SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
------------------
FORM 10-Q
------------------
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
------------------
Commission file number 0-13497
PITNEY BOWES CREDIT CORPORATION
Incorporated pursuant to the Laws of the State of Delaware
------------------
Internal Revenue Service -- Employer Identification No. 06-0946476
27 Waterview Drive, Shelton, CT 06484-4361
(203) 922-4000
------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes x No o
As of July 31, 1997, 460 shares of common stock, no par value, with a stated
value of $100,000 per share, were outstanding, all of which were owned by Pitney
Bowes Inc., the parent of the Registrant
REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND (b)
OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE
FORMAT
<PAGE>
Page 2 of 14
PITNEY BOWES CREDIT CORPORATION
Part I -- FINANCIAL INFORMATION
Item 1. -- FINANCIAL STATEMENTS
Consolidated Statements of Income:
Three and Six Months Ended June 30, 1997 and 1996........................ 3
Consolidated Balance Sheets:
As of June 30, 1997 and 1996............................................. 4
Consolidated Statements of Cash Flow:
Six Months Ended June 30, 1997 and 1996.................................. 5
Notes to Consolidated Financial Statements............................... 6-7
Item 2. -- MANAGEMENT'S NARRATIVE ANALYSIS OF
THE RESULTS OF OPERATIONS AND FINANCIAL
CONDITION................................................................ 8-10
Part II -- OTHER INFORMATION
Item 1.-- Legal Proceedings.............................................. 11
Item 6.-- Exhibits and report on Form 8-K................................ 11
Signature................................................................ 12
Exhibit (i) -- Computation of Ratio of Earnings
to Fixed Charges......................................................... 13
Exhibit (ii)-- Financial Data Schedule................................... 14
<PAGE>
Page 3 of 14
Part I -- FINANCIAL INFORMATION
Item 1. -- FINANCIAL STATEMENTS
PITNEY BOWES CREDIT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in thousands of dollars)
<TABLE>
Three Months Ended June 30 Six Months Ended June 30
-------------------------- ------------------------
1997 1996 1997 1996
---- ---- ---- ----
Revenue:
<S> <C> <C> <C> <C>
Finance income............................................... $ 183,159 $ 179,570 $ 366,553 $ 356,846
Equipment sales.............................................. - 421 - 421
------- ------- ------- -------
Total revenue.............................................. 183,159 179,991 366,553 357,267
------- ------- ------- -------
Expenses:
Selling, general and administrative.......................... 42,140 38,982 83,741 78,264
Depreciation and amortization................................ 9,833 10,186 20,337 19,113
Cost of equipment sales...................................... - 283 - 283
Provision for credit losses.................................. 15,911 13,875 30,966 30,570
Interest..................................................... 51,098 48,954 100,993 99,269
------- ------- ------- -------
Total expenses............................................. 118,982 112,280 236,037 227,499
------- ------- ------- -------
Income before income taxes..................................... 64,177 67,711 130,516 129,768
Provision for income taxes..................................... 19,391 22,636 40,492 43,125
------- ------- ------- -------
Net income..................................................... $ 44,786 $ 45,075 $ 90,024 $ 86,643
======= ======= ======= =======
Ratio of earnings to fixed charges............................. 2.25X 2.37X 2.28X 2.30X
======= ======= ======= =======
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
Page 4 of 14
PITNEY BOWES CREDIT CORPORATION
CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands of dollars)
<TABLE>
June 30, December 31,
1997 1996
--------- ------------
Assets:
<S> <C> <C>
Cash....................................................................... $ 50,507 $ 20,937
--------- ---------
Investments:
Finance assets (Note 2).................................................. 4,301,502 4,241,359
Investment in leveraged leases........................................... 644,690 617,970
Asset transferred from affiliate......................................... 21,230 32,825
Investment in operating leases, net of accumulated depreciation.......... 76,462 86,634
Allowance for credit losses.............................................. (105,551) (98,721)
--------- ---------
Net investments........................................................ 4,938,333 4,880,067
--------- ---------
Mortgage servicing rights, net of accumulated amortization (Note 3)...... 192,843 138,146
Assets held for sale..................................................... 185,850 140,420
Other assets............................................................. 197,598 167,432
--------- ---------
Total assets.......................................................... $ 5,565,131 $ 5,347,002
========= =========
Liabilities:
Senior notes payable within one year (Note 4)............................ $ 2,163,457 $ 1,901,581
Short-term notes payable to affiliates (Note 4).......................... 95,600 139,400
Accounts payable to affiliates........................................... 181,957 168,558
Accounts payable and accrued liabilities................................. 198,145 176,657
Deferred taxes........................................................... 517,766 478,624
Senior notes payable after one year (Note 4)............................. 1,150,000 1,275,000
Subordinated notes payable (Note 4)...................................... 229,154 229,154
--------- ---------
Total liabilities.................................................... 4,536,079 4,368,974
--------- ---------
Stockholder's Equity:
Common stock............................................................. 46,000 46,000
Capital surplus.......................................................... 41,725 41,725
Retained earnings........................................................ 941,327 890,303
--------- ---------
Total stockholder's equity........................................... 1,029,052 978,028
--------- ---------
Total liabilities and stockholder's equity............................ $ 5,565,131 $ 5,347,002
========= =========
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
Page 5 of 14
PITNEY BOWES CREDIT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
(unaudited)
(in thousands of dollars)
<TABLE>
Six Months Ended
----------------------------
June 30, June 30,
1997 1996
--------- ---------
Operating Activities
<S> <C> <C>
Net income................................................................. $ 90,024 $ 86,643
Adjustments to reconcile net income to cash provided by
operating activities:
Provision for credit losses.............................................. 30,966 30,570
Depreciation and amortization............................................ 20,337 19,113
Cost of equipment sales.................................................. - 283
Increase in accounts payable to affiliates............................... 13,399 8,907
Increase in deferred taxes............................................... 39,142 54,564
Increase (decrease) in accounts payable and accrued liabilities.......... 21,488 (6,207)
Decrease in assets transferred from affiliates........................... (2,174) (2,420)
Other, net............................................................... (22,361) (21,671)
--------- ---------
Net cash provided by operating activities.................................. 190,821 169,782
--------- ---------
Investing Activities
Investment in net finance assets......................................... (988,567) (692,387)
Investment in operating leases........................................... (11,807) (8,927)
Investment in leveraged leases........................................... (13,328) -
Investment in assets held for sale....................................... (326,344) (200,681)
Cash receipts collected under lease contracts, net of finance
income recognized....................................................... 1,197,206 806,878
Investment in mortgage service rights.................................... (64,125) (22,847)
Loans and advances to affiliates, net.................................... (1,651) (3,452)
Additions to equipment and leasehold improvements........................ (6,711) (6,065)
--------- ---------
Net cash used in investing activities...................................... (215,327) (127,481)
--------- ---------
Financing Activities
Increase in short-term debt.............................................. 382,376 12,398
Settlement of long-term debt............................................. (245,500) -
Short-term loans from affiliates......................................... (43,800) (19,715)
Dividends paid to Pitney Bowes, Inc...................................... (39,000) (35,600)
--------- ---------
Net cash provided by (used in) financing activities........................ 54,076 (42,917)
--------- ---------
Increase (decrease) in cash................................................ 29,570 (616)
Cash at beginning of period................................................ 20,937 10,129
--------- ---------
Cash at end of period...................................................... $ 50,507 $ 9,513
========= =========
Interest paid.............................................................. $ 113,056 $ 101,384
========= =========
Income taxes refunded, net................................................. $ (4,744) $ (35,611)
========= =========
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
Page 6 of 14
PITNEY BOWES CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Six Months Ended June 30, 1997
(Unaudited)
Note 1 -- General
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not include all
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of Pitney Bowes
Credit Corporation ("the Company" or "PBCC"), all adjustments (consisting of
only normal recurring accruals) necessary to present fairly the financial
position as of June 30, 1997 and the results of operations and cash flows for
the six months ended June 30, 1997 and 1996 have been included. Operating
results for the six months ended June 30, 1997 are not necessarily indicative of
the results that may be expected for the year ended December 31, 1997.
These statements should be read in conjunction with the financial statements
and notes thereto included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1996.
Note 2 --Finance Assets
The composition of the Company's finance assets is as follows:
<TABLE>
June 30, December 31,
(in thousands of dollars) 1997 1996
----------- ------------
<S> <C> <C>
Gross finance receivables....................................... $ 4,861,454 $ 4,826,361
Unguaranteed residual valuation................................. 724,394 700,776
Initial direct costs deferred................................... 96,433 91,588
Unearned income................................................. (1,380,779) (1,377,366)
---------- ----------
Total finance assets.......................................... $ 4,301,502 $ 4,241,359
========== ==========
</TABLE>
Note 3 -- Mortgage Servicing Rights
Mortgage servicing rights (MSR) are recorded at the lower of amortized cost or
present value of the estimated net servicing income, which does not exceed fair
market value and are amortized in proportion to, and over the period of,
estimated net servicing income. Fair value is estimated using a discounted cash
flow model which incorporates market discount and prepayment rates as well as
other assumptions that market participants would use in their estimates of
future servicing income and expense. The Company's policy for evaluating MSR for
impairment is to stratify the mortgage servicing rights based on the predominant
risk characteristics of the underlying loans. Upon evaluation, adjustments to
current period operations and the valuation allowance are made if any individual
portfolio stratum is deemed impaired. Based on the evaluation performed as of
June 30, 1997, no impairment was recognized in the Company's MSR portfolio.
<PAGE>
Page 7 of 14
PITNEY BOWES CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the Six Months Ended June 30, 1997
(Unaudited)
Note 4 -- Notes Payable
The composition of the Company's notes payable is as follows:
<TABLE>
June 30, December 31,
(in thousands of dollars) 1997 1996
--------- ---------
Senior Notes Payable:
Commercial paper at the weighted average
<S> <C> <C>
interest rate of 5.65% (5.54% in 1996)........................ $ 1,733,760 $ 1,359,200
Notes payable against bank lines of credit and others at a
weighted average interest rate of 1.98% (2.11% in 1996)....... 304,697 296,881
Current installment of long-term debt due within one year at
interest rates of 5.84% to 6.25% (5.63% to 7.48% in 1996)..... 125,000 245,500
--------- ---------
Total senior notes payable within one year...................... 2,163,457 1,901,581
Senior notes payable after one year at interest rates of
6.06% to 9.25% (5.63% to 9.25% in 1996)....................... 1,150,000 1,275,000
--------- ---------
Total senior notes payable...................................... 3,313,457 3,176,581
--------- ---------
Short-term Notes Payable to Affiliates:
Notes payable to Pitney Bowes Inc. at a weighted
average interest rate of 5.50% (5.40% in 1996)................ 95,600 139,400
--------- ---------
Subordinated Notes Payable:
Non-interest bearing notes due Pitney Bowes Inc................. 229,154 229,154
--------- ---------
Total notes payable............................................... $ 3,638,211 $ 3,545,135
========= =========
</TABLE>
Note 5 -- Other
On January 1, 1997 the Company adopted Statement of Financial Standards No.
125 "Accounting for Transactions and Servicing of Financial Assets and
Extinguishments of Liabilities". This statement may impact the method used to
sell finance assets on a prospective basis. As of June 30, 1997 there was no
material impact on the financial statements of the Company due to this
pronouncement.
<PAGE>
Page 8 of 14
PITNEY BOWES CREDIT CORPORATION
MANAGEMENT'S NARRATIVE ANALYSIS
OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations
Second Quarter of 1997 Compared to Second Quarter of 1996
Finance income in the second quarter of 1997 increased 2.0 percent to $183.2
million compared to $179.6 million in 1996. Finance income for internal
small-ticket financing programs increased 9.4 percent to $82.6 million from
$75.5 million primarily due to higher income from fee and service based
programs. Finance income for external large-ticket financing programs decreased
to $44.2 million from $46.2 million primarily due to lower investment levels in
accordance with the Company's previously announced strategy to shift the
foundation of the external financing business from asset-based to fee and
service based revenues. Finance income related to external small-ticket
financing programs decreased to $39.6 million from $45.1 million primarily due
to the sale of the Custom Vendor Finance group ("CVF") during the second quarter
of 1996 which resulted in a one time gain of $3.2 million before taxes. Revenue
generated from mortgage servicing increased 30.5 percent to $16.7 million in the
second quarter of 1997 compared with $12.8 million in the second quarter of
1996, due to a larger mortgage servicing portfolio in keeping with the Company's
fee-based income growth strategy.
Selling, general and administrative (SG&A) expenses increased 7.9 percent to
$42.1 million in the second quarter of 1997 compared to $39.0 million in 1996.
SG&A for internal small-ticket financing programs increased to $15.8 million
from $14.4 million principally due to higher professional fees related to the
support of new business initiatives and higher sales assistance fees paid to
Pitney Bowes. SG&A for external large-ticket financing programs increased 24.4
percent from $4.5 million in 1996 to $5.6 million in 1997 primarily due to
higher corporate personnel and other professional related expenses. SG&A for
external small-ticket financing programs remained level at $15.3 million
principally due to a higher level of personnel and operating related expenses in
support of larger portfolio as well as higher marketing fees paid to brokers at
CPLC offset by decreases in Dictaphone/Monarch SG&A expenses as well as
decreases in SG&A expenses related to assets transferred from an affiliate. SG&A
expenses related to mortgage servicing increased 17.0 percent in 1997 to $5.5
million primarily due to the administration of a larger mortgage servicing
portfolio.
Depreciation on operating leases was $2.3 million in the second quarter of
1997 compared to $3.7 million in 1996 reflecting a decreased operating lease
investment balance at June 30, 1997 compared to June 30, 1996. Amortization of
mortgage servicing rights was $6.1 million in the second quarter of 1997
compared to $5.9 million in 1996 due to a larger mortgage servicing portfolio.
Amortization of deferred costs associated with the Company's participation in a
partnership transaction was $0.6 million for the second quarter of both 1997 and
1996.
The provision for credit losses was $15.9 million for the second quarter of
1997 compared with $13.9 million in 1996. The provision for internal
small-ticket financing programs increased to $8.9 million from $7.3 million
primarily due to increased provisions for new business initiatives. The
provision for external small-ticket financing programs was $6.6 million for the
second quarter of 1997 compared to $6.4 million in 1996 primarily due to
increased provisions related to higher investment levels at CPLC offset by the
Custom Vendor Finance (CVF) business sale in June 1996 and a lower Dictaphone
portfolio.
The Company's allowance for credit losses as a percentage of net lease
receivables (net investments before allowance for credit losses plus the
uncollected principal balance of receivables sold) increased from 1.88 percent
at December 31, 1996 to 2.01 percent at June 30, 1997. PBCC charged $13.4
million and $19.7 million against the allowance for credit losses in the second
quarter of 1997 and 1996, respectively.
Interest expense was $51.1 million in the second quarter of 1997 compared with
$49.0 million in 1996. The increase reflects higher average borrowings in 1997
coupled with higher interest rates. The effective interest rate on average
borrowings was 6.12 percent for the second quarter of 1997 compared to 5.93
percent for the same period of 1996. The Company does not match fund its
financing investments and does not apply different interest rates to its various
financing portfolios.
<PAGE>
Page 9 of 14
PITNEY BOWES CREDIT CORPORATION
MANAGEMENT'S NARRATIVE ANALYSIS
OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations
Second Quarter of 1997 Compared to Second Quarter of 1996 (continued)
The effective tax rate for the second quarter of 1997 was 30.2 percent
compared with 33.4 percent for the same period of 1996. The decrease is
principally due to lower tax provisions related to certain external large-ticket
transactions as well as a higher level of tax-exempt income.
The Company's ratio of earnings to fixed charges was 2.25 times for the second
quarter of 1997 compared with 2.37 times for the same period of 1996. The
decrease reflects lower pretax income mainly due to the impact of the CVF sale
in the second quarter of 1996 as well as higher effective interest rates in
1997.
First Six Months of 1997 Compared to First Six Months of 1996
For the first six months of 1997 compared to the same period of 1996, total
revenue increased 2.6 percent to $366.6 million, SG&A expenses increased 6.9
percent to $83.7 million, depreciation and amortization including the cost of
equipment sales increased 4.6 percent to $20.3 million, provision for credit
losses increased 1.3 percent to $31.0 million, interest expense increased 1.7
percent to $101.0 million, provision for income taxes decreased by 6.0 percent
to $40.5 million, generating a net income increase of 3.9 percent to $90.0
million.
Except for the effect of the sale of the CVF finance assets in the second
quarter of 1996, the factors that affected the change in each of the above
income or expense items were essentially the same as those affecting the second
quarter of 1997 versus 1996.
Financial Condition
Liquidity and Capital Resources
The Company's principal sources of funds are from operations and borrowings.
It has been PBCC's practice to use a balanced mix of debt maturities, variable-
and fixed-rate debt and interest rate swap agreements to control its sensitivity
to interest rate volatility. PBCC's debt mix was 62 and 58 percent short-term
and 38 and 42 percent long-term at June 30, 1997 and December 31, 1996,
respectively. PBCC's swap-adjusted variable-rate versus fixed-rate debt mix was
54 percent variable-rate and 46 percent fixed-rate at June 30, 1997 and 43
percent variable-rate and 57 percent fixed-rate at December 31, 1996. The
Company may borrow through the sale of commercial paper, under its confirmed
bank lines of credit, and by private and public offerings of intermediate- or
long-term debt securities.
The Company has $250 million of unissued debt securities available from a
shelf registration statement filed with the Securities and Exchange Commission
in September 1995. Up to $250 million of medium-term notes may be offered under
this registration statement. The $250 million available under this shelf
registration statement should meet the Company's financing needs for the next
two years. The Company also had unused lines of credit and revolving credit
facilities totaling $1.5 billion at June 30, 1997, largely supporting its
commercial paper borrowings.
The Company continues to actively pursue a strategy of external large-ticket
asset sales. In accordance with its previously announced decision, this strategy
allows the Company to focus on fee-based transactions rather than asset based
income. The Company continues to develop strategies in support of ongoing debt
level and risk management.
Additional financing will continue to be arranged as deemed necessary.
Borrowing requirements will be primarily dependent upon the level of equipment
purchases from Pitney Bowes, the level of on balance sheet financing activity,
capitalization of any fee-based business initiatives and the refinancing of
maturing debt.
<PAGE>
Page 10 of 14
PITNEY BOWES CREDIT CORPORATION
MANAGEMENT'S NARRATIVE ANALYSIS
OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Financial Condition
Liquidity and Capital Resources (continued)
The Company's utilization of derivative instruments is currently limited to
interest rate swap agreements (interest rate swaps) and foreign currency
exchange forward contracts (foreign currency contracts). The Company
periodically enters into interest rate swaps as a means of managing interest
rate exposure. The interest rate differential to be paid or received is
recognized over the life of the agreements as an adjustment to interest expense.
The Company is exposed to credit loss in the event of non-performance by the
counterparties to the interest rate swaps to the extent of the differential
between fixed- and variable-rates; such exposure is considered minimal. The
Company has entered into foreign currency contracts for the purpose of
minimizing its risk of loss from fluctuations in exchange rates in connection
with certain intercompany loans and certain transfers to the Company by foreign
affiliates of foreign currency denominated lease receivables. The Company is
exposed to credit loss in the event of non-performance by the counterparties to
the foreign currency contracts to the extent of the difference between the spot
rate at the date of the contract delivery and the contracted rate; such exposure
is also considered minimal.
Since the Company normally enters into derivative transactions only with
members of its banking group, the credit risk of these transactions is monitored
as part of the normal credit review of the banking group. The Company monitors
the market risk of derivative instruments through periodic review of fair market
values.
Gross finance assets at the end of the second quarter of 1997 increased 1.1
percent from December 31, 1996. The increase is principally due to external
small-ticket gross finance assets at June 30, 1997 being 10.5 percent, or $110.6
million, higher than December 31, 1996, partially offset by the shift in
emphasis from asset based investments in the external large ticket segment to
fee based transactions and a seasonally lower level of internal small-ticket
financing activity, during the quarter, relative to portfolio liquidations.
Overall levels of lease receivables are in line with management's expectations.
The Company's liquidity ratio (finance contracts receivable, including
residuals, expected to be realized in cash over the next 12 months to current
maturities of debt over the same period) was .79 times at June 30, 1997 and .78
times at December 31, 1996.
The Company will continue to use cash to invest in finance assets with
emphasis on internal and external small-ticket leasing transactions and
controlled investment in external large-ticket financing programs. The Company
believes that cash generated from operations and collections on existing lease
contracts will provide the majority of cash needed for such investment
activities. Additional cash, to the extent needed, is expected to be provided
from commercial paper and intermediate- or long-term debt securities. While the
Company expects that market acceptance of its short- and long-term debt will
continue to be strong, additional liquidity is available under revolving credit
facilities and credit lines.
- --------------------------------------------------------------------------------
The Company wishes to caution readers that any forward-looking statements
contained in this Form 10-Q or made by the management of the Company involve
risks and uncertainties, and are subject to change based on various important
factors. The following factors, among others, could affect the Company's
financial results and could cause the Company's financial performance to differ
materially from the expectations expressed in any forward-looking statement made
by or on behalf of the Company - the level of business and financial performance
of Pitney Bowes; the impact of governmental financing regulations; the success
of the Company in developing strategies to manage debt levels, including the
ability of the Company to access the capital markets; the strength of worldwide
economies; the effects of and changes in trade, monetary and fiscal policies and
laws, and inflation and monetary fluctuations, including changes in interest
rates; the willingness of customers to substitute financing sources; and the
level of write-offs and the Company's associated collection and asset management
efforts.
<PAGE>
Page 11 of 14
PART II. OTHER INFORMATION
Item 1 -- Legal Proceedings
From time to time, the Company is a party to lawsuits that arise in the
ordinary course of its business. These lawsuits may involve litigation by or
against the Company to enforce contractual rights under vendor, insurance or
other contracts; lawsuits by or against the Company relating to equipment,
service or payment disputes with customers; disputes with employees; or other
matters. The Company is currently a defendant in a number of lawsuits, none of
which should have, in the opinion of management and legal counsel, a material
adverse effect on the Company's financial position or results of operations.
Item 6 -- Exhibits and Reports on Form 8-K
a. Financial Statements - see index on page 2
Exhibits (numbered in accordance with Item 601 of Regulation S-K)
<TABLE>
Reg S-K Incorporation
Exhibits Description by Reference
--------- ------------------------------------------------- ---------------
<S> <C>
(12) Computation of Ratio of Earnings to Fixed Charges See Exhibit (i)
on page 13
(27) Financial Data Schedule See Exhibit (ii)
on page 14
</TABLE>
There are no unregistered debt instruments in which the total
amount of securities authorized thereunder exceeds 10 percent of
the total assets of the Company. Copies of all instruments
defining the rights of securities holders are available on
request
b. Reports on Form 8-K
No reports on Form 8-K were filed for the first six months of 1997.
<PAGE>
Page 12 of 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PITNEY BOWES CREDIT CORPORATION
By /s/ G. KIRK HUDSON
----------------------
G. Kirk Hudson
Vice President - Finance
(Principal Financial and
Accounting Officer)
Dated: August 14, 1997
<PAGE>
Page 13 of 14
Exhibit (i)
Computation of Ratio of Earnings to Fixed Charges
<TABLE>
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income before income taxes.......... $ 64,177 $ 67,711 $ 130,516 $ 129,768
------- ------- -------- --------
Fixed charges:
Interest on debt.................. 51,098 48,954 100,993 99,269
One third rent expense............ 380 385 733 797
------- ------- -------- --------
Total fixed charges................. 51,478 49,339 101,726 100,066
------- ------- -------- --------
Earnings before fixed charges....... $ 115,655 $ 117,050 $ 232,242 $ 229,834
======= ======= ======== ========
Ratio of earnings to
fixed charges (1)................. 2.25X 2.37X 2.28X 2.30X
======= ======= ======== ========
</TABLE>
<TABLE>
Years Ended December 31,
-------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Income before income taxes.......... $ 266,089 $ 231,334 $ 218,913 $ 189,960 $ 185,704
------- ------- -------- -------- -------
Fixed charges:
Interest on debt.................. 201,543 202,090 151,239 137,372 146,594
One third rent expense............ 1,530 1,519 1,463 1,575 1,491
------- ------- -------- -------- -------
Total fixed charges................. 203,073 203,609 152,702 138,947 148,085
------- ------- -------- -------- -------
Earnings before fixed charges....... $ 469,162 $ 434,943 $ 371,615 $ 328,907 $ 333,789
======= ======= ======== ======== ========
Ratio of earnings to
fixed charges (1)................. 2.31X 2.14X 2.43X 2.37X 2.25X
======= ======= ======== ======== ========
</TABLE>
(1) The ratio of earnings to fixed charges is computed by dividing earnings
before fixed charges by fixed charges. Fixed charges consist of interest on
debt and one third of rent expense as representative of the interest
portion.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Page 14 of 14
Exhibit (ii)
Financial Data Schedule
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 6/30/97
INCOME STATEMENT AND BALANCE SHEET AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 50,507
<SECURITIES> 0
<RECEIVABLES> 5,043,884
<ALLOWANCES> 105,551
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,565,131
<CURRENT-LIABILITIES> 2,639,159
<BONDS> 0
<COMMON> 46,000
0
0
<OTHER-SE> 983,052
<TOTAL-LIABILITY-AND-EQUITY> 5,565,131
<SALES> 0
<TOTAL-REVENUES> 366,553
<CGS> 0
<TOTAL-COSTS> 104,078
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 30,966
<INTEREST-EXPENSE> 100,993
<INCOME-PRETAX> 130,516
<INCOME-TAX> 40,492
<INCOME-CONTINUING> 90,024
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 90,024
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
