SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
F O R M 10 - Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- ----- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
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: 0-13497
PITNEY BOWES CREDIT CORPORATION
State of Incorporation IRS Employer Identification No.
Delaware 06-0946476
201 Merritt Seven
Norwalk, Connecticut 06856-5151
Telephone Number: (203) 846-5600
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
----- -----
As of April 30, 1996, 460 shares of common stock, no par value with
a stated value of $100,000 per share, were outstanding, all of
which were owned by Pitney Bowes Inc., the parent of the
Registrant.
REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION
H(1) (a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM
WITH THE REDUCED DISCLOSURE FORMAT.
Pitney Bowes Credit Corporation - Form 10-Q
Three Months Ended March 31, 1996
Page 2 of 18
Pitney Bowes Credit Corporation
Index
-------------------------------
Page Number
-----------
Part I - Financial Information:
Item 1. Financial Statements
Consolidated Statement of Income -
Three Months Ended
March 31, 1996 and 1995 . . . . . . . . 3
Consolidated Balance Sheet -
March 31, 1996 and
December 31, 1995 . . . . . . . . . . . 4
Consolidated Statement of Cash Flows -
Three Months Ended
March 31, 1996 and 1995 . . . . . . . . 5 - 6
Notes to Consolidated Financial
Statements. . . . . . . . . . . . . . . 7 - 9
Item 2. Management's Narrative Analysis of
the Results of Operations . . . . . . . 10 - 14
Part II - Other Information:
Item 1. Legal Proceedings. . . . . . . . . . . . 15
Item 6. Exhibits and Reports on Form 8-K . . . . 15
Signatures . . . . . . . . . . . . . . . . . . . 16
Exhibit (i) - Computation of Ratio of Earnings
to Fixed Charges. . . . . . . . . . . . . . . . 17
Exhibit (ii) - Financial Data Schedule . . . . . 18
Pitney Bowes Credit Corporation - Form 10-Q
Three Months Ended March 31, 1996
Page 3 of 18
Part I - Financial Information
Item 1. Financial Statements
Pitney Bowes Credit Corporation
Consolidated Statement of Income
--------------------------------
(Unaudited)
(Dollars in thousands) Three Months Ended March 31,
----------------------------
1996 1995
------- -------
Finance income . . . . . . . . . . . . . $177,276 $152,170
------- -------
Expenses:
Selling, general and administrative. . 39,282 32,018
Depreciation and amortization. . . . . 8,927 6,870
Provision for credit losses. . . . . . 16,695 12,268
Interest . . . . . . . . . . . . . . . 50,315 48,549
------- -------
Total expenses . . . . . . . . . . . 115,219 99,705
------- -------
Income before income taxes . . . . . . . 62,057 52,465
Provision for income taxes . . . . . . . 20,489 16,496
------- -------
Net income . . . . . . . . . . . . . . . $ 41,568 $ 35,969
======= =======
Ratio of earnings to fixed charges . . . 2.22X 2.07X
======= =======
Pitney Bowes Credit Corporation - Form 10-Q
Three Months Ended March 31, 1996
Page 4 of 18
Pitney Bowes Credit Corporation
Consolidated Balance Sheet
-------------------------------
(Unaudited)
(Dollars in thousands) March 31, December 31,
1996 1995
------------ ------------
Assets
Cash . . . . . . . . . . . . . . . . . . . . . . $ 10,059 $ 10,129
---------- ----------
Investments:
Finance assets (Note 2) . . . . . . . . . . . 4,048,397 4,117,353
Investment in leveraged leases . . . . . . . . 569,586 562,500
Assets transferred from affiliate. . . . . . . 50,176 53,717
Investment in operating leases, net of
accumulated depreciation . . . . . . . . . . 111,745 114,587
Allowance for credit losses. . . . . . . . . . (101,411) (101,355)
---------- ----------
Net investments. . . . . . . . . . . . . . . 4,678,493 4,746,802
---------- ----------
Mortgage servicing rights, net of accumulated
amortization (Note 3) . . . . . . . . . . . . . 120,864 105,933
Assets held for sale . . . . . . . . . . . . . . 100,625 71,917
Other assets . . . . . . . . . . . . . . . . . . 174,637 123,093
---------- ----------
Total assets . . . . . . . . . . . . . . . . . . $ 5,084,678 $ 5,057,874
========== ==========
Liabilities
Senior notes payable within one year (Note 4). . $ 2,314,107 $ 2,122,880
Short-term notes payable to affiliates (Note 4). 134,974 149,709
Accounts payable to affiliates . . . . . . . . . 128,728 127,007
Accounts payable and accrued liabilities . . . . 150,784 155,603
Deferred taxes . . . . . . . . . . . . . . . . . 470,966 441,324
Senior notes payable after one year (Note 4) . . 820,500 1,020,500
Subordinated notes payable (Note 4). . . . . . . 170,857 170,857
---------- ----------
Total liabilities . . . . . . . . . . . . . . 4,190,916 4,187,880
---------- ----------
Stockholder's Equity
Common stock . . . . . . . . . . . . . . . . . . 46,000 46,000
Capital surplus. . . . . . . . . . . . . . . . . 41,725 41,725
Retained earnings. . . . . . . . . . . . . . . . 806,037 782,269
---------- ----------
Total stockholder's equity. . . . . . . . . . 893,762 869,994
---------- ----------
Total liabilities and stockholder's equity . . . $ 5,084,678 $ 5,057,874
========== ==========
Pitney Bowes Credit Corporation - Form 10-Q
Three Months Ended March 31, 1996
Page 5 of 18
Pitney Bowes Credit Corporation
Consolidated Statement of Cash Flows
------------------------------------
(Unaudited)
(Dollars in thousands) Three Months Ended March 31,
----------------------------
1996 1995
---------- ----------
Operating Activities
Net income. . . . . . . . . . . . . . . . . . $ 41,568 $ 35,969
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Provision for credit losses . . . . . . . . 16,695 12,268
Depreciation and amortization . . . . . . . 8,927 6,870
Increase (decrease) in accounts payable to
affiliates . . . . . . . . . . . . . . . . 1,721 (36,631)
Increase in deferred taxes. . . . . . . . . 29,642 20,479
Decrease in accounts payable and accrued
liabilities. . . . . . . . . . . . . . . . (4,819) (82,718)
Increase in assets transferred from
affiliate. . . . . . . . . . . . . . . . . - (25,273)
Other, net. . . . . . . . . . . . . . . . . (47,644) (3,624)
--------- ---------
Net cash provided by (used in) operating
activities . . . . . . . . . . . . . . . . . 46,090 (72,660)
--------- ---------
Investing Activities
Investment in net finance assets. . . . . . (363,595) (239,033)
Investment in operating leases. . . . . . . (8,113) (695)
Investment in assets held for sale. . . . . (67,280) (30,732)
Cash receipts collected under lease
contracts, net of finance income
recognized . . . . . . . . . . . . . . . . 458,112 241,154
Investment in mortgage servicing rights . . (18,731) (13,600)
Loans and advances to affiliates, net . . . (1,121) 33,795
Additions to equipment and leasehold
improvements . . . . . . . . . . . . . . . (4,124) (1,557)
--------- ---------
Net cash used in investing activities . . . (4,852) (10,668)
--------- ---------
Pitney Bowes Credit Corporation - Form 10-Q
Three Months Ended March 31, 1996
Page 6 of 18
Pitney Bowes Credit Corporation
Consolidated Statement of Cash Flows
------------------------------------
(Unaudited)
(Dollars in thousands) Three Months Ended March 31,
----------------------------
1996 1995
---------- ----------
Financing Activities
(Decrease) increase in short-term debt. . . (8,773) 97,244
Short-term loans from affiliates. . . . . . (14,735) -
Payments to settle subordinated debt. . . . - (740)
Dividends paid to Pitney Bowes Inc. . . . . (17,800) (15,500)
--------- ---------
Net cash (used in) provided by financing
activities. . . . . . . . . . . . . . . . (41,308) 81,004
--------- ---------
Decrease in cash. . . . . . . . . . . . . . . (70) (2,324)
Cash at beginning of period . . . . . . . . . 10,129 11,250
--------- ---------
Cash at end of period . . . . . . . . . . . . $ 10,059 $ 8,926
========= =========
Interest paid . . . . . . . . . . . . . . . . $ 53,776 $ 64,447
========= =========
Income taxes refunded, net. . . . . . . . . . $ (33,346) $ (13,827)
========= =========
Pitney Bowes Credit Corporation - Form 10-Q
Three Months Ended March 31, 1996
Page 7 of 18
Pitney Bowes Credit Corporation
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 the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of Pitney Bowes
Credit Corporation (the Company or PBCC), all adjustments (consisting of only
normal recurring accruals) necessary to present fairly the financial position
as of March 31, 1996 and the results of operations and cash flows for the
three months ended March 31, 1996 and 1995 have been included. Operating
results for the three months ended March 31, 1996 are not necessarily
indicative of the results that may be expected for the year ending December
31, 1996. These statements should be read in conjunction with the financial
statements and notes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 1995.
Note 2:
- ------
The composition of the Company's finance assets is as follows:
(Dollars in thousands)
March 31, December 31,
Finance Assets 1996 1995
------------ ------------
Gross finance receivables . . . . . . . . . . $ 4,707,276 $ 4,801,084
Unguaranteed residual valuation . . . . . . . 649,738 649,549
Initial direct cost deferred. . . . . . . . . 94,050 89,173
Unearned income . . . . . . . . . . . . . . . (1,402,667) (1,422,453)
---------- ----------
Finance assets. . . . . . . . . . . . . . . $ 4,048,397 $ 4,117,353
========== ==========
Note 3:
- ------
Mortgage servicing rights (MSR) are recorded at the lower of cost or present
value of the estimated future net servicing income, which does not exceed
fair market value and are amortized in proportion to, and over the period of,
estimated net servicing income. On January 1, 1996, the Company adopted
Statement of Financial Accounting Standards No. 122, "Accounting for Mortgage
Servicing Rights" (FAS 122). FAS 122 requires that capitalized MSR be
assessed periodically for impairment based on the fair value of those rights.
Fair value is estimated using a discounted cash flow model which incorporates
market discount and prepayment rates as well as other assumptions that market
participants would use in their estimates of future servicing income and
expense. The Company's policy for evaluating MSR for impairment is to
stratify the mortgage servicing rights based on the predominant risk
characteristics of the underlying loans. Upon evaluation, adjustments to
current period operations and the valuation allowance are made if any
individual portfolio stratum is deemed impaired. Based on the evaluation
performed as of March 31, 1996, no impairment was recognized in the Company's
mortgage servicing rights portfolio.
Pitney Bowes Credit Corporation - Form 10-Q
Three Months Ended March 31, 1996
Page 8 of 18
Note 4:
- ------
The composition of the Company's notes payable is as follows:
(Dollars in thousands)
March 31, December 31,
Notes Payable 1996 1995
------------ ------------
Senior Notes Payable
Commercial paper at a weighted average
interest rate of 5.18% (5.69% in 1995). . . $1,887,500 $1,864,000
Notes payable against bank lines of
credit and others at a weighted average
interest rate of 2.40% (2.35% in 1995). . . 226,607 258,880
Current installment of long-term debt due
within one year at an interest rate of
5.625%. . . . . . . . . . . . . . . . . . . 200,000 -
--------- ---------
Total senior notes payable within one year. . 2,314,107 2,122,880
Senior notes payable after one year at
interest rates of 5.84% to 9.25%
through 2009 (5.63% to 9.25% in 1995) . . . 820,500 1,020,500
--------- ---------
Total senior notes payable. . . . . . . . . . 3,134,607 3,143,380
--------- ---------
Short-term Notes Payable to Affiliates
Notes payable to Pitney Bowes Inc. at a
weighted average interest rate of 5.29%
(5.72% in 1995) . . . . . . . . . . . . . . 125,000 132,000
Notes payable to Pitney Bowes International
at a weighted average interest rate of
5.43% (5.85% in 1995) . . . . . . . . . . . 9,974 17,709
--------- ---------
Total short-term notes payable to affiliates. 134,974 149,709
--------- ---------
Subordinated Notes Payable
Non-interest bearing notes due
Pitney Bowes Inc. . . . . . . . . . . . . . 170,857 170,857
--------- ---------
Total notes payable . . . . . . . . . . . . . $3,440,438 $3,463,946
========= =========
Pitney Bowes Credit Corporation - Form 10-Q
Three Months Ended March 31, 1996
Page 9 of 18
Note 5:
- ------
In addition to the adoption of FAS 122, as discussed in Note 3, the
Company also adopted Statement of Financial Accounting Standards No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of" on January 1, 1996 with no material effect to
the Company's reporting results.
Pitney Bowes Credit Corporation - Form 10-Q
Three Months Ended March 31, 1996
Page 10 of 18
Item 2. Management's Narrative Analysis of the Results of Operations
------------------------------------------------------------
Event Impacting Comparability
- -----------------------------
As a result of the 1995 sale of Dictaphone Corporation (Dictaphone) and
Monarch Marking Systems, Inc. (Monarch) by Pitney Bowes Inc. (Pitney
Bowes or PBI), effective January 1, 1996, the operating results of these
two previous affiliates of the Company are now reported as part of the
Company's External small-ticket financing programs. Prior to January 1,
1996, this information had been reported as part of the Company's
Internal small-ticket financing programs. Both of these companies were
captive for the majority of last year and will therefore continue to have
their prior year results disclosed as part of the Internal small-ticket
financing programs.
Results of Operations - first quarter of 1996 compared to first quarter
of 1995
- -------------------------------------------------------------------------
Finance income in the first quarter of 1996 increased 16.5 percent to
$177.3 million compared to $152.1 million in 1995. Finance income for
Internal small-ticket financing programs increased to $74.9 million from
$73.2 million ($69.3 million excluding Dictaphone and Monarch) primarily
due to higher income from fee-based programs, partly offset by lower
lease rates on new business. Finance income for External large-ticket
financing programs increased to $52.4 million from $46.4 million
primarily due to the gain of $1.6 million realized from the sale of $139
million of finance assets in the first quarter of 1996, plus higher
income from other fee-based programs and higher investment levels, partly
offset by lower lease rates on new business. Finance income related to
External small-ticket financing programs increased to $38.8 million from
$25.2 million ($29.1 million including Dictaphone and Monarch) primarily
due to higher income from higher investment levels and fee-based
programs, in addition to higher lease rates on new business. Revenue
generated from mortgage servicing increased 53.4 percent to $11.2 million
in the first quarter of 1996 compared with $7.3 million in the first
quarter of 1995, due to a larger mortgage servicing portfolio which
supports the Company's fee-based income growth strategy.
Pitney Bowes Credit Corporation - Form 10-Q
Three Months Ended March 31, 1996
Page 11 of 18
Selling, general and administrative (SG&A) expenses increased 22.7
percent to $39.3 million in the first quarter of 1996 compared to $32.0
million in 1995. SG&A expenses for Internal small-ticket financing
programs increased to $14.7 million from $13.8 million ($12.8 million
excluding Dictaphone and Monarch) principally due to higher professional
fees related to new business initiatives and higher sales assistance fees
paid to Pitney Bowes. SG&A expenses for External large-ticket financing
programs increased 16.6 percent to $5.2 million primarily due to higher
personnel related expenses and $.3 million from the impact of the finance
asset sale in the first quarter of 1996. SG&A expenses for External
small-ticket financing programs increased to $14.9 million from $10.8
million ($11.8 million including Dictaphone and Monarch) principally due
to a higher level of marketing fees paid to brokers on higher levels of
new business and higher personnel related expenses. SG&A expenses
related to mortgage servicing increased 47.1 percent in 1996 to $4.3
million primarily due to the administration of a larger mortgage
servicing portfolio. SG&A expenses related to the start-up of the
Company's residual value operations in 1996 were $.2 million.
Depreciation on operating leases was $3.4 million in the first quarter of
1996 compared to $3.0 million in 1995 reflecting a higher operating lease
investment balance in 1996. Amortization of mortgage servicing rights
was $4.9 million in the first quarter of 1996 compared to $3.3 million in
1995 due to a larger mortgage servicing portfolio. Amortization of
deferred costs associated with the Company's participation in a
partnership transaction was $.6 million for both the first quarter of
1996 and 1995.
The provision for credit losses was $16.7 million for the first quarter
of 1996 compared to $12.3 million in 1995. The provision for Internal
small-ticket financing programs decreased to $8.0 million from $8.4
million ($7.6 million excluding Dictaphone and Monarch) primarily due to
favorable reserve adjustments. The provision for the External large-
ticket financing programs was $2.0 million in the first quarter of 1996
compared with a credit of $.7 million in the first quarter of 1995,
reflecting the impact of the finance asset sale and higher investment
levels and favorable reserve adjustments in 1995. The provision for
External small-ticket financing programs was $6.7 million for the first
quarter of 1996 compared to $4.6 million in 1995 ($5.4 million including
Dictaphone and Monarch) primarily due to higher investment levels.
Pitney Bowes Credit Corporation - Form 10-Q
Three Months Ended March 31, 1996
Page 12 of 18
The Company's allowance for credit losses as a percentage of net lease
receivables (net investments before allowance for credit losses plus the
uncollected principal balance of receivables sold) increased nominally
from 2.00 percent at December 31, 1995 to 2.03 percent at March 31, 1996.
PBCC charged $16.6 million and $17.8 million against the allowance for
credit losses in the first quarter of 1996 and 1995, respectively.
Interest expense was $50.3 million in the first quarter of 1996 compared
with $48.5 million in 1995. The increase reflects higher average
borrowings in 1996 partially offset by lower interest rates. The
effective interest rate on average borrowings was 6.04 percent for the
first quarter of 1996 compared to 6.76 percent for the same period of
1995. The Company does not match fund its financing investments and does
not apply different interest rates to its various financing portfolios.
The effective tax rate for the first quarter of 1996 was 33.0 percent
compared with 31.5 percent for the same period of 1995. The increase is
principally due to the declining impact of the residual portfolio
purchase completed in the fourth quarter of 1994 and a lower level of
tax-exempt income.
The Company's ratio of earnings to fixed charges was 2.22 times for the
first quarter of 1996 compared with 2.07 times for the same period of
1995. The increase reflects higher profitability from higher investment
and fee-based program levels, combined with lower effective interest
rates in 1996.
Liquidity and Capital Resources
- -------------------------------
The Company's principal sources of funds are from operations and
borrowings. It has been PBCC's practice to use a balanced mix of debt
maturities, variable- and fixed-rate debt and interest rate swap
agreements to control its sensitivity to interest rate volatility.
PBCC's debt mix was 71 percent short-term and 29 percent long-term at
March 31, 1996 and 66 percent short-term and 34 percent long-term at
December 31, 1995. PBCC's swap-adjusted variable-rate versus fixed-rate
debt mix was 57 percent variable-rate and 43 percent fixed-rate at both
March 31, 1996 and December 31, 1995. The Company may borrow through the
sale of commercial paper, under its confirmed bank lines of credit, and
by private and public offerings of intermediate- or long-term debt
securities.
The Company has $750 million of unissued debt securities available from
a shelf registration statement filed with the Securities and Exchange
Commission in September 1995. Up to $500 million of medium-term notes
may be offered under this registration statement. The $750 million
available under this shelf registration statement should meet the
Company's financing needs for the next two years. The Company also had
unused lines of credit and revolving credit facilities totaling $1.72
billion at March 31, 1996, largely supporting its commercial paper
borrowings.
Pitney Bowes Credit Corporation - Form 10-Q
Three Months Ended March 31, 1996
Page 13 of 18
The Company continues to develop strategies in support of ongoing debt
level management. Emphasis on fee-based transactions and consideration
of the sale of certain financing transactions are expected to continue to
control the growth of External large-ticket investments and debt levels.
Additional financing will continue to be arranged as deemed necessary.
Borrowing requirements will be primarily dependent upon the level of
equipment purchases from Pitney Bowes, the level of External Division
financing activity, capitalization of any fee-based business initiatives
and the refinancing of maturing debt.
The Company's utilization of derivative instruments is currently limited
to interest rate swap agreements (interest rate swaps) and foreign
currency exchange forward contracts (foreign currency contracts). The
Company periodically enters into interest rate swaps as a means of
managing interest rate exposure. The interest rate differential to be
paid or received is recognized over the life of the agreements as an
adjustment to interest expense. The Company is exposed to credit loss in
the event of non-performance by the counterparties to the interest rate
swaps to the extent of the differential between fixed- and variable-
rates; such exposure is considered minimal. The Company has entered into
foreign currency contracts for the purpose of minimizing its risk of loss
from fluctuations in exchange rates in connection with certain
intercompany loans and certain transfers to the Company by foreign
affiliates of foreign currency denominated lease receivables. The
Company is exposed to credit loss in the event of non-performance by the
counterparties to the foreign currency contracts to the extent of the
difference between the spot rate at the date of the contract delivery and
the contracted rate; such exposure is also considered minimal.
Since the Company normally enters into derivative transactions only with
members of its banking group, the credit risk of these transactions is
monitored as part of the normal credit review of the banking group. The
Company monitors the market risk of derivative instruments through
periodic review of fair market values.
Gross finance assets at the end of the first quarter of 1996 decreased
1.7 percent from December 31, 1995. The decrease is principally due to
the sale of $139 million of External large-ticket finance assets during
the first quarter of 1996 and a seasonally lower level of financing
volume in the Internal small-ticket financing programs being added during
the quarter relative to portfolio liquidations. This decrease is partly
offset by a favorable financing volume relative to portfolio liquidation
in the External small-ticket financing programs. Gross finance assets at
March 31, 1996 were 9.4 percent, or $460.3 million, higher than March 31,
1995. Overall levels of lease receivables are in line with management's
expectations.
Pitney Bowes Credit Corporation - Form 10-Q
Three Months Ended March 31, 1996
Page 14 of 18
The Company's liquidity ratio (finance contracts receivable, including
residuals, expected to be realized in cash over the next 12 months to
current maturities of debt over the same period) was .66 times at March
31, 1996 and .61 times at December 31, 1995.
The Company will continue to use cash to invest in finance assets with
emphasis on Internal and External small-ticket leasing transactions and
controlled investment in External large-ticket financing programs. The
Company believes that cash generated from operations and collections on
existing lease contracts will provide the majority of cash needed for
such investment activities. Additional cash, to the extent needed, is
expected to be provided from commercial paper and intermediate- or long-
term debt securities. While the Company expects that market acceptance
of its short- and long-term debt will continue to be strong, additional
liquidity is available, if needed, under revolving credit facilities and
credit lines.
As disclosed in previous filings, in December 1992, as part of the
restructuring of its German affiliate, Adrema Leasing Corporation
(Adrema), the Company purchased certain finance receivables and other
assets from Adrema. Based on the evaluation of these assets, Pitney
Bowes and the Company believe that sufficient reserves for credit losses
are in place to provide for currently expected losses. As part of the
orderly liquidation of assets from leasing non-Pitney Bowes products in
Germany, Adrema continues to bill and collect accounts and repossess and
remarket collateral where possible over the remainder of the lease terms.
The Company continues to scrutinize the circumstances surrounding the
losses and evaluate actions that can be taken against former Adrema
management and other related parties.
- -------------------------------------------------------------------------
The Company wishes to caution readers that any forward-looking statements
contained in this Form 10-Q or made by the management of the Company
involve risks and uncertainties, and are subject to change based on
various important factors. The following factors, among others, could
affect the Company's financial results and could cause the Company's
financial performance to differ materially from the expectations
expressed in any forward-looking statement made by or on behalf of the
Company - the level of business and financial performance of Pitney
Bowes; the impact of governmental financing regulations; the success of
the Company in developing strategies to manage debt levels, including the
ability of the Company to access the capital markets; the strength of
worldwide economies; the effects of and changes in trade, monetary and
fiscal policies and laws, and inflation and monetary fluctuations,
including changes in interest rates; the willingness of customers to
substitute financing sources; and the level of write-offs and the
Company's associated collection and asset management efforts.
Pitney Bowes Credit Corporation - Form 10-Q
Three Months Ended March 31, 1996
Page 15 of 18
Part II - Other Information
---------------------------
Item 1. Legal proceedings
From time to time, the Company is a party to lawsuits that arise in
the ordinary course of its business. These lawsuits may involve
litigation by or against the Company to enforce contractual rights
under vendor, insurance or other contracts; lawsuits by or against
the Company relating to equipment, service or payment disputes with
customers; disputes with employees; or other matters. The Company is
currently a 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 has been advised that the Antitrust Division of the U.S.
Department of Justice is conducting a civil investigation of its
postage equipment business (including subsidiaries) to determine
whether there is, has been, or may be a violation of the surviving
provisions of the 1959 consent decree between Pitney Bowes and the
U.S. Department of Justice, and/or the antitrust laws. The Company
intends to cooperate with the Department's investigation.
Item 6. Exhibits and Reports on Form 8-K
(a) 1. Financial Statements - see index on page 2
2. Exhibits (numbered in accordance with Item 601 of
Regulation S-K)
Reg. S-K Incorporation
Exhibits Description by Reference
-------- ---------------------------- -------------
(12) Computation of Ratio of See Exhibit (i)
Earnings to Fixed Charges on page 17
(27) Financial Data Schedule See Exhibit (ii)
on page 18
There are no unregistered debt instruments in which the total
amount of securities authorized thereunder exceeds 10 percent
of the total assets of the Company. Copies of all
instruments defining the rights of securities holders are
available upon request.
(b) No reports on Form 8-K were filed for the three months ended
March 31, 1996.
Pitney Bowes Credit Corporation - Form 10-Q
Three Months Ended March 31, 1996
Page 16 of 18
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 CREDIT CORPORATION
Date: May 13, 1996 /s/ G. Kirk Hudson
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G. Kirk Hudson
Vice President - Finance
(Principal Financial Officer)
/s/ Thomas P. Santora
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Thomas P. Santora
Controller
(Principal Accounting Officer)