UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                 F O R M  1 0 - Q




 X        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ---       EXCHANGE ACT OF 1934


For the quarterly period ended June 30, 2002

                                       OR

__        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934

For the transition period from                 to
                               ---------------    ---------------



Commission File Number: 1-3579


                                PITNEY BOWES INC.



     State of Incorporation                     IRS Employer Identification No.
            Delaware                                     06-0495050




                               World Headquarters
                        Stamford, Connecticut 06926-0700
                        Telephone Number: (203) 356-5000




Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
Yes   X   No
     ---      ---

Number of shares of common stock, $1 par value, outstanding as of July 31, 2002
is 238,382,449.


Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 2002
Page 2


                                Pitney Bowes Inc.
                                     Index
                                ----------------
                                                                     Page Number
                                                                     -----------

Part I - Financial Information:

    Item 1: Financial Statements

      Consolidated Statements of Income (unaudited) - Three and
           Six Months Ended June 30, 2002 and 2001.................       3

      Consolidated Balance Sheets - June 30, 2002 (unaudited)
           and December 31, 2001...................................       4

      Consolidated Statements of Cash Flows (unaudited) - Six
           Months Ended June 30, 2002 and 2001.....................       5

      Notes to Consolidated Financial Statements...................  6 - 14

    Item 2: Management's Discussion and Analysis of
               Financial Condition and Results of Operations....... 15 - 24

Part II - Other Information:

    Item 1:  Legal Proceedings.....................................      24

    Item 4:  Submission of Matters to a Vote of
                 Security Holders .................................      25

    Item 6:  Exhibits and Reports on Form 8-K......................      25

Signatures ........................................................      26





Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 2002
Page 3


                                                                     Part I - Financial Information

                                                                            Pitney Bowes Inc.
   Item 1. Financial Statements.                                    Consolidated Statements of Income
                                                                               (Unaudited)
                                                                  ------------------------------------

(Dollars in thousands, except per share data)
                                                           Three Months Ended June 30,                    Six Months Ended June 30,
                                                         -----------------------------      ----------------------------------------
                                                                  2002            2001                2002                     2001
                                                         -------------    ------------      --------------            -------------
                                                                                                         
Revenue from:
     Sales and management services...................    $     568,688    $    522,434      $    1,109,887            $     993,906
     Rentals and financing...........................          369,466         365,098             739,618                  733,090
     Support services................................          143,171         133,332             281,328                  260,191
                                                         -------------    ------------      --------------            -------------

         Total revenue...............................        1,081,325       1,020,864           2,130,833                1,987,187
                                                         -------------    ------------      --------------            -------------

Costs and expenses:
     Cost of sales and management services...........          339,654         303,961             673,924                  582,311
     Cost of rentals and financing...................           90,005          90,227             180,672                  181,060
     Cost of meter transition - impairment (Note 12).                -         227,300                   -                  227,300
     Cost of meter transition - additional depreciation
     (Note 12).......................................                -          20,400                   -                   20,400
     Selling, service and administrative.............          361,930         336,137             718,598                  659,040
     Research and development........................           36,095          34,865              70,164                   66,467
     Other income (Note 13)..........................                -        (362,172)                  -                 (362,172)
     Interest, net...................................           45,327          44,301              90,625                   94,886
     Restructuring charges (Note 11).................                -          27,609                   -                   70,760
                                                         -------------    ------------      --------------            -------------

         Total costs and expenses....................          873,011         722,628           1,733,983                1,540,052
                                                         -------------    ------------      --------------            -------------

Income from continuing operations before income taxes          208,314         298,236             396,850                  447,135
Provision for income taxes...........................           65,211         110,380             124,230                  155,342
                                                         -------------    ------------      --------------            -------------

Income from continuing operations....................          143,103         187,856             272,620                  291,793
Loss on disposal of discontinued operations (Note 2)                 -         (10,827)                  -                  (10,827)
                                                         -------------    ------------      --------------            -------------

Net income...........................................    $     143,103    $    177,029      $      272,620            $     280,966
                                                         =============    ============      ==============            =============

Basic earnings per share:
  Continuing operations..............................    $         .60    $        .76                1.13            $        1.18
  Discontinued operations............................                -            (.04)                  -                     (.04)
                                                         -------------    ------------      --------------            -------------
  Net income.........................................    $         .60    $        .72      $         1.13            $        1.14
                                                         =============    ============      ==============            =============
Diluted earnings per share:
  Continuing operations..............................    $         .59    $        .76      $         1.12            $        1.17
  Discontinued operations............................                -            (.04)                  -                     (.04)
                                                         -------------    ------------      --------------            -------------

  Net income.........................................    $         .59    $        .71      $         1.12            $        1.13
                                                         =============    ============      ==============            =============

Dividends declared per share of common stock.........    $        .295    $        .29      $          .59            $         .58
                                                         =============    ============      ==============            =============

Ratio of earnings to fixed charges...................             4.41            5.82                4.26                     4.43
                                                         =============    ============      ==============            =============
Ratio of earnings to fixed charges
     excluding minority interest.....................             4.54            6.20                4.38                     4.72
                                                         =============    ============      ==============            =============
<FN>
Note: The sum of the earnings per share amounts may not equal the totals above due to rounding.

See Notes to Consolidated Financial Statements
</FN>




Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 2002
Page 4

                                Pitney Bowes Inc.
                           Consolidated Balance Sheets

                                                                                       June 30,        December 31,
(Dollars in thousands, except share data)                                                  2002                2001
                                                                                ---------------    ----------------
                                                                                     (Unaudited)
                                                                                            
Assets
- ------
Current assets:
     Cash and cash equivalents.............................................     $       240,643    $        231,588
     Short-term investments, at cost which
         approximates market...............................................              11,946               1,790
     Accounts receivable, less allowances:
         6/02, $33,392; 12/01, $32,448.....................................             414,322             408,414
     Finance receivables, less allowances:
         6/02, $66,991; 12/01, $61,451.....................................           1,622,835           1,601,189
     Inventories (Note 3)..................................................             193,533             163,012
     Other current assets and prepayments..................................             161,117             150,615
                                                                                ---------------    ----------------

         Total current assets..............................................           2,644,396           2,556,608

Property, plant and equipment, net (Note 4)................................             554,489             534,595
Rental equipment and related inventories, net (Note 4).....................             450,508             472,186
Property leased under capital leases, net (Note 4).........................               1,006               1,489
Long-term finance receivables, less allowances:
     6/02, $66,143; 12/01, $65,967.........................................           1,780,539           1,898,976
Investment in leveraged leases.............................................           1,388,732           1,337,282
Goodwill ..................................................................             668,552             635,873
Other assets, net of amortization..........................................             818,336             881,462
                                                                                ---------------    ----------------

Total assets  ............................................................      $     8,306,558    $      8,318,471
                                                                                ===============    ================

Liabilities and stockholders' equity
- ------------------------------------
Current liabilities:
     Accounts payable and accrued liabilities..............................     $     1,280,707    $      1,425,809
     Income taxes payable..................................................             237,225             250,895
     Notes payable and current portion of
         long-term obligations ............................................           1,459,165           1,072,057
     Advance billings......................................................             339,587             334,281
                                                                                ---------------    ----------------

         Total current liabilities.........................................           3,316,684           3,083,042

Deferred taxes on income...................................................           1,284,301           1,273,593
Long-term debt (Note 5)....................................................           2,129,027           2,419,150
Other noncurrent liabilities...............................................             353,638             341,331
                                                                                ---------------    ----------------

         Total liabilities.................................................           7,083,650           7,117,116
                                                                                ---------------    ----------------

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

Stockholders' equity:
     Cumulative preferred stock, $50 par
         value, 4% convertible.............................................                  24                  24
     Cumulative preference stock, no par
         value, $2.12 convertible..........................................               1,539               1,603
     Common stock, $1 par value............................................             323,338             323,338
     Capital in excess of par value........................................                 960               6,979
     Retained earnings.....................................................           3,788,916           3,658,481
     Accumulated other comprehensive income (Note 8).......................            (132,796)           (155,380)
     Treasury stock, at cost...............................................          (3,069,073)         (2,943,690)
                                                                                ---------------     ---------------

         Total stockholders' equity........................................             912,908             891,355
                                                                                ---------------     ---------------

Total liabilities and stockholders' equity     ...........................      $     8,306,558     $     8,318,471
                                                                                ===============     ===============

                 See Notes to Consolidated Financial Statements



Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 2002
Page 5

                                                      Pitney Bowes Inc.
                                               Consolidated Statements of Cash Flows
                                                            (Unaudited)
                                              --------------------------------------
(Dollars in thousands)

                                                                                         Six Months Ended June 30,
                                                                                  --------------------------------
                                                                                           2002               2001
                                                                                  -------------      -------------
                                                                                              
Cash flows from operating activities:
     Net income ..............................................................    $     272,620      $     280,966
     Nonrecurring charges, net................................................                -            210,126
     Nonrecurring payments....................................................          (38,790)           (20,571)
     Adjustments to reconcile net income to
         net cash provided by operating activities:
              Depreciation and amortization...................................          129,095            160,685
              Increase in deferred taxes on income............................           25,654             74,629
              Change in assets and liabilities, net of
               effects of acquisitions:
                  Accounts receivable.........................................          (12,185)             9,004
                  Net investment in internal finance receivables..............          (20,244)            25,355
                  Inventories.................................................          (28,682)            14,091
                  Other current assets and prepayments........................           (3,865)             5,785
                  Accounts payable and accrued liabilities....................            1,341           (116,258)
                  Income taxes payable........................................           (9,327)           123,348
                  Advance billings............................................            3,157            (20,546)
                  Other, net..................................................            8,489            (17,207)
                                                                                  -------------      -------------

                  Net cash provided by operating activities...................          327,263            729,407
                                                                                  -------------      -------------

Cash flows from investing activities:
     Short-term investments...................................................          (10,115)            11,806
     Net investment in fixed assets...........................................          (96,939)          (116,136)
     Net investment in finance receivables....................................           (1,645)            17,340
     Net investment in capital services.......................................           40,703             74,296
     Investment in leveraged leases...........................................          (48,251)           (66,470)
     Net investment in insurance contracts....................................              862              1,591
     Acquisitions, net of cash acquired.......................................                -           (372,520)
     Reserve account deposits.................................................              675             80,722
     Other investing activities...............................................           (5,235)           (13,873)
                                                                                  -------------      -------------

                  Net cash used in investing activities.......................         (119,945)          (383,244)
                                                                                  -------------      -------------

Cash flows from financing activities:
     Increase (decrease) in notes payable, net................................           58,087            (92,262)
     Proceeds from long-term obligations......................................          217,938            301,165
     Principal payments on long-term obligations..............................         (202,415)          (287,352)
     Proceeds from issuance of stock..........................................           29,671             20,505
     Stock repurchases........................................................         (161,137)          (143,535)
     Dividends paid...........................................................         (142,185)          (143,524)
                                                                                  -------------      -------------

                  Net cash used in financing activities.......................         (200,041)          (345,003)
                                                                                  -------------      -------------

Effect of exchange rate changes on cash.......................................            1,778                194
                                                                                  -------------      -------------

Increase in cash and cash equivalents.........................................            9,055              1,354

Cash and cash equivalents at beginning of period..............................          231,588            198,255
                                                                                  -------------      -------------

Cash and cash equivalents at end of period....................................    $     240,643      $     199,609
                                                                                  =============      =============

Interest paid ...............................................................     $      94,303      $     102,343
                                                                                  =============      =============

Income taxes paid, net........................................................    $      88,769      $      71,167
                                                                                  =============      =============

                 See Notes to Consolidated Financial Statements





Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 2002
Page 6
                                Pitney Bowes Inc.
                   Notes to Consolidated Financial Statements
                   ------------------------------------------
Note 1:
- ------

The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions to Form 10-Q and do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of the management of Pitney
Bowes Inc. (the company), all adjustments (consisting of only normal recurring
adjustments) necessary to present fairly the financial position of the company
at June 30, 2002 and December 31, 2001, the results of its operations for the
three and six months ended June 30, 2002 and 2001 and its cash flows for the six
months ended June 30, 2002 and 2001 have been included. Operating results for
the three and six months ended June 30, 2002 are not necessarily indicative of
the results that may be expected for the year ending December 31, 2002. These
statements should be read in conjunction with the financial statements and notes
thereto included in the company's 2001 Annual Report to Stockholders on Form
10-K. Certain prior year amounts in the consolidated financial statements have
been reclassified to conform with the current year presentation.


Note 2:
- ------

On December 3, 2001, the company completed the spin off of its office systems
business to stockholders as an independent, publicly-traded company under the
name of Imagistics International Inc. (IGI).

Revenue of IGI was $155.2 million and $307.1 million for the three and six
months ended June 30, 2001, respectively. Net interest expense allocated to
IGI's discontinued operations was $3.0 million and $5.9 million for the three
and six months ended June 30, 2001, respectively. Interest has been allocated
based on the net assets of IGI charged at the company's weighted average
borrowing rate. Operating results of IGI have been segregated and reported as
discontinued operations in the Consolidated Statements of Income for the three
and six months ended June 30, 2001. Income from IGI's discontinued operations
for the three and six months ended June 30, 2001 was $.4 million (net of taxes
of $.6 million), and $8.0 million (net of taxes of $5.4 million), respectively,
offset by costs, expenses and restructuring charges directly associated with the
spin-off. Cash flow impacts of IGI's discontinued operations have not been
segregated in the Consolidated Statement of Cash Flows for the six months ended
June 30, 2001.


Note 3:
- ------

Inventories are composed of the following:



(Dollars in thousands)                                                                     June 30,            December 31,
                                                                                               2002                    2001
                                                                                  -----------------       -----------------
                                                                                                   
Raw materials and work in process..........................................       $          67,186       $          55,679
Supplies and service parts.................................................                  57,098                  48,498
Finished products..........................................................                  69,249                  58,835
                                                                                  -----------------       -----------------

Total  ...................................................................        $         193,533       $         163,012
                                                                                  =================       =================






Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 2002
Page 7

Note 4:
- ------

Fixed assets are composed of the following:


(Dollars in thousands)                                                                     June 30,            December 31,
                                                                                               2002                    2001
                                                                                  -----------------       -----------------
                                                                                                   
Property, plant and equipment..............................................       $       1,329,661       $       1,261,102
Accumulated depreciation...................................................                (775,172)               (726,507)
                                                                                  -----------------       -----------------

Property, plant and equipment, net.........................................       $         554,489       $         534,595
                                                                                  =================       =================

Rental equipment and related inventories...................................       $       1,099,973       $       1,079,260
Accumulated depreciation...................................................                (649,465)               (607,074)
                                                                                  -----------------       -----------------

Rental equipment and related inventories, net..............................       $         450,508       $         472,186
                                                                                  =================       =================

Property leased under capital leases.......................................       $          19,199       $          19,240
Accumulated amortization...................................................                 (18,193)                (17,751)
                                                                                  -----------------       -----------------

Property leased under capital leases, net..................................       $           1,006       $           1,489
                                                                                  =================       =================

Depreciation expense from continuing operations was $115.3 million and $113.1
million for the six months ended June 30, 2002 and 2001, respectively.


Note 5:
- ------

In October 2001, the company filed a shelf registration statement with the SEC
permitting issuances of up to $2 billion in debt securities, preferred stock and
depositary shares. Pursuant to this registration statement, on February 20,
2002, the company completed an offering of Euros 250 million of senior unsecured
notes. These notes bear interest at a floating rate of EURIBOR plus 20 basis
points, set two Euro business days preceding the quarterly interest payment
dates and mature in August 2003. The notes are listed on the Luxembourg Stock
Exchange and have been designated as a hedge of Euro denominated assets held by
the company. The proceeds from these notes were used for general corporate
purposes, including the repayment of commercial paper, financing acquisitions
and the repurchase of company stock. On June 30, 2002, $1.8 billion remained
available under this registration statement.

Pitney Bowes Credit Corporation (PBCC) has $75 million of unissued debt
securities available at June 30, 2002 from a shelf registration statement filed
with the SEC in July 1998. As part of this shelf registration statement, in
August 1999, PBCC established a medium-term note program for the issuance from
time to time of up to $500 million aggregate principal amount of Medium-Term
Notes, Series D.




Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 2002
Page 8

Note 6:
- ------

A reconciliation of the basic and diluted earnings per share computations for
the three months ended June 30, 2002 and 2001 is as follows (in thousands,
except per share data):


                                                       2002                                                 2001
                                    --------------------------------------------        --------------------------------------------

                                                                             Per                                                 Per
                                           Income           Shares         Share               Income            Shares        Share
- --------------------------------------------------------------------------------        --------------------------------------------
                                                                                                        
Income from continuing
  operations                        $     143,103                                       $     187,856
Less:
     Preferred stock
      dividends                                 -                                                   -
     Preference stock
      dividends                               (31)                                                (33)
- --------------------------------------------------------------------------------        --------------------------------------------

Basic earnings per
 share                              $     143,072          239,948     $     .60        $     187,823           246,433    $     .76
- --------------------------------------------------------------------------------        --------------------------------------------

Effect of dilutive
 securities:
     Preferred stock                            -               12                                  -                13
     Preference stock                          31              944                                 33               984
     Stock options                                           1,951                                                  828
     Other                                                     113                                                  162
- --------------------------------------------------------------------------------        --------------------------------------------

Diluted earnings per
 share                              $     143,103          242,968     $     .59        $     187,856           248,420    $     .76
================================================================================        ============================================


A reconciliation of the basic and diluted earnings per share computations for
the six months ended June 30, 2002 and 2001 is as follows (in thousands, except
per share data):

                                                       2002                                                 2001
                                    --------------------------------------------        --------------------------------------------

                                                                             Per                                                 Per
                                           Income           Shares         Share               Income            Shares        Share
- --------------------------------------------------------------------------------        --------------------------------------------

Income from continuing
  operations                        $     272,620                                       $     291,793
Less:
     Preferred stock
      dividends                                 -                                                  (1)
     Preference stock
      dividends                               (61)                                                (66)
- --------------------------------------------------------------------------------        --------------------------------------------

Basic earnings per
 share                              $     272,559          240,799     $    1.13        $     291,726           247,328    $    1.18
- --------------------------------------------------------------------------------        --------------------------------------------

Effect of dilutive
 securities:
     Preferred stock                            -               12                                  1                14
     Preference stock                          61              947                                 66               998
     Stock options                                           1,876                                                  678
     Other                                                     100                                                  129
- --------------------------------------------------------------------------------        --------------------------------------------

Diluted earnings per
 share                              $     272,620          243,734     $    1.12        $     291,793           249,147    $    1.17
================================================================================        ============================================
<FN>
In accordance with Statement of Financial Accounting Standards (FAS) No. 128,
"Earnings per Share," 2.1 million and 2.6 million common stock equivalent shares
were excluded from the above computation, for the six months ended June 30, 2002
and 2001, respectively, because the exercise prices of such options were greater
than the average market price of the common stock and therefore the impact of
these shares would be antidilutive.
</FN>




Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 2002
Page 9

Note 7:
- ------


Revenue and operating profit by business segment for the three and six months ended June 30, 2002 and 2001 were as follows:

                                                               Three Months Ended June 30,           Six Months Ended June 30,
                                                         --------------------------------   ----------------------------------
(Dollars in thousands)                                          2002               2001(2)          2002               2001(2)
                                                         -----------          -----------     ----------           ----------
                                                                                                    
Revenue:
   Global Mailing....................................... $   737,203          $   727,265     $1,449,294           $1,415,489
   Enterprise Solutions.................................     299,131              246,882        590,521              477,472
                                                         -----------          -----------     ----------           ----------

   Total Messaging Solutions............................   1,036,334              974,147      2,039,815            1,892,961

   Capital Services.....................................      44,991               46,717         91,018               94,226
                                                         -----------           ----------     ----------           ----------

Total revenue..........................................  $ 1,081,325          $ 1,020,864     $2,130,833           $1,987,187
                                                         ===========           ==========     ==========           ==========


Operating Profit: (1)
   Global Mailing....................................... $   225,087          $   227,207     $  426,668           $  431,536
   Enterprise Solutions.................................      22,354               19,405         39,935               38,224
                                                         -----------           ----------     ----------           ----------

   Total Messaging Solutions............................     247,441              246,612        466,603              469,760

   Capital Services.....................................      19,859               17,657         39,566               35,204
                                                         -----------           ----------     ----------           ----------

Total operating profit.................................  $   267,300          $   264,269     $  506,169           $  504,964


Unallocated amounts:
   Net interest (corporate interest expense,
    net of intercompany transactions)...................     (22,914)             (16,248)       (43,159)             (36,007)
   Corporate expense....................................     (36,072)             (36,648)       (66,160)             (65,534)
   Other income                                                    -              362,172              -              362,172
   Cost of meter transition.............................           -             (247,700)             -             (247,700)
   Restructuring charges.............................              -              (27,609)             -              (70,760)
                                                         -----------          -----------     ----------           ----------
Income from continuing operations before
 income taxes........................................... $   208,314          $   298,236     $  396,850           $  447,135
                                                         ===========          ===========     ==========           ==========

<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>


Net interest expense included in business segment operating profit was as
follows:


                                                              Three Months Ended June 30,            Six Months Ended June 30,
                                                         --------------------------------     --------------------------------
(Dollars in thousands)                                          2002                 2001             2002                2001
                                                         -----------          -----------     ------------         -----------
                                                                                                         
   Global Mailing....................................... $    11,631          $    13,531     $     25,123         $    28,079
   Enterprise Solutions.................................         191                  216              416                 467
                                                         -----------          -----------     ------------         -----------

   Total Messaging Solutions............................      11,822               13,747           25,539              28,546

   Capital Services.....................................      10,591               14,306           21,927              30,333
                                                         -----------          -----------     ------------         -----------
Total net interest expense for reportable
 segments                                                     22,413               28,053           47,466              58,879
Net interest (corporate interest expense,
 net of intercompany transactions)......................      22,914               16,248           43,159              36,007
                                                         -----------          -----------     ------------         -----------

Consolidated net interest expense....................... $    45,327          $    44,301     $     90,625         $    94,886
                                                         ===========          ===========     ============         ===========





Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 2002
Page 10

Note 8:
- ------

Comprehensive income for the three and six months ended June 30, 2002 and 2001
was as follows:

(Dollars in thousands)


                                                            Three Months Ended June 30,               Six Months Ended June 30,
                                                          -----------------------------      ----------------------------------
                                                                   2002            2001                2002                2001
                                                          -------------   -------------      --------------     ---------------
                                                                                                   
Net income.............................................   $     143,103   $     177,029      $      272,620     $       280,966
Other comprehensive income:
   Foreign currency translation adjustments............          23,759         (12,469)             21,865                (873)
   Cumulative effect of accounting change..............               -               -                   -              (9,152)
   Net unrealized (losses)/gains on derivative
     instruments.......................................          (2,251)          1,367                 719               2,542
                                                          -------------   -------------      --------------     ---------------

Comprehensive income...................................   $     164,611   $     165,927      $      295,204     $       273,483
                                                          =============   =============      ==============     ===============



Note 9:
- ------

In 1998, FAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," amended in 2000 by FAS No. 138, was issued. FAS No. 133 requires
that an entity recognize all derivative instruments as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. Changes in the fair value of those instruments will be reflected
as gains or losses. The accounting for the gains or losses depends on the
intended use of the derivative and the resulting designation. The company
adopted the provisions of FAS No. 133 in the first quarter of 2001. The company
uses derivatives to reduce the volatility in earnings and cash flows associated
with the impact of interest rate changes and foreign currency fluctuations due
to its investing and funding activities and its operations in different foreign
currencies. Derivatives designated as cash flow hedges include primarily foreign
exchange contracts and interest rate swaps related to variable-rate debt.
Derivatives designated as fair value hedges include primarily interest rate
swaps related to fixed-rate debt. The adoption of FAS No. 133 resulted in a
one-time cumulative effect of accounting change which reduced accumulated other
comprehensive income by approximately $9.2 million in the first quarter of 2001.

In 2001, FAS No. 141, "Business Combinations" and FAS No. 142, "Goodwill and
Other Intangible Assets" were issued requiring business combinations initiated
after June 30, 2001 to be accounted for using the purchase method of accounting,
and refining the criteria for recording intangible assets separate from
goodwill. Recorded goodwill and intangibles were evaluated against this new
criterion and resulted in certain intangibles being included in goodwill, or
alternatively, amounts initially recorded as goodwill being separately
identified and recognized apart from goodwill. FAS No. 142 requires the use of a
nonamortization approach to account for purchased goodwill and indefinite lived
intangibles. Under a nonamortization approach, goodwill and indefinite lived
intangibles are not amortized into results of operations, but instead will be
reviewed for impairment and charged against results of operations only in the
periods in which the recorded value of goodwill and indefinite lived intangibles
is more than its fair value. In 2001, we adopted the provisions of each
statement, which apply to business combinations completed after June 30, 2001.
The provisions of each statement, which apply to goodwill and intangible assets
acquired prior to June 30, 2001 were adopted on January 1, 2002. The adoption of
these accounting standards did not materially impact results of operations for
the three and six months ended June 30, 2002. The company has completed the
transitional impairment test as required by FAS No. 142. Based upon the results
of this analysis, no impairment loss resulted from the adoption of this
standard. Goodwill will be reviewed for impairment on a periodic basis.

In 2001, FAS No. 143, "Accounting for Asset Retirement Obligations" was issued,
amending FAS No. 19, "Financial Accounting and Reporting by Oil and Gas
Producing Companies," and applies to all entities. FAS No. 143 addresses
financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated asset retirement
costs. FAS No. 143 is effective January 1, 2003. The company does not believe
that this statement will have a material impact on its financial position,
results of operations or cash flows.

In 2001, FAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets," was issued, replacing FAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," and portions of
Accounting Principles Board (APB) Opinion 30, "Reporting the Results of
Operations." FAS No. 144 provides a single accounting model for long-lived
assets to be disposed of and changes the criteria that would have to be met to
classify an asset as held-for-sale. FAS No. 144 retains the requirement of APB
Opinion 30, to report discontinued operations separately from continuing
operations and extends that reporting to separate components of an entity. The
provisions of FAS No. 144 have been adopted effective January 1, 2002. The
adoption of these accounting standards did not materially impact results of
operations for the three and six months ended June 30, 2002.



Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 2002
Page 11

In April 2002, FAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Technical Correction," was issued. Under
FAS No. 145, gains and losses related to the extinguishment of debt should no
longer be segregated on the income statement as extraordinary items. Instead,
such gains and losses should be included as a component of income from
continuing operations. The provisions of FAS No. 145 are effective for fiscal
years beginning after May 15, 2002 with early adoption encouraged. The company
does not believe that this statement will have a material impact on its
financial position, results of operations or cash flows.

In July 2002, FAS No. 146, "Accounting for Costs Associated with Exit or
Disposal Activities," was issued. This statement nullifies Emerging Issues Task
Force (EITF) Issue No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)." FAS No. 146 requires that a liability for
costs associated with an exit or disposal activity be recognized when the
liability is incurred. The provisions of FAS No. 146 are effective for exit or
disposal activities initiated after December 31, 2002. Early adoption is
encouraged. The company is currently evaluating the impact of this statement.

Note 10:
- -------

Secap SA (Secap)

On October 31, 2001, the company announced it had completed the acquisition of
Secap, the France-based mailing systems subsidiary of Fimalac, for approximately
Euros 220 million ($206 million) in cash. The results of Secap's operations have
been included in the consolidated financial statements since the date of
acquisition. Secap offers a range of mail processing and paper handling
equipment, supplies and technology for low- to mid-volume mailers. Secap holds
more than 30% of the postage meter market share in France.

The following table summarizes the preliminary estimated fair values of the
major assets acquired and liabilities assumed at the date of acquisition:

 (Dollars in thousands)

Intangible assets                                                    $   62,200
Goodwill                                                                167,817
Other, net                                                              (23,590)
                                                                     ----------
   Purchase price                                                    $  206,427
                                                                     ==========


Intangible assets are composed of customer relationships valued at $33.9
million, and paper handling and meter technology valued at $22.9 million, and a
trade name valued at $5.4 million. These intangible assets have a
weighted-average useful life of approximately 15 years. The goodwill was
assigned to the Global Mailing segment.

Danka Services International (DSI)

On June 29, 2001, the company completed its acquisition of DSI from Danka
Business Systems PLC for $290 million in cash. DSI provides on- and off-site
document management services, including the management of central reprographic
departments, the placement and maintenance of photocopiers, print-on-demand
operations and document archiving and retrieval services. The acquisition has
been accounted for under the purchase method and accordingly, the operating
results of DSI have been included in the company's consolidated financial
statements since the date of acquisition.

The following table summarizes the estimated fair values of the major assets
acquired and liabilities assumed at the date of acquisition:

 (Dollars in thousands)

Intangible assets                                                    $   43,800
Goodwill                                                                212,258
Other, net                                                               33,942
                                                                     ----------
   Purchase price                                                    $  290,000
                                                                     ==========

The intangible assets relate to customer relationships and have a useful life of
approximately 15 years. The goodwill was assigned to the Enterprise Solutions
segment.




Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 2002
Page 12

Bell & Howell International Mail and Messaging Technologies (MMT)

On June 5, 2001, the company completed the acquisition of MMT in Europe, Africa,
the Middle East and Asia. The final purchase price, following post closing
adjustments, was $44 million in cash. MMT markets and services high-end mail
processing, sorting and service-related products through a network of
distributors and direct operations. The acquisition has been accounted for under
the purchase method, and accordingly, the operating results of the acquisition
have been included in the company's consolidated financial statements since the
date of acquisition.

The following table summarizes the estimated fair values of the major assets
acquired and liabilities assumed at the date of acquisition:

 (Dollars in thousands)

Intangible assets                                                    $   10,900
Goodwill                                                                 36,225
Other, net                                                               (3,125)
                                                                     ----------
   Purchase price                                                    $   44,000
                                                                     ==========

The intangible assets relate primarily to customer relationships and inserting
technology. These intangibles have a weighted-average useful life of
approximately 10 years. The goodwill was assigned to the Global Mailing segment.

Consolidated impact of acquisitions

The Consolidated Income Statement for the three months ended June 30, 2002
included revenues of $22.1 million, $62.5 million and $13.6 million from Secap,
DSI and MMT, respectively. The Consolidated Income Statement for the six months
ended June 30, 2002 included revenues of $45.3 million, $125.2 million and $25.4
million from Secap, DSI and MMT, respectively. The Consolidated Income Statement
for the three and six months ended June 30, 2001 included revenues of $13.5
million from MMT. The acquisitions of Secap, DSI, and MMT did not materially
impact net income for the three months and six months ended June 30, 2002 and
2001, respectively.

The following unaudited pro forma consolidated results have been prepared as if
the acquisitions of Secap, DSI, and MMT had occurred on January 1, 2001:

(Dollars in thousands)


                                                               Three Months Ended June 30,       Six Months Ended June 30,
                                                              ----------------------------       -------------------------
                                                                      2002            2001              2002          2001
                                                              ------------   -------------       -----------  ------------
                                                                                                 
Total revenue                                                 $  1,081,325   $   1,133,445       $ 2,130,833  $  2,213,425


The pro forma consolidated results do not purport to be indicative of results
that would have occurred had the acquisitions been completed on January 1, 2001,
nor do they purport to be indicative of the results that will be obtained in the
future. The pro forma earning results of these acquisitions were not material to
earnings on either a per share or an aggregate basis.

During 2001, the company also completed several smaller acquisitions including,
the acquisition of a majority ownership in MailCode Inc., a mail processing
company, the acquisition of Alysis Technologies Inc., a leading provider of
digital document delivery solutions and the acquisition of some of the company's
international dealerships. The cost of these acquisitions were in the aggregate
less than $50 million. These acquisitions did not have a material impact on the
company's financial results either individually or on an aggregate basis.

In August 2002, the company completed the acquisition of PSI Group, Inc.(PSI),
the nation's largest mail pre-sort company, for approximately $130 million in
cash. PSI prepares, sorts and aggregates mail to earn postal discounts and
expedite delivery for its customers. PSI was established in 1995 and holds
approximately a 5% share in the $1.2 billion outsourced pre-sort services
market.




Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 2002
Page 13

Note 11:
- -------

In 2001, the company adopted a formal restructuring plan to implement a common,
streamlined business infrastructure as a result of our decisions to spin off our
office systems business and align our mailing business on a global basis, as
well as cost saving opportunities resulting from strategic acquisitions and
partnerships, and additional benefits attained from the consolidation of our IT
organization and ERP initiatives. In connection with this plan, the company
recorded pretax restructuring charges of $28.9 million during the second quarter
of 2001, of which $27.6 million was related to continuing operations, and the
remaining $1.3 million related to discontinued operations. For the six months
ended June 30, 2001, pretax restructuring charges were $103.9 million, of which
$70.8 million was related to continuing operations and the remaining $33.1
million was related to discontinued operations. For the year ended December 31,
2001, pretax restructuring charges were $149.3 million, of which $116.1 million
was related to continuing operations, and the remaining $33.2 million was
related to discontinued operations. The restructuring charges related to
continuing operations have been segregated in the Consolidated Statements of
Income for the three and six months ended June 30, 2001. The restructuring
charges related to discontinued operations have been reported in discontinued
operations in the Consolidated Statements of Income for the three and six months
ended June 30, 2001.

The restructuring charges related to continuing operations are composed of:

(Dollars in millions)


                                                                 Three                       Six
                                                             Months Ended               Months Ended               Year Ended
                                                            June 30, 2001              June 30, 2001          December 31, 2001
                                                            -------------              -------------          -----------------
                                                                                                         
Severance and benefit costs........................         $        12.4              $        47.6               $       74.3
Asset impairments .................................                  14.1                       16.3                       28.0
Other exit costs...................................                   1.1                        6.9                       13.8
                                                            -------------              -------------               ------------
                                                            $        27.6              $        70.8               $      116.1
                                                            =============              =============               ============

All restructuring charges, except for the asset impairments, will result in cash
outflows. The severance and benefit costs relate to a reduction in workforce of
approximately 1,200 employees worldwide which was initiated in 2001 and will be
substantially completed over the next three months. The workforce reductions
relate to actions across several of our businesses resulting from infrastructure
and process improvements and our continuing efforts to streamline operations,
and include managerial, professional, clerical and technical roles.
Approximately 80% of the workforce reductions are in the U.S. The majority of
the international workforce reductions are in Europe. None of the reductions
will impact sales coverage. As of June 30, 2002, 1,133 employees were separated
under these initiatives and approximately $57.2 million of severance and benefit
costs were paid. Asset impairments relate primarily to the disposal or
abandonment of certain hardware and software applications, resulting from the
alignment of our mailing business on a global basis and ERP initiatives. Other
exit costs relate primarily to lease termination costs, non-cancelable lease
payments, other costs associated with business activities that have been exited
and the consolidation of excess facilities.

Accrued restructuring charges at June 30, 2002 consist of the following:

(Dollars in millions)

                                                                                Ending                                Ending
                                    Total                                    balance at                           balance at
                            restructuring     2001 cash     Non-cash       December 31,         2002 cash           June 30,
                                  charges      payments      charges               2001          payments               2002
                            -------------     ---------    ---------        -----------         ---------        -----------
                                                                                              

Severance and
 benefit costs              $        76.2    $     34.5    $       -        $      41.7         $   22.9         $      18.8

Asset impairments                    45.5             -         45.5                  -                -                   -

Other exit costs                     27.6          14.5            -               13.1              1.8                11.3
                            -------------    ----------    ---------        -----------         --------         -----------
                            $       149.3    $     49.0    $    45.5        $      54.8         $   24.7         $      30.1
                            =============    ==========    =========        ===========         ========         ===========


The company expects that the majority of the remaining cash outflows related to
restructuring charges will take place over the next six months, funded primarily
by cash provided by operating activities. The restructuring charges are expected
to increase our operating efficiency and effectiveness in 2002 and beyond while
enhancing growth, primarily as a result of reduced personnel-related expenses.

Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 2002
Page 14

Note 12:
- -------

In 2001, the company adopted a formal plan to transition to the next generation
of networked mailing technology. The information capture and exchange made
possible by advanced technology, turns the postage meter into an "intelligent"
terminal that networks the mailer to postal and carrier information and systems.
This two-way information architecture, in turn, enables convenient access to and
delivery of value-added services such as tracking, delivery confirmation and
rate information. The adoption of this plan was facilitated by the company's
expanded access to technology and ability to move to networked products combined
with expectations that the U.S. and postal services around the world will
continue to encourage the migration of mailing systems to networked digital
technologies. As a result of this plan, certain electronic meter rental assets
and related equipment will not be placed back in service. In addition, certain
leased equipment will either not be remarketed or will result in lower
realization at end of lease as a result of the introduction of new technology.
In connection with this plan, the company recorded non-cash pretax charges of
$247.7 million and $268.3 million for the three months ended June 30, 2001 and
year ended December 31, 2001, respectively, related to assets associated with
our non-networked mailing technology. In November 2001, postal regulations were
issued, consistent with our meter transition plan, defining the meter migration
process and timing.

The charges related to the meter transition plan are composed of:

(Dollars in millions)


                                                                   Three and Six
                                                                    Months Ended              Year Ended
                                                                   June 30, 2001           December 31, 2001
                                                                   -------------           -----------------
                                                                                       
Impairment of lease residual values                                  $     128.4              $        128.4
Impairment of meter rental assets                                           71.3                        71.3
Inventory writedowns                                                        27.6                        27.6
Additional depreciation costs on meter rental assets                        20.4                        41.0
                                                                   -------------           -----------------
                                                                     $     247.7              $        268.3
                                                                   =============           =================



Note 13:
- -------

In June 2001, the company and Hewlett-Packard announced that they had reached an
agreement resolving a lawsuit filed by the company in 1995. The lawsuit arose
out of a dispute over print technology patents. Under the terms of the
agreement, the companies resolved all pending patent litigation without
admission of infringement and the company received $400 million in cash and ten
year supply and technology agreements. This payment, net of legal fees and
related expenses of $37.8 million was recorded as other income in the
Consolidated Statements of Income for the three and six months ended June 30,
2001.




Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 2002
Page 15

Item 2.            Management's Discussion and Analysis of Financial
                      Condition and Results of Operations
                   -------------------------------------------------

Results of Continuing Operations - second quarter of 2002 vs. second quarter of
- -------------------------------------------------------------------------------
2001
- ----

Our revenue increased six percent in the second quarter of 2002 to $1.08 billion
compared with $1.02 billion in the second quarter of 2001. Income from
continuing operations of $143.1 million in the second quarter of 2002, compares
with $144.5 million in the second quarter of 2001 excluding special items, and
$187.9 million including special items. Diluted earnings per share from
continuing operations increased one percent to 59 cents in the second quarter of
2002 compared to 58 cents in the second quarter of 2001 excluding special items.
Including special items, diluted earnings per share from continuing operations
was 76 cents in the second quarter of 2001. Included as special items in the
second quarter of 2001 were a $28 million pretax restructuring charge, a $248
million non-cash pretax charge related to meter transition and a net pretax gain
of $362 million resulting from the settlement of a lawsuit with Hewlett-Packard.
Excluding the acquisitions of Secap SA (Secap)and Danka Services International
(DSI), revenue declined two percent during the quarter. These acquisitions did
not materially impact earnings either on a per share or aggregate basis.

Our second quarter 2002 revenue included $568.7 million from sales, up nine
percent from $522.4 million in the second quarter of 2001; $369.5 million from
rentals and financing, up one percent from $365.1 million; and $143.2 million
from support services, up seven percent from $133.3 million. Sales revenue
includes all revenues from Pitney Bowes Management Services (PBMS) which were
$241.2 million and $174.5 million for the quarters ended June 30, 2002 and 2001,
respectively. Excluding the acquisitions of Secap and DSI, sales revenue
declined five percent.

Our Global Mailing segment includes worldwide revenues and related expenses from
the rental of postage meters and the sale, rental and financing of mailing
equipment, including mail finishing and software-based mail creation equipment,
software-based shipping, transportation and logistics systems, and related
supplies and services. During the second quarter of 2002, revenue increased one
percent while operating profit declined less than one percent. Excluding the
acquisition of Secap, Global Mailing revenues decreased two percent compared to
the prior year. Revenue growth was negatively impacted by the weak economy and a
sales force that was in training to prepare for the launch of the new DM line of
digital, networked mailing systems late in the quarter. Within the Global
Mailing segment, international mailing's double-digit revenue growth was
supported by acquisition revenue and improving business trends in the UK.
Excluding the revenue from the acquisition of Secap, international Global
Mailing revenue grew less than one percent. International revenue was adversely
affected by a weak global economy and a related continued slow-down in orders
for mailing equipment in most of continental Europe.

Our Enterprise Solutions segment includes PBMS and Document Messaging
Technologies (DMT). PBMS includes facilities management contracts for advanced
mailing, reprographic, document management and other value-added services to
large enterprises. DMT includes 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. During the second quarter of 2002, revenue grew 21 percent and
operating profit grew 15 percent. Revenue growth was driven by a 38 percent
increase at PBMS. Excluding the revenue from the acquisition of DSI, PBMS
revenue increased two percent for the quarter. The weak economy continues to
have an adverse impact on some of our largest customers, which in turn resulted
in reduced revenue growth opportunities for PBMS. DMT reported revenue of $58
million for the quarter, a decline of 20 percent from the prior year, with a
greater decline in operating profit. Continued slow placements of high margin
equipment, an increase in lower margin service revenue and investments in new
product development contributed to the decline in operating profit during the
quarter.

Total Messaging Solutions, the combined results of the Global Mailing segment
and Enterprise Solutions segment, reported six percent revenue growth and flat
operating profit growth.

Our Capital Services segment includes primarily asset- and fee-based income
generated by large-ticket, non-core asset transactions. Revenue for the quarter
declined four percent and operating profit increased 12 percent due to lower
interest costs versus the prior year.



Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 2002
Page 16

Cost of sales increased to 59.7 percent of sales revenue in the second quarter
of 2002 compared with 58.2 percent in the second quarter of 2001. The increase
was mainly driven by the acquisition of DSI and the increasing mix of lower
margin core PBMS sales revenue. Cost of sales attributable to PBMS was $193.7
million and $142.0 million for the quarters ended June 30, 2002 and 2001,
respectively.

Cost of rentals and financing decreased to 24.4 percent of related revenue in
the second quarter of 2002 compared with 24.7 percent in the second quarter of
2001.

Selling, service and administrative expenses were 33.5 percent of revenue in the
second quarter of 2002 compared with 32.9 percent in the second quarter of 2001.
The increase was due primarily to the higher mix of support services revenue and
costs associated with growth initiatives.

Research and development expenses increased 3.5 percent to $36.1 million in the
second quarter of 2002 compared with $34.9 million in the second quarter of
2001. The increase reflects our continued commitment to developing new
technologies and enhanced mailing and software products.

Net interest expense increased to $45.3 million in the second quarter of 2002
from $44.3 million in the second quarter of 2001. The increase is due mainly to
higher debt associated with borrowings to fund our investment in leasing and
rental products, acquisitions and the stock repurchase program, partially offset
by lower interest rates.

The effective tax rate for the second quarter of 2002 was 31.3 percent.
Excluding special items in the second quarter of 2001, the effective tax rate
was 31.6 percent. The tax rate was favorably impacted by the nonamortization
approach to goodwill beginning in 2002.

Excluding special items, income from continuing operations decreased one percent
while diluted earnings per share from continuing operations increased 1.2
percent. The diluted earnings per share increased more than income from
continuing operations due primarily to the company's share repurchase program.

Results of Continuing Operations - six months of 2002 vs. six months of 2001
- ----------------------------------------------------------------------------

For the first six months of 2002 compared with the same period of 2001, revenue
increased seven percent to $2.13 billion, and income from continuing operations,
excluding special items, decreased one percent to $272.6 million. Excluding the
acquisitions of Secap, DSI and MMT, revenue declined two percent during the
first half of the year. The factors that affected revenue and earnings
performance included those cited for the second quarter of 2002 versus 2001.

Accounting Pronouncements
- -------------------------

In 1998, FAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," amended in 2000 by FAS No. 138, was issued. FAS No. 133 requires
that an entity recognize all derivative instruments as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. Changes in the fair value of those instruments will be reflected
as gains or losses. The accounting for the gains or losses depends on the
intended use of the derivative and the resulting designation. We adopted the
provisions of FAS No. 133 in the first quarter of 2001. We use derivatives to
reduce the volatility in earnings and cash flows associated with the impact of
interest rate changes and foreign currency fluctuations due to our investing and
funding activities and our operations in different foreign currencies.
Derivatives designated as cash flow hedges include primarily foreign exchange
contracts and interest rate swaps related to variable-rate debt. Derivatives
designated as fair value hedges include primarily interest rate swaps related to
fixed-rate debt. The adoption of FAS No. 133 resulted in a one-time cumulative
effect of accounting change which reduced accumulated other comprehensive income
by approximately $9.2 million in the first quarter of 2001.



Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 2002
Page 17

In 2001, FAS No. 141, "Business Combinations" and FAS No. 142, "Goodwill and
Other Intangible Assets" were issued requiring business combinations initiated
after June 30, 2001 to be accounted for using the purchase method of accounting,
and refining the criteria for recording intangible assets separate from
goodwill. Recorded goodwill and intangibles were evaluated against this new
criterion and resulted in certain intangibles being included in goodwill, or
alternatively, amounts initially recorded as goodwill being separately
identified and recognized apart from goodwill. FAS No. 142 requires the use of a
nonamortization approach to account for purchased goodwill and indefinite lived
intangibles. Under a nonamortization approach, goodwill and indefinite lived
intangibles are not amortized into results of operations, but instead will be
reviewed for impairment and charged against results of operations only in the
periods in which the recorded value of goodwill and indefinite lived intangibles
is more than its fair value. In 2001, we adopted the provisions of each
statement, which apply to business combinations completed after June 30, 2001.
The provisions of each statement, which apply to goodwill and intangible assets
acquired prior to June 30, 2001 were adopted on January 1, 2002. The adoption of
these accounting standards did not materially impact results of operations for
the three and six months ended June 30, 2002. We completed the transitional
impairment test as required by FAS No. 142. Based upon the results of this
analysis, no impairment loss resulted from the adoption of this standard.
Goodwill will be reviewed for impairment on a periodic basis.

In 2001, FAS No. 143, "Accounting for Asset Retirement Obligations" was issued,
amending FAS No. 19, "Financial Accounting and Reporting by Oil and Gas
Producing Companies," and applies to all entities. FAS No. 143 addresses
financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated asset retirement
costs. FAS No. 143 is effective January 1, 2003. We do not believe that this
statement will have a material impact on its financial position, results of
operations or cash flows.

In 2001, FAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets," was issued, replacing FAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," and portions of
Accounting Principles Board (APB) Opinion 30, "Reporting the Results of
Operations." FAS No. 144 provides a single accounting model for long-lived
assets to be disposed of and changes the criteria that would have to be met to
classify an asset as held-for-sale. FAS No. 144 retains the requirement of APB
Opinion 30, to report discontinued operations separately from continuing
operations and extends that reporting to separate components of an entity. The
provisions of FAS No. 144 have been adopted effective January 1, 2002. The
adoption of these accounting standards did not materially impact results of
operations for the three and six months ended June 30, 2002.

In April 2002, FAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Technical Correction," was issued. Under
FAS No. 145, gains and losses related to the extinguishment of debt should no
longer be segregated on the income statement as extraordinary items. Instead,
such gains and losses should be included as a component of income from
continuing operations. The provisions of FAS No. 145 are effective for fiscal
years beginning after May 15, 2002 with early adoption encouraged. We do not
believe that this statement will have a material impact on its financial
position, results of operations or cash flows.

In July 2002, FAS No. 146, "Accounting for Costs Associated with Exit or
Disposal Activities," was issued. This statement nullifies Emerging Issues Task
Force (EITF) Issue No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)." FAS No. 146 requires that a liability for
costs associated with an exit or disposal activity be recognized when the
liability is incurred. The provisions of FAS No. 146 are effective for exit or
disposal activities initiated after December 31, 2002. Early adoption is
encouraged. We are currently evaluating the impact of this statement.

Discontinued Operations
- -----------------------

On December 3, 2001, we completed the spin off of our office systems business to
stockholders as an independent, publicly-traded company under the name of
Imagistics International Inc. (IGI). Operating results of IGI have been
segregated and reported as discontinued operations in the Consolidated
Statements of Income for the three and six months ended June 30, 2001.




Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 2002
Page 18

Restructuring Charges
- ---------------------

In 2001, we adopted a formal restructuring plan to implement a common,
streamlined business infrastructure as a result of our decisions to spin off our
office systems business and align our mailing business on a global basis, as
well as cost saving opportunities resulting from strategic acquisitions and
partnerships, and additional benefits attained from the consolidation of our IT
organization and ERP initiatives. In connection with this plan, we recorded
pretax restructuring charges of $28.9 million during the second quarter of 2001,
of which $27.6 million was related to continuing operations, and the remaining
$1.3 million related to discontinued operations.

For the six months ended June 30, 2001, pretax restructuring charges were $103.9
million, of which $70.8 million was related to continuing operations and the
remaining $33.1 million was related to discontinued operations. For the year
ended December 31, 2001, pretax restructuring charges were $149.3 million, of
which $116.1 million was related to continuing operations, and the remaining
$33.2 million was related to discontinued operations. The restructuring charges
related to continuing operations have been segregated in the Consolidated
Statements of Income for the three and six months ended June 30, 2001. The
restructuring charges related to discontinued operations have been reported in
discontinued operations in the Consolidated Statements of Income for the three
and six months ended June 30, 2001.

The restructuring charges related to continuing operations are composed of:

(Dollars in millions)

                                                                 Three                       Six
                                                             Months Ended               Months Ended               Year Ended
                                                            June 30, 2001              June 30, 2001          December 31, 2001
                                                            -------------              -------------          -----------------
                                                                                                         
Severance and benefit costs........................         $        12.4              $        47.6               $       74.3
Asset impairments..................................                  14.1                       16.3                       28.0
Other exit costs...................................                   1.1                        6.9                       13.8
                                                            -------------              -------------               ------------
                                                            $        27.6              $        70.8               $      116.1
                                                            =============              =============               ============


All restructuring charges, except for the asset impairments, will result in cash
outflows. The severance and benefit costs relate to a reduction in workforce of
approximately 1,200 employees worldwide which was initiated in 2001 and will be
substantially completed over the next three months. The workforce reductions
relate to actions across several of our businesses resulting from infrastructure
and process improvements and our continuing efforts to streamline operations,
and include managerial, professional, clerical and technical roles.
Approximately 80% of the workforce reductions are in the U.S. The majority of
the international workforce reductions are in Europe. None of the reductions
will impact sales coverage. As of June 30, 2002, 1,133 employees were separated
under these initiatives and approximately $57.2 million of severance and benefit
costs were paid. Asset impairments relate primarily to the disposal or
abandonment of certain hardware and software applications, resulting from the
alignment of our mailing business on a global basis and ERP initiatives. Other
exit costs relate primarily to lease termination costs, non-cancelable lease
payments, other costs associated with business activities that have been exited
and the consolidation of excess facilities.

Accrued restructuring charges at June 30, 2002 consist of the following:

(Dollars in millions)

                                                                                Ending                                Ending
                                    Total                                    balance at                           balance at
                            restructuring     2001 cash     Non-cash       December 31,         2002 cash           June 30,
                                  charges      payments      charges               2001          payments               2002
                            -------------     ---------    ---------        -----------         ---------        -----------
                                                                                              

Severance and
 benefit costs              $        76.2    $     34.5    $       -        $      41.7         $   22.9         $      18.8

Asset impairments                    45.5             -         45.5                  -                -                   -

Other exit costs                     27.6          14.5            -               13.1              1.8                11.3
                            -------------    ----------    ---------        -----------         --------         -----------
                            $       149.3    $     49.0    $    45.5        $      54.8         $   24.7         $      30.1
                            =============    ==========    =========        ===========         ========         ===========




Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 2002
Page 19

We expect that the majority of the remaining cash outflows related to
restructuring charges will take place over the next six months, funded primarily
by cash provided by operating activities. The restructuring charges are expected
to increase our operating efficiency and effectiveness in 2002 and beyond while
enhancing growth, primarily as a result of reduced personnel-related expenses.
We expect pretax savings in operating expenses of approximately $50 million for
the year ending December 31, 2002.

We operate in very competitive industries and we are continually evaluating our
cost structure. Economic or competitive events in the future may necessitate
that the company formulate additional plans to reduce our existing cost
structure.

Meter Transition
- ----------------

In 2001, we adopted a formal plan to transition to the next generation of
networked mailing technology. The information capture and exchange made possible
by advanced technology, turns the postage meter into an "intelligent" terminal
that networks the mailer to postal and carrier information and systems. This
two-way information architecture, in turn, enables convenient access to and
delivery of value-added services such as tracking, delivery confirmation and
rate information. The adoption of this plan was facilitated by our expanded
access to technology and our ability to move to networked products combined with
our expectations that the U.S. and postal services around the world will
continue to encourage the migration of mailing systems to networked digital
technologies. As a result of this plan, certain electronic meter rental assets
and related equipment will not be placed back in service. In addition, certain
leased equipment will either not be remarketed or will result in lower
realization at end of lease as a result of the introduction of new technology.
In connection with this plan, we recorded non-cash pretax charges of $247.7
million and $268.3 million for the three months ended June 30, 2001 and year
ended December 31, 2001, respectively, related to assets associated with our
non-networked mailing technology. In November 2001, postal regulations were
issued, consistent with our meter transition plan, defining the meter migration
process and timing.

The charges related to the meter transition plan are composed of:

(Dollars in millions)


                                                                   Three and Six
                                                                    Months Ended              Year Ended
                                                                   June 30, 2001           December 31, 2001
                                                                   -------------           -----------------
                                                                                       
Impairment of lease residual values                                  $     128.4              $        128.4
Impairment of meter rental assets                                           71.3                        71.3
Inventory writedowns                                                        27.6                        27.6
Additional depreciation costs on meter rental assets                        20.4                        41.0
                                                                   -------------           -----------------
                                                                     $     247.7              $        268.3
                                                                   =============           =================


Acquisitions
- ------------

In October 2001, we acquired Secap, a company based in France, for approximately
Euros 220 million ($206 million) in cash. Secap offers a range of mail
processing and paper handling equipment, supplies and technology for low- to
mid-volume mailers. Secap holds more than 30% of the postage meter market share
in France.

In June 2001, we acquired DSI from Danka Business Systems PLC for $290 million
in cash. DSI provides on- and off-site document management services, including
the management of central reprographic departments, the placement and
maintenance of photocopiers, print-on-demand operations and document archiving
and retrieval services.

In June 2001, we acquired the MMT business in Europe, Africa, the Middle East
and Asia. The final purchase price, following post closing adjustments, was $44
million in cash. MMT markets and services high-end mail processing, sorting and
service-related products through a network of distributors and direct
operations.



Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 2002
Page 20

We accounted for the acquisitions of Secap, DSI and MMT under the purchase
method and accordingly, the operating results of these acquisitions have been
included in our consolidated financial statements since the date of acquisition.
The acquisitions of Secap, DSI and MMT did not materially affect income from
continuing operations for the three and six months ended June 30, 2002 and 2001,
respectively.

In August 2002, we completed the acquisition of PSI Group, Inc. (PSI), the
nation's largest mail pre-sort company, for approximately $130 million in cash.
PSI prepares, sorts and aggregates mail to earn postal discounts and expedite
delivery for its customers. PSI was established in 1995 and holds approximately
a 5% share in the $1.2 billion outsourced pre-sort services market.

Legal Settlements, net
- ----------------------

In June 2001, the company and Hewlett-Packard announced they had reached an
agreement resolving a lawsuit filed by us in 1995. The lawsuit arose out of a
dispute over print technology patents. Under the terms of the agreement, we
resolved all pending patent litigation without admission of infringement and we
received $400 million in cash and ten year supply and technology agreements. We
recorded the cash payment, net of legal fees and related expenses of $37.8
million, as other income in the Consolidated Statements of Income for the three
and six months ended June 30, 2001.

Liquidity and Capital Resources
- -------------------------------

Our ratio of current assets to current liabilities declined to .80 to 1 at June
30, 2002 compared with .83 to 1 at December 31, 2001. The decrease in this ratio
was primarily due to a higher amount of commercial paper borrowings and the
reclassification of $134 million of long-term debt to short-term.

Our cash and cash equivalents increased to $240.6 million at June 30, 2002, from
$231.6 million at December 31, 2001. The increase resulted primarily from $327.3
million provided by operating activities, offset in part by $119.9 million and
$200.0 million used in investing and financing activities, respectively. Net
cash provided by operating activities of $327.3 million consisted primarily of
net income adjusted for non cash items and changes in working capital. Net cash
used in investing activities of $119.9 million consisted primarily of
investments in fixed assets and leveraged leases, partially offset by cash
generated from investments in capital services transactions. Net cash used in
financing activities of $200.0 million consisted primarily of stock repurchases
and dividends paid to stockholders.

Excluding special items and discontinued operations in 2001, the ratio of
earnings before interest and taxes (EBIT) to interest was 5.6x and 5.8x and the
ratio of earnings before interest, taxes, depreciation and amortization (EBITDA)
to interest was 7.0x and 7.2x for the quarters ended June 30, 2002 and 2001,
respectively. The ratio of total debt to total debt and stockholders' equity was
79.7% at June 30, 2002 and December 31, 2001. Including the preferred
stockholders' equity in a subsidiary company as debt, the ratio of total debt to
total debt and stockholders' equity was 81.0% at June 30, 2002 and December 31,
2001. During the second quarter of 2002, we repurchased 2.2 million shares for
$88.8 million. Excluding the cash flow effects of special items, free cash flow
was $269 million for the six months ended June 30, 2002.

Financings and Capitalization
- -----------------------------

In October 2001, the company filed a shelf registration statement with the SEC
permitting issuances of up to $2 billion in debt securities, preferred stock and
depositary shares. Pursuant to this registration statement, on February 20,
2002, the company completed an offering of Euros 250 million of senior unsecured
notes. These notes bear interest at a floating rate of EURIBOR plus 20 basis
points, set two Euro business days preceding the quarterly interest payment
dates and mature in August 2003. The notes are listed on the Luxembourg Stock
Exchange and have been designated as a hedge of Euro denominated assets held by
the company.


Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 2002
Page 21

The proceeds from these notes were used for general corporate purposes which
may include repaying commercial paper, financing acquisitions and the
repurchase of company stock. On June 30, 2002, $1.8 billion remained available
under this registration statement.  Pitney Bowes Credit Corporation (PBCC) has
$75 million of unissued debt securities available at June 30, 2002 from a shelf
registration statement filed with the SEC in July 1998. As part of this shelf
registration statement, in August 1999, PBCC established a medium-term note
program for the issuance from time to time of up to $500 million aggregate
principal amount of Medium-Term Notes, Series D.

We believe that our financing needs for the next 12 months can be met with cash
generated internally, money from existing credit agreements, debt issued under
new and existing shelf registration statements and existing commercial paper and
medium-term note programs.

Capital Investments
- -------------------

In the first six months of 2002, net investments in fixed assets included $65.1
million in net additions to property, plant and equipment and $31.8 million in
net additions to rental equipment and related inventories compared with $56.3
million and $59.8 million, respectively, in the same period in 2001. These
additions include expenditures for normal plant and manufacturing equipment. In
the case of rental equipment, the additions included the production of postage
meters. In 2001, additions to rental assets also included the purchase of
facsimile and copier equipment related to the discontinued operations of IGI.
Excluding capital investments for IGI, net additions to property, plant and
equipment and rental equipment were $55.5 million and $28.3 million,
respectively, for the second quarter of 2001.

We expect net investments in fixed assets for the remainder of 2002, relating to
continuing operations, to be slightly higher than the prior year. These
investments will also be affected by the timing of our customers' transition to
digital meters. At June 30, 2002, commitments for the acquisition of property,
plant and equipment reflected plant and manufacturing equipment improvements as
well as rental equipment for new and replacement programs.

Investment in Commercial Aircraft Leasing Transactions
- ------------------------------------------------------

At June 30, 2002, our total investment in commercial aircraft leasing
transactions was $511.1 million, which is composed of transactions with U.S. and
foreign airlines of 45 percent and 55 percent, respectively. This portfolio is
diversified across 14 airlines and 33 aircraft. The commercial aircraft
transactions are financed through investments in leveraged lease transactions of
$299.5 million, direct financing lease transactions of $129.9 million, and
through our equity interest in PBG Capital Partners LLC, in which our
proportional equity share of commercial airline leasing transactions is $81.7
million. Risk of loss under these transactions is primarily related to: (1) the
inability of the airline to make underlying lease payments; (2) our inability to
generate sufficient cash flows either through the sale of the aircraft or
secondary lease transactions to recover our net investment; and/or (3) in the
case of the leveraged lease portfolio, the absence of an equity defeasance or
other third party credit arrangements. Approximately 45 percent of the leveraged
lease portfolio has either equity defeasance accounts or third party credit
arrangements.




Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 2002
Page 22

A further breakdown of our portfolio is as follows:


                                         # of        % of total
         Airline                     aircraft        investment
         -------                     --------        ----------
         U.S.
         ---
         United and subsidiary              5              12.4
         US Airways                         4              11.4
         Delta                              5              10.8
         America West                       1               3.6
         American                           6               3.5
         Southwest                          2               1.9
         Northwest                          1               1.1
         Alaska Air                         1                .2
                                           --              ----
                                           25              44.9
                                           --              ----

         Foreign
         -------
         KLM                                2              21.0
         Qantas                             2              14.5
         Japan                              2               8.8
         Air France                         1               6.4
         Lufthansa                          1               4.4
                                           --              ----
                                            8              55.1
                                           --              ----

            Total                          33             100.0
                                           ==             =====

We  continue to monitor  our  investment  in  commercial  aircraft  leasing
transactions  given the  current  status of the airline industry. In particular,
we are closely monitoring recent  developments  related to US Airways Group,
Inc. (US Airways) and United Air Lines, Inc. (United).

Our investment in commercial aircraft leasing transactions includes four
aircraft with US Airways for a total investment of $58.5 million. With respect
to our aircraft, US Airways failed to make scheduled leveraged lease payments
totaling $1.3 million that were due on July 1, 2002. As a result, we have
suspended the recognition of financing income on all aircraft leases with US
Airways. On August 11, 2002, US Airways filed for protection under Chapter 11 of
the U.S. Bankruptcy Code. US Airways has publicly stated that its restructuring
plan is predicated upon delivering cost reductions and concessions from its
unions, aircraft lessors and financiers and other parties. US Airways has also
publicly stated that it has received conditional approval from the Air
Transportation Stabilization Board for a $1 billion collateralized loan backed
by a federal guarantee that may be available to US Airways upon the successful
ratification of its plan for reorganization and emergence from Chapter 11
protection.

We are uncertain as to the outcome of the US Airways bankruptcy proceeding and
the impact on our investment in aircraft leases with US Airways. Under Section
1110 of the Bankruptcy Code, US Airways may, within 60 days of its filing for
protection, cure any defaults under the lease agreements and agree to fulfill
its future obligations under those leases to prevent the repossession of the
aircraft. However, other actions that may be taken by either US Airways
(including the rejection of our leases) or by others during the bankruptcy
proceeding may cause a negative impact on our cash flow and could result in
material charges related to a write-down of our investment in these
transactions.

Our investment in commercial aircraft leasing transactions also includes four
aircraft with United and one aircraft with a wholly-owned regional carrier
subsidiary of United, for a total investment of $63.5 million. To date, United
has made all contractual payments on the above transactions. While we have not
been approached by the airline to discuss concessions or the potential
restructuring of its obligations, we continue to monitor the airline's public
disclosure of its discussions with its unions and with government officials.
Continued deterioration of this situation or in the airline industry in general
may cause a negative impact on our cash flow and could result in material
charges related to a write-down of our investment in these or other airline
transactions.




Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 2002
Page 23

The potential range of pretax write-downs associated with US Airways and United
combined could be between zero and $100 million. Accordingly, due to the wide
range of outcomes, no write-down has been recorded at this time. We will
reevaluate our position in subsequent quarters as the US Airways bankruptcy
proceeding continues and more information is disclosed about United's ability to
fulfill its obligations under its leases.

Regulatory Matters
- ------------------

In 2000, the U.S. Postal Service (USPS) issued a schedule for the phaseout of
manually reset electronic meters in the U.S. as follows:

o    As of February 1, 2000, new placements of manually reset electronic meters
     were no longer permitted.

o    The current users of manually reset electronic meters could continue to use
     these meters for the term of their rental and lease agreements. Leases or
     rentals due to expire in 2000 could be extended to December 31, 2001.

On November 15, 2001, the USPS issued a rule as follows:

o    New placements of non-digital meters without the "timeout" feature that
     enables the meters to be automatically disabled, if not reset within a
     specified time period are no longer permitted after December 31, 2002.
     These meters must be off the market by December 31, 2006.

o    New placements of non-digital meters with a "timeout" feature are no
     longer permitted after June 2004. These meters must be off the market
     by December 31, 2008.

We adopted a formal plan in the second quarter of 2001 to transition to the next
generation of networked mailing technology.

USPS Information Based Indicia Program (IBIP)

In May 1995, the USPS publicly announced its concept of its IBIP for future
postage evidencing devices. As initially stated by the USPS, the purpose of the
program was to develop a new standard for future digital postage evidencing
devices which would significantly enhance postal revenue security and support
expanded USPS value-added services to mailers. The program would consist of the
development of four separate specifications: (i) the Indicium specification;
(ii) a Postal Security Device specification; (iii) a Host specification; and
(iv) a Vendor Infrastructure specification. During the period from May 1995
through June 30, 2002, we submitted extensive comments to a series of proposed
IBIP specifications issued by the USPS, including comments on the IBI
Performance Criteria.

Other Regulatory Matters
- ------------------------

In June 2002, we received an examination report from the Internal Revenue
Service (IRS) showing proposed income tax adjustments for the 1992 to 1994 tax
years. The total additional tax proposed by the IRS for the 1992 through 1994
tax years is about $24 million. We are in the process of filing protests with
the IRS to challenge most of the proposed deficiencies asserted by the IRS. We
believe that we have meritorious defenses to those deficiencies and that the
ultimate outcome will not result in a material effect on our consolidated
results of operations or financial position. Depending on the outcome of the
above matter, additional tax may be due for 1995 and future audit years. At any
time, our provision for taxes could be impacted by changes in tax law and
interpretations by governments or courts.


Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 2002
Page 24

Forward-Looking Statements
- --------------------------

We want to caution readers that any 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 in this Form 10-Q, other reports or press releases or made
by the company's management involve risks and uncertainties which may change
based on various important factors. These forward-looking statements are those
which talk about the company's or management's current expectations as to the
future and include, but are not limited to, statements about the amounts, timing
and results of possible restructuring charges and future earnings. Words such as
"estimate," "project," "plan," "believe," "expect," "anticipate," "intend," and
similar expressions may identify such forward-looking statements. Some of the
factors which could cause future financial performance to differ materially from
the expectations as expressed in any forward-looking statement made by or on
behalf of the company include:

o  changes in international or national political conditions, including any
   terrorist attacks
o  negative developments in economic conditions, including adverse impacts on
   customer demand
o  changes in postal regulations
o  timely development and acceptance of new products
o  success in gaining product approval in new markets where regulatory
   approval is required
o  successful entry into new markets
o  mailers' utilization of alternative means of communication or competitors'
   products
o  the  company's  success at managing  customer  credit risk,  including
   risks  associated  with  commercial  aircraft  leasing transactions
o  changes in interest rates
o  foreign currency fluctuations
o  timing and execution of the restructuring plan
o  regulatory approvals and satisfaction of other conditions to consummation
   of any acquisitions
o  impact on mail volume resulting from current concerns over the use of the
   mail for transmitting harmful biological agents
o  third-party suppliers ability to provide product components
o  negative income tax adjustments for prior audit years and changes in tax
   laws or regulations.

                           Part II - Other Information
                           ---------------------------

Item 1:  Legal Proceedings

In the course of normal business, the company is occasionally party to lawsuits.
These may involve litigation by or against the company relating to, among other
things:

o  contractual rights under vendor, insurance or other contracts
o  intellectual property or patent rights
o  equipment, service or payment disputes with customers
o  disputes with employees

The company is currently a plaintiff or defendant in a number of lawsuits, none
of which should have, in the opinion of management and legal counsel, a material
adverse effect on the company's financial position or results of operations.


Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 2002
Page 25

Item 4:  Submission of Matters to a Vote of Security Holders

Below are the final results of the voting at the annual meeting of stockholders
held on May 13, 2002:

Proposal 1 - Election of Directors

               Nominee                For                      Withheld
          -------------------     --------------              ---------
          Michael J. Critelli        206,104,943              3,760,692
          Herbert L. Henkel          206,146,050              3,719,585
          Michael I. Roth            206,115,974              3,749,661
          Robert E. Weissman         206,550,332              3,315,303

Proposal 2 - Appointment of PricewaterhouseCoopers LLP as Independent
             Accountants

              For                       Against                 Abstain
          -----------               -------------            ----------
          200,216,547                  8,560,483              1,088,605

Proposal 3 - Approval of the amendment and restatement of the 1991 Stock Plan

              For                       Against                 Abstain
          -----------                ------------            ----------
          160,091,537                 24,807,780              2,123,803

The following other directors continued their term of office after the annual
meeting:

     Linda G. Alvarado                           James H. Keyes
     Colin G. Campbell                           John S. McFarlane
     Jessica P. Einhorn                          Eduardo R. Menasce
     Ernie Green                                 David L. Shedlarz


Item 6:  Exhibits and Reports on Form 8-K.

(a) Exhibits

           Reg. S-K
           Exhibits            Description
           --------            -------------------------------------------------

              (12)             Computation of ratio of
                               earnings to fixed charges

            (99.1)             Certification of Chief Executive Officer

            (99.2)             Certification of Chief Financial Officer



(b) Reports on Form 8-K

       On June 28, 2002, the company filed a current report on Form 8-K pursuant
       to Item 5 thereof, reporting the Press Release dated June 27, 2002
       regarding its announcement to acquire 100% of the stock of PSI Group,
       Inc.

       On June 19, 2002, the company furnished a current report on Form 8-K
       pursuant to Item 9 thereof, reporting the 2002 Analyst Day web-cast
       presentation held on June 18, 2002 for the investment community to review
       growth strategies and business opportunities.

       On April 19, 2002, the company filed a current report on Form 8-K
       pursuant to Item 5 thereof, reporting the Press Release dated April 18,
       2002 for the quarter ended March 31, 2002.





Pitney Bowes Inc. - Form 10-Q
Six Months Ended June 30, 2002
Page 26



                                   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.




August 13, 2002




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



                                   /s/ A. F. Henock
                                   -------------------------------------------
                                   A. F. Henock
                                   Vice President - Finance
                                   (Principal Accounting Officer)



                                  Exhibit Index




           Reg. S-K
           Exhibits            Description
           --------            ------------------------------------------------

              (12)             Computation of ratio of
                               earnings to fixed charges

            (99.1)             Certification of Chief Executive Officer

            (99.2)             Certification of Chief Financial Officer








                                                                                                                        Exhibit (12)

                                                                         Pitney Bowes Inc.
                                                       Computation of Ratio of Earnings to Fixed Charges (1)
                                                       -----------------------------------------------------

(Dollars in thousands)

                                                                   Three Months Ended                      Six Months Ended
                                                                        June 30,                               June 30,
                                                             ---------------------------------     ---------------------------------
                                                                       2002            2001(2)                2002           2001(2)
                                                             --------------     --------------     ---------------    --------------
                                                                                                         
Income from continuing operations
  before income taxes......................................  $      208,314     $      298,236     $       396,850    $      447,135

Add:
    Interest expense.......................................          48,754             46,338              97,145            99,126
    Portion of rents
       representative of the interest factor...............          10,251             11,079              20,530            21,345
    Amortization of capitalized interest...................             368                243                 611               486
    Minority interest in the
       income of subsidiary with fixed charges.............           1,391              2,648               2,629             6,009
                                                             --------------     --------------     ---------------    --------------

Income as adjusted.........................................  $      269,078     $      358,544     $       517,765    $      574,101
                                                             ==============     ==============     ===============    ==============

Fixed charges:
    Interest expense.......................................  $       48,754     $       46,338     $        97,145    $       99,126
    Capitalized interest...................................               -                  -                   -                 -
    Portion of rents
       representative of the interest factor...............          10,251             11,079              20,530            21,345
    Minority interest, excluding
       taxes, in the income of
       subsidiary with fixed charges.......................           2,025              4,204               3,827             9,208
                                                             --------------     --------------     ---------------    --------------

       Total fixed charges................................   $       61,030     $       61,621     $       121,502    $      129,679
                                                             ==============     ==============     ===============    ==============

Ratio of earnings to fixed charges........................             4.41               5.82                4.26              4.43
                                                             ==============     ==============     ===============    ==============

Ratio of earnings to fixed
    charges excluding minority interest...................             4.54               6.20                4.38              4.72
                                                             ==============     ==============     ===============    ==============
<FN>
(1)      The computation of the ratio of earnings to fixed charges has been
         computed by dividing income from continuing operations before income
         taxes as adjusted by fixed charges. Included in fixed charges is
         one-third of rental expense as the representative portion of interest.

(2)      Interest expense and the portion of rents  representative  of the
         interest factor of the  discontinued  operations of IGI have
         been excluded from fixed charges in the computation.

         Including these amounts in fixed charges, the ratio of earnings to
         fixed charges would be 5.59 and 4.27 for the three and six months ended
         June 30, 2001. The ratio of earnings to fixed charges excluding
         minority interest would be 5.93 and 4.54 for the three and six months
         ended June 30, 2001.
</FN>








                                                                   Exhibit 99.1

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Pitney Bowes Inc. (the "company") on
Form 10-Q for the period ending June 30, 2002 as filed with the Securities and
Exchange Commission on the date hereof (the "Report"), pursuant to 18 U.S.C.
(S) 1350, as adopted pursuant to (S) 906 of the Sarbanes-Oxley Act of 2002,
I, Michael J. Critelli, Chief Executive Officer of the company, certify, that
to the best of my knowledge:

     (1)      The Report fully complies with the requirements of section 13(a)
              or 15(d) of the Securities Exchange Act of 1934; and

     (2)      The information contained in the Report fairly presents, in all
              material respects, the financial condition and results of
              operations of the company.



/s/ Michael J. Critelli
- ------------------------
Michael J. Critelli
Chief Executive Officer
August 13, 2002






                                                                   Exhibit 99.2

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Pitney Bowes Inc. (the "company") on
Form 10-Q for the period ending June 30, 2002 as filed with the Securities and
Exchange Commission on the date hereof (the "Report"), pursuant to 18 U.S.C.
(S) 1350, as adopted pursuant to (S) 906 of the Sarbanes-Oxley Act of 2002,
I, Bruce P. Nolop, Chief Financial Officer of the company, certify, that
to the best of my knowledge:

     (1)      The Report fully complies with the requirements of section 13(a)
              or 15(d) of the Securities Exchange Act of 1934; and

     (2)      The information contained in the Report fairly presents, in all
              material respects, the financial condition and results of
              operations of the company.



/s/ Bruce P. Nolop
- -------------------
Bruce P. Nolop
Chief Financial Officer
August 13, 2002