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): January 29, 2002
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 29, 2002, regarding its financial
results for the period ended December 31, 2001, including consolidated
statements of income for the three and twelve months ended December 31, 2001 and
2000, and consolidated balance sheets at December 31, 2001, September 30, 2001
and December 31, 2000, 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 29, 2002.
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, 2002
/s/ B. Nolop
---------------------------------------
B. Nolop
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
/s/ A. F. Henock
---------------------------------------
A. F. Henock
Vice President - Finance
(Principal Accounting Officer)
(1)
FOR IMMEDIATE RELEASE
PITNEY BOWES REPORTS RESULTS IN LINE WITH GUIDANCE
- --------------------------------------------------
o Excluding Special Items:
- Diluted Earnings per Share of 57 cents for the Quarter and $2.25 for the
Full Year
- Approximately $617 million in Free Cash Flow for the Year
o 2.2 Million Shares Repurchased During the Quarter
o Annualized Dividend Rate on Common Stock increased to $1.18 per Share
o $300 Million Share Repurchase Authorization
Stamford, Conn., January 29, 2002 - Pitney Bowes Inc. (NYSE:PBI) today reported
fourth quarter and full year 2001 performance in line with previous guidance.
For the fourth quarter, revenue increased 11 percent to $1,091 million from $978
million in 2000. Excluding special items, income from continuing operations was
$140.0 million and diluted earnings per share from continuing operations were 57
cents.
For the full year, revenue increased six percent to $4.1 billion from
$3.9 billion in 2000. Excluding special items, income from continuing operations
was $556.3 million and diluted earnings per share from continuing operations
were $2.25.
As previously announced, special items in the fourth quarter of 2001
included: a non-cash pre-tax charge of $10 million associated with the company's
plan to transition to the next generation of digital, networked mailing
technology and a pre-tax charge of $28 million related to incremental
restructuring plan initiatives to complete the company's restructuring program.
There was also a pre-tax charge of approximately $24 million associated with the
settlement of a lawsuit related to lease upgrade pricing in the early to
mid-1990's. The settlement is subject to court approval. The $24 million charge
relates to the following settlement costs: award certificates to be provided to
members of the class for purchase of office products through the Pitney Bowes
supply line and the cost of fees and expenses.
(2)
Excluding cash flows associated with special items, free cash flow from
continuing operations for the year was approximately $617 million. Including
cash flows associated with special items and discontinued operations, free cash
flow for the year was approximately $780 million. During the quarter, the
company repurchased approximately 2.2 million shares, bringing the total 2001
share repurchase to 7.8 million shares for approximately $300 million which
completes the current board authorization for share repurchase.
Demonstrating its confidence in continued strong cash flow generation,
the Board of Directors of the company has approved two actions to further
enhance shareholder value:
o First, the dividend on common stock was increased to an annualized rate of
$1.18 per share. The first quarter cash dividend at the new rate of 29.5
cents per share is payable on March 12, 2002.
o Second, the board authorized the repurchase of up to $300 million of the
company's common stock. It is expected that these shares will be
repurchased in the open market over the next 12 to 24 months.
Pitney Bowes Chairman and CEO Michael J. Critelli, commented, "During
the fourth quarter, we successfully completed the spin-off of Imagistics
International Inc. to shareholders and also completed the acquisition of Secap
SA, a leading provider of digital mailing and paper handling systems in France.
Both of these transactions enhance our strategy of delivering shareholder value
by providing leading edge global, integrated mail and document management
solutions to organizations of all sizes.
"The current global economic conditions provide us with both challenges
and opportunities. During the quarter, we continued to experience the pressures
of a slowing economy in the U.S. and around the world, as many of our customers
delayed purchase or upgrade decisions. We have also seen some of our customers
consolidate and downsize their operations, resulting in reduced demand for some
of our higher value mailing products and outsourcing services.
(3)
"We are focused on working closely with our customers during these
challenging times to provide them with the mail and document management
solutions they need to succeed in this difficult environment. We will be
launching additional digital networked mailing systems throughout 2002 which
will enable companies to access new mailing services at a lower cost, which in
turn will allow businesses to operate more efficiently."
The Global Mailing Segment includes worldwide revenues and related
expenses from the sale, rental and financing of mail finishing, mail creation
and shipping equipment, related supplies and services, postal payment solutions
and software. In the fourth quarter, Global Mailing revenue increased five
percent and operating profit increased six percent. Excluding revenues from the
recent acquisitions of Bell & Howell's international operations and Secap SA,
Global Mailing revenues were down slightly for the quarter.
In the mailing business in the U.S., customer orders and upgrades
continued to be impacted by the slow economic environment, especially for
shipping and systems related products.
Within the Global Mailing segment, international mailing's double-digit
revenue growth was fueled by the recent acquisitions in Europe and Asia,
including Secap SA and Bell & Howell's international operations, and solid
demand for mailing products in much of Europe. However, revenue growth was
moderated by weaker performance in the UK and Canada, as both countries were
similarly affected by slowing economic activity and a lull in those countries'
meter migration programs.
The Enterprise Solutions Segment includes Pitney Bowes Management
Services and Document Messaging Technologies. Revenues from Pitney Bowes
Management Services include facilities management contracts for advanced
mailing, reprographic, document management and other added-value services to
enterprises. Revenues from Document Messaging Technologies include sales,
service and financing of high speed, software-enabled production mail systems,
sorting equipment, incoming mail systems, electronic statement, billing and
payment solutions, and mailing software. The Enterprise Solutions segment
reported revenue growth of 35 percent and a decline in operating profit of 12
percent.
(4)
Pitney Bowes Management Services recorded a 52 percent increase in
revenues, during the quarter compared to the prior year. Excluding the revenues
from the recent acquisition of Danka Services International (DSI), Pitney Bowes
Management Services revenues grew ten percent. While Pitney Bowes Management
Services continues to record profitable growth, shrinking business operations of
some of its customers and increasing medical costs for its employees had an
adverse impact on operating profit during the quarter.
Document Messaging Technologies revenues declined one percent during
the quarter while operating profit decreased significantly. Document Messaging
Technologies performance continues to be impacted by a worldwide slow down in
capital spending, which has caused many of its customers to delay purchases of
higher-margin, customized inserting systems. Service revenues in the business
continued to grow steadily, but are lower margin revenues than product sales. At
the same time, the company is investing for the future growth of the business.
Total Messaging Solutions, the combined results of the Global Mailing
and Enterprise Solutions segments, reported 12 percent revenue growth while
operating profit increased four percent. Excluding the revenues from recent
acquisitions (DSI, Secap SA and the European and Asian operations of Bell &
Howell), Total Messaging Solutions revenues increased one percent.
The Capital Services Segment includes primarily asset- and fee-based
income generated by financing or arranging transactions of critical large-ticket
customer assets. Included in the segment this quarter are revenues and operating
profit associated with the strategic financing of equipment for posts around the
world. Previously, these revenues and operating profit were included in the
Global Mailing segment. Revenues for the quarter declined seven percent and
operating profit declined 12 percent, consistent with the company's ongoing
objective to shift to fee-based transactions.
(5)
Given the assumption that difficult economic conditions will persist in
2002, the company expects revenue growth in the range of nine percent to 11
percent for the first quarter 2002 and seven percent to nine percent for the
full year. After applying the new accounting standards for goodwill
amortization, diluted earnings per share from continuing operations are expected
to be in the range of 52 to 54 cents for the first quarter 2002 and $2.37 to
$2.40 for the full year.
Commenting on the year, Mr. Critelli stated, "2001 was an exceptional
and important year for Pitney Bowes. We have repositioned our business for
greater growth; realigned our organizational structure to leverage strengths and
address market opportunities; and completed the spin-off of Imagistics
International Inc. and seven strategic transactions that will better position us
for long-term growth and enhanced shareholder value. While 2002 may be a
challenging year economically, we believe we are well positioned to profitably
grow our business this year and into the future."
Fourth quarter 2001 consolidated revenue included $589.9 million from
sales, up 22 percent from $483.2 million in the fourth quarter of 2000; $362.1
million from rentals and financing, down two percent from $371.0 million; and
$138.8 million from support services, up 12 percent from $124.3 million. Income
from continuing operations for the period was $100.4 million, or 41 cents per
diluted share. Excluding special items in the fourth quarter 2001, income from
continuing operations was $140.0 million, or 57 cents per diluted share compared
to fourth quarter 2000 income from continuing operations of $137.7 million, or
55 cents per diluted share. Fourth quarter 2001 net income was $90.2 million, or
37 cents per diluted share compared to $148.3 million, or 59 cents per diluted
share in 2000. Fourth quarter 2001 consolidated net income included a loss of
$10.3 million from discontinued operations, or four cents per diluted share,
while fourth quarter 2000 net income included $10.6 million of income from
discontinued operations, or four cents per diluted share.
(6)
For the full year 2001, revenue was $4.12 billion, up six percent from
$3.88 billion in 2000. Income from continuing operations, before special items
in both periods, was $556.3 million, or $2.25 per diluted share in 2001,
compared to $562.3 million, or $2.17 per diluted share in 2000. Special items
for the full year 2001 included a non-cash pre-tax charge of $268 million
associated with the company's plan to transition to the next generation of
digital, networked mailing technology, and a pre-tax charge of $116 million
related to restructuring plan initiatives. There was also a pre-tax charge of
approximately $24 million associated with the settlement of a class action
lawsuit related to lease upgrade pricing, and a $362 million net pre-tax gain as
a result of settling a lawsuit with Hewlett-Packard Company. Special items in
2000 included: an after-tax charge of approximately $11 million related to the
consolidation of information technology staff and infrastructure, as well as a
$12 million tax benefit related to state tax law changes. Full year net income
for 2001 included a $26.0 million loss from discontinued operations, or 10 cents
per diluted share compared to $64.1 million of income, or 25 cents per diluted
share in 2000. As a result, full year net income for 2001 was $488.3 million, or
$ 1.97 per diluted share compared to $622.5 million, or $2.41 per diluted share
in 2000.
The board of directors declared a quarterly cash dividend of the
company's common stock of 29.5 cents per share, payable March 12, 2002, to
stockholders of record February 22, 2002. The board also declared a quarterly
cash dividend of 53 cents per share on the company's $2.12 convertible
preference stock, payable April 1, 2002, to stockholders of record March 15,
2002, and a quarterly cash dividend of 50 cents per share on the company's 4%
convertible cumulative preferred stock, payable May 1, 2002 to stockholders of
record April 12, 2002.
Management of Pitney Bowes will discuss the company's financial results
in a conference call today; scheduled for 8:30 a.m. EST. Instructions for
listening to the conference call over the WEB are available on the Investor
Relations page of the company's web site at
www.investorrelations.pitneybowes.com.
- --------------------------------------
Pitney Bowes is a $4 billion global provider of integrated mail and
document management solutions headquartered in Stamford, Connecticut. For more
information about the company, its products, services and solutions, visit
www.pitneybowes.com.
- --------------------
(7)
The statements contained in this press release that are not purely
historical are forward-looking statements with the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
These statements may be identified by their use of forward-looking terminology
such as the words "expects," "projects," "estimates," "anticipates," "intends,"
and other similar words. Such forward-looking statements include, but are not
limited to, statements about our restructuring plan and our future guidance,
including our expected revenue in the first quarter and full year 2002, and our
expected diluted earnings per share from continuing operations for the first
quarter and for the full year 2002. Such 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: severe adverse changes in the economic environment, changes in international
or national political or economic conditions, 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 2000 Annual Report on Form 10-K 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. The forward-looking statements contained in this news release are
made as of the date hereof and we do not assume any obligation to update the
reasons why actual results could differ materially from those projected in the
forward-looking statements.
Note: Consolidated statements of income for the three and twelve months ended
December 31, 2001 and 2000, and consolidated balance sheets at December 31,
2001, September 30, 2001 and December 31, 2000 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,
--------------------------------------- ------------------------------------
2001 2000 2001 2000
---------------- ------------- -------------- -------------
Revenue from:
Sales $ 589,892 $ 483,168 $ 2,125,745 $ 1,882,501
Rentals and financing 362,141 371,019 1,460,915 1,505,101
Support services 138,774 124,297 535,814 493,266
---------------- ------------- -------------- -------------
Total revenue 1,090,807 978,484 4,122,474 3,880,868
---------------- ------------- -------------- --------------
Costs and expenses:
Cost of sales 356,225 271,552 1,271,445 1,074,177
Cost of rentals and financing 84,641 91,064 350,870 373,232
Cost of meter transition (*) 10,300 - 268,300 -
Selling, service and administrative 366,262 333,371 1,370,152 1,299,081
Research and development 35,084 32,807 133,105 120,486
Other income (*) 24,075 - (338,097) -
Interest, net 43,972 48,261 184,173 192,377
Restructuring charges (*) 27,503 - 116,142 18,667
---------------- ------------- -------------- -------------
Total costs and expenses 948,062 777,055 3,356,090 3,078,020
---------------- ------------- -------------- -------------
Income from continuing operations
before income taxes 142,745 201,429 766,384 802,848
Provision for income taxes 42,316 63,775 252,064 239,723
---------------- ------------- -------------- -------------
Income from continuing operations 100,429 137,654 514,320 563,125
Discontinued operations (10,266) 10,632 (25,977) 64,104
Cumulative effect of accounting change (*) - - - (4,683)
---------------- ------------- -------------- -------------
Net income $ 90,163 $ 148,286 $ 488,343 $ 622,546
================ ============== ============== =============
Basic earnings per share
Continuing operations $ 0.41 $ 0.55 $ 2.09 $ 2.19
Discontinued operations (0.04) 0.04 (0.11) 0.25
Cumulative effect of accounting change - - - (0.02)
---------------- ------------- -------------- -------------
Net income 0.37 0.59 1.99 2.43
Special items after-tax (*) 0.16 - 0.17 -
Discontinued operations 0.04 (0.04) 0.11 (0.25)
---------------- ------------- -------------- -------------
Income from continuing operations
excluding special items $ 0.58 $ 0.55 $ 2.26 $ 2.19
================ ============== ============== =============
Diluted earnings per share
Continuing operations $ 0.41 $ 0.55 $ 2.08 $ 2.18
Discontinued operations (0.04) 0.04 (0.10) 0.25
Cumulative effect of accounting change - - - (0.02)
---------------- ------------- -------------- -------------
Net income 0.37 0.59 1.97 2.41
Special items after-tax (*) 0.16 - 0.17 -
Discontinued operations 0.04 (0.04) 0.10 (0.25)
---------------- ------------- -------------- -------------
Income from continuing operations
excluding special items $ 0.57 $ 0.55 $ 2.25 $ 2.17
================ ============== ============== =============
Average common and potential common
shares outstanding 245,015,133 252,517,006 247,615,560 258,602,218
================ ============== ============== =============
Note: Special items are indicated by the asterisks above or are otherwise
explained in the press release. Special items for the three and twelve
months ended December 31, 2001 resulted in a net after-tax charge of
$39,533 and $41,954, respectively.
The sum of the earnings per share amounts may not equal the totals above
due to rounding.
Pitney Bowes Inc.
Consolidated Balance Sheets
(Dollars in thousands, except per share data)
(Unaudited)
Assets 12/31/01 9/30/01 12/31/00
- ------ ------------- ------------- ------------
Current assets:
Cash and cash equivalents $ 231,588 $ 292,312 $ 198,255
Short-term investments, at cost which
approximates market 1,790 8,107 15,250
Accounts receivable, less allowances:
12/01 $32,448 9/01 $30,349 12/00 $26,468 408,414 386,885 313,510
Finance receivables, less allowances:
12/01 $61,451 9/01 $57,825 12/00 $44,129 1,601,189 1,486,910 1,592,920
Inventories 163,012 164,630 167,969
Other current assets and prepayments 150,615 151,398 145,786
Net assets of discontinued operations - 230,789 193,018
------------- ------------- ------------
Total current assets 2,556,608 2,721,031 2,626,708
------------- ------------- ------------
Property, plant and equipment, net 534,595 509,850 491,312
Rental equipment and related inventories, net 472,186 469,387 620,841
Property leased under capital leases, net 1,489 1,691 2,303
Long-term finance receivables, less allowances:
12/01 $65,967 9/01 $67,879 12/00 $53,222 1,898,976 1,790,647 1,980,876
Investment in leveraged leases 1,337,282 1,260,955 1,150,656
Goodwill, net of amortization:
12/01 $70,697 9/01 $66,451 12/00 $58,658 635,873 566,075 203,447
Other assets 881,462 691,149 612,760
Net assets of discontinued operations - 219,121 212,363
------------- ------------- ------------
Total assets $ 8,318,471 $ 8,229,906 $ 7,901,266
============= ============== ============
Liabilities and stockholders' equity
- ------------------------------------
Current liabilities:
Accounts payable and accrued liabilities $ 1,425,809 $ 1,191,435 $ 995,283
Income taxes payable 250,895 378,926 262,125
Notes payable and current portion of
long-term obligations 1,072,057 756,579 1,277,941
Advance billings 334,281 333,532 346,228
------------- ------------- ------------
Total current liabilities 3,083,042 2,660,472 2,881,577
------------- ------------- ------------
Deferred taxes on income 1,273,593 1,218,881 1,226,597
Long-term debt 2,419,150 2,436,358 1,881,947
Other noncurrent liabilities 341,331 338,076 316,170
------------- ------------- ------------
Total liabilities 7,117,116 6,653,787 6,306,291
------------- ------------- ------------
Preferred stockholders' equity in a
subsidiary company 310,000 310,000 310,000
Stockholders' equity:
Cumulative preferred stock, $50 par value,
4% convertible 24 24 29
Cumulative preference stock, no par value,
$2.12 convertible 1,603 1,609 1,737
Common stock, $1 par value 323,338 323,338 323,338
Capital in excess of par value 6,979 3,471 10,298
Retained earnings 3,658,481 3,950,435 3,766,995
Accumulated other comprehensive income (155,380) (148,132) (139,434)
Treasury stock, at cost (2,943,690) (2,864,626) (2,677,988)
------------- ------------- ------------
Total stockholders' equity 891,355 1,266,119 1,284,975
------------- ------------- ------------
Total liabilities and stockholders' equity $ 8,318,471 $ 8,229,906 $ 7,901,266
============== ============== =============
Pitney Bowes Inc.
Revenue and Operating Profit
By Business Segment
December 31, 2001
(Unaudited)
(Dollars in thousands)
%
2001 2000 (2) Change
-------------- -------------- ---------
Fourth Quarter
- --------------
Revenue
-------
Global Mailing $ 736,550 $ 702,056 5%
Enterprise Solutions 311,097 230,070 35%
-------------- --------------- ---------
Total Messaging Solutions 1,047,647 932,126 12%
-------------- --------------- ----------
Capital Services 43,160 46,358 (7%)
-------------- --------------- ----------
Total Revenue $ 1,090,807 $ 978,484 11%
=============== =============== ==========
Operating Profit (1)
-------------------
Global Mailing $ 221,881 $ 208,747 6%
Enterprise Solutions 20,891 23,830 (12%)
-------------- --------------- ---------
Total Messaging Solutions 242,772 232,577 4%
-------------- --------------- ---------
Capital Services 15,148 17,215 (12%)
-------------- --------------- ---------
Total Operating Profit $ 257,920 $ 249,792 3%
=============== =============== ==========
<FN>
(1) Operating profit excludes general corporate expenses, income taxes and net
interest other than that related to finance operations.
(2) Prior year amounts have been reclassified to conform with the current year
presentation.
</FN>
Pitney Bowes Inc.
Revenue and Operating Profit
By Business Segment
December 31, 2001
(Dollars in thousands)
%
2001 2000 (2) Change
-------------- ------------ --------
Year to Date
- ------------
Revenue
-------
Global Mailing $2,846,844 $2,830,898 1%
Enterprise Solutions 1,083,450 861,517 26%
-------------- ------------ ---------
Total Messaging Solutions 3,930,294 3,692,415 6%
-------------- ------------ ---------
Capital Services 192,180 188,453 2%
-------------- ------------ --------
Total Revenue $4,122,474 $3,880,868 6%
============== ============ =========
Operating Profit (1)
--------------------
Global Mailing $ 859,821 $ 843,523 2%
Enterprise Solutions 77,447 73,214 6%
-------------- ------------ ---------
Total Messaging Solutions 937,268 916,737 2%
-------------- ------------ ---------
Capital Services 72,396 64,950 11%
-------------- ------------ ---------
Total Operating Profit $1,009,664 $ 981,687 3%
============== ============ =========
<FN>
(1) Operating profit excludes general corporate expenses, income taxes and net
interest other than that related to finance operations.
(2) Prior year amounts have been reclassified to conform with the current year
presentation.
</FN>