For the second quarter 2006, revenue increased five percent to $1.39 billion and income from continuing operations was $121 million or $.54 per diluted share versus $.52 per diluted share for the prior year. In addition, the company recorded a $2.13 loss per diluted share in discontinued operations.
During the quarter, the company recorded an after-tax charge from restructuring activity of $3 million or $.01 per diluted share as part of the restructuring program that it intends to substantially complete this year. It also recorded an additional tax provision of $61 million associated with the anticipated tax settlement agreement with the Internal Revenue Service, of which $20 million is included in continuing operations and $41 million is included in discontinued operations. The company also recorded an additional tax provision of $16 million in discontinued operations related to a recent tax law change.
Excluding the impact of both the restructuring charge and the additional provision related to the tax settlement, adjusted diluted earnings per share from continuing operations was $.64 this quarter versus $.59 in the prior year.
On July 17, 2006, the company announced that it had completed the sale of its Capital Services external financing business to an affiliate of Cerberus Capital Management, L.P. The company recorded a $477 million loss in discontinued operations in the second quarter as a result of the sale of the Capital Services business, the sale of the Imagistics lease portfolio, the anticipated IRS settlement, and the additional tax provision related to the recent tax law change. Discontinued operations included net income of $.05 per diluted share from the Capital Services business, excluding the impact of the recent tax law change.
Critelli noted, "The sale of Capital Services is an important milestone for our company. We believe that it will enable investors to see more clearly the underlying strength and performance of our business. We are also further enhancing the transparency of our operations by providing more financial information about our business results."
Including discontinued operations, the company generated net cash from operating activities of $143 million during the quarter. Adjusted free cash flow was $70 million. Adjusted free cash flow reflects cash from operations after subtracting capital expenditures and excluding the impact of discontinued operations and the company''s restructuring program. Year-to-date, the company has generated $430 million in net cash from operating activities and $261 million of adjusted free cash flow.
The company used $141 million to repurchase 3.3 million of its shares during the quarter and has $249 million of remaining authorization for future share repurchases.
Mailstream Solutions includes worldwide revenue and related expenses from the sale, rental, and financing of mail finishing, mail creation, shipping, and production mail equipment; supplies; support services; payment solutions; and mailing and customer communication software.
In the second quarter, Mailstream Solutions revenue increased five percent to $1.0 billion and earnings before interest and taxes (EBIT) increased five percent to $297 million, when compared with the prior year.
