<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
F O R M 1 0 - 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, 1995
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission File Number: 1-3579
PITNEY BOWES INC.
State of Incorporation IRS Employer Identification No.
Delaware 06-0495050
World Headquarters
Stamford, Connecticut 06926-0700
Telephone Number: (203) 356-5000
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, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No_____
Number of shares of common stock, $2 par value, outstanding as of June
30, 1995 is 151,516,947.
<PAGE>
Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 1995
Page 2 of 19
Pitney Bowes Inc.
Index
Page Number
Part I - Financial Information:
Consolidated Statement of Income - Three and Six
Months Ended June 30, 1995 and 1994 3
Consolidated Balance Sheet - June 30, 1995
and December 31, 1994 4
Consolidated Statement of Cash Flows -
Six Months Ended June 30, 1995 and 1994 5
Notes to Consolidated Financial Statements 6 - 8
Management's Discussion and Analysis of
Financial Condition and Results of Operations 9 - 13
Part II - Other Information:
Item 4: Submission of Matters to a Vote of
Security Holders 14
Item 6: Exhibits and Reports on Form 8-K 14 - 15
Signatures 16
Exhibit (i) - Computation of Earnings per Share 17
Exhibit (ii) - Computation of Ratio of Earnings
to Fixed Charges 18
Exhibit (iii) - Financial Data Schedule 19
<PAGE>
Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 1995
Page 3 of 19
Part I - Financial Information
Pitney Bowes Inc.
Consolidated Statement of Income
(Unaudited)
<TABLE>
(Dollars in thousands, except per share data)
<CAPTION> Three Months Ended June 30, Six Months Ended June 30,
1995 1994(1) 1995 1994(1)
<S> <C> <C> <C> <C>
Revenue from:
Sales $ 371,405 $ 347,475 $ 734,801 $ 661,444
Rentals and financing 381,939 368,541 751,878 698,642
Support services 109,259 102,273 214,836 203,577
Total revenue 862,603 818,289 1,701,515 1,563,663
Costs and expenses:
Cost of sales 233,551 200,655 446,277 383,705
Cost of rentals and financing 106,591 129,204 212,802 232,124
Selling, service and administrative 287,327 286,574 577,892 554,318
Research and development 21,643 18,316 41,982 37,686
Interest, net 59,876 46,141 118,961 88,267
Total costs and expenses 708,988 680,890 1,397,914 1,296,100
Income from continuing operations
before income taxes 153,615 137,399 303,601 267,563
Provision for income taxes 55,266 50,313 109,263 98,869
Income from continuing operations 98,349 87,086 194,338 168,694
Discontinued operations 10,675 11,532 20,997 21,786
Income before effect of a change in
accounting for postemployment benefits 109,024 98,618 215,335 190,480
Effect of a change in accounting for
postemployment benefits - - - (119,532)
Net income $ 109,024 $ 98,618 $ 215,335 $ 70,948
Income per common and common equivalent
share:
Income from continuing operations $ .65 $ .55 $ 1.28 $ 1.06
Discontinued operations .07 .07 .14 .14
Effect of a change in accounting for
postemployment benefits - - - (.75)
Net income $ .72 $ .62 $ 1.42 $ .45
Average common and common equivalent
shares outstanding 152,253,551 159,117,094 152,172,775 159,349,831
Dividends declared per share of common
stock $ .30 $ .26 $ .60 $ .52
Ratio of earnings to fixed charges 3.12 3.39 3.11 3.37
<FN>
(1) Reclassified to reflect discontinued operations.
</TABLE>
<PAGE>
Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 1995
Page 4 of 19
Pitney Bowes Inc.
Consolidated Balance Sheet
(Unaudited)
<TABLE> June 30, December 31,
(Dollars in thousands) 1995 1994
<CAPTION>
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 136,805 $ 75,106
Short-term investments, at cost which
approximates market 1,385 639
Accounts receivable, less allowances:
6/95, $16,395; 12/94, $16,909 386,472 422,276
Finance receivables, less allowances:
6/95, $37,093; 12/94, $36,224 1,082,582 1,050,090
Inventories (Note 2) 418,320 430,641
Other current assets and prepayments 102,460 104,992
Total current assets 2,128,024 2,083,744
Property, plant and equipment, net
(Note 3) 554,390 578,650
Rental equipment and related
inventories, net (Note 3) 718,273 695,343
Property leased under capital
leases, net (Note 3) 9,997 12,633
Long-term finance receivables, less
allowances:
6/95, $79,111; 12/94, $76,867 3,228,854 3,086,401
Investment in leveraged leases 510,864 481,308
Goodwill, net of amortization:
6/95, $44,390; 12/94, $40,984 234,439 222,445
Other assets 267,080 239,196
Total assets $7,651,921 $7,399,720
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued
liabilities $ 723,183 $ 828,396
Income taxes payable 238,775 194,427
Notes payable and current portion of
long-term obligations 2,303,756 2,626,231
Advance billings 336,134 329,415
Total current liabilities 3,601,848 3,978,469
Deferred taxes on income 482,157 453,438
Long-term debt 1,051,528 779,217
Other noncurrent liabilities 435,735 443,527
Total liabilities 5,571,268 5,654,651
Preferred stockholders' equity in a
subsidiary company 200,000 -
Stockholders' equity:
Cumulative preferred stock, $50 par
value, 4% convertible 47 48
Cumulative preference stock, no par
value, $2.12 convertible 2,640 2,790
Common stock, $2 par value 323,338 323,338
Capital in excess of par value 32,705 35,200
Retained earnings 1,910,100 1,785,513
Cumulative translation adjustments (36,824) (41,617)
Treasury stock, at cost (351,353) (360,203)
Total stockholders' equity 1,880,653 1,745,069
Total liabilities and stockholders'
equity $7,651,921 $7,399,720
</TABLE>
<PAGE>
Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 1995
Page 5 of 19
Pitney Bowes Inc.
Consolidated Statement of Cash Flows
(Unaudited)
<TABLE>
(Dollars in thousands)
<CAPTION> Six Months Ended June 30,
1995 1994(1)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 215,335 $ 70,948
Effect of a change in accounting for
postemployment benefits - 119,532
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 129,492 133,879
Nonrecurring charges, net - (344)
Net change in the strategic focus
initiative (20,481) -
Increase in deferred taxes on income 29,546 20,094
Change in assets and liabilities:
Accounts receivable 12,575 7,802
Sales-type lease receivables (32,047) (38,510)
Inventories (19,853) (37,797)
Other current assets and
prepayments 5,002 7,399
Accounts payable and accrued
liabilities (117,748) (72,216)
Income taxes payable 30,552 36,372
Advance billings 10,397 13,636
Other, net (52,858) (35,746)
Net cash provided by operating
activities 189,912 225,049
Cash flows from investing activities:
Short-term investments (746) (198)
Net investment in fixed assets (158,870) (146,779)
Net investment in direct-finance
lease receivables (140,168) 73,462
Investment in leveraged leases (11,913) 966
Proceeds from sale of subsidiary 127,000 -
Net cash used in investing
activities (184,697) (72,549)
Cash flows from financing activities:
Decrease in notes payable (308,402) (77,042)
Proceeds from long-term obligations 275,000 200,000
Principal payments on long-term
obligations (24,322) (138,713)
Proceeds from issuance of stock 19,128 18,008
Stock repurchases (14,932) (48,183)
Proceeds from preferred stock issued
by a subsidiary 200,000 -
Dividends paid (90,748) (82,075)
Net cash provided by (used in)
financing activities 55,724 (128,005)
Effect of exchange rate changes on
cash 760 645
Increase in cash and cash equivalents 61,699 25,140
Cash and cash equivalents at beginning
of period 75,106 54,653
Cash and cash equivalents at end of
period $ 136,805 $ 79,793
Interest paid $ 130,437 $ 89,962
Income taxes paid $ 60,976 $ 54,695
<FN>
(1) Reclassified to reflect discontinued operations.
</TABLE>
<PAGE>
Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 1995
Page 6 of 19
Pitney Bowes Inc.
Notes to Consolidated Financial Statements
Note 1:
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 Inc. (the company), all adjustments (consisting of only
normal recurring adjustments) necessary to present fairly the financial
position of the company as of June 30, 1995 and the results of its
operations and cash flows for the six months ended June 30, 1995 and
1994 have been included. Operating results for the six months ended
June 30, 1995 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1995. These statements should
be read in conjunction with the financial statements and notes thereto
included in the company's Annual Report to Stockholders and Form 10-K
Annual Report for the year ended December 31, 1994.
Note 2:
<TABLE>
Inventories are comprised of the following:
<CAPTION>
(Dollars in thousands) June 30, December 31,
1995 1994
<S> <C> <C>
Raw materials and work in process $ 95,892 $111,051
Supplies and service parts 113,123 114,429
Finished products 209,305 205,161
Total $418,320 $430,641
</TABLE>
Note 3:
<TABLE>
Fixed assets are comprised of the following:
<CAPTION>
(Dollars in thousands) June 30, December 31,
1995 1994
<S> <C> <C>
Property, plant and equipment $1,166,080 $1,218,016
Accumulated depreciation (611,690) (639,366)
Property, plant and equipment, net $ 554,390 $ 578,650
Rental equipment and related
inventories $1,530,594 $1,484,698
Accumulated depreciation (812,321) (789,355)
Rental equipment and related
inventories, net $ 718,273 $ 695,343
Property leased under capital
leases $ 34,619 $ 38,644
Accumulated amortization (24,622) (26,011)
Property leased under capital
leases, net $ 9,997 $ 12,633
</TABLE>
<PAGE>
Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 1995
Page 7 of 19
Note 4:
The company has refined its strategic focus, with the intent to
capitalize on its strengths and competitive position. Based on an
extensive review, the company decided to concentrate its energies and
resources on products and services which facilitate the preparation,
organization, movement, delivery, tracking, storage and retrieval of
documents, packages, letters and other materials, in hard copy and
digital form for its customers. Accordingly, the company announced in
1994 its intent to seek buyers for its Dictaphone Corporation
(Dictaphone) and Monarch Marking Systems, Inc. (Monarch) subsidiaries.
On June 29, 1995, the company sold Monarch for approximately $127
million in cash to a new company jointly formed by Paxar Corporation and
Odyssey Partners, L.P. The sale resulted in an immaterial after-tax
gain.
In April 1995, the company signed a definitive agreement to sell
Dictaphone for $450 million in cash to an affiliate of Stonington
Partners, Inc. The sale is conditioned upon, among other things, the
buyer's obtaining financing and the receipt of applicable regulatory
approvals. The buyer has received commitment letters from Stonington
Capital Appreciation 1994 Fund, L.P., a fund managed by Stonington
Partners, Inc., for its equity financing and commitment letters and
highly confident letters from major financial institutions for its debt
financing. The sale will result in a net after-tax gain which is
expected to be included in the results of operations for the third
quarter of 1995.
Dictaphone and Monarch have been classified in the Consolidated
Statement of Income as discontinued operations. Summary results of the
Dictaphone and Monarch operations prior to their sales, which have been
classified separately, were as follows (results included for Monarch in
1995 are through June 29, 1995):
<TABLE>
(Dollars in thousands) Three Months Ended Six Months Ended
<CAPTION> June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenue $137,744 $136,572 $277,481 $267,975
Income before income taxes $ 17,285 $ 19,221 $ 34,717 $ 35,915
Provision for income taxes 6,845 7,689 13,955 14,129
Income from discontinued
operations $ 10,440 $ 11,532 $ 20,762 $ 21,786
</TABLE>
Note 5:
In June 1995, a subsidiary of the company issued $200 million of
variable term voting preferred stock to outside institutional investors
in a private placement. The preferred stock, $.01 par value, is
entitled to cumulative dividends at rates set at auction, generally for
49 day intervals. The stock issuance, which appears on the consolidated
balance sheet as "Preferred stockholders' equity in a subsidiary
company", is designed to enable the company to better manage its
international cash and investments. The consolidated statement of
income reflects the dividends as a minority interest in "Selling,
service and administrative" expense.
<PAGE>
Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 1995
Page 8 of 19
Note 6:
During 1994, the company adopted a formal plan designed to address the
impact of technology on work force requirements and to further refine
its strategic focus on core businesses worldwide. Current and future
product offerings require a smaller, but more highly skilled
engineering, manufacturing and service work force to take full
advantage of design, production, diagnostic and service strategies. As
of June 30, 1995, the company has made severance and benefit payments
of approximately $23.9 million to nearly 1,000 employees separated
under the strategic focus initiatives. Approximately 80 employees with
the requisite enhanced skills have been hired to produce and service
advanced product offerings. The company expects remaining cash outlays
to occur principally in 1995.
<PAGE>
Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 1995
Page 9 of 19
Pitney Bowes Inc.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Continuing Operations - second quarter of 1995 vs. second
quarter of 1994.
Revenue increased five percent to $862.6 million in 1995 compared to
$818.3 million in the second quarter of 1994. Excluding the effect of
approximately $27 million of operating lease assets sold in 1994
revenue increased nine percent. Income from continuing operations
increased 13 percent to $98.3 million in 1995 from $87.1 million in the
second quarter of 1994.
Sales revenue increased seven percent in 1995. This increase was
comprised of a six percent growth in volume and a one percent growth
from favorable foreign currency exchange rate changes. The facilities
management business recorded strong sales growth as it continued to
expand its facilities management contract base, especially in the
commercial and industrial market segment. In addition, sales revenue
was enhanced by strong growth in copier equipment sales and facsimile
system revenue, driven principally by supply sales partially offset
by price declines.
Rentals and financing revenue increased 12 percent from the prior year
excluding the effect of the $27 million of asset sales in 1994. Rental
revenue growth reflected a higher number of postage meters on rental,
especially higher yielding Postage By Phone and electronic meters,
a higher number of plain paper facsimile systems in service and
price increases. The company continued to grow its base of stable,
recurring revenue by adding over 25,000 postage meters to its U.S.
installed base during the first half of 1995. This represents a 60
percent increase over the comparable period last year. The increase in
financing revenue is principally due to a higher base of small-ticket
equipment under lease, as well as an increased contribution from non-
interest sensitive revenue sources. Financing revenue growth in 1995
continues to be negatively affected by the company's 1993 decision to
phase out the business of financing non-Pitney Bowes equipment outside
of the United States.
Support services revenue rose seven percent from the prior year. The
revenue growth was attributable to expansion of the service bases in
the U.S. mailing and shipping businesses and price increases.
The cost of sales to sales revenue ratio increased to 62.9 percent in
second quarter of 1995 from 57.7 percent in the second quarter of 1994.
The increased ratio reflects higher U.S. mailing product costs which
are driven, in part, by prior year efficiencies resulting from
increased volume and larger production runs relating to the final build
of the model 6100 mailing machine, as well as higher field parts usage
in 1995 to support the growing equipment base. In addition, the ratio
increase continues to be affected by the increased significance of the
company's facilities management business which includes most of its
<PAGE>
Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 1995
Page 10 of 19
expenses in cost of sales and to a lesser extent by higher copier
equipment costs related to a stronger yen.
The ratio of cost of rentals and financing to rentals and financing
revenue decreased to 27.9 percent in 1995 from 35.1 percent in 1994
primarily as a result of the 1994 operating lease asset sales which
contributed $25.2 million of cost to cost of rentals and financing in
1994. This improvement was also impacted by reduced credit loss
requirements at the financial services businesses and consistent with
the first quarter, by the change in the postage meter estimated service
lives which are based, in part, on technological content.
Selling, service and administrative expenses were 33.3 percent of
revenue in the second quarter 1995 compared to 35.0 percent in second
quarter 1994. This ratio improved reflecting that the benefits of the
actions being taken as part of the plan adopted in the third quarter
1994 to refine the strategic focus on the core businesses are being
realized. In addition, this improvement reflects cost containment
programs throughout the company.
Research and development expenses increased 18 percent to $21.6 million
in the second quarter of 1995 from $18.3 million in the second quarter
1994. This increase reflected higher expenditures for new products
approaching the end of their development cycle, as well as continued
investment in advanced product development with emphasis on electronic
technology and software development. In 1994 a greater portion of
engineering activity was attributable to engineering support for
recently introduced products which costs are included in cost of sales.
Net interest expense increased to $59.9 million in the second quarter
1995 from $46.1 million in 1994. This increase is due to higher short-
term interest rates and higher average borrowing levels in 1995.
The second quarter effective tax rate was 36.0 percent in 1995 compared
to 36.6 percent in 1994. The 1995 effective rate was favorably affected
by tax benefits associated with a company owned life insurance program,
the positive impact of the residual portfolio purchase at financial
services, completed in the fourth quarter of 1994, as well as a higher
level of tax-exempt income.
Results of Continuing Operations - six months of 1995 vs. six months
of 1994.
For the first six months of 1995 compared with the same period of 1994,
revenue increased nine percent while income from continuing operations
increased 15 percent to $194.3 million. The factors that affected
revenue and earnings performance included those cited for the second
quarter 1995 versus 1994. In addition, in the first quarter of 1995,
revenue was favorably affected by approximately $30 million increased
PROM (memory chip) sales attributable to the January 1, 1995 United
States postal rate change.
<PAGE>
Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 1995
Page 11 of 19
As part of the company's review of the impacts of technology on its
core businesses and the desire of worldwide postal services to
transition to all electronic postage meters, the estimated service
lives of postage meters was revised effective January 1, 1995. The
meter base has been segregated according to technological content.
Mechanical meters, which constitute approximately 60 percent of the
meter base, had their depreciable lives shortened while electronic
meters had their depreciable lives lengthened due to improved security,
functionality and limited risk of technological obsolescence. These
changes have been accounted for as changes in accounting estimates and
did not have a material effect on the 1995 results.
Nonrecurring Item
During 1994, the company adopted a formal plan designed to address the
impact of technology on work force requirements and to further refine
its strategic focus on core businesses worldwide. Current and future
product offerings require a smaller, but more highly skilled
engineering, manufacturing and service work force to take full
advantage of design, production, diagnostic and service strategies. As
of June 30, 1995, the company has made severance and benefit payments
of approximately $23.9 million to nearly 1,000 employees separated
under the strategic focus initiatives. Approximately 80 employees with
the requisite enhanced skills have been hired to produce and service
advanced product offerings. The company expects remaining cash outlays
to occur principally in 1995.
Discontinued Operations
On June 29, 1995, the company sold Monarch Marking Systems, Inc.
(Monarch) for approximately $127 million in cash to a new company
jointly formed by Paxar Corporation and Odyssey Partners, L.P. The
sale resulted in an immaterial after-tax gain.
In April 1995, the company signed a definitive agreement to sell
Dictaphone Corporation (Dictaphone) for $450 million in cash to an
affiliate of Stonington Partners, Inc. The sale is conditioned upon,
among other things, the buyer's obtaining financing and the receipt of
applicable regulatory approvals. The buyer has received commitment
letters from Stonington Capital Appreciation 1994 Fund, L.P., a fund
managed by Stonington Partners, Inc., for its equity financing and
commitment letters and highly confident letters from major financial
<PAGE>
Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 1995
Page 12 of 19
institutions for its debt financing. The sale which is expected to be
included in the results of operations for the third quarter of 1995
will result in a net after-tax gain.
1994 Accounting Change
The company adopted Statement of Financial Accounting Standards No.
112, "Employers' Accounting for Postemployment Benefits" (FAS 112), as
of January 1, 1994. FAS 112 required that postemployment benefits be
recognized on the accrual basis of accounting. Postemployment benefits
include primarily company-provided medical benefits to disabled
employees and company provided life insurance as well as other
disability- and death-related benefits to former or inactive employees,
their beneficiaries and covered dependents. The one-time effect on
first quarter 1994 earnings of adopting FAS 112 was a non-cash, after-
tax charge of $119.5 million (net of approximately $80.5 million of
income taxes), or 75 cents per share.
Liquidity and Capital Resources
Working capital has improved since year-end 1994, due to decreases in
short-term borrowings caused by the proceeds from the issuance of long-
term debt by Pitney Bowes Credit Corporation (PBCC), the issuance of
preferred stock in a subsidiary company, and from the sale of Monarch.
The current ratio as of June 30, 1995 was .59 to 1 and as of December
31, 1994, was .52 to 1.
As part of the company's non-financial services shelf registrations, a
medium-term note facility exists permitting issuance of up to $100
million in debt securities with maturities ranging from more than one
year up to 30 years of which $32 million remain available at June 30,
1995. The company also has an additional $300 million remaining on its
non-financial services shelf registrations filed with the Securities
and Exchange Commission. Amounts available under credit agreements,
shelf registrations and commercial paper and medium-term note programs,
in addition to cash generated internally and by the sales of Monarch
and Dictaphone, are expected to be sufficient to provide for financing
needs in the next two years.
In May 1995, PBCC issued $100 million of 6.250 percent notes due in
June, 1998 and $100 million of 6.625 percent notes due in June, 2002.
In June 1995, PBCC also issued $75 million of medium term notes due in
June, 1998 and June, 2000 with a weighted average coupon rate of 6.014
percent. PBCC has $125 million available from a $500 million shelf
registration statement filed with the Securities and Exchange
Commission in October 1992.
In June 1995, a subsidiary of the company, issued $200 million of
variable term voting preferred stock to outside institutional investors
in a private placement. The preferred stock, $.01 par value, is
entitled to cumulative dividends at rates set at auction, generally for
49 day intervals. The stock issuance, which appears on the
<PAGE>
Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 1995
Page 13 of 19
consolidated balance sheet as "Preferred stockholders' equity in a
subsidiary company", is designed to enable the company to better manage
its international cash and investments. The proceeds of the issuance
were used to pay down short-term borrowings. The consolidated
statement of income reflects the dividends as a minority interest in
"Selling, service, and administrative" expense.
The ratio of total debt to total debt and stockholders' equity
including the preferred stockholders' equity in a subsidiary company in
total debt was 65.5% at June 30, 1995 compared to 66.3% at December 31,
1994. This ratio was favorably affected by the proceeds from the sale
of Monarch which were used primarily to repay short-term debt. This
ratio is expected to be favorably impacted by the anticipated proceeds
from the sale of Dictaphone, which is expected to close in the third
quarter of 1995 and which will be used to repay short-term debt and
for other corporate purposes. Book value per common share increased to
$12.39 at June 30, 1995 from $11.52 at year-end 1994 principally due
to year-to-date income. This was offset, in part, by the repurchase of
approximately 450,000 common shares for $14.9 million in the first
quarter of 1995. These repurchases were in anticipation of the proceeds
from the sales of Dictaphone and Monarch.
The company enters into interest rate swap agreements principally
through its financial services business. It has been the practice and
objective of the company to use a balanced mix of debt maturities,
variable- and fixed-rate debt and interest rate swap agreements to
control the company's sensitivity to interest rate volatility. The
company utilizes interest rate swap agreements when it considers the
economic benefits to be favorable. Swap agreements, as noted above,
have been principally utilized to fix interest rates on commercial
paper and/or obtain a lower cost on debt than would otherwise be
available absent the swap.
Capital investments
In the first half of 1995, net investments in fixed assets included
$61.4 million in net additions to property, plant and equipment and
$94.8 million in net additions to rental equipment and related
inventories compared with $49.1 million and $87.6 million during the
same period in 1994, respectively. These additions included
expenditures for a new facility the company is building in Shelton,
Connecticut, as well as normal plant and manufacturing equipment. In
the case of rental equipment, the additions included the production of
postage meters and purchase of facsimile and copier equipment for both
new placement and upgrade programs.
At June 30, 1995, commitments for the acquisition of property, plant
and equipment included plant and manufacturing equipment improvements,
as well as rental equipment for new and replacement programs.
<PAGE>
Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 1995
Page 14 of 19
Part II - Other Information
Item 4: Submission of Matters to a Vote of Security Holders.
Below are the final results of the voting at the annual meeting of
shareholders held on May 8, 1995:
Proposal 1 - Election of Directors
Nominee For Withheld
Linda G. Alvarado 128,734,273 812,963
Marc C. Breslawsky 128,651,313 895,923
Colin G. Campbell 128,765,377 781,859
Charles E. Hugel 128,760,063 787,173
Proposal 2 - Appointment of Price Waterhouse LLP as Independent
Accountants
For Withheld Abstain
128,922,773 257,395 367,068
There were no broker non-votes on either proposal.
The following other directors continued their term of office after the
annual meeting:
William E. Butler Leroy D. Nunery
David T. Kimball Phyllis S. Sewell
Michael J. Critelli Arthur R. Taylor
George B. Harvey
Item 6: Exhibits and Reports on Form 8-K.
(a) Exhibits (numbered in accordance with Item 601 of Regulation S-K)
Reg. S-K Status or Incorporation
Exhibits Description by Reference
(11) Computation of earnings See Exhibit (i)
per share. on page 17.
(12) Computation of ratio of See Exhibit (ii)
earnings to fixed charges. on page 18.
<PAGE>
Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 1995
Page 15 of 19
(b) Reports on Form 8-K.
On May 11, 1995, the company filed a Form 8-K disclosing the
signing of a definitive agreement to sell Dictaphone Corporation
and related operations worldwide.for $450 million in cash to an
affiliate of Stonington Partners, Inc.
On June 21, 1995 the company filed a Form 8-K disclosing the
signing of a definitive agreement to sell Monarch Marking Systems,
Inc. and related operations worldwide for $127 million in cash to
a new company jointly formed by Paxar Corporation and Odyssey
Partners.
<PAGE>
Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 1995
Page 16 of 19
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 INC.
August 10, 1995
/s/ C. F. Adimando
C. F. Adimando
Vice President - Finance and
Administration, and Treasurer
(Principal Financial Officer)
/s/ S. J. Green
S. J. Green
Vice President - Controller
(Principal Accounting Officer)
<PAGE>
<TABLE>
Pitney Bowes Inc. - Form 10-Q Pitney Bowes Inc.
Six Months Ended June 30, 1995 Computation of Earnings per Share Exhibit (i)
Page 17 of 19
Three Months Ended June 30, Six Months Ended June 30,
(Dollars in thousands, except per share data) 1995 1994(1) 1995 1994(1)
<CAPTION>
<S> <C> <C> <C> <C>
Primary
Income from continuing operations (2) $ 98,348 $ 87,086 $ 194,337 $ 168,693
Discontinued operations 10,675 11,532 20,997 21,786
Effect of accounting change - - - (119,532)
Net income applicable to common stock $ 109,023 $ 98,618 $ 215,334 $ 70,947
Weighted average number of common shares
outstanding 151,140,234 157,752,918 151,147,730 157,918,406
Preference stock, $2.12 cumulative convertible 789,002 850,662 800,486 860,118
Stock option and purchase plans 324,315 513,514 224,559 571,307
Total common and common equivalent shares
outstanding 152,253,551 159,117,094 152,172,775 159,349,831
Income per common and common equivalent share -
primary:
Continuing operations $ .65 $ .55 $ 1.28 $ 1.06
Discontinued operations .07 .07 .14 .14
Effect of accounting change - - - (.75)
Net income $ .72 $ .62 $ 1.42 $ .45
Fully Diluted
Income from continuing operations $ 98,349 $ 87,086 $ 194,338 $ 168,694
Discontinued operations 10,675 11,532 20,997 21,786
Effect of accounting change - - - (119,532)
Net income applicable to common stock $ 109,024 $ 98,618 $ 215,335 $ 70,948
Weighted average number of common shares
outstanding 151,140,234 157,752,918 151,147,730 157,918,406
Preference stock, $2.12 cumulative convertible 789,002 850,662 800,486 860,118
Stock option and purchase plans 356,987 522,388 259,794 592,135
Preferred stock, 4% cumulative convertible 11,490 15,235 11,526 15,804
Total common and common equivalent shares
outstanding 152,297,713 159,141,203 152,219,536 159,386,463
Income per common and common equivalent share -
fully diluted:
Continuing operations $ .65 $ .55 $ 1.28 $ 1.06
Discontinued operations .07 .07 .14 .14
Effect of accounting change - - - (.75)
Net income $ .72 $ .62 $ 1.42 $ .45
<FN>
(1) Reclassified to reflect discontinued operations.
<FN>
(2) Income from continuing operations was adjusted for preferred dividends.
</TABLE>
<PAGE>
<TABLE>
Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 1995
Page 18 of 19
Exhibit (ii)
Pitney Bowes Inc.
Computation of Ratio of Earnings to Fixed Charges (1)
(Dollars in thousands) Three Months Ended Six Months Ended
<CAPTION> June 30, June 30,
1995 1994(2) 1995 1994(2)
<S> <C> <C> <C> <C>
Income from continuing
operations before income
taxes $153,615 $137,399 $303,601 $267,563
Add:
Interest expense 61,593 47,140 121,704 91,270
Portion of rents
representative of the
interest factor 10,446 10,393 21,227 21,388
Amortization of capitalized
interest 229 225 457 457
Income as adjusted $225,883 $195,157 $446,989 $380,678
Fixed charges:
Interest expense $ 61,593 $ 47,140 $121,704 $ 91,270
Capitalized interest 468 110 962 172
Portion of rents
representative of the
interest factor 10,446 10,393 21,227 21,388
$ 72,507 $ 57,643 $143,893 $112,830
Ratio of earnings to fixed
charges 3.12 3.39 3.11 3.37
<FN>
(1) The computation of the ratio of earnings to fixed charges has been
computed by dividing income from continuing operations before income taxes and
fixed charges by fixed charges. Included in fixed charges is one-third of
rental expense as the representative portion of interest.
<FN>
(2) Reclassified to reflect discontinued operations.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS FINANCIAL INFORMATION EXTRACTED FROM PITNEY BOWES INC.
CONSOLIDATED BALANCE SHEET, CONSOLIDATED STATEMENT OF INCOME, CORRESPONDING
FOOTNOTE #3 FIXED ASSETS AND STATEMENT RE COMPUTATION OF PER SHARE EARNINGS AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 136,805
<SECURITIES> 1,385
<RECEIVABLES> 402,867
<ALLOWANCES> 16,395
<INVENTORY> 418,320
<CURRENT-ASSETS> 2,128,024
<PP&E> 1,166,080
<DEPRECIATION> 611,690
<TOTAL-ASSETS> 7,651,921
<CURRENT-LIABILITIES> 3,601,848
<BONDS> 1,051,528
<COMMON> 323,338
200,000
2,687
<OTHER-SE> 1,554,628
<TOTAL-LIABILITY-AND-EQUITY> 7,651,921
<SALES> 734,801
<TOTAL-REVENUES> 1,701,515
<CGS> 446,277
<TOTAL-COSTS> 659,079
<OTHER-EXPENSES> 619,874
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 118,961
<INCOME-PRETAX> 303,601
<INCOME-TAX> 109,263
<INCOME-CONTINUING> 194,338
<DISCONTINUED> 20,997
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 215,335
<EPS-PRIMARY> 1.42
<EPS-DILUTED> 1.42
</TABLE>
