FORM 8 - K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
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): April 20, 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
Item 5 - Other Events.
The registrant's press release dated April 20, 1999, regarding its financial
results for the period ended March 31, 1999, including consolidated statements
of income for the three months ended March 31, 1999 and 1998, and consolidated
balance sheets at March 31, 1999, December 31, 1998 and March 31, 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
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(1) Pitney Bowes Inc. press release dated April 20, 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.
April 26, 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)
1
Exhibit 1
PITNEY BOWES REPORTS 17th CONSECUTIVE QUARTER
OF DOUBLE-DIGIT EARNINGS PER SHARE GROWTH
FOR IMMEDIATE RELEASE
Stamford, Conn., April 20, 1999 -- Pitney Bowes Inc. (NYSE: PBI) today announced
first quarter results featuring a 15.7-percent growth in diluted earnings per
share from continuing operations to 52 cents, and income from continuing
operations growth of 12 percent to $142.3 million. This record performance
represents the 17th consecutive quarter of double-digit year-over-year diluted
earnings per share growth from continuing operations. Revenue rose 11 percent to
$1.1 billion during the quarter, which includes $10 million of revenue from the
sale of PROM (memory) chips and scale charts associated with the United States
Postal Service rate increase.
Pitney Bowes Chairman and Chief Executive Officer Michael J. Critelli
assessed the company's first-quarter performance: "Our first quarter performance
reflects the strength of our core business and our success in profitable
expansion in new and existing markets. We are pleased that our ongoing focus on
enhancing shareholder value continues to provide excellent financial results
such as our year-over-year improvement in operating and income margins from
continuing operations. We also experienced year-over-year operating margin
improvements in our two largest business segments -- Mailing and Integrated
Logistics and Office Solutions -- even as we continued to invest in and refine
our operations.
2
"Fortune Magazine's annual rankings provide additional evidence of
Pitney Bowes' consistent growth and superior returns, as we ranked number one
for the third consecutive year in `profits as a percent of revenue' in the
Computers, Office Equipment Industry segment, and our `profits as a percent of
stockholders' equity' ranked 36 out of the entire Fortune 500."
The Mailing and Integrated Logistics Segment includes revenues and
related expenses from the rental, sale and financing of mailing and shipping
equipment, related supplies and service, and software. During the quarter, the
segment posted strong revenue growth of 12 percent and a 20-percent increase in
operating profit, which included significant improvements in operating profit
from international operations. Excluding the sales of memory chips and scale
charts related to the U.S. postal rate increase, revenue grew 10 percent. The
market demand for Pitney Bowes' comprehensive portfolio of advanced mailing and
logistics systems for businesses of all sizes remains strong. The value in
providing solutions which address multiple parts of the end-to-end mailing and
shipping cycle -- from creation to delivery -- was underscored by the
contribution of several categories to the segment's solid performance:
o Mail Creation, led by the award-winning Pitney Bowes DocuMatchTM ,which
prints and prepares customized, one-to-one marketing materials
o Integrated Logistics, which recently introduced ConquestTM, a software
application for managing the integrated supply chain, and
o The 3 SeriesTM Desktop Inserting System, which allows low-to mid-volume
mailers to automate the collating, folding and inserting of mail.
During the quarter, Pitney Bowes continued to aggressively leverage the
opportunity presented by the U.S. Postal Service requirement that customers
migrate to more advanced technology. As a result, Pitney Bowes leads the mailing
industry in upgrading customers to more advanced mailing systems, with
approximately 95 percent of our meter unit base now electronic or digital, as
compared to 78 percent of our meter unit base at the end of the first quarter
1998, and 90 percent of our meter unit base at year-end 1998. The company also
continues to be the undisputed leader in digital mailing systems, with this
category comprising almost 40 percent of our meter unit base. This broadening
population of digital meters, in turn, continued to benefit the segment's
performance because of the increasing stream of recurring supplies revenues that
it generates.
3
The Office Solutions Segment includes Pitney Bowes Office Systems and
Pitney Bowes Management Services. First-quarter performance in this segment
featured an eight percent growth in revenue and a 12-percent increase in
operating profit.
During the quarter, Office Systems' revenue grew by eight percent
excluding the impact of foreign currency as operating profits continued to
increase at a double-digit rate. The organization continues to leverage
relationships with Fortune 1000 facsimile customers to increase the mix of major
and national accounts in its copier base. To this end, the sales and service
organizations are accelerating their transition to support the digital and
networked products and systems these high-end customers require.
Pitney Bowes Management Services' revenue grew nine percent during the
quarter as the company pursued its strategy of disciplined, profitable
expansion, while providing superior customer service. These efforts, in
conjunction with improved operating efficiencies, continued to drive operating
profit growth at a faster pace than revenue growth. Our primary business
challenge continues to center on account-by-account profitability.
The Mortgage Servicing Segment represents the operations of Atlantic
Mortgage and Investment Corporation (AMIC). In this segment, revenue grew 39
percent while operating profit decreased 18 percent. This quarter's performance
reflects industry-wide conditions which resulted in higher rates of mortgage
pre-payments and associated additional amortization costs compared to the first
quarter of 1998. As announced last quarter, the company continues to explore a
range of strategic options to address the changing profile of this business in a
way that maximizes shareholder value.
The Capital Services Segment includes primarily asset- and fee-based
income generated by large ticket external assets. During the quarter, the
segment's revenue decreased by one percent and its operating profit decreased
two percent. The anticipated revenue and operating profit declines relative to
first quarter 1998 are consistent with the company's previously announced
strategy to shift from asset-based income by lowering the asset base and
concentrating on fee-based income opportunities.
4
Mr. Critelli concluded, "The momentum generated by the strength of our
core business, our investments and focus on profitable growth in 1998, continued
during the first quarter of this year. We continue to deliver advanced
technology solutions that increase the impact and efficiency of mail and
messaging with innovations such as: GalaxyTM, the first digital system for
mid-volume mailers; the Universal AccessTM copier system, a technological
breakthrough for workers with disabilities; the Pitney Bowes 2050 facsimile
system, with a revolutionary touch screen user interface; and, ClickStampTM, a
PC-based metering system currently in Phase II Beta testing with the United
States Postal Service. This combination of factors underscores our confidence
that continued focus on maximizing customer and shareholder value is the key to
our future success."
As previously announced, the company initiated an 11.6-million share
repurchase program. During the first quarter 1999, the company repurchased
approximately 2.2 million shares on the open market under this program.
First quarter 1999 revenue included $510.4 million from sales, up 13
percent from $450.4 million in the first quarter of 1998; $438.2 million from
rentals and financing, up nine percent from $403.7 million; and $133.2 million
from support services, up eight percent from $123.0 million. Net income for the
period was $142.3 million, or 52 cents per diluted share, compared to
first-quarter 1998 net income of $129.7 million, or 46 cents per diluted share.
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 months ended March 31,
1999 and 1998, and consolidated balance sheets as of March 31, 1999, December
31, 1998, and March 31, 1998, are attached.
Pitney Bowes Inc.
Consolidated Statements of Income
(Unaudited)
(Dollars in thousands, except per share data)
Three Months Ended March 31,
---------------------------------------
1999 1998
------------------- -----------------
Revenue from:
Sales $ 510,382 $ 450,425
Rentals and financing 438,223 403,683
Support services 133,217 122,989
------------------- -----------------
Total revenue 1,081,822 977,097
------------------- -----------------
Costs and expenses:
Cost of sales 296,719 275,000
Cost of rentals and financing 139,481 118,889
Selling, service and administrative 361,028 330,982
Research and development 25,904 23,631
Interest, net 43,610 35,056
------------------- -----------------
Total costs and expenses 866,742 783,558
------------------- -----------------
Income from continuing operations
before income taxes 215,080 193,539
Provision for income taxes 72,809 66,605
------------------- -----------------
Income from continuing operations 142,271 126,934
Discontinued operations - 2,753
------------------- -----------------
Net income $ 142,271 $ 129,687
=================== =================
Basic earnings per share
Continuing operations $ 0.53 $ 0.45
Discontinued operations - 0.01
------------------- -----------------
$ 0.53 $ 0.46
=================== =================
Diluted earnings per share
Continuing operations $ 0.52 $ 0.45
Discontinued operations - 0.01
------------------- -----------------
$ 0.52 $ 0.46
=================== =================
Average common and potential common
shares outstanding 274,962,244 283,871,448
=================== =================
Pitney Bowes Inc.
Consolidated Balance Sheets
---------------------------
(Dollars in thousands, except per share data) (*)
(Unaudited) (Unaudited)
Assets 3/31/99 12/31/98 3/31/98
- ------ ----------- ---------- -----------
Current assets:
Cash and cash equivalents $ 129,687 $ 125,684 $ 117,200
Short-term investments, at cost which
approximates market 1,654 3,302 34,597
Accounts receivable, less allowances:
3/99 $25,667 12/98 $24,665 3/98 $21,962 419,002 382,406 347,263
Finance receivables, less allowances: 1,543,328 1,400,786 1,663,483
3/99 $51,114 12/98 $51,232 3/98 $57,519
Inventories 260,727 266,734 241,553
Other current assets and prepayments 350,659 330,051 376,447
----------- ---------- -----------
Total current assets 2,705,057 2,508,963 2,780,543
----------- ---------- -----------
Property, plant and equipment, net 474,985 477,476 495,189
Rental equipment and related inventories, net 829,470 806,585 799,377
Property leased under capital leases, net 3,418 3,743 4,219
Long-term finance receivables, less allowances:
3/99 $78,816 12/98 $79,543 3/98 $74,540 1,941,355 1,999,339 2,473,189
Investment in leveraged leases 841,780 827,579 758,932
Goodwill, net of amortization:
3/99 $49,588 12/98 $47,514 3/98 $42,522 223,213 222,980 204,058
Other assets 823,025 814,374 798,091
----------- ---------- ----------
Total assets $7,842,303 $7,661,039 $8,313,598
=========== ========== ==========
Liabilities and stockholders' equity
- ------------------------------------
Current liabilities:
Accounts payable and accrued liabilities $ 830,084 $ 898,548 $ 937,532
Income taxes payable 224,865 194,443 169,777
Notes payable and current portion of
long-term obligations 1,483,599 1,259,193 1,718,449
Advance billings 393,829 369,628 377,343
----------- ---------- ----------
Total current liabilities 2,932,377 2,721,812 3,203,101
----------- ---------- ----------
Deferred taxes on income 949,322 920,521 937,507
Long-term debt 1,710,427 1,712,937 1,626,870
Other noncurrent liabilities 354,801 347,670 368,906
----------- ---------- ----------
Total liabilities 5,946,927 5,702,940 6,136,384
----------- ---------- ----------
Preferred stockholders' equity in a
subsidiary company 310,000 310,097 300,000
Stockholders' equity:
Cumulative preferred stock, $50 par value,
4% convertible 34 34 34
Cumulative preference stock, no par value,
$2.12 convertible 1,976 2,031 2,159
Common stock, $1 par value 323,338 323,338 323,338
Capital in excess of par value 13,807 16,173 25,120
Retained earnings 3,146,946 3,073,839 2,811,675
Accumulated other comprehensive income (88,665) (88,217) (73,387)
Treasury stock, at cost (1,812,060) (1,679,196) (1,211,725)
----------- ----------- -----------
Total stockholders' equity 1,585,376 1,648,002 1,877,214
----------- ----------- -----------
Total liabilities and stockholders' equity $7,842,303 $7,661,039 $8,313,598
=========== =========== ===========
(*) Certain prior year amounts have been reclassified to conform with the
current year presentation.
Pitney Bowes Inc.
Revenue and Operating Profit
By Business Segment
March 31, 1999
(Unaudited)
(Dollars in thousands)
%
1999 1998 Change
------------- ------------ -----------
First Quarter
- -------------
Revenue
-------
Mailing and Integrated Logistics $ 698,629 $ 626,240 12%
Office Solutions 314,580 291,182 8%
Mortgage Servicing 32,498 23,312 39%
Capital Services 36,115 36,363 (1%)
------------- ------------ ------------
Total Revenue $1,081,822 $ 977,097 11%
============= ============ ============
Operating Profit (1)
--------------------
Mailing and Integrated Logistics $ 174,525 $ 144,979 20%
Office Solutions 58,545 52,459 12%
Mortgage Servicing 5,700 6,913 (18%)
Capital Services 8,182 8,345 (2%)
------------- ------------ ------------
Total Operating Profit $ 246,952 $ 212,696 16%
============= ============ ============
(1) Operating profit excludes general corporate expenses, income taxes and net
interest other than that related to finance operations.
