Following are the financial statements for Pitney Bowes Inc.

(“Pitney
Bowes”) for the fiscal year ended December 31, 2020. Please note that the
financial statements have been modified. Lots of information has been
redacted, as it is not relevant to your exam. In addition, we have modified
some of the information to make your exam easier.

We strongly recommend that as you prepare for the exam you only refer to
these modified financials. The information that has been redacted will not
be helpful to you, and will potentially cause you to make errors on the final.

This document is 18 pages long.

Please note that TAs and professors are not allowed to answer questions on
these financial statements.
 PITNEY BOWES INC.
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(In thousands, except per share amounts)

Years Ended December 31,

2020 2019 2018
Revenue:
Total revenue 3,554,075 3,205,125 3,211,522
Costs and expenses:
Cost of goods sold 2,506,223 1,922,139 1,790,274
Selling, general and administrative 863,323 1,003,989 1,002,935
Research and development 38,384 51,258 58,523
Restructuring charges and asset impairments 20,712 69,606 25,899
Goodwill impairment 198,170 — —
Interest expense, net 105,753 110,910 115,381
Other components of net pension and postretirement (income) cost (1,709) (4,225) 22,425
Other expense, net 8,151 24,306 7,964
Total costs and expenses 3,739,007 3,177,983 3,023,401
(Loss) income from continuing operations before income taxes (184,932) 27,139 188,121
Provision (benefit) for income taxes 6,727 (13,010) 6,416
(Loss) income from continuing operations (191,659) 40,149 181,705
Income from discontinued operations, net of tax 10,115 154,460 60,106
Net (loss) income $ (181,544) $ 194,609 $ 241,811
Basic (loss) earnings per share attributable to common stockholders (1):
Continuing operations $ (1.12) $ 0.23 $ 0.97
Discontinued operations 0.06 0.88 0.32
Net (loss) income $ (1.06) $ 1.10 $ 1.29
Diluted (loss) earnings per share attributable to common stockholders (1):
Continuing operations $ (1.12) $ 0.23 $ 0.96
Discontinued operations 0.06 0.87 0.32
Net (loss) income $ (1.06) $ 1.10 $ 1.28

(1)The sum of the earnings per share amounts may not equal the totals due to rounding.
 PITNEY BOWES INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
Years Ended December 31,
2020 2019 2018
Net (loss) income $ (181,544) $ 194,609 $ 241,811
Other comprehensive income (loss), net of tax:
Foreign currency translations, net of tax of $2,374, $3,071 and $(4,992), respectively 37,252 75,319 (52,299)
Net unrealized (loss) gain on cash flow hedges, net of tax of $(583), $49 and $232, respectively (1,748) 146 684
Net unrealized (loss) gain on available for sale securities, net of tax of $(816), $1,970 and $(1,545), respectively (2,447) 5,910 (5,002)
Adjustments to pension and postretirement plans, net of tax of $(20,440), $(1,270) and $(13,508), respectively (70,623) (845) (46,170)
Amortization of pension and postretirement costs, net of tax of $11,930, $9,497 and $21,675, respectively 38,578 28,288 64,999
Other comprehensive income (loss), net of tax 1,012 108,818 (37,788)
Comprehensive (loss) income $ (180,532) $ 303,427 $ 204,023
 PITNEY BOWES INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
December 31, 2020 December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents $ 921,450 $ 924,442
Short-term investments (includes $18,974 and $35,879, respectively, reported at fair value) 18,974 115,879
Accounts and other receivables (net of allowance of $18,899 and $17,830 respectively) 389,240 373,471
Short-term finance receivables (net of allowance of $18,012 and $12,556, respectively) 568,050 629,643
Inventories 65,845 68,251
Current income taxes 23,219 5,565
Other current assets and prepayments 120,145 101,601
Assets of discontinued operations — 17,229
Total current assets 2,106,923 2,236,081
Property, plant and equipment, net 429,715 417,402
Long-term finance receivables (net of allowance of $17,857 and $7,095, respectively) 605,292 625,487
Goodwill 1,152,285 1,324,179
Intangible assets, net 159,839 190,640
Operating lease assets 201,916 200,752
Noncurrent income taxes 72,653 71,903
Other assets (includes $355,799 and $230,442, respectively, reported at fair value) 491,514 400,456
Total assets $ 5,220,137 $ 5,466,900

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable and accrued liabilities $ 880,616 $ 793,690
Customer deposits at the Bank 617,200 591,118
Current operating lease liabilities 39,182 36,060
Current portion of long-term debt 216,032 20,108
Advance billings 114,550 101,920
Current income taxes 2,880 17,083
Liabilities of discontinued operations — 9,713
Total current liabilities 1,870,460 1,569,692
Long-term debt 2,348,361 2,719,614
Deferred taxes on income 279,451 274,435
Tax uncertainties and other income tax liabilities 38,163 38,834
Noncurrent operating lease liabilities 180,292 177,711
Other noncurrent liabilities 437,015 400,518
Total liabilities 5,153,742 5,180,804
Stockholders' equity:
Common stock, $1 par value (480,000,000 shares authorized; 323,337,912 shares issued) 323,338 323,338
Additional paid-in capital 68,502 98,748
Retained earnings 5,201,195 5,438,930
Accumulated other comprehensive loss (839,131) (840,143)
Treasury stock, at cost (151,162,724 and 152,888,969 shares, respectively) (4,687,509) (4,734,777)
Total stockholders’ equity 66,395 286,096
Total liabilities and stockholders’ equity $ 5,220,137 $ 5,466,900
 PITNEY BOWES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Years Ended December 31,
2020 2019 2018
Cash flows from operating activities:
Net (loss) income $ (181,544) $ 194,609 $ 241,811
Income from discontinued operations, net of tax (10,115) (154,460) (60,106)
Restructuring payments (20,014) (27,148) (52,730)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization 160,625 159,142 148,464
Allowance for credit losses 42,193 28,488 26,370
Stock-based compensation 17,476 25,149 21,042
Restructuring charges and asset impairments 20,712 69,606 25,899
Amortization of debt fees 10,870 8,482 6,771
Goodwill impairment 198,170 — —
Loss on extinguishment of debt 36,987 6,623 7,964
Gain on sale of investments (21,969) — —
Loss on sale of businesses — 17,683 —
Pension plan settlement — — 31,329
Deferred tax provision 14,885 4,931 64,065
Changes in operating assets and liabilities, net of acquisitions/divestitures:
Increase in accounts and other receivables (47,236) (8,027) (53,801)
Decrease in finance receivables 70,505 29,171 38,453
Decrease (increase) in inventories 3,145 (5,588) (1,441)
Increase in other current assets and prepayments (19,581) (27,096) (9,881)
Increase (decrease) in accounts payable and accrued liabilities 94,851 22,081 (4,368)
Increase (decrease) in current and noncurrent income taxes 8,622 (40,119) (28,127)
Increase (decrease) in advance billings 11,009 (10,361) (19,802)
Decrease in pension and retiree medical liabilities (36,009) (37,469) (40,941)
Other, net (13,698) 2,914 11,597
Net cash provided by operating activities: continuing operations 339,884 258,611 352,568
Net cash (used in) provided by operating activities: discontinued operations (37,912) 9,272 (7,916)
Net cash provided by operating activities 301,972 267,883 344,652
Cash flows from investing activities:
Capital expenditures (104,987) (137,253) (137,810)
Purchases of investment securities (596,841) (137,194) (82,153)
Proceeds from sales/maturities of investment securities 576,536 108,548 175,866
Net investment in loan receivables (4,174) (15,676) (1,773)
Acquisitions, net of cash acquired (6,608) (22,100) (10,484)
Sale of other investments 58,248 — —
Other investing activities 4,636 (8,905) 8,168
Net cash used in investing activities: continuing operations (73,190) (212,580) (48,186)
Net cash (used in) provided by investing activities: discontinued operations (2,502) 670,130 334,532
Net cash (used in) provided by investing activities (75,692) 457,550 286,346
Cash flows from financing activities:
Proceeds from issuance of long-term debt 818,133 389,986 —
Principal payments of long-term debt (1,005,650) (930,189) (570,180)
Premiums and fees to extinguish debt (32,645) (4,704) (6,575)
Dividends paid to stockholders (34,291) (35,361) (140,498)
Increase in customer deposits at the Bank 26,082 16,341 21,008
Common stock repurchases — (107,000) —
Other financing activities (7,003) 628 (49,166)
Net cash used in financing activities (235,371) (670,299) (745,411)
Effect of exchange rate changes on cash and cash equivalents 6,099 2,046 (25,381)
(Decrease) increase in cash and cash equivalents (2,992) 57,180 (139,794)
Cash and cash equivalents at beginning of period 924,442 867,262 1,009,021
Cash and cash equivalents at end of period 921,450 924,442 869,227
Less cash and cash equivalents of discontinued operations — — 1,965
Cash and cash equivalents of continuing operations at end of period $ 921,450 $ 924,442 $ 867,262

Cash interest paid $ 151,857 $ 157,709 $ 171,120

Cash income tax payments, net of refunds $ 20,185 $ 27,109 $ 25,906
 PITNEY BOWES INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands)
Preferred Preference Common Additional Paid- Retained Accumulated other Treasury Total
stock stock Stock in Capital earnings comprehensive loss stock equity
Balance at December 31, 2017 $ 1 $ 441 $ 323,338 $ 138,367 $ 5,074,343 $ (794,940) $ (4,710,997) $ 30,553
Cumulative effect of accounting changes — — — — 104,026 (116,233) — (12,207)
Net income — — — — 241,811 — — 241,811
Other comprehensive loss — — — — — (37,788) — (37,788)
Cash dividends
Common ($0.75 per share) — — — — (140,466) — — (140,466)
Preference — — — — (32) — — (32)
Issuances of common stock — — — (37,030) — — 35,959 (1,071)
Conversions to common stock — (45) — (904) — — 949 —
Stock-based compensation — — — 21,042 — — — 21,042
Balance at December 31, 2018 1 396 323,338 121,475 5,279,682 (948,961) (4,674,089) 101,842
Net income — — — — 194,609 — — 194,609
Other comprehensive income — — — — — 108,818 — 108,818
Cash dividends
Common ($0.20 per share) — — — — (35,353) — — (35,353)
Preference — — — — (8) — — (8)
Issuances of common stock — — — (43,062) — — 41,378 (1,684)
Conversions to common stock — (130) — (4,804) — — 4,934 —
Redemption of preferred/preference stock (1) (266) — (10) — — — (277)
Stock-based compensation — — — 25,149 — — — 25,149
Repurchase of common stock — — — — — — (107,000) (107,000)
Balance at December 31, 2019 — — 323,338 98,748 5,438,930 (840,143) (4,734,777) 286,096
Cumulative effect of accounting changes — — — — (21,900) — — (21,900)
Net loss — — — — (181,544) — — (181,544)
Other comprehensive income — — — — — 1,012 — 1,012
Dividends ($0.20 per share) — — — — (34,291) — — (34,291)
Issuances of common stock — — — (47,722) — — 47,268 (454)
Stock-based compensation — — — 17,476 — — — 17,476
Balance at December 31, 2020 $ — $ — $ 323,338 $ 68,502 $ 5,201,195 $ (839,131) $ (4,687,509) $ 66,395
 PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except per share amounts)

1. Summary of Significant Accounting Policies

Basis of Presentation
The accompanying Consolidated Financial Statements of Pitney Bowes Inc. and its wholly owned subsidiaries (we, us, our, or th e
company) have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP).
Intercompany transactions and balances have been eliminated. Certain prior year amounts have been reclassified to conform to the
current year presentation.
Cash Equivalents and Investments
Cash equivalents include interest-earning investments with maturities of three months or less at the date of purchase. Short-term
investments include investments with original maturities of greater than three months and remaining maturities of less than one year
from the reporting date. Investments with maturities greater than one year from the reporting date are recorded as other assets.
Investment securities classified as available-for-sale are recorded at fair value with unrealized holding gains and losses, net of tax,
recorded in accumulated other comprehensive income (AOCI). Purchase premiums and discounts are amortized using the effective
interest method over the term of the security. Gains and losses on the sale of available-for-sale securities are recorded on the trade date
using the specific identification method. Investment securities that management has the positive intent and ability to hold to maturity
are classified as held-to-maturity and are carried at amortized cost.

Accounts and Other Receivables and Allowance for Doubtful Accounts

Accounts receivable are generally due within 30 days after the invoice date. We provide an allowance for doubtful accounts based on
historical loss experience, the age of the receivables, specific troubled accounts and other currently available information.
Finance Receivables and Allowance for Credit Losses
Finance receivables are comprised of sales-type leases, secured loans and unsecured revolving loans.
We provide an allowance for credit losses based on historical loss experience, the nature of our portfolios, adverse situations that may
affect a client's ability to pay, current conditions, reasonable and supportable forecasts and current economic outlook. We continually
evaluate the adequacy of the allowance for credit losses and adjust as necessary.
Inventories
Inventories are stated at the lower of cost or market. Cost is determined on the last-in, first-out (LIFO) basis, the first-in, first-out (FIFO)
basis or average cost.

Fixed Assets
Property, plant and equipment and rental equipment are stated at cost and depreciated principally using the straight-line method over
their estimated useful lives, which are 50 years for buildings, 10 to 20 years for building improvements, up to 3 years for internal use
software development costs, 3 to 12 years for machinery and equipment and 4 to 6 years for rental equipment. Major improvements that
add to the productive capacity or extend the life of an asset are capitalized while repairs and maintenance are charged to expense as
incurred. Leasehold improvements are amortized over the shorter of their estimated useful life or the remaining lease term. Fully
depreciated assets are retained in fixed assets and accumulated depreciation until they are removed from service.

Intangible Assets
Finite-lived intangible assets are amortized using the straight-line method over their estimated useful lives of up to 10 years.

Revenue Recognition
We derive revenue from multiple sources including sales, rentals, financing and services. Certain transactions are consummated at the
same time and can therefore generate revenue from multiple sources. The most common form of these transactions involves a sale or
noncancelable lease of equipment, meter services and an equipment maintenance agreement. We determine whether each product and
service within the contract should be treated as a separate performance obligation (unit of accounting) for revenue recognition purposes.
For contracts that include multiple performance obligations, the transaction price is allocated based on relative standalone selling prices
(SSP) which are a range of selling prices that we would sell a product or service to a customer on a separate basis. SSP are established
for each performance obligation at the inception of the contract and can be observable prices or estimated. The allocation of the
transaction price to the various performance obligations impacts the timing of revenue recognition, but does not change the total revenue
recognized.

Research and Development Costs

Research and development costs include engineering costs related to research and development activities and are expensed as incurred.

Restructuring Charges
Costs associated with restructuring actions primarily include employee severance and other separation costs. These costs are recognized
when a liability is incurred, which is generally upon communication to the affected employees, and the amount to be paid is both
probable and reasonably estimable. Severance accruals are based on company policy, historical experience and negotiated settlements.

Impairment Review
Long-lived assets and finite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be fully recoverable. Goodwill is tested annually for impairment at the reporting unit level during the
fourth quarter or sooner if circumstances indicate an impairment may exist.

Income Taxes
Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and
liabilities is recognized in income in the period that includes the enactment date of such change. A valuation allowance is provided when
it is more likely than not that a deferred tax asset will not be realized. We adjust the valuation allowance through income tax expense
when new information becomes available that would alter our determination of the amount of deferred tax assets that will ultimately be
realized.

Earnings per Share

Basic earnings per share is computed based on the weighted-average number of common shares outstanding during the year. Diluted
earnings per share is computed based on the weighted-average number of common shares outstanding during the year plus the dilutive
effect of common stock equivalents.

New Accounting Pronouncements - Standards Adopted in 2020

Effective January 1, 2020, we adopted Accounting Standards Update (ASU) 2016-13, Financial Instruments - Credit Losses. The ASU
applies to financial assets measured at amortized cost, including finance receivables, trade and other receivables and investments in debt
securities classified as available-for-sale and held-to-maturity. The ASU replaces the current incurred loss impairment model that
recognizes losses when a probable threshold is met with a requirement to recognize lifetime expected credit losses immediately when a
financial asset is originated or purchased.
We adopted this standard using the modified retrospective transition approach with a cumulative effect adjustment to retained earnings.

3. Business and Segment Information

Pitney Bowes Inc. is a global technology company providing commerce solutions that power billions of transactions. Clients around the
world rely on the accuracy and precision delivered by our equipment, solutions, analytics, and application programming interface (API)
technology in the areas of ecommerce fulfillment, shipping and returns, cross-border ecommerce, office mailing and shipping, presort
services and financing.

Our reportable segments are Global Ecommerce, Presort Services and SendTech Solutions. Global Ecommerce and Presort Services
comprise the Commerce Services reporting group. The principal products and services of each reportable segment are as follows:
Global Ecommerce: Includes the revenue and related expenses from domestic parcel services, cross-border solutions and digital delivery
services.
Presort Services: Includes the revenue and related expenses from sortation services to qualify large volumes of First Class Mail,
Marketing Mail and Bound and Packet Mail (Marketing Mail Flats and Bound Printed Matter) for postal worksharing discounts.
SendTech Solutions: Includes the revenue and related expenses from physical and digital mailing and shipping technology solutions,
financing, services, supplies and other applications to help simplify and save on the sending, tracking and receiving of letters, parcels
and flats.

5. Earnings per Share (EPS)

The calculations of basic and diluted earnings per share are presented below. The sum of earnings per share amounts may not equal the
totals due to rounding.
 Years Ended December 31,

2020 2019 2018

Numerator:
(Loss) income from continuing operations $ (191,659) $ 40,149 $ 181,705
Income from discontinued operations, net of tax 10,115 154,460 60,106
Net (loss) income (numerator for diluted EPS) (181,544) 194,609 241,811
Less: Preference stock dividend — 8 32
(Loss) income attributable to common stockholders
$ (181,544) $ 194,601 $ 241,779
(numerator for basic EPS)
Denominator:
Weighted-average shares used in basic EPS 171,519 176,251 187,277
Dilutive effect of common stock equivalents (1) — 1,198 1,105
Weighted-average shares used in diluted EPS 171,519 177,449 188,382
Basic (loss) earnings per share:
Continuing operations $ (1.12) $ 0.23 $ 0.97
Discontinued operations 0.06 0.88 0.32
Net (loss) income $ (1.06) $ 1.10 $ 1.29
Diluted (loss) earnings per share:
Continuing operations $ (1.12) $ 0.23 $ 0.96
Discontinued operations 0.06 0.87 0.32
Net (loss) income $ (1.06) $ 1.10 $ 1.28

Common stock equivalents excluded from calculation of

diluted earnings per share because their impact would be anti- 11,626 15,751 12,089
dilutive:

(1) Due to the net loss for the year ended December 31, 2020, common stock equivalents of 2,483 shares were excluded from the
calculation of diluted earnings per share as the impact would have been anti-dilutive.

6. Inventories
Inventories consisted of the following:
December 31,
2020 2019
Raw materials $ 16,570 $ 13,514
Supplies and service parts 24,061 21,840
Finished products 30,852 36,969
Inventory at FIFO cost, net 71,483 72,323
Excess of FIFO cost over LIFO cost (5,638) (4,072)
Total inventory, net $ 65,845 $ 68,251

7. Finance Receivables
Allowance for Credit Losses
Activity in the allowance for credit losses on finance receivables was as follows:
 Total
Balance at December 31, 2017 $ 18,633
Amounts charged to expense 16,600
Write-offs (22,862)
Recoveries 9,221
Other (1,370)
Balance at December 31, 2018 20,222
Amounts charged to expense 12,144
Write-offs (18,296)
Recoveries 5,426
Other 155
Balance at December 31, 2019 19,651
Cumulative effect of accounting change 9,503
Amounts charged to expense 22,404
Write-offs (19,183)
Recoveries 5,742
Other (2,248)
Balance at December 31, 2020 $ 35,869

Aging of Receivables
The aging of gross finance receivables was as follows:
Total
Past due amounts 0 - 90 days $ 1,467,650
Past due amounts > 90 days 30,061
Total $ 1,497,711
Past due amounts > 90 days
Still accruing interest $ 7,447
Not accruing interest 22,614
Total $ 30,061

8. Fixed Assets
Fixed assets consisted of the following:
December 31,
2020 2019
Land $ 9,333 $ 9,333
Rental property and equipment 145,954 151,195
Machinery and equipment 617,748 606,420
Capitalized software 443,400 410,171
Buildings and improvements 203,790 191,108
1,420,224 1,368,227
Accumulated depreciation (990,509) (950,825)
Property, plant and equipment, net $ 429,175 $ 417,402

Depreciation expense was $127 million, $123 million and $110 million for the years ended December 31, 2020, 2019 and 2018,
respectively.

9. Intangible Assets and Goodwill

Intangible Assets
Intangible assets consisted of the following:
December 31, 2020 December 31, 2019
Gross Net Gross Net
Carrying Accumulated Carrying Carrying Accumulated Carrying
Amount Amortization Amount Amount Amortization Amount
Customer relationships $ 268,199 $ (115,010) $ 153,189 $ 265,665 $ (88,550) $ 177,115
Software & technology 19,000 (12,350) 6,650 31,600 (19,999) 11,601
Trademarks & other — — — 13,324 (11,400) 1,924
Total intangible assets, net $ 287,199 $ (127,360) $ 159,839 $ 310,589 $ (119,949) $ 190,640

Amortization expense was $33 million, $36 million and $39 million for the years ended December 31, 2020, 2019 and 2018,
respectively.

Goodwill
Changes in the carrying amount of goodwill are shown below.
December 31, December 31,
2019 Acquisitions Impairment FX Impact 2020
Total goodwill $ 1,324,179 $ 8,464 $ (198,170) $ 17,812 $ 1,152,285

During the first quarter of 2020, our Global Ecommerce reporting unit experienced weaker than expected performance, due in part to
the deteriorating macroeconomic conditions and uncertainty brought on by COVID-19, causing us to evaluate the Global Ecommerce
goodwill for impairment. To test Global Ecommerce goodwill for impairment, we determined the fair value of the Global Ecommerce
reporting unit and compared it to its unit's carrying value, including goodwill. We engaged a third-party to assist in the determination of
the fair value of the reporting unit. The fair value of the Global Ecommerce reporting unit was estimated using a discounted cash flow
model. As a result of the impairment test, we determined that the estimated fair value of the Global Ecommerce reporting unit was less
than its carrying value and recorded a non-cash, pre-tax goodwill impairment charge of $198 million.

During the fourth quarter of 2020, we performed our annual goodwill impairment test to assess the recoverability of the carrying value
of goodwill. As a result of the annual test, we determined that the fair value of the Global Ecommerce reporting unit exceeded its
carrying value and no further impairment was recorded.

10. Fair Value Measurements

Available-For-Sale Securities
Investment securities classified as available-for-sale are recorded at fair value with changes in fair value due to market conditions (i.e.,
interest rates) recorded in accumulated other comprehensive income (AOCI), and changes in fair value due to credit conditions recorded
in earnings. There were no unrealized losses due to credit losses charged to earnings in 2020 or 2019.

Available-for-sale securities consisted of the following:

 December 31, 2020
Amortized cost Gross unrealized gains Gross unrealized losses Estimated fair value

Government and related securities $ 31,882 $ 157 $ (78) $ 31,961

Corporate debt securities 71,174 614 (355) 71,433
Commingled fixed income securities 1,706 16 — 1,722
Mortgage-backed / asset-backed securities 220,659 734 (715) 220,678
Total $ 325,421 $ 1,521 $ (1,148) $ 325,794

Held-to-Maturity Securities
Held-to-maturity securities at December 31, 2020 and 2019 include $75 million and $383 million, respectively, of short-term, highly
liquid time deposits. Due to the short-term nature of these securities, the carrying value approximates fair value.

Fair Value of Financial Instruments

Our financial instruments include cash and cash equivalents, investment securities, accounts receivable, loan receivables, derivative
instruments, accounts payable and debt. The carrying value for cash and cash equivalents, accounts receivable, loans receivable, and
accounts payable approximate fair value.

The fair value of our debt is estimated based on recently executed transactions and market price quotations. The inputs used to determine
the fair value of our debt were classified as Level 2 in the fair value hierarchy. The carrying value and estimated fair value of our debt
was as follows:
December 31,
2020 2019
Carrying value $ 2,564,393 $ 2,739,722
Fair value $ 2,479,895 $ 2,572,794

11. Supplemental Financial Statement Information

Activity in the allowance for credit losses on accounts receivables is presented below.

Balance at Cumulative effect of Amounts charged to Write-offs, recoveries Balance at end

beginning of year accounting change expense and other of year
2020 $ 17,830 $ 15,337 $ 19,788 $ (17,611) $ 35,344
2019 $ 17,443 $ — $ 16,345 $ (15,958) $ 17,830
2018 $ 14,319 $ — $ 9,770 $ (6,646) $ 17,443
13. Debt
December 31,
Interest rate 2020 2019
Notes due October 2021 4.875% 152,588 600,000
Notes due May 2022 5.375% 148,792 400,000
Notes due April 2023 5.95% 271,000 400,000
Notes due March 2024 4.625% 374,000 500,000
Notes due January 2037 5.25% 35,841 35,841
Notes due March 2043 6.70% 425,000 425,000
Term loan due November 2024 LIBOR + 1.75% 380,000 400,000
Notes due December 2025 5.11% 818,133 —
Other debt 4,882 5,108
Principal amount 2,610,246 2,765,949
Less: unamortized costs, net 45,853 26,227
Total debt 2,564,393 2,739,722
Less: current portion long-term debt 216,032 20,108
Long-term debt $ 2,348,361 $ 2,719,614

In December 2020, we issued $850 million in notes maturing January 2025. The effective interest rate for the Notes at the time of
issuance was 6.00%.

In March 2020, we purchased under a tender offer a total of $928 million of our notes: $428 million of the October 2021 notes,
$250 million of the May 2022 notes, $125 million of the April 2023 notes and $125 million of the March 2024 notes. A $39 million loss
was incurred on the early redemption of debt.

Annual maturities of outstanding debt at December 31, 2020 are as follows:

2021 $ 216,303
2022 238,471
2023 391,955
2024 750,181
2025 552,495
Thereafter 460,841
Total $ 2,610,246

We have a $500 million secured revolving credit facility that expires in November 2024 and contains financial and non-financial
covenants. At December 31, 2020, we were in compliance with all covenants.

On February 10, 2021, Standard and Poor's downgraded our credit rating and the credit ratings of our secured and unsecured debt. As a
result of this downgrade, the interest rates on the May 2022 notes and April 2023 notes will increase 0.25% after their next interest
payment date. Further, on February 17, 2021, we announced that on February 22, 2021, we will redeem the October 2021 notes.

15. Income Taxes

(Loss) income from continuing operations before taxes consisted of the following:
Years Ended December 31,
2020 2019 2018
U.S. $ (245,323) $ 910 $ 109,393
International 60,391 26,229 78,728
Total $ (184,932) $ 27,139 $ 188,121

The provision (benefit) for income taxes from continuing operations consisted of the following:
 Years Ended December 31,
2020 2019 2018
U.S. Federal:
Current $ (10,582) $ (18,789) $ (56,743)
Deferred 6,205 11,577 61,514
(4,377) (7,212) 4,771
U.S. State and Local:
Current (2,569) (9,142) (12,214)
Deferred 4,016 8,043 866
1,447 (1,099) (11,348)
International:
Current 4,996 9,993 11,308
Deferred 4,661 (14,692) 1,685
9,657 (4,699) 12,993

Total current (8,155) (17,938) (57,649)

Total deferred 14,882 4,928 64,065
Total provision (benefit) for income taxes $ 6,727 $ (13,010) $ 6,416

Effective tax rate (3.6) % (47.9) % 3.4 %

A reconciliation of income taxes computed at the federal statutory rate and our provision for income taxes consist of the following:

Years Ended December 31,

2020 2019 2018
Federal statutory provision $ (38,836) $ 5,700 $ 39,505
State and local income taxes 1,143 (868) 1,292
Impact of foreign operations taxed at rates other than the U.S. statutory rate (3,345) (18,541) (2,483)
Accrual/release of uncertain tax amounts related to foreign operations 1,802 191 (4,595)
U.S. tax impacts of foreign income in the U.S. (2,300) 5,587 5,854
CARES Act carryback benefit (1,646) — —
Tax incentives/credits/exempt income (750) (5,437) 3,526
Unrealized stock compensation benefits 2,312 2,176 1,941
Surrender of company-owned life insurance policies 10,313 — —
Goodwill impairment 41,615 — —
Remeasurement of U.S. deferred taxes — — (13,120)
U.S. tax on unremitted earnings — — (23,712)
Other, net (-3,581) (1,818) (1,792)
Provision (benefit) for income taxes $ 6,727 $ (13,010) $ 6,416

Deferred tax liabilities and assets consisted of the following:

 December 31,
2020 2019
Deferred tax liabilities:
Depreciation $ (69,900) $ (69,222)
Deferred profit (for tax purposes) on sale to finance subsidiary (28,101) (30,791)
Lease revenue and related depreciation (190,852) (174,083)
Intangible assets (81,816) (88,024)
Operating lease liability (50,071) (52,731)
Other (27,865) (24,941)
Gross deferred tax liabilities (448,605) (439,792)

Deferred tax assets:

Postretirement medical benefits 42,423 41,015
Pension 48,385 43,763
Operating lease asset 54,538 52,731
Inventory and equipment capitalization 2,494 2,735
Restructuring charges 2,022 2,944
Long-term incentives 12,905 12,929
Net operating loss 82,823 82,673
Tax credit carry forwards 64,070 64,430
Tax uncertainties gross-up 6,656 6,577
Other 42,079 38,247
Gross deferred tax assets 358,395 348,044
Less: Valuation allowance (116,543) (110,781)
Net deferred tax assets 241,852 237,263
Total deferred taxes, net $ (206,753) $ (202,529)
The deferred tax assets and liabilities disclosure at December 31, 2019 has been adjusted to reflect the gross deferred tax operating lease
asset and related gross deferred operating lease liability recognized in accordance with ASC 842.

The valuation allowance relates primarily to certain foreign, state and local net operating loss and tax credit carryforwards that will
more-likely-than-not expire unutilized.

17. Leased Assets and Liabilities

We lease real estate and equipment under operating and finance lease agreements. Our leases have terms of up to 15 years, and may
include an option to extend the lease for up to 5 years. At lease commencement, a lease liability and corresponding right-of-use asset is
recognized. Lease liabilities represent the present value of future lease payments over the expected lease term. The present value of our
lease liability is determined using our incremental borrowing rate at lease commencement. Information regarding operating and
financing leases are as follows:
 Leases Balance Sheet Location December 31, 2020 December 31, 2019
Assets
Operating Operating lease assets $ 201,916 $ 200,752
Finance Property, plant and equipment, net 23,973 10,443
Total leased assets $ 225,889 $ 211,195

Liabilities
Operating Current operating lease liabilities $ 39,182 $ 36,060
Noncurrent operating lease liabilities 180,292 177,711
Finance Accounts payable and accrued liabilities 4,714 2,879
Other noncurrent liabilities 18,862 7,927
Total lease liabilities $ 243,050 $ 224,577
Years Ended December 31,
Lease Cost 2020 2019 2018
Operating lease expense $ 54,718 $ 48,503 $ 43,727
Finance lease expense
Amortization of leased assets 3,793 3,372 2,697
Interest on lease liabilities 949 700 527

Future Lease Payments Operating Leases Finance Leases Total

2021 $ 52,010 $ 6,206 $ 58,216
2022 42,934 5,642 48,576
2023 35,758 4,899 40,657
2024 32,127 3,972 36,099
2025 25,471 2,853 28,324
Thereafter 91,000 5,074 96,074
Total 279,300 28,646 307,946
Less: present value discount 59,826 5,070 64,896
Lease liability $ 219,474 $ 23,576 $ 243,050
19. Accumulated Other Comprehensive Loss and Available for Sale Securities
Reclassifications out of accumulated other comprehensive loss were as follows:
Gain (Loss) Reclassified from AOCL (a)
Years Ended December 31,
2020 2019 2018
Available for sale securities
Total before tax 10,355 1,079 3,244
Tax provision 2,589 270 821
Net of tax $ 7,766 $ 809 $ 2,423
(a) Amounts in parentheses indicate reductions to income and increases to other comprehensive income.

Changes in accumulated other comprehensive loss, net of tax, were as follows:

Available-for-sale securities
Balance at December 31, 2017 $ 1,597
Cumulative effect of accounting change 344
Restated balance at December 31, 2017 1,941
Other comprehensive loss before reclassifications (2,579)
Amounts reclassified from accumulated other comprehensive loss (2,423)
Net other comprehensive income (loss) (5,002)
Balance at December 31, 2018 (3,061)
Other comprehensive income (loss) before reclassifications 6,719
Amounts reclassified from accumulated other comprehensive loss (809)
Net other comprehensive income (loss) 5,910
Balance at December 31, 2019 2,849
Other comprehensive (loss) income before reclassifications 5,319
Amounts reclassified from accumulated other comprehensive loss (7,766)
Net other comprehensive (loss) income (2,447)
Balance at December 31, 2020 $ 402

20. Stock-Based Compensation Plans

We typically grant restricted stock units, non-qualified stock options and performance stock units to eligible employees. We settle stock
awards with treasury shares. At December 31, 2020, there were 20,581,676 shares available for future grants.