UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8 - K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report
(Date of earliest event reported): October 19, 1999
PITNEY BOWES INC.
Commission File Number: 1-3579
State of Incorporation IRS Employer Identification No.
Delaware 06-0495050
World Headquarters
Stamford, Connecticut 06926-0700
Telephone Number: (203) 356-5000
<PAGE>
Item 5 - Other Events.
The registrant's press release dated October 19, 1999, regarding its financial
results for the period ended September 30, 1999, including consolidated
statements of income and selected segment data for the three and nine months
ended September 30, 1999 and 1998 and consolidated balance sheets at September
30, 1999, June 30, 1999 and September 30, 1998, are attached.
Item 7 - Financial Statements and Exhibits.
c. Exhibits.
The following exhibits are furnished in accordance with the provisions of Item
601 of Regulation S-K:
Exhibit Description
------- -----------
(1) Pitney Bowes Inc. press release dated October 19, 1999.
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 hereunto duly authorized.
PITNEY BOWES INC.
October 22, 1999
/s/ M. L. Reichenstein
-----------------------------
M. L. Reichenstein
Vice President and Chief Financial Officer
(Principal Financial Officer)
/s/ A. F. Henock
-----------------------------
A. F. Henock
Vice President - Controller
and Chief Tax Counsel
(Principal Accounting Officer)
<PAGE>
(1)
Exhibit 1
PITNEY BOWES ANNOUNCES RECORD QUARTERLY RESULTS
"Quarter's Solid Performance Led by MAIL Segment's Exceptionally Strong Growth"
FOR IMMEDIATE RELEASE
- ---------------------
Stamford, Conn., October 19, 1999 -- Pitney Bowes Inc. (NYSE: PBI) today
announced another record quarter as third-quarter diluted earnings per share
from continuing operations grew 44 percent to 69 cents. Excluding the impact of
the previously announced one-time, after-tax net settlement of $29.5 million
received from the U.S. Postal Service, diluted earnings per share from
continuing operations rose 21 percent to 58 cents during the quarter. This marks
the 19th consecutive quarter of double-digit, year-on-year diluted earnings per
share growth from continuing operations. Consolidated revenue grew eight percent
to $1.1 billion. Income from continuing operations grew 40 percent to $186.1
million, or 18 percent to $156.6 million, excluding the impact of the U.S.
Postal Service settlement.
Pitney Bowes Chairman and Chief Executive Officer Michael J. Critelli
commented on the company's quarterly performance: "Once again the exceptionally
strong growth in our Mailing and Integrated Logistics (MAIL) segment led the
quarter's solid financial performance. The market demand for the MAIL segment's
comprehensive line of mailing, shipping and logistics software, systems and
professional services demonstrates Pitney Bowes' unequaled ability to provide
valuable end-to-end solutions for businesses of all sizes -- from the desktop to
the global enterprise. Additionally, our international operations enhanced the
quarter's performance as we continued to increase revenues and expand market
share in key overseas markets."
<PAGE>
(2)
In segment performance for the quarter, Mailing and Integrated
Logistics (MAIL) revenue grew 11 percent and operating profit rose 21 percent.
The segment includes revenues and related expenses from the rental, sale and
financing of mailing and shipping equipment, related supplies and services, and
software. Growth contributors included:
o Sophisticated, productivity-enhancing Automated Document Factory
Solutions, featuring customized, high-speed production mail equipment,
software and systems integration services
o Multi-functional mail finishing systems such as the Paragon(R) and the
GalaxyTM digital system, with their range of mail processing applications
for all types of mail such as the patented Weigh-on-the-WayTM (W-O-WTM)
feature
o Ongoing robustness in demand for advanced shipping and logistics
systems, as businesses of all types seek cost-efficient, multi-carrier
solutions for managing the fulfillment and logistics of orders from the
Internet and other channels
o The continued need for mail creation hardware, software, and hybrid
solutions as businesses use mail for one-to-one marketing to acquire and
retain customers.
Pitney Bowes' international operations continued to excel, driven by
regulatory changes such as the required Euro conversion in some markets, meter
migration and international Posts' need for operating improvements due to the
elimination of postal subsidies.
During the quarter, the company also launched PitneyWorksSM, its
web-based business suite focused solely on meeting the needs of today's small
business owners (www.pitneyworks.com). The portfolio of Internet-enabled
solutions is designed to work the way small businesses work and meet a wide
range of operational needs for running a small business such as: prospecting for
customers (Target ProspectsTM database), producing effective direct mail
(DirectNETTM online mailing service), managing cash flow and financing critical
needs (PitneyWorksSM Reserve Account, PitneyWorksSM Capital Line, PitneyWorksSM
Purchase PowerSM), shipping orders (ValueShipTM online multi-carrier rating and
routing software)...and putting a digital stamp on the envelope (ClickStampTM
Online and ClickStampTM Plus currently in Beta testing with the U.S. Postal
Service, and Personal PostTM digital postage meter with a built-in modem).
<PAGE>
(3)
The Office Solutions Segment includes Pitney Bowes Office Systems and
Pitney Bowes Management Services. Third-quarter performance in this segment
featured two-percent revenue growth and a two-percent increase in operating
profit. Excluding the impact of currency, operating profit growth would have
been six percent. The segment's operating profit was impacted by the longer
selling cycles of digital copier systems and the recent sharp and rapid rise in
the value of the yen.
During the quarter, Management Services revenues were flat as new
management continues to focus on programs to improve the profitability of
customer contracts while increasing service levels.
Office Systems, featuring Copier and Facsimile, grew revenues three
percent for the quarter. The copier business posted good sales growth even as
the business continued the transition to digital, networked solutions and the
focus on training to sell to national and major accounts. Ongoing price
pressures in the market and lower supplies revenues impacted Facsimile revenues.
The Capital Services Segment includes primarily asset- and fee-based
income generated by large ticket external assets. During the quarter, the
segment's revenue increased by one percent while its operating profit increased
four percent. This performance is consistent with the company's previously
announced strategy to shift to fee-based income by lowering the asset base and
focusing on fee-based income opportunities.
As announced last quarter, the results from Mortgage Servicing have
been excluded from continuing operations. Pitney Bowes decided to dispose of
Atlantic Mortgage & Investment Corporation (AMIC) after an extensive review of
various strategic options to determine how best to enhance shareholder value.
Mr. Critelli concluded, "Our focus remains on maximizing long-term
shareholder value, and our ongoing actions reflect our commitment to this
strategy. We will continue to invest in developing breakthrough products and
services, refining our operating efficiency and growing existing and emerging
markets around the world."
<PAGE>
(4)
As previously announced, the company is in the midst of an 11.6 million
share repurchase program. During the third quarter the company repurchased
approximately 1.7 million shares on the open market, bringing the total to 5.9
million shares repurchased during the first nine months of 1999.
Third quarter 1999 revenue included $529.6 million from sales, up eight
percent from $488.6 million in the third quarter of 1998; $420.8 million from
rentals and financing, up six percent from $396.3 million; and $139.4 million
from support services, up nine percent from $128.3 million.
Third quarter 1999 income from continuing operations was $186.1
million, including the $29.5 million after-tax net settlement from the U.S.
Postal Service, or 69 cents per diluted share, compared to $132.8 million, or 48
cents per diluted share from continuing operations, in 1998. There was no income
from discontinued operations during the quarter compared to $8.8 million of
income from discontinued operations, or three cents per diluted share in third
quarter 1998.
For the nine-month period ended September 30, 1999, revenue was $3.245
billion, up nine percent from $2.982 billion in 1998; and net income in 1999 was
$458.1 million, including the $29.5 million after-tax net settlement from the
U.S. Postal Service, or $1.68 per diluted share, compared to $413.3 million, or
$1.47 per diluted share in 1998. The year-to-date net income included a $24.0
million net after-tax charge, or nine cents per diluted share, for discontinued
operations, compared to $25.4 million of income, or nine cents per diluted
share, in 1998.
Pitney Bowes is a global provider of informed mail and messaging
management.
The forward-looking statements contained in this news release involve
risks and uncertainties, and are subject to change based on various important
factors including timely development and acceptance of new products, gaining
product approval, successful entry into new markets, changes in interest rates,
and changes in postal regulations, as more fully outlined in the company's 1998
Form 10-K Annual Report filed with the Securities and Exchange Commission.
# # #
Note: Consolidated statements of income for the three and nine months ended
September 30, 1999 and 1998 and consolidated balance sheets at September 30,
1999, June 30, 1999, and September 30, 1998, are attached.
<PAGE>
Pitney Bowes Inc.
Consolidated Statements of Income
(Unaudited)
-----------
<TABLE>
<CAPTION>
(Dollars in thousands, except per share data)
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------------- ---------------------------------------
1999 1998 1999 1998
--------------- --------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Revenue from:
Sales $ 529,550 $ 488,575 $ 1,586,302 $ 1,431,310
Rentals and financing 420,836 396,329 1,245,334 1,170,525
Support services 139,439 128,271 412,945 379,715
--------------- --------------- ---------------- ----------------
Total revenue 1,089,825 1,013,175 3,244,581 2,981,550
--------------- --------------- ---------------- ----------------
Costs and expenses:
Cost of sales 300,490 282,503 903,560 847,486
Cost of rentals and financing 118,049 102,767 346,425 309,743
Selling, service and administrative 375,462 362,921 1,109,622 1,046,819
Research and development 25,105 24,699 78,707 73,395
Other income (49,574) - (49,574) -
Interest,net 41,256 39,261 133,694 115,209
--------------- --------------- ---------------- ----------------
Total costs and expenses 810,788 812,151 2,522,434 2,392,652
--------------- --------------- ---------------- ----------------
Income from continuing operations
before income taxes 279,037 201,024 722,147 588,898
Provision for income taxes 92,960 68,201 240,091 200,971
--------------- --------------- ---------------- ----------------
Income from continuing operations 186,077 132,823 482,056 387,927
Discontinued operations - 8,763 (23,967) 25,363
--------------- --------------- ---------------- ----------------
Net income $ 186,077 $ 141,586 $ 458,089 $ 413,290
=============== =============== ================ ================
Basic earnings per share
Continuing operations $ 0.70 $ 0.49 $ 1.80 $ 1.41
Discontinued operations - 0.03 (0.09) 0.09
--------------- --------------- ---------------- ----------------
$ 0.70 $ 0.52 $ 1.71 $ 1.50
=============== =============== ================ ================
Diluted earnings per share
Continuing operations $ 0.69 $ 0.48 $ 1.77 $ 1.38
Discontinued operations - 0.03 (0.09) 0.09
--------------- --------------- ---------------- ----------------
$ 0.69 $ 0.51 $ 1.68 $ 1.47
=============== =============== ================ ================
Average common and potential common
shares outstanding 271,196,789 278,712,757 273,124,305 280,667,340
=============== =============== ================ ================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Pitney Bowes Inc.
Consolidated Balance Sheets
(Unaudited)
------------------------------------
(Dollars in thousands, except per share data) (*)
Assets 9/30/99 6/30/99 9/30/98
- ------ ------- ------- -------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 152,057 $ 132,693 $ 144,974
Short-term investments, at cost which
approximates market 873 949 1,930
Accounts receivable, less allowances:
9/99 $25,493 6/99 $24,983 9/98 $22,513 404,720 416,302 346,485
Finance receivables, less allowances:
9/99 $43,147 6/99 $48,642 9/98 $61,274 1,560,641 1,498,531 1,687,540
Inventories 242,678 259,858 235,568
Other current assets and prepayments 131,433 83,173 301,409
Net assets of discontinued operations 137,869 156,507 -
----------- ----------- -----------
Total current assets 2,630,271 2,548,013 2,717,906
----------- ----------- -----------
Property, plant and equipment, net 473,558 467,013 486,842
Rental equipment and related inventories, net 825,946 842,176 804,190
Property leased under capital leases, net 3,097 3,269 3,909
Long-term finance receivables, less allowances:
9/99 $57,197 6/99 $76,291 9/98 $73,840 1,925,891 1,954,990 2,397,466
Investment in leveraged leases 979,910 962,531 817,144
Goodwill, net of amortization:
9/99 $53,057 6/99 $51,425 9/98 $45,902 227,507 227,874 213,778
Other assets 495,998 454,198 813,110
Net assets of discontinued operations 319,248 313,063 -
----------- ----------- -----------
Total assets $ 7,881,426 $ 7,773,127 $ 8,254,345
=========== =========== ===========
Liabilities and stockholders' equity
- ------------------------------------
Current liabilities:
Accounts payable and accrued liabilities $ 825,622 $ 776,665 $ 864,511
Income taxes payable 230,347 186,279 165,414
Notes payable and current portion of
long-term obligations 1,315,316 1,273,197 1,844,077
Advance billings 374,512 391,103 362,801
----------- ----------- -----------
Total current liabilities 2,745,797 2,627,244 3,236,803
----------- ----------- -----------
Deferred taxes on income 1,061,686 1,029,923 929,199
Long-term debt 1,847,808 1,898,942 1,710,533
Other noncurrent liabilities 348,292 352,911 366,799
----------- ----------- -----------
Total liabilities 6,003,583 5,909,020 6,243,334
----------- ----------- -----------
Preferred stockholders' equity in a
subsidiary company 310,000 310,000 300,000
Stockholders' equity:
Cumulative preferred stock, $50 par value,
4% convertible 29 29 34
Cumulative preference stock, no par value,
$2.12 convertible 1,901 1,945 2,076
Common stock, $1 par value 323,338 323,338 323,338
Capital in excess of par value 10,330 11,927 18,198
Retained earnings 3,326,639 3,208,052 2,971,883
Accumulated other comprehensive income (93,456) (85,851) (90,548)
Treasury stock, at cost (2,000,938) (1,905,333) (1,513,970)
----------- ----------- -----------
Total stockholders' equity 1,567,843 1,554,107 1,711,011
----------- ----------- -----------
Total liabilities and stockholders' equity $ 7,881,426 $ 7,773,127 $ 8,254,345
=========== =========== ===========
<FN>
(*) Certain prior year amounts have been reclassified to conform with the
current year presentation.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Pitney Bowes Inc.
Revenue and Operating Profit
By Business Segment
September 30, 1999
(Unaudited)
(Dollars in thousands)
%
1999 1998 Change
--------------- --------------- -------------
<S> <C> <C> <C>
Third Quarter
- -------------
Revenue
-------
Mailing and Integrated Logistics $ 736,945 $ 666,141 11%
Office Solutions 312,063 306,716 2%
Capital Services 40,817 40,318 1%
--------------- --------------- -------------
Total Revenue $1,089,825 $1,013,175 8%
=============== =============== =============
Operating Profit (1)
--------------------
Mailing and Integrated Logistics $ 198,213 $ 163,702 21%
Office Solutions 60,526 59,461 2%
Capital Services 11,908 11,482 4%
--------------- --------------- -------------
Total Operating Profit $ 270,647 $ 234,645 15%
=============== =============== =============
<FN>
(1) Operating profit excludes general corporate expenses, income taxes and net
interest other than that related to finance operations.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Pitney Bowes Inc.
Revenue and Operating Profit
By Business Segment
September 30, 1999
(Unaudited)
(Dollars in thousands)
%
1999 1998 Change
--------------- --------------- -------------
<S> <C> <C> <C>
Year to Date
- ------------
Revenue
-------
Mailing and Integrated Logistics $2,182,526 $1,960,662 11%
Office Solutions 943,396 901,580 5%
Capital Services 118,659 119,308 (1%)
--------------- --------------- -------------
Total Revenue $3,244,581 $2,981,550 9%
=============== =============== =============
Operating Profit (1)
--------------------
Mailing and Integrated Logistics $ 573,252 $ 472,332 21%
Office Solutions 179,727 169,530 6%
Capital Services 32,874 32,029 3%
--------------- --------------- -------------
Total Operating Profit $ 785,853 $ 673,891 17%
=============== =============== =============
<FN>
(1) Operating profit excludes general corporate expenses, income taxes and net
interest other than that related to finance operations.
</FN>
</TABLE>
