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): July 18, 2000
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 July 18, 2000, regarding its financial
results for the period ended June 30, 2000, including consolidated statements of
income and selected segment data for the three and six months ended June 30,
2000 and 1999, and consolidated balance sheets at June 30, 2000, March 31, 2000
and June 30, 1999, 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 July 18, 2000.
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.
July 21, 2000
/s/ B. P. Nolop
------------------------------------------
B. P. Nolop
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 SECOND QUARTER EARNINGS
--------------------------------------------
Highlights:
o 22nd Consecutive Quarter of Double-Digit Earnings Per Share Growth
o Approximately $160 Million in Free Cash Flow
o Repurchase of 5.4 Million Shares During the Quarter
Stamford, Conn., July 18, 2000 - Pitney Bowes Inc. (NYSE: PBI ) today reported
second quarter results that included diluted earnings per share from continuing
operations of 64 cents, an 11% increase and the 22nd consecutive quarter of
double-digit growth. Revenue in the quarter grew five percent to $1.2 billion
and income from continuing operations rose five percent to $166.0 million.
Pitney Bowes Chairman and Chief Executive Officer Michael J. Critelli
commented on the second quarter results: "We are pleased with what we've
accomplished this quarter. Our Office Solutions segment reported its fourth
consecutive quarter of higher year-over-year revenue growth. In particular, we
experienced continued improvement in revenue growth in our copier and management
services businesses. Our Mailing and Integrated Logistics (MAIL) segment
reported six percent revenue growth despite unfavorable foreign currency
impacts. We achieved these results against a difficult comparison to the second
quarter 1999, which included the benefits of meter migration."
(2)
The Mailing and Integrated Logistics Segment includes the revenues and
related expenses from the rental, sale and financing of mailing and shipping
equipment, related supplies and services, and software. As noted above, the
segment revenue grew six percent and its operating profit grew 15 percent, in
line with our first quarter performance. Operating profit benefited from
improving rental and financing margins in our core mail finishing business.
The higher growth components of the MAIL segment are producing strong
results. In particular, our International Mailing operations continued to reap
the benefits of the growth strategy: increasing market share; developing
existing and new markets; increasing the value of business per customer and
expanding the customer base. The success of these strategies, plus ongoing cost
controls, resulted in another quarter of U.S. dollar-based double-digit revenue
growth and even greater operating profit growth.
Worldwide production mail revenues also continued its double-digit growth
trend, as large volume mailers turn to Pitney Bowes software-based solutions for
enhanced functionality, speed and accuracy.
The Office Solutions Segment includes Pitney Bowes Office Systems and
Pitney Bowes Management Services. Marking the fourth consecutive quarter of
improved revenue growth and the highest growth since the first quarter of 1999,
second quarter revenue grew five percent in the segment, while operating profit
declined nine percent.
Office Systems' revenue grew six percent, while operating profit declined
due to adverse currency impacts and ongoing strategic business initiatives. The
relative value of the Yen and margin impacts associated with the ongoing
transition to a rental revenue model for large national accounts in the copier
business negatively impacted operating profit. Strong copier rental revenue
growth demonstrates success of the company's strategy and its ability to place
copier fleets in national accounts by leveraging its established relationships
between corporations and its facsimile account teams.
Pitney Bowes Management Services delivers advanced mailing, reprographic,
document management and other high value outsourcing services to leading
financial, legal and technology firms. Its strategy to pursue disciplined,
profitable growth once again produced substantially higher operating profit
growth as year-over-year revenue growth increased by five percent. The unit's
strategy has resulted in enhanced customer service and also led to a substantial
improvement in net new written business versus the prior year.
(3)
Total Messaging Solutions, the combined results of the MAIL and Office
Solutions segments, reported six percent growth in revenue and nine percent
growth in operating profit.
The Capital Services Segment includes primarily asset- and fee-based
income generated by large ticket non-core asset transactions. This quarter,
consistent with the company's stated strategy to concentrate on fee-based income
opportunities, the segment's revenue decreased eight percent and its operating
profit decreased 13 percent.
Mr. Critelli continued, "Striking a strategic balance through carefully
managing our substantial recurring revenue base, enhancing our growth-oriented
businesses and making focused investments for the future, we were able to
generate approximately $160 million in free cash flow during the quarter. We
expect to generate similar levels of free cash flow in the future, which will be
used for investments, dividends and share repurchases.
"We continued to enhance our future revenue growth opportunities during
the quarter through additional investments of approximately $25 million in
Internet and other new business initiatives. In fact, in addition to growing our
investment, we were still able to reduce selling, service and administrative
expenses as a percent of revenue by 20 basis points during the quarter."
"During the second quarter, we completed the repurchase of 3.6 million
shares remaining under an authorization to repurchase 8.2 million shares of
common shares outstanding. In addition, we repurchased 1.8 million shares during
the quarter, under a subsequent authorization to buy up to $300 million worth of
shares of common stock. This resulted in a total of 5.4 million shares being
repurchased during the quarter and 10 million shares repurchased during the
first half of 2000.
Mr. Critelli concluded, "Pitney Bowes has an extremely sound business
foundation that allows us to invest for growth in the future and we continually
improve that foundation. An example of this is the recent sale of our credit
card portfolio. During the quarter, the company, through its subsidiary Pitney
Bowes Credit Corporation, announced a strategic alliance under which U.S.
Bancorp acquired and will service the PitneyWorksSM Business RewardsSM Visa(R)
and Business Visa(R) card portfolios. This alliance expands Pitney Bowes' and
U.S. Bank's capabilities to capture a greater share of the growing small
business market. While the revenue and operating profit associated with this
transaction were not material to second quarter 2000 results, the ongoing
alliance with U.S. Bank will allow us to greatly expand the availability of
these credit products while minimizing the amount of capital committed to this
effort."
(4)
Second quarter 2000 revenue included $571.5 million from sales, up five
percent from $546.4 million in the second quarter of 1999; $443.8 million from
rentals and financing, up six percent from $418.8 million; and $145.7 million
from support services, up four percent from $140.3 million.
Second quarter 2000 net income was $166.0 million, or 64 cents per diluted
share, compared to $129.7 million, or 48 cents per diluted share, in 1999.
Second quarter 1999 net income included a $27.7 million net after-tax charge, or
10 cents per diluted share related to discontinued operations.
For the six-month period ended June 30, 2000, revenue was $2.263 billion,
up five percent from $2.155 billion in 1999; and net income in 2000 was $317.5
million, or $1.21 per diluted share, compared to $272.0 million, or 99 cents per
diluted share in 1999. The year-to-date net income for 1999 included a $24.0
million net after-tax charge, or nine cents per diluted share, from discontinued
operations.
Pitney Bowes is a global provider of total messaging solutions.
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 1999 Form
10-K Annual Report filed with the Securities and Exchange Commission.
# # #
Note: Consolidated statements of income for the three and six months ended June
30, 2000 and 1999 and consolidated balance sheets at June 30, 2000, March 31,
2000, and June 30, 1999 are attached.
Pitney Bowes Inc.
Consolidated Statements of Income
(Unaudited)
-----------
(Dollars in thousands, except per share data)
Three Months Ended June 30, Six Months Ended June 30,
------------------------------ ----------------------------
2000 1999 2000 1999
-------------- --------------- ------------- --------------
Revenue from:
Sales $ 571,538 $ 546,370 $ 1,091,580 $ 1,056,752
Rentals and financing 443,801 418,773 879,967 824,498
Support services 145,695 140,289 291,454 273,506
-------------- --------------- ------------- --------------
Total revenue 1,161,034 1,105,432 2,263,001 2,154,756
-------------- --------------- ------------- --------------
Costs and expenses:
Cost of sales 321,814 306,351 622,647 603,070
Cost of rentals and financing 119,598 117,443 241,209 228,376
Selling, service and administrative 389,763 373,132 768,076 734,160
Research and development 30,528 27,698 60,039 53,602
Interest, net 53,361 46,938 100,523 92,438
-------------- --------------- ------------- -------------
Total costs and expenses 915,064 871,562 1,792,494 1,711,646
-------------- --------------- ------------- -------------
Income from continuing operations
before income taxes 245,970 233,870 470,507 443,110
Provision for income taxes 80,013 76,462 152,997 147,131
-------------- --------------- ------------- -------------
Income from continuing operations 165,957 157,408 317,510 295,979
Loss from discontinued operations - (27,667) - (23,967)
-------------- --------------- ------------- -------------
Net income $ 165,957 $ 129,741 $ 317,510 $272,012
============== =============== ============= =============
Basic earnings per share
Continuing operations $ 0.64 $ 0.58 $ 1.22 $ 1.10
Discontinued operations - (0.10) - (0.09)
-------------- --------------- ------------- -------------
Net income $ 0.64 $ 0.48 $ 1.22 $ 1.01
============== =============== ============= =============
Diluted earnings per share
Continuing operations $ 0.64 $ 0.58 $ 1.21 $ 1.08
Discontinued operations - (0.10) - (0.09)
-------------- --------------- ------------- -------------
Net income $ 0.64 $ 0.48 $ 1.21 $ 0.99
============== =============== ============= =============
Average common and potential common
shares outstanding 259,702,184 273,016,885 262,624,456 274,073,691
============== =============== ============= =============
Pitney Bowes Inc.
Consolidated Balance Sheets
(Unaudited)
-----------
(Dollars in thousands, except per share data)
Assets 6/30/00 3/31/00 6/30/99
- ------ ----------- ----------- -----------
Current assets:
Cash and cash equivalents $ 296,695 $ 219,063 $ 132,693
Short-term investments, at cost which
approximates market 2,811 19,126 949
Accounts receivable, less allowances:
6/00 $25,767 3/00 $25,443 6/99 $24,983 435,749 423,192 416,302
Finance receivables, less allowances:
6/00 $40,927 3/00 $43,034 6/99 $48,642 1,431,588 1,617,858 1,498,531
Inventories 260,668 262,595 259,858
Other current assets and prepayments 173,013 152,870 83,173
Net assets of discontinued operations - - 156,507
----------- ----------- ----------
Total current assets 2,600,524 2,694,704 2,548,013
----------- ----------- ----------
Property, plant and equipment, net 486,140 484,812 467,013
Rental equipment and related inventories, net 789,369 797,301 842,176
Property leased under capital leases, net 2,640 2,800 3,269
Long-term finance receivables, less allowances:
6/00 $58,777 3/00 $59,089 6/99 $76,291 1,983,529 2,010,562 1,954,990
Investment in leveraged leases 1,043,118 987,297 962,531
Goodwill, net of amortization:
6/00 $58,426 3/00 $56,628 6/99 $51,425 229,039 229,180 227,874
Other assets 624,830 612,005 454,198
Net assets of discontinued operations - - 313,063
----------- ----------- -----------
Total assets $ 7,759,189 $ 7,818,661 $ 7,773,127
=========== =========== ===========
Liabilities and stockholders' equity
- ------------------------------------
Current liabilities:
Accounts payable and accrued liabilities $ 825,341 $ 903,565 $ 776,665
Income taxes payable 217,665 265,275 186,279
Notes payable and current portion of
long-term obligations 956,925 974,370 1,273,197
Advance billings 376,022 380,620 391,103
----------- ----------- -----------
Total current liabilities 2,375,953 2,523,830 2,627,244
----------- ----------- -----------
Deferred taxes on income 1,182,766 1,122,865 1,029,923
Long-term debt 2,201,591 2,037,860 1,898,942
Other noncurrent liabilities 326,588 331,985 352,911
----------- ----------- -----------
Total liabilities 6,086,898 6,016,540 5,909,020
----------- ----------- -----------
Preferred stockholders' equity in a
subsidiary company 310,000 310,000 310,000
Stockholders' equity:
Cumulative preferred stock, $50 par value,
4% convertible 29 29 29
Cumulative preference stock, no par value,
$2.12 convertible 1,796 1,809 1,945
Common stock, $1 par value 323,338 323,338 323,338
Capital in excess of par value 11,067 13,479 11,927
Retained earnings 3,606,430 3,513,693 3,208,052
Accumulated other comprehensive income (114,798) (91,805) (85,851)
Treasury stock, at cost (2,465,571) (2,268,422) (1,905,333)
----------- ----------- -----------
Total stockholders' equity 1,362,291 1,492,121 1,554,107
----------- ----------- -----------
Total liabilities and stockholders' equity $ 7,759,189 $ 7,818,661 $ 7,773,127
=========== =========== ===========
Pitney Bowes Inc.
Revenue and Operating Profit
By Business Segment
June 30, 2000
(Unaudited)
(Dollars in thousands)
%
2000 1999 Change
------------ ------------ ----------
Second Quarter
- --------------
Revenue
-------
Mailing and Integrated Logistics $ 789,218 $ 746,952 6%
Office Solutions 333,615 316,753 5%
------------ ------------ ----------
Total Messaging Solutions 1,122,833 1,063,705 6%
------------ ------------ ----------
Capital Services 38,201 41,727 (8%)
------------ ------------ ----------
Total Revenue $1,161,034 $1,105,432 5%
============ ============ ==========
Operating Profit (1)
--------------------
Mailing and Integrated Logistics $ 225,937 $ 197,294 (2) 15%
Office Solutions 55,287 60,656 (9%)
------------ ------------ ----------
Total Messaging Solutions 281,224 257,950 9%
------------ ------------ ----------
Capital Services 11,131 12,784 (13%)
------------ ------------ ----------
Total Operating Profit $ 292,355 $ 270,734 8%
============ ============ ==========
(1) Operating profit excludes general corporate expenses, income taxes and net
interest other than that related to finance operations.
(2) Prior year amount has been reclassified to conform with the current year
presentation.
Pitney Bowes Inc.
Revenue and Operating Profit
By Business Segment
June 30, 2000
(Unaudited)
(Dollars in thousands)
%
2000 1999 Change
------------ ------------ ----------
Year to Date
- ------------
Revenue
-------
Mailing and Integrated Logistics $1,531,059 $1,445,581 6%
Office Solutions 657,604 631,333 4%
------------ ------------ ----------
Total Messaging Solutions 2,188,663 2,076,914 5%
------------ ------------ ----------
Capital Services 74,338 77,842 (5%)
------------ ------------ ----------
Total Revenue $2,263,001 $2,154,756 5%
============ ============ ==========
Operating Profit (1)
--------------------
Mailing and Integrated Logistics $ 422,041 $ 368,638 (2) 14%
Office Solutions 108,279 119,201 (9%)
------------ ------------ ----------
Total Messaging Solutions 530,320 487,839 9%
------------ ------------ ----------
Capital Services 19,692 20,966 (6%)
------------ ------------ ----------
Total Operating Profit $ 550,012 $ 508,805 8%
============ ============ ==========
(1) Operating profit excludes general corporate expenses, income taxes and net
interest other than that related to finance operations.
(2) Prior year amount has been reclassified to conform with the current year
presentation.
