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 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 April 18, 2000, regarding its
financial results for the period ended March 31, 2000, including consolidated
statements of income and selected segment data for the three months ended March
31, 2000 and 1999, and consolidated balance sheets at March 31, 2000, December
31, 1999 and March 31, 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 April 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.
April 20, 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 FIRST QUARTER EARNINGS
-------------------------------------------
Highlights:
o 21st Consecutive Quarter of Double-Digit Earnings Per Share Growth
o Improved Pretax Margin to 20.4 percent
o Company Invests Over $20 Million in Growth Initiatives During the Quarter
STAMFORD, Conn., April 18, 2000 - Pitney Bowes Inc. (NYSE: PBI) today reported
first quarter results that featured a 13 percent increase in diluted earnings
per share from continuing operations to 57 cents, the 21st consecutive quarter
of double-digit growth. Revenue in the quarter grew five percent to $1.1 billion
and income from continuing operations grew nine percent to $151.6 million.
Pitney Bowes Chairman and Chief Executive Officer Michael J. Critelli
discussed the first quarter results: "We were pleased with the good growth and
margin expansion in strategic parts of our business, while we invested
aggressively and structured our business to focus on Internet and other new
business growth initiatives.
(2)
However, revenues in the quarter did not reflect our underlying growth rate
which we believe to be eight percent. We are experiencing a challenging revenue
comparison for the first half of the year, due to the lack of meter migration
and PROM revenues that were realized during the first half of 1999. Adjusting
for these factors, our revenue growth this quarter would have been approximately
eight percent."
"During the quarter, we delivered technologically-driven products and
services for businesses of all sizes, including Internet-enabled applications.
For example, we formed the docSense business to help large companies easily
integrate web-based delivery of bills and statements with their existing hard
copy systems. Our recently approved ClickStamp OnlineTM Internet postage
application joins the PitneyWorksSM suite of mailing, shipping, marketing and
financial solutions to help small businesses improve their operating efficiency.
Over one million customers of all sizes use our Postage By Phone(R) system to
manage more than $11 billion in postage transactions. Now they can visit
www.postagebyphone.com and use the Internet 24/7 to download funds and monitor
their postage usage. In addition to these and other Internet related products
announced during the quarter, we announced a new incoming mail solution and a
new digital metering system. We also completed a number of strategic alliances
that broaden our solution set and customer base. Though it's too early in the
process for these initiatives to have generated revenues, we expect strong
contribution to revenue growth in the future.
"We continue to believe that our business models will produce higher
revenue growth in the second half of the year. The core mail finishing business
remains strong. We also have solid positions in high growth sectors of the
market such as logistics, mail creation, production mail, and international mail
as well as our new growth areas of Internet-based small business solutions,
incoming messaging and desktop messaging solutions.
(3)
"This quarter alone we have invested approximately $20 million in Internet
and other new business initiatives representing a 44 percent increase over the
prior year because we believe these are key drivers of future growth in
shareholder value. During the year our plan is to invest in excess of $100
million in Internet and other new business initiatives, which is almost twice
the spend rate of 1999."
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 services, and software. On a reported basis, the segment's
revenue grew six percent and its operating profit grew a strong 14 percent led
by improved sales margins. Revenue for the segment would have grown
approximately 10 percent during the quarter excluding the impacts of meter
migration and PROM sales associated with the U.S. postal rate increase in the
first quarter 1999. Direct marketing and e-commerce activity stimulated strong
demand for vendor-inclusive shipping and logistics systems, as well as the
Company's unique mail creation products, such as the one-to-one marketing mail
preparation system, DocumatchTM, and the address correction and postal
formatting software, SmartMailerTM. As a result, there was strong revenue growth
in the software and services portion of the Mailing and Integrated Logistics
segment, which includes the Company's mail creation and shipping businesses.
Worldwide production mail revenues continued to show strong growth as
direct marketing and billing applications drove demand worldwide for high-speed,
intelligent mail finishing. This included the first installations of the largest
order the Company has ever received from the Peoples' Republic of China.
(4)
International Mailing results were also strong as the Company continues to
benefit from meter migration mandates related to the Euro conversion in Germany
and the transition to electronic and digital metering technology in the United
Kingdom and Canada. During the quarter, the Company signed a working party
agreement with Royal Mail to enable working together to develop products and
services in the United Kingdom.
The Office Solutions Segment includes Pitney Bowes Office Systems and
Pitney Bowes Management Services. First-quarter performance in this segment
included three percent revenue growth with a nine percent decline in operating
profit.
During the quarter, Office Systems' revenue grew three percent while
operating profit declined. Operating profit was negatively impacted by an
increase in the value of the Yen, the higher costs of digital equipment, and
margin impacts associated with the transition to a rental revenue model for
large national accounts in the copier business. Strong copier rental revenue
growth demonstrates the Company's ongoing success in leveraging its extensive
corporate facsimile relationships to place copier fleets in national accounts.
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 of pursuing disciplined,
profitable growth continues to be demonstrated in several ways. This quarter the
business once again produced substantially higher operating profit growth than
the three percent revenue growth. This strategy, which includes enhanced
customer service, also resulted in net new written business in the first quarter
of 2000 nearly equal to that of full-year 1999. We believe that this positions
us well for revenue growth improvement during 2000.
(5)
The Capital Services Segment includes primarily asset- and fee-based income
generated by large ticket external assets. During the quarter, the segment's
revenue was flat while operating profit increased by five percent. We expect the
revenue base of Capital Services to be flat or decline as the Company continues
its strategic shift to fee-based income resulting in a lower revenue generating
asset base.
Mr. Critelli concluded, "We are confident that the actions we are taking in
our core business as well as the significant investments we are making in new
growth initiatives, will drive higher revenue growth in the second half of the
year."
As previously announced, the Company has authorization to repurchase 8.2
million of its common shares outstanding. During the first quarter 2000, the
Company repurchased approximately 4.6 million shares under this program.
First quarter 2000 revenue included $520.0 million from sales, up two
percent from $510.4 million in the first quarter of 1999 (exclusive of PROM
revenues associated with the U.S. Postal Service rate increase, sales would have
grown four percent); $436.2 million from rentals and financing, up eight percent
from $405.7 million; and $145.8 million from support services, up nine percent
from $133.2 million. Net income for the period was $151.6 million, or 57 cents
per diluted share, compared to first-quarter 1999 net income of $142.3 million,
or 52 cents per diluted share. First quarter 1999 net income included $3.7
million of income from discontinued operations, or 1 cent per diluted share in
1999.
Pitney Bowes is a global provider of informed mail and messaging
management.
(6)
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 months ended March 31,
2000 and 1999, and consolidated balance sheets at March 31, 2000, December 31,
1999, and March 31, 1999, are attached.
Pitney Bowes Inc.
Consolidated Statements of Income
(Unaudited)
-----------
(Dollars in thousands, except per share data)
Three Months Ended March 31,
--------------------------------
2000 1999
-------------- -------------
Revenue from:
Sales $ 520,042 $ 510,382
Rentals and financing 436,166 405,725
Support services 145,759 133,217
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Total revenue 1,101,967 1,049,324
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Costs and expenses:
Cost of sales 300,833 296,719
Cost of rentals and financing 121,611 110,933
Selling, service and administrative 378,313 361,028
Research and development 29,511 25,904
Interest, net 47,162 45,500
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Total costs and expenses 877,430 840,084
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Income from continuing operations
before income taxes 224,537 209,240
Provision for income taxes 72,984 70,669
-------------- -------------
Income from continuing operations 151,553 138,571
Income from discontinued operations - 3,700
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Net income $ 151,553 $ 142,271
============== =============
Basic earnings per share
Continuing operations $ 0.58 $ 0.52
Discontinued operations - 0.01
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Net income $ 0.58 $ 0.53
============== =============
Diluted earnings per share
Continuing operations $ 0.57 $ 0.51
Discontinued operations - 0.01
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Net income $ 0.57 $ 0.52
============== =============
Average common and potential common
shares outstanding 266,033,984 274,962,244
============== =============
Pitney Bowes Inc.
Consolidated Balance Sheets
---------------------------
(Dollars in thousands, except per share data)
(Unaudited) (Unaudited)
Assets 3/31/00 12/31/99 3/31/99
- ------ ----------- ----------- -----------
Current assets:
Cash and cash equivalents $ 219,063 $ 254,270 $ 129,687
Short-term investments, at cost which
approximates market 19,126 2,414 1,654
Accounts receivable, less allowances:
3/00 $25,443 12/99 $28,716 3/99 $25,667 423,192 432,224 419,002
Finance receivables, less allowances:
3/00 $43,034 12/99 $48,056 3/99 $51,114 1,617,858 1,779,696 1,543,328
Inventories 262,595 257,452 260,727
Other current assets and prepayments 152,870 128,662 350,659
Net assets of discontinued operations - 487,856 -
----------- ----------- -----------
Total current assets 2,694,704 3,342,574 2,705,057
----------- ----------- -----------
Property, plant and equipment, net 484,812 484,181 474,985
Rental equipment and related inventories, net 797,301 810,788 829,470
Property leased under capital leases, net 2,800 11,140 3,418
Long-term finance receivables, less allowances:
3/00 $59,089 12/99 $56,665 3/99 $78,816 2,010,562 1,907,431 1,941,355
Investment in leveraged leases 987,297 969,589 841,780
Goodwill, net of amortization:
3/00 $56,628 12/99 $54,848 3/99 $49,588 229,180 226,764 223,213
Other assets 612,005 470,205 823,025
----------- ----------- -----------
Total assets $ 7,818,661 $ 8,222,672 $ 7,842,303
=========== =========== ===========
Liabilities and stockholders' equity
- ------------------------------------
Current liabilities:
Accounts payable and accrued liabilities $ 903,565 $ 915,826 $ 830,084
Income taxes payable 265,275 255,201 224,865
Notes payable and current portion of
long-term obligations 974,370 1,320,332 1,483,599
Advance billings 380,620 381,405 393,829
----------- ----------- -----------
Total current liabilities 2,523,830 2,872,764 2,932,377
----------- ----------- -----------
Deferred taxes on income 1,122,865 1,082,019 949,322
Long-term debt 2,037,860 1,997,856 1,710,427
Other noncurrent liabilities 331,985 334,423 354,801
----------- ----------- -----------
Total liabilities 6,016,540 6,287,062 5,946,927
----------- ----------- -----------
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 34
Cumulative preference stock, no par value,
$2.12 convertible 1,809 1,841 1,976
Common stock, $1 par value 323,338 323,338 323,338
Capital in excess of par value 13,479 17,382 13,807
Retained earnings 3,513,693 3,437,185 3,146,946
Accumulated other comprehensive income (91,805) (93,015) (88,665)
Treasury stock, at cost (2,268,422) (2,061,150) (1,812,060)
----------- ----------- -----------
Total stockholders' equity 1,492,121 1,625,610 1,585,376
----------- ----------- -----------
Total liabilities and stockholders' equity $ 7,818,661 $ 8,222,672 $ 7,842,303
=========== =========== ===========
Pitney Bowes Inc.
Revenue and Operating Profit
By Business Segment
March 31, 2000
(Unaudited)
(Dollars in thousands)
%
2000 1999 Change
------------- ------------- ---------
First Quarter
- -------------
Revenue
-------
Mailing and Integrated Logistics $ 741,841 $ 698,629 6%
Office Solutions 323,989 314,580 3%
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MAIL and Office Solutions 1,065,830 1,013,209 5%
------------- ------------- ---------
Capital Services 36,137 36,115 -
------------- ------------- ---------
Total Revenue $ 1,101,967 $ 1,049,324 5%
============= ============= =========
Operating Profit (1)
--------------------
Mailing and Integrated Logistics $ 196,104 $ 171,343 (2) 14%
Office Solutions 52,992 58,545 (9%)
------------- ------------- ---------
MAIL and Office Solutions 249,096 229,888 8%
------------- ------------- ---------
Capital Services 8,561 8,182 5%
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Total Operating Profit $ 257,657 $ 238,070 8%
============= ============= =========
<FN>
(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.
</FN>