UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8 - K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report
(Date of earliest event reported): January 27, 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 January 27, 2000, regarding its financial
results for the period ended December 31, 1999, including consolidated
statements of income and selected segment data for the three and twelve months
ended December 31, 1999 and 1998, and consolidated balance sheets at December
31, 1999, September 30, 1999 and December 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
------- -----------
(1) Pitney Bowes Inc. press release dated January 27, 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.
January 31, 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 RECORD FOURTH QUARTER
AND YEAR-END RESULTS
Fourth Quarter 1999
- -------------------
18% Growth in Diluted EPS from Continuing Operations to 66 cents
7% Revenue Growth to $1.19 Billion
14.9% Income from Continuing Operations Margin
Full-Year 1999
- --------------
13% Growth in Diluted EPS from Net Income to $2.34
8% Revenue Growth to $4.43 Billion
Operating Profit Exceeds $1 Billion for the First Time on 15% Growth
Nearly $1 Billion in Cash Generated from Operations
Stamford, Conn., January 27, 2000 -- Pitney Bowes Inc. (NYSE: PBI) today
announced record fourth-quarter performance featuring a seven-percent increase
in revenue to $1.19 billion up from $1.11 billion in 1998 and an 18-percent
increase in diluted earnings per share from continuing operations to 66 cents.
Income from continuing operations rose 15 percent to $177.1 million. Net income
grew nine percent to $178.1 million and diluted earnings per share grew 13
percent.
The Company additionally reported record 1999 performance, which included
an eight-percent increase in full-year revenue to $4.43 billion and a 25 percent
increase in diluted earnings per share from continuing operations to $2.42.
Full-year income from continuing operations rose 22 percent from the prior year
to $659.2 million. The full-year results include the one time, after-tax net
settlement of $29.5 million received from the U.S. Postal Service in the third
quarter of 1999. Diluted earnings per share from net income, increased 13
percent to $2.34 on income of $636.2 million, which is an increase of 10 percent
above the prior year. Cash generated from operations was $981 million for the
year, a 27 percent increase over 1998.
(2)
The Company also announced that it has received approximately $490 million
from the sale of its mortgage servicing subsidiary, Atlantic Mortgage &
Investment Corporation (AMIC) to ABN AMRO North America, which closed earlier
this month. Financial results for 1999 and 1998 have been restated to exclude
AMIC from continuing operations.
Pitney Bowes Chairman and CEO, Michael J. Critelli, commented, "I am
pleased that our focus on customers' messaging needs yielded yet another year of
strong revenue growth and the fifth consecutive year of double-digit diluted
earnings per share growth from continuing operations. By extending our product
offerings with value-added software and services and improving the customer
experience by redesigning our business processes, we continue to enhance the
return on the assets deployed in the business. The resulting cash from
operations, when combined with the $490 million from the sale of AMIC, will
provide us with additional flexibility as we invest for growth in 2000."
Turning to the quarter, Mr. Critelli noted, "Our success has not only been
driven by having superior products and services that meet customers' messaging
needs, but also by our investment in web-enabling systems and processes that
help to improve customer acquisition, sales effectiveness and operating
productivity. As a result of these and other initiatives, net margins improved
when compared to the previous year, and we expect this trend to continue."
As previously announced, the Company is in the midst of an 11.6 million
share repurchase program. During the fourth quarter, the Company repurchased
approximately 1.5 million shares on the open market, bringing the total to
approximately 7.4 million shares repurchased throughout 1999. Additionally, the
Board of Directors implemented two actions to enhance total shareholder value:
o An 11.8 percent increase in the dividend on common stock to $1.14 per share,
marking the eighteenth consecutive year of double-digit increases
o An additional authorization to repurchase four million shares of common
stock for a total authorization of 8.2 million shares
(3)
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. Mailing and Integrated Logistics
revenue grew eight percent in the quarter with a 19 percent increase in
operating profit.
Once again, the demand for software-enabled production mail systems, which
process complex marketing, statement and billing applications, helped fuel the
revenue growth for the sector. International results were also strong as the
Company benefited from meter migration opportunities related to Euro conversion
in Germany and technology transition opportunities in Canada and the United
Kingdom. Customers continued to take advantage of the attractive financial
alternatives offered them as part of a complete solution for their messaging
needs. They can gain easy access to postage 24 hours a day, 7 days a week
through Postage-by-Phone(TM) and pay for postage through credit products such as
Purchase PowerSM, or advance deposit, interest-paying accounts via Postal
PrivilegeSM.
The Office Solutions Segment includes Pitney Bowes Office Systems and
Pitney Bowes Management Services. Fourth quarter performance in this segment
included three-percent revenue growth and a six-percent decline in operating
profit. Excluding the impact of currency, operating profit would have grown two
percent. The segment's operating profit was impacted by the recent sharp and
rapid rise in the value of the yen, the longer selling cycles of national
accounts, and the costs associated with transitioning to renting copiers,
consistent with our strategy of acquiring Fortune 1000 customers. In fact, the
Company recently added copier as a preferred supplier to three Fortune 1000
companies.
During the quarter, Pitney Bowes Management Services (PBMS) revenues were
flat while operating profits increased at a double-digit percentage rate, driven
by programs designed to improve the profitability of customer contracts while
increasing service levels. In the fourth quarter, PBMS booked its highest net
new business since the third quarter of 1998.
Office Systems, featuring the copier and facsimile product lines, grew
revenues four percent for the quarter. The copier business posted excellent
rental revenue growth as the business continued the transition to digital,
networked solutions and a focus on selling to national and major accounts.
Ongoing price pressures in the market and lower supplies revenues impacted
facsimile revenues.
(4)
The Capital Services Segment includes primarily asset- and fee-based
income generated by large ticket external assets. During the quarter, the
segment's revenue increased by 16 percent while its operating profit decreased
by six percent. The Company continued its strategic shift to fee-based income by
lowering the asset base. Excluding the Capital Services Segment, the Company's
revenue also grew seven percent for the quarter.
Commenting on the year, Mr. Critelli stated, "1999 was an excellent year
of profitability and growth where Pitney Bowes benefited from strong demand for
a wide variety of products and services that help businesses of all sizes meet
their mail and messaging needs. The Paragon(TM) and Galaxy(TM) multifunctional
mail finishing systems were in high demand by mid- to high-volume mailers
looking for enhanced operational efficiency. The customer acquisition and
retention needs of businesses of all kinds, including e-businesses, stimulated
the demand for targeted direct marketing mail. Mailers at the high-end of the
market turned to the customized software, equipment and systems integration
services provided by our Production Mail and Document Factory Solutions
business. We provide that same ability to produce professional, tailored
one-to-one marketing documents for the mid-volume user through our unique Mail
Creation solutions such as the DocuMatch(TM), a networked, integrated mail
preparation system.
"Additionally, our shipping and logistics business has experienced
superior growth in revenue and operating profit because of the growing needs of
all businesses, including e-tailers, to select and manage the most efficient and
cost-effective way to fulfill customer orders.
"Our international operations enjoyed excellent growth in revenue and
profitability during the year led by focused sales management and cost controls,
plus meter migration mandates in several countries.
"As a result, during the past year Pitney Bowes was able to grow its
revenue by eight percent, its operating profit by 15 percent and deliver 19
percent growth in diluted earnings per share from continuing operations, even
when the $29.5 million net after-tax settlement with the U.S. Postal Service is
excluded."
Mr. Critelli concluded, "Looking toward 2000, we will benefit not only
from the drivers of growth in 1999, but from the explosive growth of the 'new
economy.' E-commerce and the Internet are expanding customers' options for
business transactions, adding e-tail to traditional retail transactions. The
opportunity is to participate in both a greater volume of transactions and a
greater part of the transaction cycle, from customer acquisition/retention,
order fulfillment and product delivery, to bill presentment and payment.
(5)
"Our e-business initiatives will leverage the explosive growth of the
Internet by creating new revenue opportunities in both the business-to-business
and business-to-consumer market places, as well as creating efficient e-business
models which leverage our cost structure. Central to defining our total
e-business strategy is our extensive expertise in understanding the value
proposition for customers in the business messaging and logistics marketplace.
PBI is positioned to be a significant participant in the commercially-viable
segments of these emerging markets by employing the following guiding
principles:
o PBI will web-enable all of our two million plus customers
o PBI will achieve seamless interaction with our customers through multiple
distribution channels and touch points
o PBI will approach developing segments utilizing a scalable investment
strategy
o PBI will leverage the four critical components that spell competitive
success on the Internet
- Customer Base
- Brand Recognition
- Intellectual Property
- Investment Capital
"New and developing e-commerce companies must use significant investment
capital to grow customer base, build brand recognition and develop technology.
Pitney Bowes will exploit its already substantial advantage in these areas to
compete and win in targeted market segments.
"In summary, the transaction cycle is changing the new e-commerce world,
but properly positioned companies like Pitney Bowes can use these opportunities
to enrich product and services offerings."
Fourth quarter 1999 revenue included $594.0 million from sales, up six
percent from $562.2 million in the fourth quarter of 1998; $451.6 million from
rentals and financing, up 10 percent from $411.3 million; and $142.5 million
from support services, up five percent from $135.8 million.
Fourth quarter 1999 net income was $178.1 million, or 66 cents per diluted
share, compared to $163.1 million, or 59 cents per diluted share, in 1998. There
was no income from AMIC in the fourth quarter 1999 compared to $8.5 million in
net income, or three cents per diluted share, in 1998.
(6)
For the full year, revenue was $4.43 billion, up eight percent from $4.09
billion in 1998; and net income in 1999 was $636.2 million, or $2.34 per diluted
share, compared to $576.4 million, or $2.06 per diluted share in 1998. The full
year net income included $22.9 million in net losses from discontinued
operations, or eight cents per diluted share, compared to $33.9 million in net
income or twelve cents per diluted share, in 1998.
Pitney Bowes is a global provider of informed mail and messaging
management. For more information about the Company visit www.pitneybowes.com.
--------------------
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 and subsequent Form 8-K current report filed with the
Securities and Exchange Commission.
# # #
Note: Consolidated statements of income for the three and twelve months ended
December 31, 1999 and 1998, and consolidated balance sheets at December 31,
1999, September 30, 1999 and December 31, 1998 are attached.
Pitney Bowes Inc.
Consolidated Statements of Income
---------------------------------
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended December 31, Twelve Months Ended December 31,
------------------------------------ ------------------------------------
1999 1998 1999 1998
-------------- -------------- -------------- ---------------
Revenue from:
Sales $ 593,953 $ 562,236 $ 2,180,255 $ 1,993,546
Rentals and financing 451,618 411,341 1,696,952 1,581,866
Support services 142,456 135,788 555,401 515,503
-------------- -------------- -------------- ---------------
Total revenue 1,188,027 1,109,365 4,432,608 4,090,915
-------------- -------------- -------------- ---------------
Costs and expenses:
Cost of sales 316,564 298,918 1,220,124 1,146,404
Cost of rentals and financing 123,487 109,380 469,912 419,123
Selling, service and administrative 409,727 396,261 1,519,349 1,443,080
Research and development 30,193 27,411 108,900 100,806
Other income - - (49,574) -
Interest, net 45,631 41,689 179,325 156,898
-------------- -------------- -------------- ---------------
Total costs and expenses 925,602 873,659 3,448,036 3,266,311
-------------- -------------- -------------- ---------------
Income from continuing operations
before income taxes 262,425 235,706 984,572 824,604
Provision for income taxes 85,322 81,121 325,413 282,092
-------------- -------------- -------------- ---------------
Income from continuing operations 177,103 154,585 659,159 542,512
Discontinued operations 1,020 8,519 (22,947) 33,882
-------------- -------------- -------------- ---------------
Net income $ 178,123 $ 163,104 $ 636,212 $ 576,394
============== ============== ============== ===============
Basic earnings per share
Continuing operations $ 0.67 $ 0.57 $ 2.47 $ 1.98
Discontinued operations - 0.03 (0.09) 0.12
-------------- -------------- -------------- ---------------
Net income $ 0.67 $ 0.60 $ 2.38 $ 2.10
============== ============== ============== ===============
Diluted earnings per share
Continuing operations $ 0.66 $ 0.56 $ 2.42 $ 1.94
Discontinued operations - 0.03 (0.08) 0.12
-------------- -------------- -------------- ---------------
Net income $ 0.66 $ 0.59 $ 2.34 $ 2.06
============== ============== ============== ===============
Average common and potential common
shares outstanding 268,775,741 276,722,479 272,006,143 279,656,603
============== ============== ============== ===============
Pitney Bowes Inc.
Consolidated Balance Sheets
---------------------------
(Dollars in thousands, except per share data)
(Unaudited)
Assets 12/31/99 9/30/99 12/31/98
- ------ ----------- ----------- -----------
Current assets:
Cash and cash equivalents $ 254,270 $ 152,057 $ 125,684
Short-term investments, at cost which
approximates market 2,414 873 3,302
Accounts receivable, less allowances:
12/99 $28,716 9/99 $25,493 12/98 $24,665 432,224 404,720 382,406
Finance receivables, less allowances:
12/99 $48,056 9/99 $43,147 12/98 $51,232 1,779,696 1,560,641 1,400,786
Inventories 257,452 242,678 266,734
Other current assets and prepayments 128,662 131,433 330,051
Net assets of discontinued operations 487,856 137,869 -
----------- ----------- -----------
Total current assets 3,342,574 2,630,271 2,508,963
----------- ----------- -----------
Property, plant and equipment, net 484,181 473,558 477,476
Rental equipment and related inventories, net 810,788 825,946 806,585
Property leased under capital leases, net 11,140 3,097 3,743
Long-term finance receivables, less allowances:
12/99 $56,665 9/99 $57,197 12/98 $79,543 1,907,431 1,925,891 1,999,339
Investment in leveraged leases 969,589 979,910 827,579
Goodwill, net of amortization:
12/99 $54,848 9/99 $53,057 12/98 $47,514 226,764 227,507 222,980
Other assets 470,205 495,998 814,374
Net assets of discontinued operations - 319,248 -
----------- ----------- -----------
Total assets $ 8,222,672 $ 7,881,426 $ 7,661,039
=========== =========== ===========
Liabilities and stockholders' equity
- ------------------------------------
Current liabilities:
Accounts payable and accrued liabilities $ 915,826 $ 825,622 $ 898,548
Income taxes payable 255,201 230,347 194,443
Notes payable and current portion of
long-term obligations 1,320,332 1,315,316 1,259,193
Advance billings 381,405 374,512 369,628
----------- ----------- -----------
Total current liabilities 2,872,764 2,745,797 2,721,812
----------- ----------- -----------
Deferred taxes on income 1,082,019 1,061,686 920,521
Long-term debt 1,997,856 1,847,808 1,712,937
Other noncurrent liabilities 334,423 348,292 347,670
----------- ----------- -----------
Total liabilities 6,287,062 6,003,583 5,702,940
----------- ----------- -----------
Preferred stockholders' equity in a
subsidiary company 310,000 310,000 310,097
Stockholders' equity:
Cumulative preferred stock, $50 par value,
4% convertible 29 29 34
Cumulative preference stock, no par value,
$2.12 convertible 1,841 1,901 2,031
Common stock, $1 par value 323,338 323,338 323,338
Capital in excess of par value 17,382 10,330 16,173
Retained earnings 3,437,185 3,326,639 3,073,839
Accumulated other comprehensive income (93,015) (93,456) (88,217)
Treasury stock, at cost (2,061,150) (2,000,938) (1,679,196)
----------- ----------- -----------
Total stockholders' equity 1,625,610 1,567,843 1,648,002
----------- ----------- -----------
Total liabilities and stockholders' equity $ 8,222,672 $ 7,881,426 $ 7,661,039
=========== =========== ===========
Pitney Bowes Inc.
Revenue and Operating Profit
By Business Segment
December 31, 1999
(Unaudited)
(Dollars in thousands)
%
1999 1998 Change
------------- ------------- --------
Fourth Quarter
- --------------
Revenue
-------
Mailing and Integrated Logistics $ 808,923 $ 746,382 8%
Office Solutions 322,615 314,427 3%
Capital Services 56,489 48,556 16%
------------- ------------- --------
Total Revenue $1,188,027 $1,109,365 7%
============= ============= ========
Operating Profit (1)
--------------------
Mailing and Integrated Logistics $ 225,125 $ 188,408 19%
Office Solutions 61,710 65,626 (6%)
Capital Services 18,253 19,402 (6%)
------------- ------------- --------
Total Operating Profit $ 305,088 $ 273,436 12%
============= ============= ========
<FN>
(1) Operating profit excludes general corporate expenses, income taxes and net
interest other than that related to finance operations.
</FN>
Pitney Bowes Inc.
Revenue and Operating Profit
By Business Segment
December 31, 1999
(Unaudited)
(Dollars in thousands)
%
1999 1998 Change
------------- ------------- --------
Year Ended December 31
- ----------------------
Revenue
-------
Mailing and Integrated Logistics $2,991,449 $2,707,044 11%
Office Solutions 1,266,011 1,216,007 4%
Capital Services 175,148 167,864 4%
------------- ------------- --------
Total Revenue $4,432,608 $4,090,915 8%
============= ============= ========
Operating Profit (1)
--------------------
Mailing and Integrated Logistics $ 798,377 $ 660,740 21%
Office Solutions 241,437 235,156 3%
Capital Services 51,127 51,431 (1%)
------------- ------------- --------
Total Operating Profit $1,090,941 $ 947,327 15%
============= ============= ========
<FN>
(1) Operating profit excludes general corporate expenses, income taxes and net
interest other than that related to finance operations.
</FN>