UNITED STATES
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 March 31, 1997
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 March
31, 1997 is 145,753,938.
Pitney Bowes Inc. - Form 10-Q
Three Months Ended March 31, 1997
Page 2
Pitney Bowes Inc.
Index
Page Number
Part I - Financial Information:
Consolidated Statement of Income - Three Months
Ended March 31, 1997 and 1996 3
Consolidated Balance Sheet - March 31, 1997
and December 31, 1996 4
Consolidated Statement of Cash Flows -
Three Months Ended March 31, 1997 and 1996 5
Notes to Consolidated Financial Statements 6 - 7
Management's Discussion and Analysis of
Financial Condition and Results of Operations 8 - 14
Part II - Other Information:
Item 1: Legal Proceedings 15
Item 6: Exhibits and Reports on Form 8-K 15
Signatures 16
Pitney Bowes Inc. - Form 10-Q
Three Months Ended March 31, 1997
Page 3
Part I - Financial Information
Pitney Bowes Inc.
Consolidated Statement of Income
(Unaudited)
(Dollars in thousands, except per share data)
Three Months Ended March 31,
1997 1996
Revenue from:
Sales $ 417,822 $ 384,004
Rentals and financing 424,562 409,078
Support services 118,986 113,183
Total revenue 961,370 906,265
Costs and expenses:
Cost of sales 253,808 238,764
Cost of rentals and financing 127,674 125,752
Selling, service and administrative 326,109 311,016
Research and development 20,648 18,710
Interest, net 49,496 48,584
Total costs and expenses 777,735 742,826
Income before income taxes 183,635 163,439
Provision for income taxes 63,690 56,930
Net income $ 119,945 $ 106,509
Income per common and common equivalent share:
Net income $ .81 $ .70
Average common and common equivalents shares
outstanding 148,975,517 151,416,081
Dividends declared per share of
common stock $ .40 $ .345
Ratio of earnings to fixed charges 3.83 3.56
Ratio of earnings to fixed
charges excluding minority interest 3.92 3.65
Pitney Bowes Inc. - Form 10-Q
Three Months Ended March 31, 1997
Page 4
Pitney Bowes Inc.
Consolidated Balance Sheet
(Unaudited)
(Dollars in thousands) March 31, December 31,
1997 1996
Assets
Current assets:
Cash and cash equivalents $ 142,718 $ 135,271
Short-term investments, at cost which
approximates market 12,336 1,500
Accounts receivable, less allowances:
3/97, $15,952; 12/96, $16,160 326,709 340,730
Finance receivables, less allowances:
3/97, $42,597; 12/96, $40,176 1,402,870 1,339,286
Inventories (Note 2) 263,947 281,942
Other current assets and prepayments 135,244 123,337
Total current assets 2,283,824 2,222,066
Property, plant and equipment, net (Note 3) 482,703 486,029
Rental equipment and related
inventories, net (Note 3) 809,752 815,306
Property leased under capital
leases, net (Note 3) 5,037 5,848
Long-term finance receivables, less
allowances:
3/97, $73,910; 12/96, $73,561 3,396,834 3,450,231
Investment in leveraged leases 640,113 633,682
Goodwill, net of amortization:
3/97, $36,001; 12/96, $34,372 204,188 205,802
Other assets 362,343 336,758
Total assets $8,184,794 $8,155,722
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and
accrued liabilities $ 850,954 $ 849,789
Income taxes payable 182,599 212,155
Notes payable and current portion of
long-term obligations 1,986,193 1,911,481
Advance billings 343,369 331,864
Total current liabilities 3,363,115 3,305,289
Deferred taxes on income 800,653 720,840
Long-term debt 1,299,155 1,300,434
Other noncurrent liabilities 385,358 389,113
Total liabilities 5,848,281 5,716,676
Preferred stockholders' equity in a
subsidiary company 200,000 200,000
Stockholders' equity:
Cumulative preferred stock, $50 par
value, 4% convertible 46 46
Cumulative preference stock, no par
value, $2.12 convertible 2,329 2,369
Common stock, $2 par value 323,338 323,338
Capital in excess of par value 29,504 30,260
Retained earnings 2,511,055 2,450,294
Cumulative translation adjustments (54,088) (31,297)
Treasury stock, at cost (675,671) (535,964)
Total stockholders' equity 2,136,513 2,239,046
Total liabilities and stockholders' equity $ 8,184,794 $ 8,155,722
Pitney Bowes Inc. - Form 10-Q
Three Months Ended March 31, 1997
Page 5
Pitney Bowes Inc.
Consolidated Statement of Cash Flows
(Unaudited)
(Dollars in thousands) Three Months Ended March 31,
1997 1996
Cash flows from operating activities:
Net income $ 119,945 $ 106,509
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 73,905 65,524
Net change in the strategic focus
initiative - (6,421)
Increase(decrease) in deferred taxes
on income 80,599 (3,316)
Change in assets and liabilities:
Accounts receivable 12,222 5,908
Sales-type lease receivables (23,640) (3,575)
Inventories 15,447 7,151
Other current assets and
prepayments (12,243) (29,588)
Accounts payable and accrued
liabilities 3,844 (42,374)
Income taxes payable (29,099) 31,885
Advance billings 12,549 11,518
Other, net (53,913) (28,902)
Net cash provided by operating
activities 199,616 114,319
Cash flows from investing activities:
Short-term investments (3,516) 1,041
Net investment in fixed assets (60,251) (69,763)
Net investment in direct-finance lease
receivables 5,400 52,931
Investment in leveraged leases (8,219) (14,021)
Net cash used in investing
activities (66,586) (29,812)
Cash flows from financing activities:
Increase(decrease) in notes payable 280,101 (9,268)
Principal payments on long-term
obligations (204,507) (1,809)
Proceeds from issuance of stock 5,004 6,298
Stock repurchases (145,507) (24,500)
Dividends paid (59,184) (51,855)
Net cash used in financing
activities (124,093) (81,134)
Effect of exchange rate changes on cash (1,490) (214)
Increase in cash and cash
equivalents 7,447 3,159
Cash and cash equivalents at beginning
of period 135,271 85,352
Cash and cash equivalents at end of
period $ 142,718 $ 88,511
Interest paid $ 49,766 $ 53,894
Income taxes paid $ 15,609 $ 26,477
Pitney Bowes Inc. - Form 10-Q
Three Months Ended March 31, 1997
Page 6
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 of 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 March 31, 1997 and the results of its operations and cash flows
for the three months ended March 31, 1997 and 1996 have been
included. Operating results for the three months ended March 31,
1997 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1997. 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, 1996.
Note 2:
Inventories are comprised of the following:
(Dollars in thousands) March 31, December 31,
1997 1996
Raw materials and work in process $ 54,674 $ 58,536
Supplies and service parts 94,683 103,182
Finished products 114,590 120,224
Total $ 263,947 $ 281,942
Note 3:
Fixed assets are comprised of the following:
(Dollars in thousands) March 31, December 31,
1997 1996
Property, plant and equipment $1,102,196 $1,093,501
Accumulated depreciation (619,493) (607,472)
Property, plant and equipment, net $ 482,703 $ 486,029
Rental equipment and related
inventories $1,649,075 $1,634,111
Accumulated depreciation (839,323) (818,805)
Rental equipment and related
inventories, net $ 809,752 $ 815,306
Property leased under capital
leases $ 21,435 $ 24,124
Accumulated amortization (16,398) (18,276)
Property leased under capital
leases, net $ 5,037 $ 5,848
Pitney Bowes Inc. - Form 10-Q
Three Months Ended March 31, 1997
Page 7
Note 4:
Revenue and operating profit by business segment for the three months
ended March 31, 1997 and 1996 were as follows:
(Dollars in thousands) 1997 1996
Revenue
Business Equipment $ 745,120 $ 700,937
Business Services 128,990 111,890
Commercial and Industrial Financing
Large-Ticket External 49,551 54,423
Small-Ticket External 37,709 39,015
Total 87,260 93,438
Total Revenue $ 961,370 $ 906,265
Operating Profit (1)
Business Equipment $ 169,411 $ 150,686
Business Services 10,488 8,839
Commercial and Industrial Financing 16,511 18,327
Total Operating Profit $ 196,410 $ 177,852
[FN]
(1) Operating profit excludes general corporate expenses, income
taxes, and net interest other than that related to finance
operations.
Note 5:
In June 1996, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 125 "Accounting for
Transactions and Servicing of Financial Assets and Extinguishments of
Liabilities" (FAS 125) for transfers and servicing of financial assets
and extinguishments of liabilities occurring after December 31, 1996.
In December 1996, the FASB issued Statement of Accounting Standards
No. 127, "Deferral of the Effective Date of Certain Provisions of FASB
Statement No. 125". The company adopted FAS 125 on January 1, 1997.
As of March 31, 1997 there was no material impact on the financial
statements of the company due to the adoption of this statement.
Pitney Bowes Inc. - Form 10-Q
Three Months Ended March 31, 1997
Page 8
Pitney Bowes Inc.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Continuing Operations - first quarter of 1997 vs. first
quarter of 1996
Revenue increased six percent in the first quarter of 1997 to $961.4
million compared to $906.3 million in the first quarter of 1996. Net
income increased 13 percent to $119.9 million from $106.5 million in
the same period in 1996. Per share earnings grew to 81 cents, a 14.5
percent increase from first quarter 1996. Revenue growth was eight
percent excluding revenue from large ticket external financing and
prior-year revenue from businesses in Australia, from which the
company made the strategic decision to exit in 1996.
First quarter 1997 revenue included $417.8 million from sales, up nine
percent from $384.0 million in the first quarter of 1996; $424.6
million from rentals and financing, up four percent from $409.1
million; and $119.0 million for support services, up five percent from
$113.2 million.
To facilitate a better understanding, the following discussion on
revenue and operating profit is based on the company's business
segments. Revenue for each segment includes all sources - sales,
rentals and financing, and support services.
In the Business Equipment Segment, which includes mailing, facsimile
and copier operations, revenue grew six percent and operating profit
increased 12 percent during the first quarter. Mailing Systems' six
percent revenue increase during the quarter was driven by strong
equipment sales in the U.S. Mailing and Production Mail markets. The
company continues to see strong market acceptance of products such as
the Personal Post Office meter. The company also continues to see
excellent growth in Europe in Paragon(r) mail processor and PostPerfect(r)
digital meter placements. Growth in revenue for the quarter has been
partially offset by last year's strategic decision to exit non-
profitable businesses in Australia.
Revenue from Facsimile Systems grew 10 percent in first quarter 1997
driven by customer acceptance of its advanced money-saving systems,
such as the Model 9830, and increased revenue from consumable
supplies.
Pitney Bowes Inc. - Form 10-Q
Three Months Ended March 31, 1997
Page 9
Copier Systems revenue increased seven percent in the first quarter
driven by solid equipment sales. This sales increase was notable
because it was generated while six new products were introduced and
the phased rollout of the color and digital copier systems continued.
Copier Systems also strengthened its ability to profitably grow by
strategically broadening its distribution network in selected
geographic areas.
In the Business Services Segment first-quarter revenue grew 15 percent
and operating profit grew 19 percent. The segment includes Pitney
Bowes Management Services and Atlantic Mortgage and Investment
Corporation. These service businesses have maintained profitable
double-digit growth by bringing Pitney Bowes innovation and expertise
to key market segments.
In line with management's previously announced strategy to concentrate
on fee-based rather than asset-based income, the Commercial and
Industrial Financing Segment had a decline in revenue and operating
profit of seven percent and 10 percent, respectively. The segment
includes large-ticket and small-ticket external financing. The large-
ticket external financing revenue declined nine percent and the small-
ticket revenue declined three percent in the first quarter. The
segment continued to benefit from growth in service-based revenue
sources such as syndication fees. The overall reduction in revenue
and operating profit was driven by previous asset sales resulting in
the planned decrease in runoff income from both portfolios.
The ratio of cost of sales to sales revenue decreased from 62.2
percent in first quarter 1996 to 60.7 percent in 1997. The
improvement was due to the product mix at U.S. Mailing towards higher-
margin products and exiting from non-profitable businesses in
Australia. The improvement was offset, in part, by the continued
growth of the facilities management business which includes most of
its expenses in cost of sales.
The ratio of cost of rentals and financing to rentals and financing
revenue improved to 30.1 percent from 30.7 percent. Margin gains in
the company's mortgage servicing business and in U.S. Mailing
contributed to this improvement.
Selling, service and administrative expenses as a percentage of
revenue improved to 33.9 percent in 1997 from 34.3 percent in the same
period in 1996, continuing the improving trend in this ratio. Exiting
from non-profitable businesses in Australia and efforts to control
operating expenditures contributed to this improvement.
Research and development expenses increased 10 percent to $20.6
million. The current year increase reflects the company's increased
investment in developing new digital meters and other mailing and
software products.
Pitney Bowes Inc. - Form 10-Q
Three Months Ended March 31, 1997
Page 10
Net interest expense increased just under two percent to $49.5 million
principally as a result of a change in mix of debt maturities and
related interest rates.
The effective tax rate in 1997 was 34.7 percent versus 34.8 percent in
1996.
Liquidity and Capital Resources
The current ratio remained essentially unchanged at March 31, 1997 and
December 31, 1996 at .68 to 1 and .67 to 1, respectively. Working
capital at March 31, 1997 and December 31, 1996 remained at comparable
levels.
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 March 31,
1997. The company also has an additional $300 million remaining on
its non-financial services shelf registrations filed with the
Securities and Exchange Commission (SEC). Amounts available under
credit agreements, shelf registrations and commercial paper and medium-
term note programs, in addition to cash generated internally are
expected to be sufficient to provide for financing needs in the next
several years.
Pitney Bowes Credit Corporation (PBCC) has $250 million of unissued
debt securities available from a shelf registration statement filed
with the SEC 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
PBCC's financing needs for the next year. PBCC also had unused lines
of credit and revolving credit facilities totaling $1.5 billion at
March 31, 1997, largely supporting its commercial paper borrowings.
The ratio of total debt to total debt and stockholders' equity
including the preferred stockholders' equity in a subsidiary company
in total debt was 62.1% at March 31, 1997 compared to 60.5% at
December 31, 1996. Book value per common share was $14.64 at March
31, 1997 and $15.11 at year-end 1996 principally as a result of the
repurchase of common shares. During the quarter ended March 31, 1997,
the company repurchased 2,372,000 common shares for approximately
$145.5 million. During the period April 28, 1997 to May 8, 1997 the
company repurchased an additional 211,100 shares for approximately
$13.6 million.
In April 1997, Pitney Bowes International Holding, Inc., a subsidiary
of the company, issued an additional $100 million of variable term
voting preferred stock to outside institutional investors in a private
placement transaction. The preferred stock, $.01 par value, is
entitled to cumulative dividends at rates set at auction, generally
Pitney Bowes Inc. - Form 10-Q
Three Months Ended March 31, 1997
Page 11
for 49 day intervals. The proceeds of the issuance were used to pay
down short-term borrowings.
The company enters into interest rate swap agreements principally
through its financial services businesses. 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, 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 quarter of 1997, net investments in fixed assets included
$18.9 million in net additions to property, plant and equipment and
$36.8 million in net additions to rental equipment and related
inventories compared with $21.7 million and $47.9 million,
respectively, in the same period in 1996. In the case of rental
equipment, the additions included the production of postage meters and
the purchase of facsimile and copier equipment for both new placements
and upgrade programs.
As of March 31, 1997, 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.
Regulatory Matters
In June 1995, the United States Postal Service (U.S.P.S.) issued final
regulations on the manufacture, distribution and use of postage
meters. The regulations cover four general categories: meter
security, administrative controls, Computerized Meter Resetting
Systems (C.M.R.S.) and other issues.
In general, the regulations put reporting and performance obligations
on meter manufacturers, outline potential administrative sanctions for
failure to meet these obligations and require changes in the fund
management system of C.M.R.S. (such as the company's Postage by Phone (r)
System) to give the U.S.P.S. more direct control over meter licensee
deposits.
The company is working with the U.S.P.S. to ensure that these
regulations provide mailing customers and the U.S.P.S. with the
intended benefits, and that the company also benefits. The company
continues to implement these changes, including modifying our Postage
by Phone (r) system so that customers deposit prepayments of postage
Pitney Bowes Inc. - Form 10-Q
Three Months Ended March 31, 1997
Page 12
into a U.S.P.S. account rather than a trust account. Resetting meters
through Postage by Phone (r) still requires the customer to request an
authorization and a reset code from the company, a service for which
it charges a fee. The company continues to believe that the financial
impact implementing these regulations will not be material to the
company.
In May 1996, the U.S.P.S. issued a proposed schedule for the phase out
of mechanical meters in the United States marketplace. The schedule
proposed that:
- - as of June 1, 1996, placements of mechanical meters will be
available only as replacements for existing licensed mechanical meters
- - as of March 1, 1997, mechanical meters may not be used by persons
or firms who process mail for a fee (subsequently revised to March 31,
1997).
- - as of December 31, 1997, mechanical meters that interface with
mail machines or processors will no longer be approved
- - as of March 1, 1999, all other mechanical meters (stand-alone
meters) will no longer be approved.
The company has voluntarily halted new placements of mechanical meters
in the United States as of June 1, 1996. The company also has been
actively and voluntarily pursuing removal from the market by March
1997, of mechanical meters used by persons or firms who process mail
for a fee as set forth in the U.S.P.S. proposed schedule for that
segment of meter users. Further, the company agreed, in March 1997,
to use its best efforts to remove from the market mechanical systems
meters (meters that interface with mail machines or processors), by a
revised target date of December 31, 1998, in lieu of the December 31,
1997 date specified in the U.S.P.S. proposed schedule.
The company continues to work with the U.S.P.S. to reach agreement on
all aspects of a mechanical meter migration schedule that reflects the
interests of its customers while minimizing any negative impact on the
company. The company's constant focus on bringing new technologies
into the mailing market has already resulted in a significant shift in
the makeup of the company's meter base. As of March 31, 1997
electronic and digital meters represent 63% of the company's US
installed base, up from 60 percent in December 1996. Until a
mechanical meter migration plan is finalized, the financial impact, if
any, on the company cannot be determined with certainty. However,
based on the proposed schedule and agreements reached to date the
company believes that the plan will not cause a material adverse
financial impact on the company.
The May 1996 U.S.P.S. proposed document also discusses a change in
metering technology that would include use of a digital, information-
based indicia standard. This standard has not yet been developed,
although initial specifications were proposed by the U.S.P.S. in July
Pitney Bowes Inc. - Form 10-Q
Three Months Ended March 31, 1997
Page 13
1996. At some undetermined date in the future, the U.S.P.S. believes
that digital metering will eventually replace electronic metering in
the United States. The company supports a digital product migration
strategy, and the company anticipates working with the U.S.P.S. to
achieve a timely and effective substitution plan. However, until the
U.S.P.S. finalizes standards for a digital information-based indicia
program (and clarifies transition to the new standard), the impact of
this proposal, if any, on the company cannot be determined. The
company has taken the lead in deploying digital meters in the
marketplace.
Forward-looking Statements
The company cautions readers that any forward-looking statements
(those which talk about the company's or management's current
expectations as to the future) in this Form 10-Q or made by company
management involve risks and uncertainties which may change based on
various important factors. Some of the factors which could cause
future financial performance to differ materially from the
expectations as expressed in any forward-looking statement made by or
on behalf of the company include:
- - changes in postal regulations
- - timely development and acceptance of new products
- - success in gaining product approval in new markets where
regulatory approval is required
- - successful entry into new markets
- - mailer's utilization of alternative means of communication or
competitor's products
- - the company's success at managing customer credit risk
Pitney Bowes Inc. - Form 10-Q
Three Months Ended March 31, 1997
Page 14
Part II - Other Information
Item 1: Legal Proceedings
In the course of normal business, the company is occasionally party to
lawsuits. These may involve litigation by or against the company
relating to, among other things:
- - contractual rights under vendor, insurance or other contracts
- - intellectual property or patent rights
- - equipment, service or payment disputes with customers
- - disputes with employees
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) Exhibits (numbered in accordance with Item 601 of
Regulation S-K)
Reg. S-K Status or Incorporation
Exhibits Description by Reference
(10) Pitney Bowes Inc. Deferred
Incentive Savings Plan for
the Board of Directors See Exhibit (i)
(11) Computation of earnings See Exhibit (ii)
per share.
(12) Computation of ratio of See Exhibit (iii)
earnings to fixed charges.
(27) Financial Data Schedule See Exhibit (iv)
(b) Reports on Form 8-K
No reports on Form 8-K wre filed for the three months ended March
31, 1997.
Pitney Bowes Inc. - Form 10-Q
Three Months Ended March 31, 1997
Page 15
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.
May 15, 1997
/s/ M. L. Reichenstein
M. L. Reichenstein
Vice President - Chief Financial Officer
(Principal Financial Officer)
/s/ A. F. Henock
A. F. Henock
Vice President - Controller
and Chief Tax Counsel
(Principal Accounting Officer)
Pitney Bowes Inc. - Form 10-Q
Three Months Ended March 31, 1997
Exhibit (ii)
Pitney Bowes Inc.
Computation of Earnings per Share
Three Months Ended March 31,
(Dollars in thousands, except per share data) 1997 1996
Primary
Net income applicable to common stock(1) $ 119,945 $ 106,509
Weighted average number of common shares 147,315,165 149,876,325
Preference stock, $2.12 cumulative convertible 694,392 746,408
Stock option and purchase plans 965,960 793,348
Total common and common shares equivalent
outstanding 148,975,517 151,416,081
Income per common and common equivalent share
- primary:
Net income $ .81 $ .70
Fully Diluted
Net income applicable to common stock $ 119,945 $ 106,509
Weighted average number of common shares
outstanding 147,315,165 149,876,325
Preference stock, $2.12 cumulative convertible 694,392 746,408
convertible
Stock option and purchase plans 999,253 799,305
Preferred stock, 4% cumulative convertible 11,187 11,490
Total common and common shares equivalent
outstanding 149,019,997 151,433,528
Income per common and common share equivalent
- fully diluted:
Net income $ .80 $ .70
[FN]
(1) Net income applicable to common stock was adjusted for preferred
dividends.
Pitney Bowes Inc. - Form 10-Q
Three Months Ended March 31, 1997
Exhibit (iii)
Pitney Bowes Inc.
Computation of Ratio of Earnings to Fixed Charges (1)
(Dollars in thousands)
Three Months Ended March 31,
1997 1996
Income from continuing operations
before income taxes $ 183,635 $ 163,439
Add:
Interest expense 51,905 49,912
Portion of rents
representative of the
interest factor 11,129 11,061
Amortization of capitalized
interest 243 228
Minority interest
in the income of
subsidiary with
fixed charges 1,966 2,119
Income as adjusted $ 248,878 $ 226,759
Fixed charges:
Interest expense $ 51,905 $ 49,912
Capitalized interest - 602
Portion of rents
representative of the
interest factor 11,129 11,061
Minority interest
in the income of
subsidiary with
fixed charges 1,966 2,119
$ 65,000 $ 63,694
Ratio of earnings to fixed
charges 3.83 3.56
Ratio of earings to fixed
charges excluding minority
interest 3.92 3.65
(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.
5
1,000
3-MOS
DEC-31-1997
MAR-31-1997
142,718
12,336
342,661
15,952
263,947
2,283,824
1,102,196
619,493
8,184,794
3,363,115
1,299,155
323,338
200,000
2,375
1,810,800
8,184,794
417,822
961,370
253,808
381,482
346,757
0
49,496
183,635
63,690
119,945
0
0
0
119,945
.81
.80
Exhibit (i)
PITNEY BOWES INC.
DEFERRED INCENTIVE SAVINGS PLAN
FOR THE BOARD OF DIRECTORS
Effective as of April 1, 1997
PITNEY BOWES INC.
DEFERRED INCENTIVE SAVINGS PLAN
FOR THE BOARD OF DIRECTORS
ARTICLE 1
Purpose and Effective Date
The purpose of the Pitney Bowes Inc. Deferred
Incentive Savings Plan for the Board of Directors
(hereinafter referred to as the "Plan") is to aid
Pitney Bowes Inc. in retaining and attracting capable
outside directors by providing them with savings and
tax deferral opportunities. The Plan shall be effective
for deferral elections made hereunder on or after
April 1, 1997.
ARTICLE 2
Definitions
For the purposes of this Plan, the following words
and phrases shall have the meanings indicated, unless
the context clearly indicates otherwise:
Section 2.01. Beneficiary. "Beneficiary" means
the person, persons or entity designated by the
Participant to receive any benefits payable under the
Plan pursuant to Article VIII.
Section 2.02. Board. "Board" means the Board of
Directors of Pitney Bowes Inc.
Section 2.03. Change of Control. For purposes of
this Plan, a "Change of Control" shall be deemed to
have occurred if:
(i) there is an acquisition, in any one
transaction or a series of transactions, other than
from Pitney Bowes Inc., by any individual, entity or
group (within the meaning of Section 1 3(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), of beneficial ownership
(within the meaning of Rule 13(d)(3) promulgated under
the Exchange Act) of 20% or more of either the then
outstanding shares of Common Stock or the combined
voting power of the then outstanding voting securities
of Pitney Bowes Inc. entitled to vote generally in the
election of directors, but excluding, for this purpose,
any such acquisition by Pitney Bowes Inc. or any of its
subsidiaries, or any employee benefit plan (or related
trust) of Pitney Bowes Inc. or its subsidiaries, or any
corporation with respect to which, following such
acquisition,
more than 50% of the then outstanding
shares of common stock of such corporation and the
combined voting power of the then outstanding voting
securities of such corporation entitled to vote
generally in the election of directors is then
beneficially owned, directly or indirectly, by the
individuals and entities who were the beneficial
owners, respectively, of the common stock and voting
securities of Pitney Bowes Inc. immediately prior to
such acquisition in substantially the same proportion
as their ownership, immediately prior to such
acquisition, of the then outstanding shares of Common
Stock or the combined voting power of the then
outstanding voting securities of Pitney Bowes Inc.
entitled to vote generally in the election of
directors, as the case may be; or
(ii) individuals who, as of January 1, 1997,
constitute the Board (as of such date, the
"Incumbent Board") cease for any reason to
constitute at least a majority of the Board,
provided that any individual becoming a director
subsequent to such date, whose election, or
nomination for election by Pitney Bowes'
shareholders, was approved by a vote of at least a
majority of the directors then comprising the
Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board,
but excluding, for this purpose, any such
individual whose initial assumption of office is
in connection with an actual or threatened
election contest relating to the election of the
directors of Pitney Bowes Inc. (as such terms are
used in Rule 14(a)(11) or Regulation 14A
promulgated under the Exchange Act); or
(iii) there occurs either (A) the consummation
of a reorganization, merger or consolidation, in each
case, with respect to which the individuals and
entities who were the respective beneficial owners of
the common stock and voting securities of Pitney Bowes
Inc. immediately prior to such reorganization, merger
or consolidation do not, following such reorganization,
merger or consolidation, beneficially own, directly or
indirectly, more than 50% of, respectively, the then
outstanding shares of common stock and the combined
voting power of the then outstanding voting securities
entitled to vote generally in the election of
directors, as the case may be, of the corporation
resulting from such reorganization, merger or
consolidation, or (B) an approval by the shareholders
of Pitney Bowes Inc. of a complete liquidation of
dissolution of Pitney Bowes Inc. or of the sale or
other disposition of all or substantially all of the
assets of Pitney Bowes Inc. Section 2.04. Committee.
"Committee" means the Nominating and Organization
Affairs Committee of the Board of Directors. Any
action authorized hereunder to be taken by the
Committee is also authorized to be taken by the Board.
Section 2.05. Common Stock. "Common Stock" means
the common stock of Pitney Bowes Inc.
Section 2.06. Company. "Company" means Pitney
Bowes Inc., its successors, and any organization into
which or with which Pitney Bowes Inc. may merge or
consolidate or to which all or substantially all of its
assets may be transferred.
Section 2.07. Deferral Account. "Deferral
Account" means the account maintained on the books of
the Committee for each Participant pursuant to Article
6.
Section 2.08. Deferral Period. "Deferral Period"
is defined in Section 4.02.
Section 2.09. Deferred Amount. "Deferred Amount"
is defined in Section 4.02.
Section 2.10. Eligible Compensation. "Eligible
Compensation" means any cash compensation payable by
the Company to a Participant for service on the Board
or any Committee thereof.
Section 2.11. Fair Market Value. "Fair Market
Value" of a share of Common Stock means the closing
price of the Common Stock on the New York Stock
Exchange on the most recent day on which the Common
Stock was so traded that precedes the date as of which
Fair Market Value is to be determined.
Section 2.12. Option. "Option" means an option
to acquire shares of Common Stock granted pursuant to
the Directors' Stock Plan or any successor thereto.
Section 2.13. Participant. "Participant" means
any director who is eligible to participate in this
Plan and who elects to participate by filing a
Participation Agreement as provided in Article 4.
Section 2.14. Participation Agreement.
"Participation Agreement" means an agreement filed by a
Participant in accordance with Article 4.
Section 2.15. Plan Year. "Plan Year" means a
twelve-month period beginning January 1 and ending the
following December 31; provided, however that the first
Plan Year shall consist of the period from April 1,
1997 through December 31, 1997.
Section 2.16. Termination of Service.
"Termination of Service" means the cessation of a
Participant's services as a director of the Company.
Section 2.17. Treasury Rate of Return. "Treasury
Rate of Return" means a rate of return equal to (i) the
annualized rate payable on United States Treasury Notes
with a five-year maturity, plus (ii) 100 basis points.
Such Treasury Rate of Return shall be determined for
each month of the Deferral Period based on the monthly
5 year Treasury rates appearing in the Wall Street
Journal, plus 100 basis points and such earnings shall
be compounded monthly.
Section 2.18. Valuation Date. Valuation Date"
means the last day of each calendar month or such other
date as the Committee in its sole discretion may
determine.
ARTICLE 3
Administration
Section 3.01. Committee. (a) This Plan shall be
administered by the Committee. A majority of the
members of the Committee shall constitute a quorum for
the transaction of business. All resolutions or other
action taken by the Committee shall be by a vote of a
majority of its members present at any meeting or,
without a meeting, by an instrument in writing signed
by all its members. Members of the Committee may
participate in a meeting of such committee by means of
a conference telephone or similar communications
equipment that enables all persons participating in the
meeting to hear each other, and such participation in a
meeting shall constitute presence in person at the
meeting.
The Committee shall be responsible for the
administration of this Plan and shall have all powers
necessary to administer this Plan, including
discretionary authority to determine eligibility for
benefits and to decide claims under the terms of this
Plan. The Committee may from time to time establish
rules for the administration of this Plan, and it shall
have the exclusive right to interpret this Plan and to
decide any matters arising in connection with the
administration and operation of this Plan. All rules,
interpretations and decisions of the Committee shall be
conclusive and binding on the Company, Participants and
Beneficiaries.
The Committee may delegate responsibility for
performing certain administrative and ministerial
functions under this Plan, including without
limitation, issues related to eligibility, investment
choices, distribution of Deferred Amounts,
determination of account balances, crediting of
hypothetical earnings and of Deferred Amounts and
debiting of hypothetical losses and of distributions,
in-service withdrawals, deferral elections and any
other duties concerning the day-to-day operation of
this Plan.
No member of the Board nor any member of the
Committee shall be liable for any act or action
hereunder, whether of omission or commission, by any
other member or employee or by any agent to whom duties
in connection with the administration of this Plan have
been delegated or for anything done or omitted to be
done in connection with this Plan. The Committee shall
keep records of all of its proceedings and shall keep
records of all payments made to Participants or
Beneficiaries and payments made for expenses or
otherwise. The Company shall, to the fullest extent
permitted by law, indemnify each director, officer or
employee of the Company (including the heirs,
executors, administrators and other personal
representatives of such person) and each member of the
Committee against expenses (including attorneys' fees),
judgments, fines, amounts paid in settlement, actually
and reasonably incurred by such person in connection
with any threatened, pending or actual suit, action or
proceeding (whether civil, criminal,
administrative or investigative in nature or otherwise) in which
such person may be involved by reason of the fact that he or
she is or was serving this Plan in any capacity at the
request of the Company.
Any expense incurred by the Company or the
Committee relative to the administration of this Plan
shall be paid by the Company.
ARTICLE 4
Participation
Section 4.01. Participation. Participation in
the Plan shall be limited to members of the Board who
(i) are not employees of the Company or meet such
eligibility criteria as the Committee shall establish
from time to time, and (ii) elect to participate in
this Plan by filing a Participation Agreement with the
Committee. A Participation Agreement must be filed
prior to the beginning of the Plan Year with respect to
services in which the Eligible Compensation relates.
Section 4.02. Participation Agreement. Subject
to Article 7, each Participation Agreement shall set
forth: (i) the amount of Eligible Compensation for the
Plan Year to which the Participation Agreement relates
that is to be deferred under the Plan (the "Deferred
Amount"), expressed as either a dollar amount or a
percentage of the total Eligible Compensation for such
Plan Year; provided, that the minimum Deferred Amount
for any Plan Year shall not be less than $2,000; (ii)
the period after which payment of the Deferred Amount
is to be made or begin to be made (the "Deferral
Period"), expressed as (A) a number of full years, not
less than three, following the end of the Plan Year to
which the Participation Agreement relates, or (B) the
period ending upon the Termination of Service of the
Participant, or (C) a period ending upon the earlier or
later of (A) or (B); and (iii) the form in which
payments are to be made, which may be a lump sum or in
equal annual installments of five, ten or fifteen
years.
Section 4.03. Changes to Participation Agreement.
A Participation Agreement may not be amended or revoked
after December 31st of the Plan Year in which it is
made, except that the Deferral Period maybe extended
and the form of payment may be altered if an amended
Participation Agreement is filed with the Committee at
least one full calendar year before the Deferral Period
(as in effect before such amendment) ends; provided,
that only one such amended Participation Agreement may
be filed with respect to each Participation Agreement.
Upon a Participant's Termination of Service, the most
recent Participation Agreement received by the
Committee prior to Termination of Service shall
supersede all previous Participation Agreements on file
with regard to Termination of Service elections and the
entire amount in the Participant's Deferral Account
shall be distributed at Termination of Service in
accordance with such elections.
ARTICLE 5
Deferred Incentive Compensation
Section 5.01. Elective Deferred Incentive
Compensation. Except as provided in Section 6.02(c),
the Deferred Amount of a Participant with respect to
each Plan Year of participation in the Plan shall be
credited by the Committee to the Participant's Deferral
Account as and when such Deferred Amount would
otherwise have been paid to the Participant. To the
extent that the Company is required to withhold any
taxes or other amounts from the Deferred Amount
pursuant to any state, Federal or local law, such
amounts shall first be taken out of compensation to the
Participant that is not deferred under this Plan, if
any.
Section 5.02. Vesting of Deferral Account.
Except as provided in Section 7.04, a Participant shall
be 100% vested in his/her Deferral Account at all
times.
ARTICLE 6
Maintenance and Investment of Accounts
Section 6.01. Maintenance of Accounts. Separate
Deferral Accounts shall be maintained for each
Participant. More than one Deferral Account may be
maintained for a Participant as necessary to reflect
(a) various investment choices and/or (b) separate
Participation Agreements specifying different Deferral
Periods and/or forms of payment. A Participant's
Deferral Account(s) shall be utilized solely as a
device for the measurement and determination of the
amounts to be paid to the Participant pursuant to this
Plan, and shall not constitute or be treated as a trust
fund of any kind. The Committee shall determine the
balance of each Deferral Account, as of each Valuation
Date, by adjusting the balance of such Deferral Account
as of the immediately preceding Valuation Date to
reflect changes in the value of the deemed investments
thereof, credits and debits pursuant to Section 5.01
and Section 6.02 and distributions pursuant to Article
7 with respect to such Deferral Account since the
preceding Valuation Date Investment Choices.
Section 6.02. Investment Choices. (a)Each
Participant shall be entitled to direct the manner in
which his/her Deferral Accounts will be deemed to be
invested, selecting among the investment choices
specified in Appendix A hereto, as amended by the
Committee from time to time, and in accordance with
such rules, regulations and procedures as the Committee
may establish from time to time.
b(i)The investment choices available for
Deferral Accounts from time to time may include a
"Phantom Share Fund." The Phantom Share Fund shall
consist of deemed investments in shares of Common
Stock. Deferred Amounts that are deemed to be
invested in the Phantom Share Fund shall be
converted into deemed shares based upon the Fair
Market Value of the Common Stock on the date(s)
the Deferred Amounts are to be credited to a
Deferral Account. The
portion of any Deferral
Account that is invested in the Phantom Share Fund
shall be credited, as of each Valuation Date, with
additional shares of Common Stock with respect to
cash dividends paid on the Common Stock with
record dates during the period beginning on the
day after the most recent preceding Valuation Date
and ending on such Valuation Date, as follows. The
credit shall be for a number of additional deemed
shares of Common Stock having a Fair Market Value,
as of the payment date for a cash dividend, equal
to the dollar amount of such cash dividend paid
with respect to a number of actual shares of
Common Stock equal to the number of deemed shares
in such Deferral Account as of such Valuation Date
minus the number of such deemed shares that were
distributed to the Participant before such
Valuation Date but after the most recent prior
Valuation Date.
(ii) When a deemed reinvestment or
a distribution of all or a portion of a Deferral
Account that is invested in the Phantom Share Fund
is to be made, the balance in such a Deferral
Account shall be determined by reference to the
Fair Market Value of the Common Stock on the most
recent Valuation Date preceding the date of such
reinvestment or distribution. Upon such a lump sum
distribution, the amounts in the Phantom Share
Fund shall be distributed in the form of cash
having a value equal to the Fair Market Value of
the deemed shares being distributed, actual shares
of Common Stock, or a combination thereof, in
accordance with the terms of the Pitney Bowes Inc.
Directors' Stock Plan (the "Stock Plan").
(iii) In the event of a stock
dividend, split-up or combination of the Common
Stock, merger, consolidation, reorganization,
recapitalization, or other change in the corporate
structure or capitalization affecting the Common
Stock, such that an adjustment is determined by
the Committee to be appropriate in order to
prevent dilution or enlargement of the benefits or
potential benefits intended to be made available
under this Plan, then the Committee may make
appropriate adjustments to the number of deemed
shares credited to any Deferral Account. The
determination of the Committee as to such
adjustments, if any, to be made shall be
conclusive.
(iv) Notwithstanding any other
provision of this Plan, the Committee may adopt
such procedures as it may determine are desirable
to ensure that, with respect to any Participant
who is subject to Section 16(b) of the Securities
Exchange Act of 1934, as amended, the crediting of
deemed shares to, or the distribution of amounts
from, his or her Deferral Account is not deemed to
be a non-exempt purchase or sale for purposes of
such Section 16(b).
(c) The Committee may authorize Options
as an investment choice under the Plan. The terms and
conditions under which Options may be made available as an
investment choice shall be determined and
communicated by the Committee to Participants from time
to time.
Section 6.03. Statement of Accounts. The
Committee shall submit to each Participant quarterly
statements of his/her Deferral Account(s), in such form
as the Committee deems desirable, setting forth the
balance to the credit of such Participant in his/her
Deferral Account(s) as of the end of the most recently
completed quarter.
ARTICLE 7
Benefits
Section 7.01. Time and Form of Payment. At the
end of the Deferral Period for each Deferral Account,
the Company shall pay to the Participant the balance of
such Deferral Account at the time or times elected by
the Participant in the applicable Participation
Agreement; provided that if the Participant has elected
to receive payments from a Deferral Account in a lump
sum, the Company shall pay the balance in such Deferral
Account (determined as of the most recent Valuation
Date preceding the end of the Deferral Period) in a
lump sum in cash (plus any shares of Common Stock
distributed in accordance with the Stock Plan in
respect of any investment in the Phantom Share Fund) as
soon as practicable after the end of the Deferral
Period. If the Participant has elected to receive
payments from a Deferral Account in installments, the
Company shall make annual cash only payments from such
Deferral Account, each of which shall consist of an
amount equal to (i) the balance of such Deferral
Account as of the most recent Valuation Date preceding
the payment date times (ii) a fraction, the numerator
of which is one and the denominator of which is the
number of remaining installments (including the
installment being paid). The first such installment
shall be paid as soon as practicable after the end of
the Deferral Period and each subsequent installment
shall be paid on or about the anniversary of such first
payment. Each such installment shall be deemed made on
a pro rata basis from each of the different deemed
investments of the Deferral Account (if there is more
than one such deemed investment).
Section7.02. Termination of Service. If a
Participant has elected to have the balance of his/her
Deferral Account distributed upon Termination of
Service, the account balance of the Participant
(determined as of the most recent Valuation Date
preceding such Termination of Service) shall be
distributed upon Termination of Service in installments
or a lump sum in accordance with the Plan and as
elected in the Participation Agreement.
Section 7.03 . In-Service Distributions. Subject
to Section 7.02 hereof, if a Participant has elected to
defer Eligible Compensation under the Plan for a stated
number of years, the account balance of the Participant
(determined as of the most recent Valuation Date
preceding such Deferral Period) shall be distributed in
installments or a lump sum in accordance with the Plan
and as elected in the Participation Agreement.
Section 7.04. Voluntary Early Withdrawal.
Notwithstanding the provisions of Section 7.01 and any
Participation Agreement, a Participant shall be
entitled to elect to withdraw all of the balance in
his/her Deferral Account(s) in accordance with this
Section 7.04 by filing with the Committee such form, in
accordance with such procedures, as the Committee shall
determine from time to time. As soon as practicable
after receipt of such form by the Committee, the
Company shall pay an amount equal to ninety percent of
the balance in such Participant's Deferral Account(s)
(determined as of the most recent Valuation Date
preceding the date such election is filed) to the
electing Participant in a lump sum in cash, and the
Participant shall forfeit the remainder of such
Deferral Account(s). All Participation Agreements
previously filed by a Participant who elects to make a
withdrawal under this Section 7.04 shall be null and
void after such election is filed (including without
limitation Participation Agreements with respect to
Plan Years or performance periods that have not yet
been completed), and such a Participant shall not
thereafter be entitled to file any Participation
Agreements under the Plan with respect to the first
Plan Year that begins after such election is made.
Section 7.05 . Payments in Connection with Change
of Control. Notwithstanding anything contained in this
Plan to the contrary, upon a Change of Control, the
Company shall immediately pay to each Participant in a
lump sum in cash the balance in his/her Deferral
Account(s) (determined as of the most recent Valuation
Date preceding the Change of Control).
Section 7.06. Withholding of Taxes.
Notwithstanding any other provision of this Plan, the
Company shall withhold from payments made hereunder any
amounts required to be so withheld by any applicable
law or regulation.
ARTICLE 8
Beneficiary Designation
Section 8.01. Beneficiary Designation. Each
Participant shall have the right, at any time, to
designate any person, persons or entity as his
Beneficiary or Beneficiaries. A Beneficiary designation
shall be made, and may be amended, by the Participant
by filing a written designation with the Committee, on
such form and in accordance with such procedures as the
Committee shall establish from time to time.
Section 8.02. No Beneficiary Designation. If a
Participant fails to designate a Beneficiary as
provided above, or if all designated Beneficiaries
predecease the Participant, then the Participant's
Beneficiary shall be deemed to be the Participant's
estate.
ARTICLE 9
Amendment and Termination of Plan
Section 9.01. Amendment. The Board or the
Committee may at any time amend this Plan in whole or
in part, provided, however, that no amendment shall be
effective to decrease the balance in any Deferral
Account as accrued at the time of such amendment, nor
shall any amendment otherwise have a retroactive
effect.
Section 9.02. Company's Right to Terminate. The
Board or the Committee may at any time terminate the
Plan with respect to future Participation Agreements.
The Board or the Committee may also terminate the Plan
in its entirety at any time for any reason, including
without limitation if, in its judgment, the continuance
of the Plan, the tax, accounting, or other effects
thereof, or potential payments thereunder would not be
in the best interests of the Company, and upon any such
termination, the Company shall immediately pay to each
Participant in a lump sum the accrued balance in his
Deferral Account (determined as of the most recent
Valuation Date preceding the termination date).
ARTICLE 10
Miscellaneous
Section 10.01. Unfunded Plan. This Plan is
intended to be an unfunded plan. All payments pursuant
to the Plan shall be made from the general funds of the
Company and no special or separate fund shall be
established or other segregation of assets made to
assure payment. No Participant or other person shall
have under any circumstances any interest in any
particular property or assets of the Company as a
result of participating in the Plan. Notwithstanding
the foregoing, the Company may (but shall not be
obligated to) create one or more grantor trusts, the
assets of which are subject to the claims of the
Company's creditors, to assist it in accumulating funds
to pay its obligations under the Plan.
Section 10.02. Nonassignability. Except as
specifically set forth in the Plan with respect to the
designation of Beneficiaries, neither a Participant nor
any other person shall have any right to commute, sell,
assign, transfer, pledge, anticipate, mortgage or
otherwise encumber, transfer, hypothecate or convey in
advance of actual receipt the amounts, if any, payable
hereunder, or any part thereof, which are, and all
rights to which are, expressly declared to be
unassignable and non-transferable. No part of the
amounts payable shall, prior to actual payment, be
subject to seizure or sequestration for the payment of
any debts, judgments, alimony or separate maintenance
owed by a Participant or any other person, nor be
transferable by operation of law in the event of a
Participant's or any other person's bankruptcy or
insolvency.
Section 10.03. Validity and Severability. The
invalidity or unenforceability of any provision of this
Plan shall not affect the validity or enforceability of
any other provision of this Plan, which shall remain in
full force and effect, and any prohibition or
unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in
any other jurisdiction.
Section 10.04. Governing Law. The validity,
interpretation, construction and performance of this
Plan shall in all respects be governed by the laws of
the State of Connecticut, without reference to
principles of conflict of law, except to the extent pre-
empted by federal law.
Section 10.05. Status as a Director. This Plan
does not constitute a contract of employment or impose
on the Participant or the Company any obligation for
the Participant to remain a director of the Company or
change the policies of the Company and its affiliates
regarding termination of services as a director.
Section 10.06. Underlying Compensation
Arrangements. Nothing in this Plan shall prevent the
Company or the Board from modifying, amending or
terminating the compensation arrangements for directors
of the Company.
APPENDIX A
Effective as of January 1, 1997, the deemed
investment choices under the Plan are as follows:
Mutual Funds
Merrill Lynch Capital Funds, Inc.
Merrill Lynch Global Allocation Fund, Inc.
Merrill Lynch Basic Value Fund, Inc.
Other
Merrill Lynch Equity Index Trust
Treasury Rate of Return
Pitney Bowes Phantom Share Fund
Pitney Bowes Stock Options
