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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
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FORM 8-K
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CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of Earliest Event Reported):
July 20, 1999
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Commission file number 0-13497
PITNEY BOWES CREDIT CORPORATION
Incorporated pursuant to the Laws of the State of Delaware
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Internal Revenue Service -- Employer Identification No. 06-0946476
27 Waterview Drive, Shelton, CT 06484-4361
(203) 922-4000
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Item 5 -- Other Events
On July 20, 1999 Pitney Bowes Credit Corporation ("the Company") announced
that it has decided to dispose of Atlantic Mortgage and Investment Corporation
("AMIC"), a wholly owned subsidiary of the Company specializing in the servicing
of residential first mortgages for a fee. The decision will allow the Company to
actively market AMIC and to place more focus on its core businesses.
Item 7 -- Financial Statements and Exhibits
c. The following exhibit is furnished in accordance with Item 601 of Regulation
S-K:
Exhibit
(99) Pitney Bowes Inc. (parent company) press release dated July 20, 1999. See Exhibit (i)
On pages 4-7
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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
By /s/ NANCY E. COOPER
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Nancy E. Cooper
Vice President, Finance and
Chief Financial Officer
(Principal Financial Officer)
Dated: July 26, 1999
By /s/ R. JEFFREY MACARTNEY
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R. Jeffrey Macartney
Controller
(Principal Accounting Officer)
Dated: July 26, 1999
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Exhibit (i)
PITNEY BOWES REPORTS STRONG SECOND QUARTER EARNINGS
Highlights
o 18th Consecutive Quarter of Double-Digit Earnings Per Share Growth
o Continued Strength in Mailing and Integrated Logistics (MAIL) Segment
o Decision to Dispose of Mortgage Servicing Unit to Focus on Core Businesses
FOR IMMEDIATE RELEASE
Stamford, Conn., July 20, 1999 - Pitney Bowes Inc. (NYSE: PBI) today reported
strong second quarter results with a 21.5-percent increase in diluted earnings
per share from continuing operations to 58 cents. Revenue increased by nine
percent on a consolidated basis to $1.1 billion for the strongest second quarter
growth rate in nine years. Income from continuing operations grew 19 percent to
$157.4 million versus $132.8 million in the second quarter 1998. The company has
now recorded 18 consecutive quarters of double-digit, year-on-year diluted
earnings per share growth from continuing operations. Net income, including a
one-time charge for discontinued operations attributable to the company's
decision to dispose of its mortgage servicing business, is $129.7 million or 48
cents per diluted share, versus $142.0 million or 51 cents per diluted share in
the second quarter 1998.
Chairman and Chief Executive Officer Michael J. Critelli discussed the
company's performance during the quarter: "We are pleased with this quarter's
strong financial performance, which was led by our Mailing and Integrated
Logistics (MAIL) segment. The segment continues to benefit from demand for our
customized mail creation and full range of shipping solutions, complementing our
core mailing and financing offerings. As a result, we have again experienced
excellent revenue growth and expanding operating profit margin in our largest
business segment."
Adds Mr. Critelli: "The underlying strength of our mailing and shipping business
has allowed us to accelerate our efforts to position the Office Solutions
segment for even greater future profitable growth."
In segment performance for the quarter, Mailing and Integrated Logistics
posted strong revenue growth of 12 percent and a 22-percent increase in
operating profit. The segment includes revenues and related expenses from the
rental, sale and financing of mailing and shipping equipment, related supplies
and service, and software. Contributors to growth included: o The Internet's
positive impact on package delivery and direct mail volumes. Our multi-carrier,
shipping and logistics systems enable customers to rate shop
for the most cost-effective and efficient ways to ship overnight letters
and packages with systems which integrate with enterprise-wide resource planning
systems o Customized, high-speed production mail equipment used in Automated
Document Factories and high-volume mailrooms
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Exhibit (i) (continued)
o Advanced, multi-functional mailing systems, such as ParagonTM and the recently
introduced digital GalaxyTM system, which enable customers to process mid- to
high volumes of mail quickly and conveniently
o Demand for Mail Creation solutions, led by DocuMatchTM, which prints and
prepares customized, one-to-one marketing materials The U.S. Postal Service
recently honored Pitney Bowes for helping customers
transition to advanced metering technologies by converting 98 percent of its
meter unit base to electronic and digital systems. In fact, with over 40 percent
of our meter unit base now digital, the company continues to lead in delivering
the most advanced technologies to the marketplace, while recognizing excellent
supplies revenues and reduced costs related to supporting new metering systems.
As the inventor of PC-based postage, Pitney Bowes is excited about the
potential benefits this innovative technology will deliver for certain mailing
applications of small businesses and entrepreneurs who today use stamps. While
several other companies are currently testing products, Pitney Bowes is the only
company that has two versions of the PC-based postage product in the U.S. Postal
Service supervised beta product review and testing process: o ClickStampTM Plus,
that allows customers to print postage via the computer without a constant
connection to the Internet, and o ClickStampTM Online, which is designed for
customers who prefer to maintain an Internet connection. The extensive testing
process consists of three beta phases with limited quantities of product
available in specific Zip codes. During the limited launch testing phase,
companies will be allowed to place up to 10,000 units, with a review by the U.S.
Postal Service, before permission is given to distribute another 10,000 units.
None of the companies involved in the testing process have been given a
timetable for the unrestricted, national availability of this product.
The Office Solutions Segment includes Pitney Bowes Office Systems and
Pitney Bowes Management Services. Second-quarter performance in this segment
featured four- percent revenue growth and a five-percent increase in operating
profit.
During the quarter, Management Services revenues grew four percent as the
company continues to focus on profitable growth through providing high value
services, such as business recovery, to both new and existing customers. The
focus on profitability resulted in double-digit operating profit growth.
Office Systems, featuring Copier and Facsimile, grew revenues five percent
for the quarter. The copier business remains solid, posting strong sales growth.
Additionally, the business continues the transition from stand-alone analog
copiers, to digital, networked solutions while strengthening the ability to sell
to national and major accounts. Facsimile revenues were helped by strong unit
placements partly offset by ongoing price pressure in the market.
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Exhibit (i) (continued)
The Capital Services Segment includes primarily asset- and fee-based income
generated by large ticket external assets. During the quarter, the segment's
revenue decreased by two percent while its operating profit increased five
percent. This performance is consistent with the company's previously announced
strategy to shift from asset-based income by lowering the asset base and
concentrating on fee-based income opportunities.
The results from Mortgage Servicing have been excluded from continuing
operations. Pitney Bowes decided to dispose of Atlantic Mortgage & Investment
Corporation (AMIC) after an extensive review of various strategic options to
determine how best to enhance shareholder value. This decision will also allow
the company to actively market the business and focus on its core businesses.
The company has recorded a $27.7 million after-tax charge, which includes costs
associated with: o Net loss from mortgage servicing operations of $2.7 million
for the second quarter primarily attributable to increased amortization of
mortgage servicing rights
o Expected loss of $34.3 million after-tax on the disposal of AMIC offset by
gains of $9.3 million from the company's sale of Colonial Pacific Leasing
Corporation (CPLC) completed in 1998
The company commenced its review of AMIC earlier this year. The process was
consistent with earlier reviews of its financial services businesses, which
resulted in the GATX transaction in 1997 and the CPLC transaction in 1998. The
strategic review was undertaken to address the changing profile of the mortgage
servicing industry, the dynamic interest rate environment and the potential
impact of fluctuating interest rates and prepayment patterns on the business in
the future.
Mr. Critelli concluded, "This quarter we continued to take actions that
will maximize long-term shareholder value. While we have decided to exit the
mortgage servicing business, the quarter's performance underscores the ongoing
demand for advanced business messaging solutions worldwide. We will continue to
invest in research and development and provide innovative products and services
that reduce the cost, increase the efficiency and enhance the productivity of
mail and messaging. The outlook for our business remains very positive."
The company previously announced an 11.6-million share repurchase program.
During the second quarter the company repurchased approximately 1.9 million
shares on the open market under this program, for a total of 4.1 million shares
repurchased year-to-date.
Second quarter 1999 revenue included $546.4 million from sales, up 11
percent from $492.3 million in the second quarter of 1998; $418.8 million from
rentals and financing, up six percent from $393.8 million; and $140.3 million
from support services, up nine percent from $128.5 million.
Second quarter 1999 net income was $129.7 million, or 48 cents per diluted
share, compared to $142.0 million, or 51 cents per diluted share, in 1998.
Second quarter net income included a $27.7 million charge, or 10 cents per
diluted share related to discontinued operations, compared to $9.2 million of
income, or three cents per diluted share, in 1998.
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Exhibit (i) (continued)
For the six-month period ended June 30, 1999 revenue was $2.155 billion, up
nine percent from $1.968 billion in 1998; and net income in 1999 was $272.0
million, or 99 cents per diluted share, compared to $271.7 million, or 97 cents
per diluted share in 1998. The year-to-date net income included a $24.0 million
net after-tax charge, or nine cents per diluted share, for discontinued
operations compared to $16.6 million of income, or six cents per diluted share,
in 1998.
Pitney Bowes is a global provider of informed mail and messaging
management.
The forward-looking statements contained in this news release involve risks
and uncertainties, and are subject to change based on various important factors
including timely development and acceptance of new products, gaining product
approval, successful entry into new markets, changes in interest rates, and
changes in postal regulations, as more fully outlined in the company's 1998 Form
10-K Annual Report filed with the Securities and Exchange Commission.