SEC Filing | Pitney Bowes Inc.

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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

October 24, 2006 (October 23, 2006)
Date of Report (Date of earliest event reported)

Pitney Bowes Inc.
(Exact name of registrant as specified in its charter)

Delaware	1-3579	06-0495050
(State or other jurisdiction of	(Commission file number)	(I.R.S. Employer
incorporation or organization)		Identification No.)

World Headquarters
1 Elmcroft Road
Stamford, Connecticut 06926-0700
(Address of principal executive offices)

(203) 356-5000
(Registrant’s telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c))

ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION

The following information is furnished pursuant to Item 2.02 Disclosure of “Results of Operations and Financial Condition.”

On October 23, 2006, the registrant issued a press release setting forth its financial results, including consolidated statements of income, supplemental information, and a reconciliation of reported results to adjusted results for the three and nine months ended September 30, 2006 and 2005, and consolidated balance sheets at September 30, 2006, June 30, 2006, and September 30, 2005. A copy of the press release is attached hereto as Exhibit 99.1 and hereby incorporated by reference.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS

(c)	Exhibits

	99.1 Press release of Pitney Bowes Inc. dated October 23, 2006

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.

October 24, 2006




		/s/ B.P. Nolop
		B.P. Nolop
		Executive Vice President and
		Chief Financial Officer
		(Principal Financial Officer)



		/s/ S.J. Green
		S.J. Green
		Vice President – Finance and
		Chief Accounting Officer
		(Principal Accounting Officer)

Exhibit 99.1

Pitney Bowes Announces Third Quarter Results

STAMFORD, Conn., Oct. 23 /PRNewswire-FirstCall/ -- Pitney Bowes Inc. (NYSE: PBI) today reported third quarter 2006 financial results.

For the third quarter 2006, revenue increased eight percent to $1.43 billion and income from continuing operations also rose eight percent to $144 million or $.64 per diluted share versus $.57 per diluted share for the prior year. This was a 12 percent increase in earnings per share over the prior year.

During the quarter, the company recorded an after-tax charge of $4 million or $.02 per diluted share as part of its previously announced restructuring program.

Excluding the impact of the restructuring charges in both periods, adjusted diluted earnings per share from continuing operations increased nine percent from $.61 in the prior year to $.66 this quarter. This was in line with the company's guidance of $.65 to $.67 per diluted share.

The company's Chairman and CEO Michael J. Critelli, noted, "This quarter we continued to enhance the strength and resiliency of our business model as we invested in growth opportunities, while improving operating efficiency. Our confidence in the sustainability of our results was underscored during the quarter as our revenue and earnings per share were again both within our targeted growth ranges. We believe the company is uniquely positioned to take advantage of the many large and growing opportunities in the mailstream."

Net cash used in operating activities was $68 million during the quarter. The net use of cash during the quarter includes the payment of approximately $238 million of taxes related to the sale of Capital Services and the settlement with the IRS as previously disclosed. Free cash flow was $133 million. Year-to-date the company has generated $390 million of free cash flow.

The company used $19 million to repurchase 440 thousand of its shares during the quarter and has $229 million of remaining authorization for future share repurchases. Year-to-date the company has repurchased $312 million of its shares and plans to buy a total of $350 million to $400 million by year- end.

Mailstream Solutions includes worldwide revenue and related expenses from the sale, rental, and financing of mail finishing, mail creation, shipping, and production mail equipment; supplies; support services; payment solutions; and mailing and customer communication software.

In the third quarter, Mailstream Solutions revenue increased nine percent to $1.0 billion and earnings before interest and taxes (EBIT) increased four percent to $297 million, when compared with the prior year.

Within Mailstream Solutions:

U.S. Mailing operations had third quarter revenue growth of five percent to $587 million and EBIT growth of three percent to $232 million. Growth in the quarter was driven by supplies and payment solutions as the meter base continued to transition to new digital technology and customers took advantage of our broad range of financial offerings. There was also good growth in the company's shipping solutions that allow businesses to determine the best and most cost effective way to ship packages and documents.

International Mailing revenue grew 17 percent to $253 million while EBIT increased by eight percent to $44 million. International Mailing revenue particularly benefited from growth in mailing systems equipment in the U K driven by the new requirement to pay postage based on the size and shape of the mail piece, as well as weight. Improved performance in Canada also contributed to revenue growth during the quarter. Transitional expenses related to the consolidation and outsourcing of administrative functions adversely affected the growth of International Mailing EBIT. We expect to start seeing the benefits of these initiatives in 2007.

Worldwide revenue for Production Mail grew 15 percent to $146 million and EBIT increased 43 percent to $14 million. In the U.S. revenue growth was favorably affected by continued strong placements of inserting systems and the company's advanced, high-speed metering system. The strong U.S. results were partially offset by lower sales in Europe.

Software revenue increased two percent to $50 million and EBIT declined 18 percent to $8 million. Revenue growth for the quarter was negatively affected by the comparison to the prior year, which included a large contract. EBIT was adversely impacted by investments in sales and marketing to position the business for longer-term growth.

Mailstream Services includes worldwide revenue and related expenses from facilities management contracts, reprographics, document management, and other value-added services for targeted customer markets; mail services operations, which include presort mail services and international outbound mail services; and marketing services.

For the quarter, Mailstream Services reported revenue growth of five percent to $397 million and EBIT growth of 32 percent to $35 million, versus the prior year.

Within Mailstream Services:

Management Services revenue increased one percent to $263 million for the quarter while EBIT increased 14 percent to $19 million, consistent with the company's strategy to focus on higher value service offerings and administrative cost reductions. The strong improvement in EBIT in the U.S. was partially offset by lower EBIT outside of the U.S.

Mail Services revenue grew nine percent to $91 million and EBIT grew 81 percent to $9 million. Revenue reflects growth in presort and international mail services, while EBIT benefited from the ongoing successful integration of acquired sites and increased operating efficiencies.

Marketing Services revenue increased 32 percent to $43 million and EBIT grew 42 percent to $6 million. Revenue growth benefited from the continued expansion of our marketing services programs.

Outlook

The company anticipates fourth quarter revenue growth in the range of seven to nine percent, which would result in full year revenue growth in the range of six to seven percent.

The company expects adjusted earnings per share in fourth quarter 2006 in the range of $0.76 to $0.78 and $2.68 to $2.70 for the full year. Earnings per share on a Generally Accepted Accounting Principles (GAAP) basis is expected to be $0.71 to $0.75 for the fourth quarter and $2.49 to $2.53 for the full year. The earnings expectations for fourth quarter and the full year are further summarized as follows:

	4Q06	4Q05	Full Year 2006	Full Year 2005
Adjusted EPS	$0.76 to $0.78	$0.69	$2.68 to $2.70	$2.46
Restructuring	($0.03 to $0.05)	($0.09)	($0.08 to $0.10)	($0.15)
Foundation
Contributions	N/A	N/A	N/A	($0.03)
Tax Reserve
Increase	N/A	($0.24)	($0.09)	($0.24)
GAAP EPS	$0.71 to $0.75	$0.36	$2.49 to $2.53	$2.04

During the fourth quarter, the company expects to record a restructuring charge in the range of $.03 to $0.05 per diluted share, which will complete the charges associated with the restructuring program.

Mr. Critelli added, "The consistency of performance and enhanced visibility of our operating results after the sale of Capital Services allowed us to provide 2007 revenue and earnings guidance during our recent Investor Update meeting in September. This was the earliest we have ever provided guidance for an ensuing year."

The company reconfirmed that in 2007 it expects revenue growth of five to eight percent with earnings per share in the range of $2.90 to $2.98.

Management of Pitney Bowes will discuss the company's results in a conference call today at 5:00 p.m. EDT. Instructions for listening to the conference call over the WEB are available on the Investor Relations page of the company's web site at http://www.pb.com/investorrelations.

Pitney Bowes engineers the flow of communication. The company is a $5.6 billion global leader of mailstream solutions headquartered in Stamford, Connecticut. For more information about the company, its products, services and solutions, visit http://www.pitneybowes.com/.

Pitney Bowes has presented in this earnings release diluted earnings per share on an adjusted basis. Also, management has included a presentation of free cash flow on an adjusted basis and earnings before interest and taxes (EBIT). Management believes this presentation provides a reasonable basis on which to present the adjusted financial information, and is provided to assist in investors' understanding of the company's results of operations. The company's financial results are reported in accordance with generally accepted accounting principles (GAAP).

However, the earnings per share and free cash flow results are adjusted to exclude the impact of special items such as restructuring charges and write downs of assets, which materially impact the comparability of the company's results of operations. Restructuring charges often reflect retooling of the business in an episodic way. Although they represent actual expenses to the company, these episodic charges might mask the periodic income associated with our business had there not been a retooling. The use of free cash flow has limitations. GAAP cash flow has the advantage of including all cash available to the company after actual expenditures for all purposes. Free cash flow permits a shareholder insight into the amount of cash that management could have available for discretionary uses if it made different decisions about employing its cash. It adjusts for long-term commitments such as capital expenditures, as well as special items like cash used for restructuring charges and contributions to its pension funds. Of course, these items use cash that is not otherwise available to the company and are important expenditures. Management compensates for these limitations by using a combination of GAAP cash flow and free cash flow in doing its planning.

The adjusted financial information and certain financial measures such as EBIT are intended to be more indicative of the ongoing operations and economic results of the company. EBIT excludes interest payments and taxes, both cash items, and as a result, has the effect of showing a greater amount of earnings than net income. The company uses EBIT, in addition to net income, for purposes of measuring the performance of its unit management team. The interest rates and tax rates applicable to the company generally are outside the control of management, and it can be useful to judge performance independent of those variables.

The adjusted financial information should be viewed as a supplement to, rather than a replacement for, the financial results reported in accordance with GAAP. Further, our definition of this adjusted financial information may differ from similarly titled measures used by other companies.

Pitney Bowes has provided in supplemental schedules attached for reference adjusted financial information and a quantitative reconciliation of the differences between the adjusted financial measures with the financial measures calculated and presented in accordance with GAAP, except with respect to our guidance because it would not be meaningful. Additional reconciliation of adjusted financial measures to financial measures calculated and presented in accordance with GAAP may be found at the company's web site http://www.pb.com/investorrelations in the Investor Relations section.

The information contained in this document is as of October 23, 2006. Quarterly results are preliminary and unaudited. This document contains "forward-looking statements" about our expected future business and financial performance. Pitney Bowes assumes no obligation to update any forward-looking statements contained in this document as a result of new information or future events or developments. Words such as "estimate," "project," "plan," "believe," "expect," "anticipate," "intend," and similar expressions may identify forward-looking statements. For us forward-looking statements include, but are not limited to, statements about possible restructuring charges and our future guidance, including our expected revenue in the fourth quarter and full year 2006 and full year 2007, and our expected diluted earnings per share for the fourth quarter and for the full year 2006 and full year 2007. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected. These risks and uncertainties include, but are not limited to: negative developments in economic conditions, including adverse impacts on customer demand, timely development and acceptance of new products or 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 2005 Form 10-K Annual Report filed with the Securities and Exchange Commission. In addition, the forward-looking statements are subject to change based on the timing and specific terms of any announced acquisitions or dispositions.

Note: Consolidated statements of income for the three months ended September 30, 2006 and 2005, and consolidated balance sheets at September 30, 2006, June 30, 2006, and September 30, 2005, are attached.

Pitney Bowes Inc.
Consolidated Statements of Income
(Unaudited)

(Dollars in thousands, except per share data)


	Three Months Ended Sept 30,				Nine Months Ended Sept 30,
		2006		2005 (1)		2006			2005 (1)
Revenue from:
Equipment sales	$	337,291	$	295,026	$	959,683		$	883,603
Supplies		84,728		73,165		250,412			222,797
Software		49,979		49,236		139,614			123,291
Rentals		196,219		198,894		590,257			606,029
Financing		185,547		162,810		538,139			488,334
Support services		182,294		172,216		529,399			518,176
Business services		397,273		377,682		1,176,682			1,097,335

Total revenue		1,433,331		1,329,029		4,184,186			3,939,565

Costs and expenses:
Cost of equipment
sales		173,068		146,147		485,828			443,500
Cost of supplies		26,071		18,105		66,475			54,372
Cost of software		11,044		10,260		32,326			26,787
Cost of rentals		42,231		38,975		128,070			125,261
Cost of support
services		104,042		97,574		298,791			290,898
Cost of business
services		307,378		299,863		917,285			888,522
Selling, general and
administrative		443,426		412,049		1,293,619			1,220,930
Research and
development		41,893		40,265		124,409			122,551
Interest, net		51,962		49,421		160,600			136,486
Restructuring charge		6,771		12,918		17,409			23,480
Charitable
contribution		-		-		-			10,000

Total costs
and expenses		1,207,886		1,125,577		3,524,812			3,342,787

Income from continuing
operations
before income taxes		225,445		203,452		659,374			596,778

Provision for income
taxes		77,565		68,023		247,222			200,243
Minority interest		3,653		2,410		9,814			6,914

Income from continuing
operations		144,227		133,019		402,338			389,621
Discontinued
operations		4,393		6,789		(456,264	)		30,420

Net income (loss)	$	148,620	$	139,808	$	(53,926	)	$	420,041

Basic earnings per
share
Continuing
operations	$	0.65	$	0.58	$	1.80		$	1.70
Discontinued
operations		0.02		0.03		(2.05	)		0.13

Net income (loss)	$	0.67	$	0.61	$	(0.24	)	$	1.83

Diluted earnings per
share
Continuing
operations	$	0.64	$	0.57	$	1.78		$	1.67
Discontinued
operations		0.02		0.03		(2.02	)		0.13

Net income (loss)	$	0.66	$	0.60	$	(0.24	)	$	1.80

Average common and
potential common
shares outstanding		224,082,673		231,466,231		225,848,482			232,718,298

(1)	Prior year amounts have been reclassified to conform with the current year presentation.

Note: The sum of the earnings per share amounts may not equal the totals above due to rounding.

Pitney Bowes Inc.
Consolidated Balance Sheets
(Unaudited)

(Dollars in thousands, except per share data)

Assets		09/30/06			6/30/06			09/30/05	(1)
Current assets:
Cash and cash equivalents	$	202,865		$	196,315		$	294,527
Short-term investments, at
cost which approximates
market		830,711			81,504			50,703
Accounts receivable, less
allowances:
09/06 $46,470 06/06 $46,856
09/05 $47,726		674,267			660,092			637,054
Finance receivables, less
allowances:
09/06 $44,693 06/06 $46,435
09/05 $63,950		1,325,764			1,285,907			1,354,119
Inventories		244,523			243,225			228,708
Other current assets and
prepayments		239,940			225,588			214,087
Assets of discontinued
operations		-			1,218,435			-

Total current assets		3,518,070			3,911,066			2,779,198

Property, plant and
equipment, net		614,817			621,627			626,737
Rental property and
equipment, net		491,777			480,942			1,015,875
Property leased under
capital leases, net		2,427			2,396			3,667
Long-term finance receivables,
less allowances:
09/06 $39,140 06/06 $37,540
09/05 $77,162		1,522,162			1,511,722			1,771,356
Investment in leveraged leases		255,993			255,724			1,464,218
Goodwill		1,788,081			1,753,812			1,623,505
Intangible assets, net		378,279			375,826			360,585
Other assets		849,333			799,506			874,646

Total assets	$	9,420,939		$	9,712,621		$	10,519,787

Liabilities and stockholders' equity
Current liabilities:
Accounts payable and
accrued liabilities	$	1,568,610		$	1,478,114		$	1,465,538
Income taxes payable		1,007,700			220,503			135,684
Notes payable and current
portion of long-term
obligations		1,007,712			707,050			962,504
Advance billings		466,511			491,856			467,522
Liabilities of
discontinued operations		-			1,448,121			-

Total current liabilities		4,050,533			4,345,644			3,031,248

Deferred taxes on income		487,657			527,538			1,725,108
Long-term debt		3,348,990			3,363,665			3,689,759
Other noncurrent liabilities		266,631			270,901			331,642

Total liabilities		8,153,811			8,507,748			8,777,757

Preferred stockholders'
equity in a subsidiary
company		310,000			310,000			310,000

Stockholders' equity:
Cumulative preferred stock,
$50 par value,
4% convertible		12			17			17
Cumulative preference stock,
no par value,
$2.12 convertible		1,092			1,105			1,160
Common stock, $1 par value		323,338			323,338			323,338
Capital in excess of par value		227,440			229,745			215,232
Retained earnings		4,056,278			3,978,614			4,299,121
Accumulated other
comprehensive income		163,406			181,521			118,121
Treasury stock, at cost		(3,814,438	)		(3,819,467	)		(3,524,959	)

Total stockholders' equity		957,128			894,873			1,432,030

Total liabilities and
stockholders' equity	$	9,420,939		$	9,712,621		$	10,519,787

(1)	Prior period amounts have been reclassified to conform with the current year presentation.

Pitney Bowes Inc.
Revenue and EBIT
Business Segments
September 30, 2006
(Unaudited)

(Dollars in thousands)

							%
		2006			2005 (2)		Change
Third Quarter

Revenue

U.S. Mailing	$	587,226		$	558,901		5	%
International Mailing		252,641			216,254		17	%
Production Mail		146,212			126,956		15	%
Software		49,979			49,236		2	%
Mailstream Solutions		1,036,058			951,347		9	%

Management Services		263,229			261,535		1	%
Mail Services		91,067			83,610		9	%
Marketing Services		42,977			32,537		32	%
Mailstream Services		397,273			377,682		5	%

Total Revenue	$	1,433,331		$	1,329,029		8	%

EBIT (1)

U.S. Mailing	$	232,337		$	225,387		3	%
International Mailing		43,843			40,741		8	%
Production Mail		13,668			9,525		43	%
Software		7,566			9,259		(18	%)
Mailstream Solutions		297,414			284,912		4	%

Management Services		18,976			16,627		14	%
Mail Services		9,444			5,232		81	%
Marketing Services		6,087			4,291		42	%
Mailstream Services		34,507			26,150		32	%

Total EBIT	$	331,921		$	311,062		7	%

Unallocated amounts:
Interest, net		(51,962	)		(49,421	)
Corporate expense		(47,743	)		(45,271	)
Restructuring charge		(6,771	)		(12,918	)
Income before income taxes	$	225,445		$	203,452

(1)	Earnings before interest and taxes (EBIT) excludes general corporate expenses.

(2)	Prior year amounts have been reclassified to conform with the current year presentation.

Pitney Bowes Inc.
Revenue and EBIT
Business Segments
September 30, 2006
(Unaudited)

(Dollars in thousands)

							%
		2006			2005 (2)		Change
Year to Date

Revenue

U.S. Mailing	$	1,729,983		$	1,670,784		4	%
International Mailing		741,639			676,421		10	%
Production Mail		396,268			371,734		7	%
Software		139,614			123,291		13	%
Mailstream Solutions		3,007,504			2,842,230		6	%

Management Services		798,280			805,008		(1	%)
Mail Services		275,914			247,525		11	%
Marketing Services		102,488			44,802		129	%
Mailstream Services		1,176,682			1,097,335		7	%

Total Revenue	$	4,184,186		$	3,939,565		6	%

EBIT (1)

U.S. Mailing	$	697,816		$	669,160		4	%
International Mailing		131,565			134,160		(2	%)
Production Mail		32,512			20,094		62	%
Software		17,183			15,822		9	%
Mailstream Solutions		879,076			839,236		5	%

Management Services		61,367			48,622		26	%
Mail Services		30,100			12,579		139	%
Marketing Services		11,803			6,557		80	%
Mailstream Services		103,270			67,758		52	%

Total EBIT	$	982,346		$	906,994		8	%

Unallocated amounts:
Interest, net		(160,600	)		(136,486	)
Corporate expense		(144,963	)		(140,250	)
Restructuring charge		(17,409	)		(23,480	)
Other expense		-			(10,000	)
Income before income taxes	$	659,374		$	596,778

(1)	Earnings before interest and taxes (EBIT) excludes general corporate expenses.

(2)	Prior year amounts have been reclassified to conform with the current year presentation.

Pitney Bowes Inc.
Reconciliation of Reported Consolidated Results to Adjusted Results
(Unaudited)

(Dollars in thousands, except per share amounts)

	Three months ended Sept 30,						Nine months ended Sept 30,
		2006			2005			2006			2005

GAAP income from
continuing operations
after income taxes,
as reported	$	144,227		$	133,019		$	402,338		$	389,621
Restructuring
charge		4,332			8,268			11,141			15,934
Tax settlement		-			-			20,000			-
Contributions to
charitable foundations		-			-			-			6,100
Income from continuing
operations after income
taxes, as adjusted	$	148,559		$	141,287		$	433,479		$	411,655

GAAP diluted earnings
per share from continuing
operations, as reported	$	0.64		$	0.57		$	1.78		$	1.67
Restructuring charge		0.02			0.04			0.05			0.07
Tax settlement		-			-			0.09			-
Contributions to
charitable foundations		-			-			-			0.03
Diluted earnings per
share from continuing
operations, as
adjusted	$	0.66		$	0.61		$	1.92		$	1.77


GAAP net cash provided
by operating activities,
as reported	$	(67,634	)	$	216,202		$	328,710		$	425,735
Capital
expenditures		(81,430	)		(67,766	)		(243,858	)		(215,446	)
Reserve account
deposits		10,390			100			10,390			(9,100	)
Restructuring payments
and discontinued
operations		33,045			(105	)		56,437			(9,634	)
Contributions to
charitable foundations		-			-			-			10,000
IRS/ Capital Services
tax payment		238,500						238,500
IRS bond payment		-			-			-			200,000

Free cash flow, as
adjusted	$	132,871		$	148,431		$	390,179		$	401,555

Note: The sum of the earnings per share amounts may not equal the totals above due to rounding.

Editorial - Sheryl Y. Battles
	VP, Corp. Communications
	203/351-6808

SOURCE: Pitney Bowes Inc.

CONTACT: Editorial - Sheryl Y. Battles, VP, Corp. Communications,
+1-203-351-6808; Financial - Charles F. McBride, VP, Investor Relations,
+1-203-351-6349

Web site: http://www.pb.com/