Sachs & Co: Good morning, thanks for taking my question. A few of them have been asked already, but maybe just a couple. I guess Mike; can you just remind us what the CapEx guidance is for the year? I know it was lower in the quarter, but I think you're expecting it to be up for the year, I believe and then I have a few follow-ups.

Yes, sure. We had talked about, typically our CapEx is about $125 million to $150 million, but we did say that we expected an increment on that related to our ERP system. So I think we gave guidance.

$30 million to $50 million.

$30 million to $50 million incremental for the ERP program. So probably in the $1.50 to $1.75 range is an annual CapEx target. As you noted, we were a little lower than that on a run rate basis in the first quarter. Scott R. Wipperman – Goldman Sachs & Co.: :

I think the benefits of the go-to-market are primarily in terms of more effective and efficient reach into your existing customer base and those are the benefits that you've seen right now. Over time, what that will allow you to do is to redeploy your face-to-face sales and your field sales to more acquisition, but those benefits are still in front of us. So, right now the way I would characterize the benefits that we've seen is better and more effective region, obviously more efficient. Scott R. Wipperman – Goldman Sachs & Co.: Got it. Then maybe last one, just Mike, jumping back to the balance sheet. You guys have obviously done a lot of work, good job in addressing the maturity profile. With the tapping of the institutional debt market, earlier this quarter, as you look out at the curve, I mean you do still have some towers, I mean 2016 I guess still stands out to me, I guess when I factor in the preferred securities that you guys have as well. I mean is that – should we expect Pitney to be back in the institutional market, maybe on a more consistent basis going forward as you kind of look to address the maturity profile?

Well, clearly, what we did in the first quarter was aimed at getting back into the institutional market and making sure that we had access. So I would see that clearly as an option for us to manage the maturities that come due both in 2015 and 2016. Obviously, we're looking at the preferred as a different animal and looking at our options around that. But some combination of accessing the markets and free cash flow is how we will address our maturities. Scott R. Wipperman – Goldman Sachs & Co.: Great, thank you very much for the questions.

Thank you.

And we have a question from the line of Glenn Mattson with Sidoti & Company. Please go ahead. Glenn G. Mattson – Sidoti & Co. LLC: Good morning. Maybe a minor point, but have you guys kind of talked about the larger than normal postage rate increase and whether or not you expect it to have any effect on your business? I mention it because also it just went into effect kind of late in January, so there might be a 60 or so day lag. Do you have any view as to the utilization rates of the printers, of the equipment at the printers that you deal with, that kind of thing?

Yes, I would say, Glenn, what we've seen is obviously the addition of a postage discount has given us something to go and talk to our clients about in market against that opportunity to kind of mitigate some of that increase. I wouldn't say that that's a big deal to date, but certainly it gives us something to talk about. Where we have seen a little bit of an impact from it is more on the Presort side in standard class mail, where customers are, I think, kind of retrenching in figuring out how best they use direct mail in their overall mix. And the good news is we had 5% growth in Presort despite that impact in Standard Class Mail and that growth really came in First Class Mail volumes, as well as improved sortation rates. Glenn G. Mattson – Sidoti & Co. LLC: So more of just a neutral effect when you put together all of the factors in?

Correct. Glenn G. Mattson – Sidoti & Co. LLC: Okay, great thanks.

Thank you,

And we have no more questions in queue at this time.

Then I'll take the opportunity to wrap up. First of all, I would like to thank everyone again for your participation in your call. We appreciate your interest in the Company and we think it is a very interesting and compelling story. As I said at the outset, we had a very good quarter, in some way it is an excellent quarter. I take great solace in that, that said to me the most important part about the quarter wasn't what these 90 days meant by itself, but what this quarter meant as it relates to our long-term model. I think it's an important point of reaffirmation of our strategy and, as I said, and most importantly our ability to execute that strategy. So those were good 90 days. We are off to a good start to the year, and we'll look forward to hopefully seeing many of you next week at our Analyst Meeting. So thank you again. We'll talk soon.