EXHIBIT 99
[PITNEY BOWES LOGO]

November 14, 2001

Dear Pitney Bowes Stockholder:

Pitney Bowes Inc. has implemented a plan to enhance its strategic focus to
unlock and create greater value for stockholders. The strategy and the actions
that have resulted from this focus are described in the accompanying
information statement.

As part of these actions, Pitney Bowes has announced a plan to establish its
office systems division as a public company under the name Imagistics
International Inc. In order to implement this plan, the board of directors of
Pitney Bowes has approved a spin-off to our stockholders of all of the
outstanding shares of common stock of Imagistics to holders of record of Pitney
Bowes common stock on November 19, 2001. In the spin-off, you will receive one
share of Imagistics common stock for every 12.5 shares of Pitney Bowes common
stock that you hold at the close of business on November 19, 2001. Your current
shares of Pitney Bowes common stock will be unchanged and will continue to
represent your ownership position in Pitney Bowes.

Your board of directors has concluded that the spin-off is in the best
interests of Pitney Bowes, Imagistics and Pitney Bowes' stockholders, because
it believes that:

. separating Pitney Bowes and Imagistics will enable Pitney Bowes to
enhance its focus on its core business and concentrate its financial,
managerial and marketing resources on the aggressive development of the
areas in which it has the strongest market position, the best expertise
and the highest growth potential.
. separate management and ownership structures for Imagistics will
liberate Imagistics from the constraints on its development currently
imposed by reason of its inclusion in Pitney Bowes.
. the spin-off will allow Pitney Bowes to improve its profitability,
stabilize its earnings growth and reduce its exposure to market
fluctuations.
. the spin-off will allow Imagistics to:

. make substantial investments in systems, training and
infrastructure;

. provide more targeted compensation to its management and work force;

. tailor our benefits package to be more aligned with our competitive
industry; and

. raise additional funds to pursue an expansion strategy in a
consolidating industry.

Imagistics has been approved for listing of its common stock on the New York
Stock Exchange. Shares of Imagistics common stock are expected to trade on the
New York Stock Exchange under the ticker symbol "IGI."

The enclosed information statement explains the proposed spin-off in detail
and provides important information regarding Imagistics. We urge you to read it
carefully. Please note that a stockholder vote is not required in connection
with this matter, and holders of Pitney Bowes common stock are not required to
take any action to participate in the spin-off. Thus, we are not asking you for
a proxy.

Effective as of the spin-off date, the distribution agent for the spin-off
will distribute shares of Imagistics common stock to each eligible holder of
Pitney Bowes common stock by crediting book-entry accounts with that holder's
proportionate number of whole shares of Imagistics common stock. The
distribution agent will mail an account statement to each holder stating the
number of whole shares received in the spin-off. The distribution agent will
aggregate all fractional interests into whole shares and sell them in the open
market at then prevailing prices on behalf of holders who would be entitled to
receive a fractional interest in Imagistics common stock. You will receive a
check for the cash value of any fractional interest in Imagistics common stock.

Very truly yours,

/s/ Michael J. Critelli
Michael J. Critelli
Chairman and Chief Executive Officer
Pitney Bowes Inc.

[IMAGISTICS LOGO]

November 14, 2001

Dear Imagistics Stockholder:

We welcome you as a "founding" stockholder of Imagistics International
Inc., the successor company to Pitney Bowes' office systems division, that
will be publicly traded for the first time on December 3, 2001. You will
become an owner of one share of Imagistics common stock for every 12.5 shares
of Pitney Bowes common stock that you hold at the close of business on
November 19, 2001. We expect that shares of our common stock will trade on the
New York Stock Exchange under the ticker symbol "IGI."

As you know, Imagistics is a large direct sales, service and marketing
organization offering document imaging solutions -- including copiers,
facsimile machines and multi-functional products -- in the United States and
the United Kingdom.

We are enthusiastic about our future and we believe that our company has a
great opportunity to grow.

Congratulations on becoming one of the "founding" stockholders of
Imagistics.

Very truly yours,

/s/ Marc C. Breslawsky
Marc C. Breslawsky
Chairman and Chief Executive Officer
Imagistics International Inc.

INFORMATION STATEMENT
[IMAGISTICS LOGO]

IMAGISTICS INTERNATIONAL INC.

COMMON STOCK
(par value $.01 per share)

At this time, Imagistics International Inc. is a wholly-owned subsidiary of
Pitney Bowes Inc. In this spin-off, Pitney Bowes will distribute 100% of the
outstanding shares of our common stock to its stockholders. We expect that each
of you, as a holder of Pitney Bowes common stock, will receive one share of our
common stock for every 12.5 shares of Pitney Bowes common stock that you hold
at the close of business on November 19, 2001, the record date for the spin-
off.

We are sending you this information statement to describe the spin-off. We
expect the spin-off to occur on December 3, 2001. Effective as of that date,
our distribution agent for the spin-off will distribute shares of our common
stock to each eligible holder of Pitney Bowes common stock by crediting book-
entry accounts with that holder's proportionate number of whole shares of our
common stock. The distribution agent will mail an account statement to each
holder stating the number of whole shares received in the spin-off. The
distribution agent will aggregate all fractional interests into whole shares
and sell them in the open market at then prevailing prices on behalf of holders
who would be entitled to receive a fractional interest in our common stock. You
will receive a check for the cash value of any fractional interest in our
common stock.

Immediately after the spin-off is completed, Pitney Bowes will not own any
shares of our common stock and we will be an independent public company. We
refer to ourselves in this information statement as "Imagistics International
Inc." or "Imagistics."

No stockholder action is necessary to receive the shares of our common stock
to which you are entitled in the spin-off. This means that:

. you do not need to pay any consideration to Pitney Bowes or Imagistics,
and

. you do not need to surrender any shares of Pitney Bowes common stock to
receive your shares of our common stock.

In addition, a stockholder vote is not required for the spin-off to occur.
Pitney Bowes is not asking you for a proxy, and Pitney Bowes requests that you
do not send a proxy.

There has been no trading market for our common stock. However, we expect
that a limited market for shares of our common stock, commonly known as a "when
issued" trading market, will develop on or shortly before the record date for
the spin-off. We have been approved for listing of our common stock on the New
York Stock Exchange under the ticker symbol "IGI."

As you review this information statement, you should carefully consider the
matters described in "Risk Factors."

----------------

The Securities and Exchange Commission and state securities regulators have
not approved or disapproved of these securities, or determined if this
information statement is truthful or complete. Any representation to the
contrary is a criminal offense.

The date of this information statement is November 14, 2001.

TABLE OF CONTENTS

Page
----

Introduction............................................................. 3
Summary.................................................................. 5
Risk Factors............................................................. 13
Special Note About Forward-Looking Statements............................ 22
The Spin-Off............................................................. 23
Trading Market........................................................... 27
Dividends................................................................ 28
Selected Combined Financial Data......................................... 29
Unaudited Pro Forma Combined Financial Statements........................ 30
Capitalization........................................................... 35
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 36
Business................................................................. 45
Relationship with Pitney Bowes........................................... 59
Management............................................................... 69
Executive Compensation................................................... 74
Security Ownership of Pitney Bowes and Imagistics........................ 84
Description of Capital Stock............................................. 85
Where You Can Find More Information...................................... 92
Index to Combined Financial Statements................................... F-1

INTRODUCTION

Over the past several years, Pitney Bowes Inc.'s board of directors and
senior management have embarked upon a comprehensive review of Pitney Bowes'
organizational structure and operations, with the primary goals of generating
maximum value for Pitney Bowes' stockholders and focusing its resources on its
key strategic businesses.

After much consideration, Pitney Bowes determined that a spin-off of
Imagistics International Inc., the successor company to Pitney Bowes' office
systems division, from Pitney Bowes is consistent with these objectives and
would be in the best interests of Pitney Bowes, Imagistics and Pitney Bowes'
stockholders. We believe that the spin-off will allow Imagistics greater
flexibility to grow and, at the same time, allow Pitney Bowes to focus its
resources on its other divisions where it can add more value. Pitney Bowes
believes that:

. separate management and ownership structures for Imagistics will
liberate us from the constraints on our development currently imposed by
reason of our inclusion in Pitney Bowes, specifically in competing for
capital with the alternative uses of Pitney Bowes free cash flow. These
alternative uses include investment capital for other Pitney Bowes
businesses, share repurchases and payment of dividends to Pitney Bowes
shareholders. In addition, the separation will allow Imagistics to
provide more focused incentives to our management and work force that
are directly related to the success of Imagistics.

. the spin-off will allow Pitney Bowes to improve its profitability,
stabilize its earnings growth and reduce its exposure to fluctuations in
the copier and facsimile market. Specifically, Pitney Bowes is expected
to have a sharper focus on its business and strategic opportunities as a
result of its board of directors and management teams focusing solely on
its business.

. the spin-off will allow Imagistics to:

. make substantial investments in systems, training and
infrastructure;

. provide more targeted compensation to its management and work force;

. tailor our benefits package to be more aligned with our competitive
industry; and

. raise additional funds to pursue an expansion strategy in a
consolidating industry.

In deciding to pursue the spin-off, Pitney Bowes considered several things,
including the financial advice of Merrill Lynch & Co. and the legal advice of
Davis Polk & Wardwell. To review the reasons for the spin-off in greater
detail, see "The Spin-Off--Background to and Reasons for the Spin-Off."

Pitney Bowes has declared a dividend payable to holders of record of Pitney
Bowes common stock at the close of business on November 19, 2001, of 0.08
shares of our common stock for each share of Pitney Bowes common stock owned of
record on that date, which is equivalent to one share of Imagistics common
stock for every 12.5 shares of Pitney Bowes common stock you hold. We expect
the spin-off to occur on December 3, 2001. Effective as of that date, our
distribution agent for the spin-off will distribute shares of our common stock
to each eligible holder of Pitney Bowes common stock by crediting book-entry
accounts with that holder's proportionate number of whole shares of our common
stock. The distribution agent will mail an account statement to each holder
stating the number of whole shares received in the spin-off. The distribution
agent will aggregate all fractional interests into whole shares and sell them
in the open market at then prevailing prices on behalf of holders who would be
entitled to receive a fractional interest in our common stock. You will receive
a check for the cash value of any fractional interest in our common stock.

In the spin-off, Pitney Bowes will distribute 100% of the outstanding shares
of our common stock to its stockholders. Immediately after the spin-off is
completed, Pitney Bowes will not own any shares of our common stock. We have
been approved for listing of our common stock on the New York Stock Exchange
under the ticker symbol "IGI."

If you have any questions relating to the spin-off, you should contact
EquiServe Trust Company, N.A., our distribution agent for the spin-off. The
contact information for our distribution agent is:

EquiServe Trust Company, N.A.
525 Washington Blvd.
Jersey City, NJ 07310
(800) 648-8170

You can also contact Pitney Bowes with any questions. Pitney Bowes' contact
information is:

Pitney Bowes Inc.
1 Elmcroft Road
Stamford, CT 06926-0700
(203) 356-5000
Attention: Stockholder Services

After the spin-off, if you are a stockholder of Imagistics and have
questions relating to the spin-off, you can contact us directly. Our contact
information is:

Imagistics International Inc.
100 Oakview Drive
Trumbull, CT 06611
(203) 365-7000
Attention: Investor Relations

No action is necessary to receive the shares of our common stock to which
you are entitled in the spin-off. You do not need to pay any consideration to
Pitney Bowes or to us, and you do not need to surrender any shares of Pitney
Bowes common stock to receive your shares of Imagistics common stock.

SUMMARY

This summary highlights information contained in this information statement
relating to Imagistics and the Imagistics common stock being distributed in the
spin-off. You should read the entire information statement, including the risk
factors, our historical and pro forma combined financial statements and the
notes to those financial statements.

Our Company

We are a large direct sales, service and marketing organization offering
document imaging solutions--including copiers, facsimile machines and multi-
functional products--in the United States and the United Kingdom. We strive to
provide our customers with flexible, comprehensive document imaging products
and services at the lowest possible cost. We market our products to large
corporate and government customers, which we refer to as major accounts, as
well as to small- to mid-sized businesses which we refer to as commercial
users. Historically, we have focused our marketing efforts on major account
customers for facsimile machines and commercial customers for copiers. We are
seeking to capitalize on our proven leadership position with major accounts in
the facsimile market to expand our sales of copier products, both in the United
States and abroad.

Pitney Bowes began marketing and distributing copiers in 1967 and facsimile
machines in 1982. Pitney Bowes' office systems division, which combined the
copier and facsimile product lines, was created in 1998. In 2000, Pitney Bowes
made a determination to spin off the United States and the United Kingdom
operations of the office systems division to enable us to more fully realize
our potential within both the copier and facsimile markets.

Our direct sales and service network, located throughout the United States
and the United Kingdom, provides a broad range of document imaging products and
services. We currently have an installed base of over 320,000 copier and
facsimile products in use. We consider products in use if they are subject to a
current rental or service agreement. Based on the needs of our customers, our
representatives offer specialized document imaging options including digital,
analog, color and/or networked products and systems. We offer a full array of
copiers and facsimile machines that satisfy our customers' needs ranging from a
few copies to hundreds of thousands of copies per month. We have historically
offered our products under the brand name "Pitney Bowes," which we believe is
internationally recognized and associated with quality products. In 2002, we
will begin introducing products under the "Imagistics" brand name, which will
be used in conjunction with the "Pitney Bowes Office Systems" name. We also
provide aftermarket support to our customers through service and supply
contracts, as well as the sale of consumable supplies, primarily toner, for all
of our products. In addition, we offer document management software systems and
network controllers to serve our digital copiers. We have nearly 2,500 fully-
trained sales and service representatives in 150 locations who assist customers
with all of their product and service needs.

For maximum flexibility in product development, we do not manufacture any of
our products, but rather we purchase equipment and software from a number of
different firms. We impose high quality standards on all of the equipment that
we offer. Historically, we have used manufacturers such as Minolta, Matsushita,
Heidelberg and Kyocera Mita to produce our copier equipment and Matsushita,
Muratec, Oki and Brother to produce our facsimile equipment. We believe that
our market position and long-term relationships with many of the top
manufacturers allow us to negotiate favorable contracts, and in many cases
manufacturers agree to provide features and functionality exclusively in
products delivered to us. Examples of products that are specially manufactured
for us include several new products including the Model 2050 facsimile machine,
which incorporates an intuitive LCD touch screen, and ConnexTM, a platform
controller for digital copiers that functions within the computer network and
allows users to print and fax directly from their networked desktop computers.

Our primary targets are large corporate customers and federal, state and
local government entities. While continuing to strengthen and expand our
relationships with our current customers, we are also establishing new
marketing initiatives geared specifically toward more efficiently serving
small- to mid-sized companies or commercial users. Beginning in 1996, we
expanded our sales and service coverage into geographic areas where we did not
have a significant presence. We plan to maintain our relationships with
commercial users through the use of our trained team of commercial sales
representatives.

We have benefitted from our relationship with Pitney Bowes. In connection
with the spin-off, we have entered into arrangements with Pitney Bowes that
will:

. allow us to continue using the Pitney Bowes brand name in the United
States and the United Kingdom for a period of two years, and we may
request the ability to use the name in additional geographic areas,
subject to Pitney Bowes' consent, not to be unreasonably withheld,

. continue our relationship as a provider of products to Pitney Bowes
Management Services, a subsidiary of Pitney Bowes, which provides on-
site document and copier fleet management services, and Pitney Bowes'
Canadian office products operations, in each case for a period of two
years,

. continue using Pitney Bowes Credit Corporation as the primary lease
vendor for our equipment on a multi-year basis after the spin-off, and

. permit us to use Pitney Bowes' information technology systems until the
end of 2002.

Our Strategy

Our goal is to be a leading provider of document imaging products and
services. To that end, we plan to build on our strengths and pursue the
following initiatives:

. maintain and further strengthen major account relationships through
superior customer support and additional products and services,

. expand our product offerings through our sourcing and distribution
relationships,

. increase outreach of our direct sales and service force to the copier
market to provide major account customers with one point of contact for
their imaging product needs, and

. pursue an expansion strategy to remain an industry leader and enhance
both our copier and our facsimile businesses in geographic markets in
the United States and abroad.

Risk Factors

Our business may be adversely affected by certain risks, including the
following:

. we will no longer benefit to the same extent from our relationship with
Pitney Bowes,

. we may face difficulty in implementing our own information technology
systems,

. adverse economic conditions that are now impacting, and may in the
future impact, our business,

. we may not be able to offer products that are accepted by our customers,

. the industry trend toward digital technology may result in lost value of
analog copiers,

. many of our rental contracts are subject to adjustment or amendment
under specified circumstances, which may cause us to lose business or
have excess inventory returned to us,

. we may not successfully anticipate industry trends in our product
purchasing,

. we may experience disruptions in our product offerings from the outside
suppliers upon whom we depend,

. fluctuations in the value of foreign currencies relative to the U.S.
dollar could have a negative impact on our future financial results, and

. we may have difficulty in establishing brand identity under our new
name.

In addition, our industry is highly competitive. These and other risks are
addressed in the section entitled "Risk Factors" in this information statement.

* * *

We were incorporated in Delaware on February 28, 2001 as "Pitney Bowes
Office Systems, Inc.," and changed our name to "Imagistics International Inc."
on October 12, 2001. Prior to the spin-off, Pitney Bowes Inc. will have
contributed the United States segment and will have transferred the United
Kingdom segment of the office systems business to us, so that we will operate
the office systems business at the time of the spin-off. This information
statement assumes the completion of that contribution. Our principal office is
located at 100 Oakview Drive, Trumbull, Connecticut 06611, and our telephone
number is (203) 365-7000.

This information statement contains trademarks and registered marks. Unless
otherwise indicated, these trademarks and registered marks are owned by us.

THE SPIN-OFF

The following is a brief summary of the terms of the spin-off.

Distributing Company.................. Pitney Bowes Inc. After the spin-off,
Pitney Bowes will not own any shares of
our common stock.

Spun-Off Company...................... Imagistics International Inc. After the
spin-off, Imagistics will be an
independent public company.

Primary Purposes of the Spin-Off...... Pitney Bowes has determined that the
spin-off is in the best interests of
Pitney Bowes, Imagistics and Pitney
Bowes' stockholders. In reaching this
conclusion, Pitney Bowes considered
several issues, including:

. separate management and ownership
structures for Imagistics will
liberate Imagistics from the
constraints on its development
currently imposed by reason of its
inclusion in Pitney Bowes,
specifically in competing for
capital with the alternative uses of
Pitney Bowes free cash flow. These
alternative uses include investment
capital for other Pitney Bowes
businesses, share repurchases and
payment of dividends to Pitney Bowes
shareholders. In addition, the
separation will allow Imagistics to
provide more focused incentives to
its management and work force that
are directly related to the success
of Imagistics.

. the spin-off will allow Pitney Bowes
to improve its profitability,
stabilize its earnings growth and
reduce its exposure to fluctuations
in the copier and facsimile market.
Specifically, Pitney Bowes is
expected to have a sharper focus on
its business and strategic
opportunities as a result of its
board of directors and management
teams focusing solely on its
business.

. the spin-off will allow Imagistics
to:

. make substantial investments in
systems, training and
infrastructure;

. provide more targeted
compensation to our management
and work force;

. tailor our benefits packages to
be more aligned with our
competitive industry; and

. raise additional funds to pursue
an expansion strategy in a
consolidating industry.

See "The Spin-Off--Background to and
Reasons for the Spin-Off."

Securities to Be Distributed.......... 100% of the outstanding shares of our
common stock. Based on the number of
shares of Pitney Bowes common stock
outstanding as of September 30, 2001
and the distribution ratio described
below, we estimate that Pitney Bowes
will distribute approximately 19.5
million shares of our common stock to
its stockholders. Immediately after the
spin-off, we estimate that
approximately 30,000 stockholders of
record will hold shares of our common
stock, although some of the shares may
be registered in the name of a single
stockholder who represents a number of
stockholders.

Distribution Ratio.................... Expected to be one share of our common
stock for every 12.5 shares of Pitney
Bowes common stock that you hold at the
close of business on November 19, 2001,
the record date for the spin-off.

Record Date........................... November 19, 2001 (close of business).

Spin-Off Date......................... December 3, 2001.

Distribution Agent.................... EquiServe Trust Company, N.A.

Trading Market and Symbol............. There has been no trading market for
our common stock. However, we expect
that a limited market for shares of our
common stock, commonly known as a "when
issued" trading market, will develop on
or shortly before the record date for
the spin-off. We have been approved for
listing of our common stock on the New
York Stock Exchange under the ticker
symbol "IGI."

Tax Consequences...................... Pitney Bowes has received a ruling from
the IRS stating that, subject to
certain representations, the spin-off
qualifies as tax-free to Pitney Bowes
and its stockholders for United States
federal income tax purposes. See "The
Spin-Off--Material Federal Income Tax
Consequences of the Spin-Off" for a
more detailed description of the
federal income tax consequences of the
spin-off.

Risk Factors.......................... You should carefully consider the
matters described under "Risk Factors"
in this information statement.

Book-Entry Shareholding............... Effective as of the date of the spin-
off, the distribution agent will
distribute shares of our common stock
to each eligible holder of Pitney Bowes
common stock by crediting book-entry
accounts with that holder's
proportionate number of whole shares of
our common stock.

No Fractional Shares.................. Pitney Bowes will not distribute any
fractional shares of our common stock.
The distribution agent will aggregate
all fractional interests, sell them on
behalf of stockholders, and distribute
the cash proceeds to the stockholders
who are entitled to a fractional
interest in our common stock. See "The
Spin-Off--Description of the Spin-Off."

Relationship with Pitney Bowes After
the Spin-Off......................... We and Pitney Bowes have entered into
the following agreements:

. a distribution agreement,
. a transition services agreement,
. two reseller agreements,
. a vendor financing agreement,
. an intellectual property agreement,
. a tax separation agreement,

and other agreements described under
"Relationship with Pitney Bowes." We
and Pitney Bowes may enter into
additional or modified agreements,
arrangements and transactions after the
spin-off which will be negotiated at
arm's length. In connection with the
spin-off, we may hire personnel or
contract with third parties for
financial, treasury, real estate,
employee benefit, tax, consulting and
other services. Pitney Bowes Credit
Corporation, a wholly owned subsidiary
of Pitney Bowes, is a participant in
our credit facility. Pitney Bowes
Credit Corporation (i) will provide
less than 50 percent

of our credit facility and (ii) will
cease to be a lender under our credit
facility no later than one year after
the spin-off. See "Management's
Discussion and Analysis of Financial
Condition and Results of Operations --
Liquidity and Capital Resources --
Credit Facility."

Our Management and Management
Compensation After the Spin-Off...... Our management team and the
compensation, awards and other benefits
payable to selected members of
management after the spin-off are
described under "Management" and
"Executive Compensation."

Dividend Policy.......................
We anticipate that future earnings will
be used principally to support
operations and finance the growth of
our business. Thus, we do not intend to
pay cash dividends on our common stock
in the foreseeable future.

SUMMARY FINANCIAL DATA

The following table presents our summary combined financial data. The
information set forth below should be read in conjunction with the "Unaudited
Pro Forma Combined Financial Statements," "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and our combined financial
statements and notes thereto included elsewhere in this information statement.
The historical financial information may not be indicative of our future
performance and does not reflect what our financial position and results of
operations would have been had we operated as a separate, stand-alone entity
during the periods presented.

Nine months ended
Years ended December 31, September 30,
-------------------------------------------- -----------------
1996 1997 1998 1999 2000 2000 2001
-------- -------- -------- -------- -------- -------- --------
(Dollars in thousands)

Combined Statement of
Income data
Total revenue.......... $500,728 $543,941 $589,701 $626,477 $642,758 $482,092 $467,341
Income before income
taxes................. $116,443 $137,622 $158,127 $153,574 $103,991 $ 82,850 $ 23,569
Net income............. $ 69,160 $ 82,432 $ 94,675 $ 91,936 $ 62,847 $ 50,100 $ 14,276
Pro forma basic and
diluted earnings per
share................. $ 3.20 $ .72
Combined Balance Sheet
data
Total assets........... $253,991 $296,638 $385,105 $449,834 $505,464 $485,280 $520,447
Total current
liabilities, including
amounts due to Pitney
Bowes................. $ 81,017 $ 77,698 $108,256 $133,670 $180,088 $155,685 $191,040
Total long-term
liabilities........... $ 5,914 $ 6,259 $ 13,716 $ 10,898 $ 10,213 $ 8,546 $ 14,439

RISK FACTORS

You should carefully consider each of the following risks, which we believe
are the principal risks that we face, and all of the other information in this
information statement. Some of the following risks relate principally to our
spin-off from Pitney Bowes. Other risks relate principally to the securities
markets and ownership of our stock. Our business may also be adversely affected
by risks and uncertainties not presently known to us or that we currently
believe to be immaterial.

If any of the following risks and uncertainties develop into actual events,
this could have a material adverse effect on our business, financial condition
or results of operations. If this occurs, the trading price of our common stock
could decline, and you may lose all or part of your investment.

Risk Factors Relating to Separating Our Company from Pitney Bowes

We face the following risks in connection with our spin-off from Pitney
Bowes.

We have no history operating as an independent entity and we may be unable
to make the changes necessary to operate as a stand-alone entity or we may
incur greater costs as a stand-alone entity causing our profitability to
decline.

Prior to the spin-off, our business was operated by Pitney Bowes as part of
its broader corporate organization rather than as a stand-alone company. Pitney
Bowes assisted us by providing financing, as well as corporate, legal, tax and
information technology functions. Following the spin-off, Pitney Bowes will
have no obligation to provide assistance to us other than services described
under "Relationship with Pitney Bowes--Transition Services Agreement." Because
our business has never been operated as an independent entity we cannot assure
you that we will be able to successfully implement the changes necessary to
operate independently, that we will not incur additional costs as a result of
operating independently or that we will be in a financial position to incur
such additional costs. Each of these events would cause our profitability to
decline.

We are in the process of creating our own, or engaging third parties to
provide, systems and business functions to replace many of the systems and
business functions historically provided by Pitney Bowes. By the end of 2002,
when our agreement with Pitney Bowes for the provision of certain transition
services concludes, we will need to have our own information technology and
enterprise resource planning systems in place in order to operate our business
without interruption. We may not be successful in implementing these systems
and business functions or in transitioning data from Pitney Bowes' systems to
ours. If we do not have in place our own systems and business functions or if
we do not have agreements with other service providers once our transition
services agreement with Pitney Bowes expires or if these services are more
costly than we expect, we may not be able to effectively operate our business
and our profitability may decline.

As one of Pitney Bowes' divisions, we have benefitted from Pitney Bowes'
financial strength and extensive network of business relationships. After the
spin-off and our independence from Pitney Bowes, we will not be able to draw on
Pitney Bowes' financial strength or business relationships to the extent that
we have done so historically. In addition, over 3% of our total revenue in 2000
was derived from Pitney Bowes, primarily Pitney Bowes Management Services, Inc.
and Pitney Bowes of Canada Ltd. In addition to these revenues, Pitney Bowes
Credit Corporation, purchased products from us, for the purpose of leasing them
to end users, representing 14% of our total revenue in 2000. After the spin-
off, these entities may have less incentive to purchase products and services
from us.

Customers may discontinue their relationship with us after the spin-off.

Some of our customers who are accustomed to working directly with Pitney
Bowes may be reluctant to continue their relationship with us once we are an
independent entity. Customers may stop using our products

and services after the spin-off, in reaction to either a perceived or real
change in these products and services. Product recognition is an important part
of our overall business strategy and we cannot assure you that customers will
maintain the same level of interest in our products when we are no longer
associated with Pitney Bowes. While we believe that we will minimize the loss
of these customers through our commitment to quality and our continuing use of
the "Pitney Bowes" brand name, alone or in conjunction with the "Imagistics"
brand name, for up to two years, we cannot predict whether our customers will
seek document imaging products and services from our competitors after the
spin-off.

Substantially all of our existing rental contracts with non-Pitney Bowes
customers, which we entered into as a division of Pitney Bowes, require the
consent of the customer in order to assign or transfer the contract, including
an assignment or transfer to us. We are in the process of reviewing these
contracts. Because of the large number of such contracts, we do not currently
intend to seek consents from or enter into new contracts with the majority of
our customers in connection with our spin-off from Pitney Bowes. We cannot
predict whether a material number of customers will object to our spin-off from
Pitney Bowes or whether the spin-off will adversely affect our business with
them.

Our agreements with Pitney Bowes regarding non-competition and the use of
the "Pitney Bowes" brand name may restrict our business; under some
circumstances, we may be required to operate under a different brand name.

In connection with the spin-off, we and Pitney Bowes have entered into a
non-exclusive intellectual property agreement that will allow us to operate
under the "Pitney Bowes" brand name. The agreement has an initial term of two
years after the spin-off; however, our right to use the "Pitney Bowes" brand
name may be terminated if we or Pitney Bowes elect to terminate the non-
competition obligations contained in the distribution agreement. In 2002, we
will begin introducing products under the "Imagistics" brand name, which will
be used in conjunction with the "Pitney Bowes Office Systems" name. We may be
required to expend substantial resources to establish our new brand name,
particularly in 2002 and 2003. Under the agreement, Pitney Bowes will have the
right to inspect our distribution facilities and an opportunity to review and
approve our advertising. Pitney Bowes will have the right to terminate our
right to use the "Pitney Bowes" name if:

. we breach any of our obligations under any of the agreements described
in the "Relationship with Pitney Bowes" section of this information
statement and do not cure the breach within 60 days after receiving
notice of the breach,

. we become bankrupt or insolvent, or

. we experience a change of control.

The agreements will also restrict the way in which we use the licensed brand
in our business such that we will only be permitted to use the brand name
"Pitney Bowes" in connection with the marketing and distribution of our target
product offerings (as described below) in the United States and the United
Kingdom. We may subsequently request Pitney Bowes' consent, which may not be
unreasonably withheld, for our use of the brand name in any additional
geographic markets that we may enter in the future. If we grow the business and
offer products beyond our current offerings or market and distribute products
outside of the permitted geographic regions or in geographic regions for which
Pitney Bowes withholds its consent, we would be required to offer them under
the "Imagistics" brand name without reference to "Pitney Bowes." Our current
target product offerings include copiers, facsimile machines and multi-
functional machines and related products.

If we are forced to terminate our use of the "Pitney Bowes" brand name as a
result of our breach of the agreements, the early termination of the non-
competition provision or the expansion of our target product offerings or
moving outside of our permitted geographic regions, our business could be
seriously harmed. In any event, after not more than two years, we will be
forced to abandon the use of the "Pitney Bowes" brand

name in connection with our products. Because all of our products are
currently sold under the "Pitney Bowes" brand name, adopting the "Imagistics"
brand name may cause confusion for our customers and adversely affect our
product recognition, which could result in a loss of business.

Our historical financial information may not be representative of our results
as an independent entity and, therefore, may not be reliable as an indicator
of our historical or future results.

The historical financial information we have included in this information
statement may not reflect what our results of operations, financial position
and cash flows would have been had we been a stand-alone entity during the
periods presented or what our results of operations, financial position and
cash flows will be in the future. This is because:

. various adjustments and allocations were made to the historical
financial statements in this information statement because Pitney Bowes
did not account for us as a separate stand-alone entity for all periods
presented,

. the historical information does not reflect many significant changes
that will occur in our financial condition, capital structure and
operations as a result of our spin-off from Pitney Bowes, and

. the historical information may not accurately reflect our indebtedness
outstanding after the spin-off.

We cannot assure you that the adjustments and allocations we have made in
preparing our historical and pro forma combined financial statements
appropriately reflect our operations during the periods presented as if we had
operated as a stand-alone entity, nor can we predict what the actual effect of
our spin-off from Pitney Bowes will be.

In connection with the spin-off, we will assume a significant amount of debt
and may substantially increase our debt in the future, which could subject us
to various restrictions and higher interest costs, as well as decrease our
profitability.

Historically, because we were a division of Pitney Bowes, the vast majority
of our external financing was incurred by Pitney Bowes at the parent level and
provided to us internally. Our historical financial statements include debt
due to Pitney Bowes. In our historical financial statements, interest expense
has been allocated based on a relationship between our net assets and Pitney
Bowes' net assets, charged at Pitney Bowes' weighted average borrowing rate.

We have entered into a senior secured credit facility in the amount of $225
million, providing for both term and revolving credit borrowings and the
issuance of letters of credit, which allows us to borrow funds for general
corporate purposes, including the repayment of other debt, working capital and
acquisitions. The availability of the revolving loans and letters of credit is
subject to a borrowing base as defined in the credit facility. The credit
facility is guaranteed by each of our present and future subsidiaries and
secured by liens on substantially all of our assets and properties and those
of our present or future domestic subsidiaries and 65% of the capital stock of
any present or future foreign subsidiaries that is owned by us or any of our
present or future domestic subsidiaries. The credit facility contains
customary affirmative, negative and financial covenants with which we will be
required to comply, including a minimum EBITDA (earnings before interest,
taxes, depreciation and amortization) covenant and a maximum debt to EBITDA
ratio covenant. The credit facility also contains covenants that, among other
things, limit our ability to: declare and pay dividends on our shares, incur
indebtedness or liens, make investments, enter into mergers, acquisitions and
asset sales (including sale and lease back transactions), change our business,
make capital expenditures and enter into transactions with our affiliates. Any
failure to comply with these covenants will result in our default under the
credit facility, which will allow the lenders to accelerate the maturity of
the borrowings under the credit facility and sell or otherwise exercise
remedies with respect to their collateral.

Pitney Bowes Credit Corporation, a wholly owned subsidiary of Pitney Bowes,
is a participant in the credit facility. Pitney Bowes Credit Corporation (i)
will provide less than 50 percent of our credit facility and (ii) will cease to
be a lender under our credit facility no later than one year after the spin-
off. Because of the restrictions in the credit facility and the possibility
that we may need to seek approval for certain actions or upon the occurrence of
certain events, Pitney Bowes Credit Corporation, as a participant in the
lending group under the credit facility, may exercise some influence over the
conduct of our business. For example, this may include the imposition of new
conditions or additional restrictions on how we operate our business (such as
restrictions on our capital expenditures or on acquisitions) in return for the
lenders', including Pitney Bowes Credit Corporation's, waiver of borrowing or
other conditions or covenants under the credit facility. Since Pitney Bowes
Credit Corporation is controlled by Pitney Bowes, this may permit Pitney Bowes
to exercise influence over our business. Our interests and those of Pitney
Bowes, particularly in areas in which we may compete, or in which we sell
products or provide services to or on behalf of Pitney Bowes, may conflict. If,
during the period in which Pitney Bowes Credit Corporation is a participant in
our credit facility, Pitney Bowes, through Pitney Bowes Credit Corporation,
exercises influence over our business in a way that conflicts with our
interests, that may have a material adverse effect on our business and
financial condition.

We will use borrowings under the credit facility, and may use a portion of
our cash balances, to repay Pitney Bowes for all intercompany borrowings
(including amounts relating to income taxes payable) and to pay a dividend to
Pitney Bowes, as our sole stockholder. The lenders' obligation to make loans
and issue letters of credit to us will be subject to certain conditions,
including the absence of any default under the credit facility, the truth as of
each date of borrowing or issuance of our representations under the credit
facility and the absence of any material adverse change to our business.

We may substantially increase our debt in the future. If our cash flow from
operations is less than we expect, we may require additional financing. We may,
from time to time, make borrowings under our credit facility or issue other
long-term or short-term debt, if available. Our future indebtedness may impose
various restrictions and covenants on us which could limit our ability to
respond to market conditions, to make capital investments or to take advantage
of business opportunities. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Credit Facility." We also may
incur higher than expected interest expenses in servicing our debt, which would
decrease our profitability. Potential creditors may be more reluctant to enter
into lending arrangements with us after the spin-off than they have been with
Pitney Bowes, as we will be a smaller, less diversified company.

There has not been any prior trading market for our shares; our stock price
may fluctuate significantly following the spin-off; stockholders who buy or
sell our common stock may lose all or part of the value of their common stock,
depending on the value of our common stock from time to time.

There has been no trading market for our shares, although a "when-issued"
trading market may develop prior to completion of the spin-off. We have been
approved for listing of our common stock on the New York Stock Exchange, under
the symbol "IGI."

We cannot assure you as to whether our shares will be actively traded or as
to the prices at which the shares will trade. In particular, at the time of the
spin-off and soon thereafter, Pitney Bowes stockholders who receive shares of
our common stock in the spin-off may sell shares of our common stock for a
number of reasons. These may include:

. the fact that our common stock is unlikely to be included in the S&P
500. Any investors, including mutual funds, that invest only in
companies that are included in the S&P 500 will be forced to sell the
shares of our common stock that they receive in the spin-off;

. the fact that we will likely be considered a small-capitalization
company after the spin-off. We cannot assure you that stockholders who
focus on large- or mid-capitalization companies, possibly including some
of our largest stockholders, will not sell the shares of our common
stock that they receive in the spin-off;

. the fact that we do not intend to pay a dividend. Some stockholders are
not allowed to hold stock of companies that do not pay dividends. These
stockholders will be forced to sell the shares of our common stock that
they receive in the spin-off; and

. the fact that our business profile may not match the investment strategy
of some of our stockholders, causing them to sell the shares of our
common stock that they receive in the spin-off.

Any sales of substantial amounts of our common stock in the public market, or
the perception that such sales might occur, may cause the market price of our
common stock to decline. In addition, sales of substantial amounts of our
common stock may delay the development of an orderly trading market in our
shares for a period of time following the spin-off. Until our shares are fully
distributed and an orderly market, if any, develops, the prices at which our
shares trade may fluctuate significantly and may be lower or higher than the
price that would be expected for a fully distributed issue.

Prices for our shares will be determined in the marketplace and may be
influenced by many factors, including the depth and liquidity of the market for
our shares, our results of operations, what investors think of our company and
our industry, changes in earnings estimates by any analysts that may follow our
company, changes in economic conditions in our industry and general economic
and market conditions. In addition, the stock market often experiences
significant price fluctuations that are unrelated to the operating performance
of the specific companies whose stock is traded. Market fluctuations could have
a material adverse impact on the trading price of our shares.

The possibility of substantial sales may have an adverse impact on the trading
price of our shares.

Based on the number of shares of Pitney Bowes common stock outstanding on
September 30, 2001, Pitney Bowes will distribute to its stockholders a total of
approximately 19.5 million Imagistics shares. Under the United States federal
securities laws, all of these shares may be resold immediately in the public
market, except for shares held by our affiliates. Persons who can be considered
our affiliates after the spin-off generally include individuals or entities
that directly, or indirectly through one or more intermediaries, control, are
controlled by, or are under common control with, us, and may include certain of
our officers and directors. We cannot predict whether stockholders will resell
large numbers of our shares in the public market following the spin-off or how
quickly they may resell those shares.

Risks Relating to Our Business

We face the following risks in connection with the general conditions and
trends of the industry in which we operate.

Adverse economic conditions could affect our sales or ability to service debt.

The weakening of the U.S. economy continues to negatively impact our revenue
growth. In addition, the terrorist attacks of September 11, 2001, while not
materially impacting the Company's performance for historical periods presented
in this information statement, could cause further weakening of the economy
which may continue to adversely impact our revenues. We cannot predict the
ongoing impact of these terrorist acts or whether future acts, if any, will
further reduce demand for our products and continue to adversely effect our
results. If our sales were to continue to decline our business would be
seriously threatened. Lost sales revenue would force us to take measures such
as reducing our number of employees, selling or closing certain of our
facilities, and limiting our product offerings in order to try to remain
competitive. In addition, we might face more dire long-term consequences such
as bankruptcy if the level of our sales were to decrease substantially for a
sustained period.

Our ability to service our indebtedness will depend on our future operating
performance, which will be affected by prevailing economic conditions and
financial and other factors, certain of which we cannot control.

Our debt service requirements may make us more vulnerable to economic
downturns. If we are not able to service our indebtedness, we would be forced
to pursue one or more alternative strategies such as reducing our capital
expenditures, selling assets, restructuring or refinancing our indebtedness or
seeking additional equity capital (which may substantially dilute the ownership
interest of holders of our shares). There can be no assurance that we can
effect any of these strategies on satisfactory terms, if at all. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."

Our success will depend on our ability to respond to technological
developments.

The document imaging and management industry is undergoing an evolution in
product offerings, moving toward the use of digital technology in a multi-
functional office environment. Our continued success will depend to a great
extent on our ability to respond to this rapidly changing environment. We
cannot assure you that we will be able to anticipate which products or
technologies will gain market acceptance or that, even if we do correctly
anticipate market demand, our suppliers will be willing or able to supply such
products to us at competitive prices. Further, we may not be able to obtain the
necessary manufacturers' authorization to market newly-developed equipment or
to arrange agreeable terms with manufacturers to market newly-developed
equipment. Additionally, new products using new technology may be sold through
other channels of distribution. While it is possible that technological
advancements may result in lower product costs which may increase unit volume
sales, this trend may reduce our overall sales revenues and/or margins. In
addition, product reliability improvements may result in reduced service
revenues. We will also incur increased expenses for the continued training of
our sales and service personnel to familiarize them with new technologies. See
"Our Business--Industry Overview."

The industry trend toward digital technology may result in lost value of
analog copiers.

Digital copiers have gained market share over the past three to five years
and current industry trends and predictions indicate that the demand for
digital copiers will increase substantially in the next few years. Since analog
copiers are cheaper to purchase, we still provide analog copiers to many of our
customers and will continue to provide these machines as long as there is a
market for them. However, many of our rental customers have provisions allowing
for technology upgrades during the terms of their contract. If many of our
customers exercise their contractual rights to upgrade to digital equipment in
line with the overall increase in use of digital copiers, we may experience
returns of a large number of analog machines and a subsequent loss of book
value on these machines. In addition, as we attempt to manage the balance
between digital copiers and analog copiers, we may miscalculate the demand for
one or the other. If we miscalculate, we may not provide a product line that
appeals to our customers, and we may lose customers. In addition, if the trend
toward digital copiers accelerates faster than we project, we may be forced to
sell excess analog copiers at reduced prices, assuming we are able to do so. As
a result of these events, our results of operations may be harmed.

Our customers have many technological options and may reduce their use of our
products.

The proliferation of e-mail, multi-functional printers and other
technologies in the workplace may lead to a reduction in the use of traditional
copiers and fax machines. As compared to several years ago, we believe that our
customers are making fewer copies per installed copier. We cannot anticipate
whether technological advancements will substantially minimize the need for our
products in the future. Our future success may depend on our ability to develop
new options and document imaging solutions for our customers.

Pitney Bowes Management Services and/or Pitney Bowes Credit Corporation may
choose to stop purchasing our products.

In the past, we have sold our products to Pitney Bowes Management Services,
which provides on-site document management services to many of our customers.
We have entered into an agreement providing for the continuation of our
relationship with Pitney Bowes Management Services. However, Pitney Bowes

Management Services is not required to use our products in connection with its
procurement and on-site management of copier products, and it is possible that
other manufacturers and distributors will be more successful.

Our agreement with Pitney Bowes Management Services provides for a term of
only two years. Following the termination of this agreement, we will need to
determine whether or not to continue our relationship with Pitney Bowes
Management Services, develop our own management services unit or enter a
partnership arrangement with a different management services provider. In the
interim, as more procurement decisions are handled by outside entities, many of
which are controlled by or otherwise affiliated with manufacturers or
distributors of copier products, it may become more difficult or impossible to
compete for this business. This may have a material adverse effect on our
business, results of operations or financial condition.

In addition, we have entered into a vendor financing agreement with Pitney
Bowes Credit Corporation, which accounted for 14% of our 2000 total revenue.
Although the agreement sets terms for Pitney Bowes Credit Corporation's
provision of vendor financing for our products, Pitney Bowes Credit Corporation
is not obligated to continue to provide vendor financing for our products. If
Pitney Bowes Credit Corporation does not continue to provide vendor financing
and we are unable to obtain an alternate entity to provide vendor financing for
our products, our business, results of operations, financial condition and cash
flows could be adversely affected. In addition, Pitney Bowes Credit Corporation
is a participant in our credit facility.

Many of our rental contracts are subject to adjustment or amendment under
specified circumstances, which may cause us to lose business or to have excess
inventory returned to us.

At the end of a rental contract, if the contract is not renewed, the product
subject to the rental contract is returned to us. When setting rental contract
pricing, we must make certain assumptions as to the value, if any, at the time
of return of the product as well as the economic useful life of the equipment,
because we seek to resell or rerent used product after the rental period. If
product returned to us at the end of a rental contract is worth less than we
had projected, we may suffer a material adverse effect on our business, results
of operations and financial condition as a result. Products may be worth less
than projected due to faulty assumptions at the time we entered into the rental
contract or because of a shift in demand for particular products (such as
increased demand for digital products, and lower demand for analog products).

Many of our rental contracts provide for upgrades of products during the
term of the rental contract. If we have priced these upgrades improperly, this
may cause a material adverse effect on our business, results of operations or
financial condition. In addition, the product returned to us as a result of the
upgrade must be resold or rerented, which may cause adverse effects similar to
those that may occur at the end of a rental term.

A substantial percentage of our revenue is from government customers; in most
cases, these customers may terminate their contracts at will.

We derive a substantial portion of our revenues from federal, state and
local government entities. Our revenues could be adversely impacted by a
reduction in the overall level of government spending and by changes in
spending priorities at federal, state and local levels from year to year.
Furthermore, even if the overall level of government spending does increase or
remains stable, the budgets of the government agencies with whom we do business
may be decreased. In addition, obtaining government contracts continues to be
competitive and we cannot be certain that we will be successful in renewing
contracts secured through the bidding process. Historically, there have been no
significant contract terminations, however, government contracts are generally
terminable at will by the customer and we cannot assure you that our government
contracts will not be terminated early. Though our customer base extends into
other markets, we are dependent upon government entities as one of our major
sources of revenues. Our future success and revenue growth will depend in part
on our ability to further expand our customer base, including with government
customers.

Our copier business currently commands a very small share of its market.

As a part of Pitney Bowes, we were part of a company with a major presence
across many areas of the workplace. As an independent entity we will need to
build on our current relationships and forge new ones based on our own
strengths. Although our fax machine business has a very significant share of
the corporate fax market, our copier business has a very insignificant share of
the corporate copier market. In addition, more of our major account customers
buy or rent our fax machines than our copiers. Our goal is to develop new
copier customers at both the major account and commercial user levels. We also
plan to increase our copier product offerings and to continue to work with
third-party developers to introduce office solutions packages in order to
further develop our copier business and increase our copier market share. We
operate in a highly competitive market and, therefore, cannot predict whether
copier customers will be attracted to our product offerings or whether we will
be able to enhance our copier market share and build our presence in this
market.

The document imaging solutions industry is very competitive; we may be unable
to compete favorably, causing us to lose sales to our competitors.

Our competitors include the distribution units of large office equipment
manufacturers and independent distributors, as well as office superstores and
consumer electronics chains. As digital and other new technology develops, we
may have to compete with new distribution channels, including computer
distributors and value added resellers, for products containing new technology.
While we are a significant distributor in the office products and document
management solutions market, certain competitors, principally the distribution
units of large office equipment manufacturers, may have greater total
financial, purchasing and/or sourcing power than we do. We believe that the
principal competitive factors in the office products and corporate imaging
solutions market are price and product capabilities; availability, quality and
speed of post-sales service support; availability of equipment, parts and
supplies; speed of delivery; financing terms; and availability of financing,
leasing or rental programs. Our future success depends, in part, on our ability
to deliver enhanced products and service packages while also offering
competitive price levels.

We are highly dependent on our sales staff.

Our sales personnel are responsible for initial outreach to both major
accounts and commercial users and they are essential to establishing long-term
relationships with these customers. We depend on these employees to attract new
customers and maintain relationships with current customers. The turnover of
our sales personnel, particularly in our commercial markets, is high. Continual
turnover in our sales force could affect our ability to properly identify,
solicit and maintain new customers for our products.

We are dependent on outside suppliers and distribution facilities.

We rely on outside suppliers to manufacture the products that we distribute,
including Minolta, Matsushita, Muratec, Oki, Brother, Heidelberg and Kyocera
Mita. Minolta currently supplies a significant portion of our new copier
equipment. Minolta or our other suppliers may be unable to deliver us products
in the future. If these manufacturers discontinue their products or if
political changes, economic disruptions or natural disasters occur where their
production facilities are located, we will be forced to identify an alternative
supplier for the product. We may not be successful in doing so. Even if we are
successful, the replacement product may be more expensive or may lack certain
features of the discontinued product and we will experience some delay in
obtaining the product. These events would cause disruption to our customers. In
addition, we cannot assure you that products from Minolta or our other
suppliers will not decline in quality in the future. This would also require us
to find an alternative supplier. Delivery of our products may also be subject
to disruption by strikes, which may close ports or interfere with ship, rail or
truck transport or damage to port or other transport facilities by natural or
other disasters, including acts of war and/or terrorist activity. Any of these
events could have a material adverse effect on our business and financial
condition.

We are dependent on certain key personnel.

Our success depends to a significant extent on the continued service of
certain key management personnel. Currently, we have agreements with our
Chairman and Chief Executive Officer, Marc C. Breslawsky, our Chief Financial
Officer, Joseph D. Skrzypczak, and our Vice President, General Counsel and
Secretary, Mark S. Flynn, regarding the key components of their compensation
with us. The terms of their employment may be further reflected in formal
employment agreements to be entered into prior to the spin-off. We have not
entered into employment arrangements with any of our other key management
personnel. The loss or interruption of the services of our senior management
personnel or the inability to attract and retain other qualified management,
sales, marketing and technical employees would affect us adversely.

We are subject to risks related to international operations, particularly
risks related to foreign currencies.

We operate a multinational business and, accordingly, are subject to risks
inherent in international operations. Non-U.S. operations generated
approximately 3.4% of our 2000 revenues and approximately 4.2% of our 1999
revenues. Our non-U.S. operations are subject to political, economic and other
risks inherent in operating in countries outside the United States, including
possible adverse government regulation, imposition of import and export duties
and quotas, currency restrictions, price controls, potentially burdensome
taxation and/or other restrictive government actions.

Also, a large portion of our costs are denominated in foreign currencies.
For example, our margins were negatively impacted in 2000 because of cost
increases for product purchases from our Japanese vendors, as a result of the
increased strength of the Japanese yen. In 2000, approximately 77% of our
total product purchases, based on costs, were denominated in yen. Fluctuations
in the value of foreign currencies relative to the U.S. dollar could have a
material adverse effect on our U.S. dollar-denominated operating results. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Market Risk" and "--Effects of Inflation and Foreign Exchange."

Risk Factor Relating to Our Corporate Documents

Provisions in our certificate of incorporation and bylaws and of Delaware
law, as well as our rights agreement, may delay or prevent an unsolicited
takeover effort to acquire us, which could inhibit your ability to receive an
acquisition premium for your shares of our common stock.

Provisions of our certificate of incorporation and bylaws and of Delaware
law, as well as our rights agreement, may delay or prevent an unsolicited
takeover effort to acquire us on terms that holders of Imagistics common stock
may consider to be favorable. For more detail on these provisions, see
"Description of Capital Stock."

SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS

We have made forward-looking statements in this information statement
including in the sections entitled "Summary," "Risk Factors," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business," that are based on our management's beliefs and assumptions and on
information currently available to our management. Forward-looking statements
include the information concerning our possible or assumed future results of
operations, business strategies, financing plans, competitive position,
potential growth opportunities, potential operating performance improvements,
benefits resulting from our spin-off from Pitney Bowes, the effects of
competition and the effects of future legislation or regulations. Forward-
looking statements include all statements that are not historical facts and can
be identified by the use of forward-looking terminology such as the words
"believe," "expect," "plan," "intend," "anticipate," "estimate," "predict,"
"potential," "continue," "may," "will," "should" or the negative of these terms
or similar expressions.

Forward-looking statements involve risks, uncertainties and assumptions.
Actual results may differ materially from those expressed in these forward-
looking statements. You should not put undue reliance on any forward-looking
statements. Except as required under the federal securities laws and the rules
and regulations of the Securities and Exchange Commission, we do not have any
intention or obligation to update publicly any forward-looking statements after
we distribute this information statement.

The risk factors discussed in "Risk Factors" could cause our results to
differ materially from those expressed in forward-looking statements. There may
also be other risks and uncertainties that we are unable to predict at this
time or which we do not now expect to have a material adverse impact on our
business.

THE SPIN-OFF

Background to and Reasons for the Spin-Off

Pitney Bowes' board of directors and senior management have embarked upon a
comprehensive review of Pitney Bowes' organizational structure and operations,
with the primary goals of generating maximum value for Pitney Bowes'
stockholders and focusing its resources on its key strategic business. To date,
Pitney Bowes has taken a number of actions in furtherance of these goals:

To enhance stockholder value, Pitney Bowes intends to streamline operations
and focus on core products and services. To this end, Pitney Bowes has explored
various transaction structures to continue to implement these goals with
respect to Pitney Bowes' interest in our business. In the beginning of 1998,
Pitney Bowes acknowledged that its office systems division had become an
established business with a dedicated customer base, a focused product image
and a profitable growth strategy. Pitney Bowes began to conduct discussions
with various financial institutions, and retained Merrill Lynch & Co., as
financial adviser, and Davis Polk & Wardwell, as legal counsel, to begin an
analysis of various alternatives, including the possibility of designing,
formulating and implementing a plan to separate us from Pitney Bowes.

Pitney Bowes' board of directors approved the separation of the office
systems business based on the following material factors:

. in making the decision to approve the spin-off, Pitney Bowes' board of
directors focused on the key benefits of the separation described below.

. the spin-off will allow Pitney Bowes to improve its profitability,
stabilize its earnings growth and reduce its exposure to fluctuations in
the document imaging market. Specifically, Pitney Bowes is expected to
have a sharper focus on its business and strategic opportunities as a
result of its board of directors and management teams focusing solely on
its business.

. the spin-off will allow Imagistics to:

. make substantial investments in systems, training and
infrastructure;

. provide more targeted compensation to our management and work force;

. tailor our benefits package to be more aligned with our competitive
industry; and

. raise additional funds to pursue an expansion strategy in a
consolidating industry.

We believe that as a separate company we will have a dedicated management
team that is more focused and motivated to drive profitability and growth. In
addition, with direct access to capital markets, we will no longer have to
compete with other divisions of Pitney Bowes for capital and we will be better
able to pursue a growth strategy including potential acquisitions.

Description of the Spin-Off

The distribution agreement between Pitney Bowes and us provides the general
terms and conditions relating to the spin-off. See "Relationship with Pitney
Bowes--Distribution Agreement."

Pitney Bowes will effect the spin-off on or about December 3, 2001 by
providing for the distribution of the shares of our common stock by EquiServe,
the distribution agent. The distribution agent will distribute these shares to
each holder of record of Pitney Bowes common stock at the close of business on
November 19, 2001, the record date for the spin-off. The shares of our common
stock will be validly granted, fully paid and nonassessable, and the holders of
these shares will not be entitled to preemptive rights. See "Description of
Capital Stock."

In the spin-off, Pitney Bowes will distribute 100% of the outstanding shares
of our common stock to Pitney Bowes stockholders. Each record holder of Pitney
Bowes shares is expected to receive one share of our common stock for every
12.5 shares of Pitney Bowes common stock that the recipient holds at the close
of business on the record date for the spin-off. The actual number of shares of
our common stock to be distributed will depend on the number of shares of
Pitney Bowes common stock that are outstanding on the record date. Based on the
number of shares of Pitney Bowes common stock outstanding as of September 30,
2001, we estimate that Pitney Bowes will distribute approximately 19.5 million
shares of our common stock to Pitney Bowes stockholders. Immediately after the
spin-off, we estimate that approximately 30,000 stockholders of record will
hold shares of our common stock, although some of the shares may be registered
in the name of a single stockholder who represents a number of stockholders.

As part of the spin-off, we will be adopting a book-entry share transfer and
registration system for our common stock. For registered holders of Pitney
Bowes common stock, instead of sending physical share certificates, the
distribution agent will credit the shares of our common stock distributed on
the date of the spin-off to book-entry accounts established for all registered
holders of our common stock. The distribution agent will then mail an account
statement to each of those registered holders stating the maximum number of
whole shares of our common stock to which that holder is entitled in connection
with the spin-off. After the spin-off, registered holders of our common stock
may request:

. a transfer of all or a portion of their shares to a brokerage or other
account or

. receipt of one or more physical share certificates representing their
shareholding.

For those holders of Pitney Bowes common stock who hold their shares through
a broker, bank or other nominee, the distribution agent will transfer the
shares of our common stock to the registered holders of record who will make
arrangements to credit their customers' accounts with our common stock. We and
Pitney Bowes anticipate that brokers, banks and other nominees will generally
credit their customers' accounts with our common stock on or about December 3,
2001.

Pitney Bowes will not issue any certificates representing fractional shares
of our common stock as part of the spin-off. The distribution agent will
aggregate all fractional interests into whole shares and sell them in the open
market at then prevailing prices on behalf of holders who would be entitled to
receive a fractional interest in our common stock. These holders will receive
cash payments in the amount of their proportionate share of the total sale
proceeds from the sale of the aggregated fractional interests. The distribution
agent will pay the proceeds from these sales based upon the average gross
selling price per share of our common stock. See

"--Material Federal Income Tax Consequences of the Spin-Off." Pitney Bowes will
bear the cost of commissions incurred in connection with these sales. We
anticipate that these sales will occur as soon after the date of the spin-off
as practicable.

The distribution agent will act in its sole discretion, without influence
from Imagistics or Pitney Bowes, in effecting these sales. The distribution
agent will independently determine all aspects of the sales. Neither the
distribution agent nor the broker-dealers it uses are affiliates of Imagistics
or of Pitney Bowes.

None of Pitney Bowes, Imagistics or the distribution agent will guarantee
any minimum sale price for the fractional shares of our common stock. Neither
we nor Pitney Bowes will pay any interest on the proceeds from the sale of
aggregated fractional shares.

If you become a registered holder of our common stock in connection with the
spin-off and you prefer to receive one or more physical share certificates
representing your shareholding of our common stock, you will receive one or
more certificates for all whole shares of our common stock and, if applicable,
cash for any fractional interest. The distribution agent will mail you
certificates representing your proportionate number of whole shares of our
common stock as soon after the date of request as practicable.

We anticipate that, in connection with the spin-off, options exercisable for
Pitney Bowes common stock will be equitably adjusted as follows:

. for options held by employees of Pitney Bowes who will continue as
Pitney Bowes employees after the spin-off, the exercise price and the
number of options will be adjusted so that each employee's options will
have the same intrinsic value after the spin-off. These employees will
not receive options exercisable for Imagistics common stock; and

. for options held by employees of Imagistics, the exercise price (but not
the number of options) will be adjusted to reflect the spin-off in a
similar manner to the option price adjustment made for Pitney Bowes
employees, and in order to maintain the aggregate intrinsic value of
their options, each such employee will receive new options exercisable
for Imagistics common stock.

Dividend Prior to the Spin-Off

Prior to the spin-off, we will pay to Pitney Bowes an amount equal to $150
million plus the aggregate amount of any additional funds advanced to us by
Pitney Bowes between August 1, 2001 and the date of the spin-off. The amount of
this payment which exceeds the net intercompany balance payable by us to Pitney
Bowes will be paid as a dividend to Pitney Bowes, as our sole stockholder prior
to the spin-off. We will fund the dividend from borrowings under our credit
facility and may also use a portion of our cash balances. The dividend will be
at the discretion of the board of directors of Pitney Bowes, as sole
stockholder of Imagistics prior to the spin-off, with consideration of the
availability of funds. For details about this dividend, see "Pro Forma Combined
Financial Statements" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

Results of the Spin-Off

After the spin-off, we will be a separate public company operating our
current document imaging products and solutions business. Immediately after the
spin-off, we expect to have approximately 30,000 holders of record of
Imagistics shares and approximately 19.5 million Imagistics shares outstanding,
based on the number of stockholders of record and outstanding Pitney Bowes
shares on September 30, 2001 and a distribution ratio of one share of
Imagistics common stock for every 12.5 shares of Pitney Bowes common stock. The
actual number of Imagistics shares to be distributed will be determined as of
the record date. The spin-off will not affect the number of outstanding Pitney
Bowes shares or any rights of Pitney Bowes stockholders.

Material Federal Income Tax Consequences of the Spin-Off

Pitney Bowes has received a ruling from the IRS stating that, subject to
certain representations, the spin-off qualifies as tax-free to Pitney Bowes and
its stockholders under Section 355 of the Internal Revenue Code.

The material federal income tax consequences of a tax-free spin-off are:

. Except as described below with respect to fractional shares,
stockholders of Pitney Bowes will not recognize gain or loss as a result
of the spin-off.

. Cash received instead of a fractional share will be treated as received
in exchange for the fractional share. Gain or loss will be recognized by
a recipient stockholder to the extent of the difference between the
stockholder's basis in the fractional share and the amount received for
the fractional share. If the fractional share interest is held as a
capital asset by the recipient stockholder, the gain or loss will be a
capital gain or loss.

. You, as a stockholder of Pitney Bowes, will apportion your tax basis in
Pitney Bowes common stock between Pitney Bowes common stock and our
common stock received in the spin-off in proportion to the relative fair
market values of Pitney Bowes common stock and our common stock on the
date of the spin-off.

. If you hold Pitney Bowes common stock as a capital asset as of the date
of the spin-off, your holding period for our common stock received in
the spin-off will include the period during which you held the common
stock which enabled you to receive our common stock in the spin-off.

. Pitney Bowes generally will not recognize any gain or loss as a result
of the spin-off.

Current Treasury regulations require each stockholder of Pitney Bowes who
receives our common stock in the spin-off to attach a descriptive statement
concerning the spin-off to the stockholder's federal income tax return for the
year in which the spin-off occurs. Pitney Bowes, or Imagistics on behalf of
Pitney Bowes, will make available the required information to each stockholder
of record of Pitney Bowes as of the record date for the spin-off.

You should consult your tax adviser regarding the particular federal,
foreign, state and local tax consequences of the spin-off to you.

For a description of the agreement under which we and Pitney Bowes have
provided for tax sharing and other tax matters, see "Relationship with Pitney
Bowes--Tax Separation Agreement."

TRADING MARKET

There has been no public market for our common stock. An active trading
market may not develop or be sustained in the future. However, we expect that a
limited market for shares of our common stock, commonly known as a "when
issued" trading market, will develop on or shortly before the record date for
the spin-off. We have been approved for listing of our common stock on the New
York Stock Exchange under the ticker symbol "IGI" and believe that our common
stock will be acceptable to the NYSE for listing.

We cannot predict the prices at which our common stock may trade before the
spin-off on a "when issued" basis or after the spin-off. These prices will be
determined by the marketplace and may be significantly below the book value per
share of our common stock. Prices at which trading in shares of our common
stock occurs may fluctuate significantly. These prices may be influenced by
many factors, including quarter to quarter variations in our actual or
anticipated financial results or those of other companies in the industries or
the markets that we serve, investor perception of our company and the document
imaging industry, and general economic and market conditions. In addition, the
stock market in general has experienced extreme price and volume fluctuations
that have affected the market price of many stocks and that have often been
unrelated or disproportionate to the operating performance of these companies.
These are just some factors that may adversely affect the market price of our
common stock. See "Risk Factors--There has not been any prior trading market
for our shares; our stock price may fluctuate significantly following the spin-
off; stockholders who buy or sell our common stock may lose all or part of the
value of their common stock, depending on the value of our common stock from
time to time."

Shares of our common stock that you will receive in the spin-off will be
freely transferable, except if you are considered an "affiliate" of us under
Rule 144 under the Securities Act of 1933. Persons who can be considered our
affiliates after the spin-off generally include individuals or entities that
directly, or indirectly through one or more intermediaries, control, are
controlled by, or are under common control with, us, and may include certain of
our officers and directors. Our affiliates may only sell common stock received
in the spin-off:

. under a registration statement that the SEC has declared effective under
the Securities Act or

. under an exemption from registration under the Securities Act, such as
the exemption afforded by Rule 144.

The number of options to purchase shares of our common stock that will be
outstanding immediately after the spin-off cannot be determined until after the
spin-off. These options will be granted under the Imagistics Stock Plan. See
"Executive Compensation--Imagistics Stock Plan." Shares of our common stock
issued upon exercise of these options will be registered on Form S-8 under the
Securities Act and will, therefore, be freely transferable under the securities
laws, except by affiliates as described above.

Except for the shares of our common stock distributed in the spin-off and
the options described above, none of our securities will be outstanding on or
immediately after the spin-off.

DIVIDENDS

We anticipate that future earnings will be used principally to support
operations and finance the growth of our business. Thus, we do not intend to
pay cash dividends on our common stock in the foreseeable future. We have
entered into a senior secured credit facility providing for both term and
revolving credit borrowings, which allows us to borrow funds for general
corporate purposes, including the repayment of other debt, working capital and
acquisitions. The credit facility contains affirmative and negative covenants
that, among other things, require us to satisfy certain financial tests and
maintain certain financial ratios. The credit facility also limits our ability
to declare and pay dividends on our shares. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources-- Credit Facility." If our lenders permit us to declare
dividends, the dividend amounts, if any, will be determined by our board. Our
board will consider a number of factors, including our financial condition,
capital requirements, funds generated from operations, future business
prospects, applicable contractual restrictions and any other factors our board
may deem relevant.

SELECTED COMBINED FINANCIAL DATA

The following table presents our selected combined financial data. The
information set forth below should be read in conjunction with the "Unaudited
Pro Forma Combined Financial Statements," "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and our combined financial
statements and notes thereto included elsewhere in this information statement.
The combined statement of income data set forth below for the years ended
December 31, 1998, 1999 and 2000 and the combined balance sheet data at
December 31, 1999 and 2000 are derived from, and are qualified by reference to,
our audited combined financial statements included elsewhere in this
information statement. The combined statement of income data for the years
ended December 31, 1996 and 1997 and for the nine months ended September 30,
2000 and 2001 and the combined balance sheet data at December 31, 1996, 1997
and 1998 and at September 30, 2000 and 2001 are derived from our unaudited
combined financial statements. Results for the nine months ended September 30,
2001 are not necessarily indicative of results to be expected for the entire
fiscal year 2001 or any other interim period. In our opinion, all adjustments,
which consist only of normal and recurring items considered necessary for a
fair presentation, have been included in our unaudited combined financial
statements.

The historical financial information may not be indicative of our future
performance and does not reflect what our financial position and results of
operations would have been had we operated as a separate, stand-alone entity
during the periods presented.

Combined Statement of
Income data
Revenue:
Sales.................. $249,285 $271,765 $299,440 $322,947 $326,046 $245,352 $231,041
Rentals................ 169,033 185,915 199,525 211,353 227,790 169,432 174,179
Support services....... 82,410 86,261 90,736 92,177 88,922 67,308 62,121
-------- -------- -------- -------- -------- -------- --------
Total revenue......... 500,728 543,941 589,701 626,477 642,758 482,092 467,341
-------- -------- -------- -------- -------- -------- --------
Costs and expenses:
Cost of sales.......... 129,065 131,536 143,263 157,385 186,181 134,222 142,733
Cost of rentals........ 61,385 65,613 68,819 74,245 88,506 68,943 69,837
Selling, service and
administrative........ 190,372 204,653 213,712 232,627 252,799 187,753 222,718
Interest expense, net.. 3,463 4,517 5,780 8,646 11,281 8,324 8,484
-------- -------- -------- -------- -------- -------- --------
Total costs and
expenses............. 384,285 406,319 431,574 472,903 538,767 399,242 443,772
-------- -------- -------- -------- -------- -------- --------
Income before income
taxes................. 116,443 137,622 158,127 153,574 103,991 82,850 23,569
Provision for income
taxes................. 47,283 55,190 63,452 61,638 41,144 32,750 9,293
-------- -------- -------- -------- -------- -------- --------
Net income............. $ 69,160 $ 82,432 $ 94,675 $ 91,936 $ 62,847 $ 50,100 $ 14,276
======== ======== ======== ======== ======== ======== ========
Pro forma basic and
diluted earnings per
share................. $ 3.20 .72
Combined Balance Sheet
data
Total assets........... $253,991 $296,638 $385,105 $449,834 $505,464 $485,280 $520,447
Total current
liabilities, including
amounts due to Pitney
Bowes................. $ 81,017 $ 77,698 $108,256 $133,670 $180,088 $155,685 $191,040
Total long-term
liabilities........... $ 5,914 $ 6,259 $ 13,716 $ 10,898 $ 10,213 $ 8,546 $ 14,439
Other data
Depreciation and
amortization.......... $ 47,803 $ 51,450 $ 58,364 $ 67,219 $ 73,755 $ 54,472 $ 57,628
Earnings before
interest, taxes,
depreciation and
amortization.......... $167,709 $193,589 $222,271 $229,439 $189,027 $145,646 $ 89,681
Capital expenditures... $ 56,208 $ 69,085 $ 78,566 $ 98,756 $ 89,183 $ 70,460 $ 57,777

Earnings before interest, taxes, depreciation and amortization, or EBITDA,
is not presented as an alternative measure of operating results or cash flow
from operations, as determined in accordance with generally accepted accounting
principles, but is presented because we believe it is a widely accepted
indicator of our ability to incur and service debt. EBITDA does not give effect
to cash used for debt service requirements and capital expenditures and thus
does not reflect funds available for reinvestment, dividends or other
discretionary uses. In addition, EBITDA as presented in this information
statement may not be comparable to similarly titled measures reported by other
companies.

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

Before the spin-off, we operated as part of Pitney Bowes. The following
unaudited pro forma combined financial statements provide the historical
combined financial statements for Imagistics adjusted for the spin-off and the
related transactions and events described in the notes to the unaudited pro
forma combined financial statements. You should read the unaudited pro forma
combined financial statements together with our historical combined financial
statements and the notes to those combined financial statements and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included in this information statement.

The unaudited pro forma combined statement of income for the year ended
December 31, 2000 and for the nine months ended September 30, 2001 presents our
results of operations assuming the spin-off had been completed as of January 1,
2000. The unaudited pro forma combined balance sheet at September 30, 2001
presents our combined financial position assuming that the spin-off had been
completed on that date. The pro forma adjustments set forth in the pro forma
adjustments column are based upon currently available information and are
described in the notes to the unaudited pro forma financial statements.

We are providing unaudited pro forma combined financial statements for
informational purposes only. You should not construe them to be indicative of
our results of operations or financial condition had the spin-off and the
related transactions and events been completed on the dates assumed. They may
not reflect the results of operations or financial condition which would have
resulted had we been operated as a separate, independent entity during such
periods. In particular, note that the pro forma combined statements of income
do not include adjustments to selling, service and administrative expenses
associated with our being a stand-alone public company. We estimate that stand-
alone public company incremental administrative overhead costs (including
accounting, treasury, tax, legal, human resources and corporate governance)
would have been approximately $16 million on an annual basis. In addition, we
estimate that we will invest approximately $20 million to $30 million over the
next 24 months to enhance our information systems infrastructure. These
expected information systems expenditures are not included in the pro forma
combined financial statements. Finally, the pro forma combined financial
statements are not necessarily indicative of our future results of operations
or financial condition.

Unaudited Pro Forma Combined Statement of Income
(Dollars in thousands, except share data)
For the nine months ended September 30, 2001

Pro Forma
Historical Adjustments Pro Forma
---------- ----------- -----------

Revenue:
Sales................................. $231,041 $ 231,041
Rentals............................... 174,179 174,179
Support services...................... 62,121 62,121
-------- -----------
Total revenue........................ 467,341 467,341
-------- -----------
Costs and expenses:
Cost of sales......................... 142,733 142,733
Cost of rentals....................... 69,837 69,837
Selling, service and administrative... 222,718 222,718
Interest expense, net................. 8,484 (377)(a)
720 (b) 8,827
-------- ---- -----------
Total costs and expenses............. 443,772 343 444,115
-------- ---- -----------
Income before income taxes............. 23,569 (343) 23,226
Provision for income taxes............. 9,293 (138)(c) 9,155
-------- ---- -----------
Net income............................. $ 14,276 (205) $ 14,071
======== ==== ===========
Pro forma basic and diluted earnings
per share............................. $ .72(d)
Pro forma weighted average common
shares outstanding.................... 19,525,297(e)

See notes to unaudited pro forma combined financial statements.

Unaudited Pro Forma Combined Statement of Income
(Dollars in thousands, except share data)
For the year ended December 31, 2000

Pro Forma
Historical Adjustments Pro Forma
---------- ----------- -----------

Revenue:
Sales................................. $326,046 $ 326,046
Rentals............................... 227,790 227,790
Support services...................... 88,922 88,922
-------- -----------
Total revenue........................ 642,758 642,758
-------- -----------
Costs and expenses:
Cost of sales......................... 186,181 186,181
Cost of rentals....................... 88,506 88,506
Selling, service and administrative... 252,799 252,799
Interest expense, net................. 11,281 (458)(a)
960 (b) 11,783
-------- ---- -----------
Total costs and expenses............. 538,767 502 539,269
-------- ---- -----------
Income before income taxes............. 103,991 (502) 103,489
Provision for income taxes............. 41,144 (201)(c) 40,943
-------- ---- -----------
Net income............................. $ 62,847 (301) $ 62,546
======== ==== ===========
Pro forma basic and diluted earnings
per share............................. $ 3.20(d)
Pro forma weighted average common
shares outstanding.................... 19,525,297(e)

See notes to unaudited pro forma combined financial statements.

Unaudited Pro Forma Combined Balance Sheet
(Dollars in thousands)
September 30, 2001

Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ---------

Assets
Current assets:
Cash...................................... $ 38,912 $ 38,912
Accounts receivable, net.................. 120,399 120,399
Inventories............................... 130,156 130,156
Current deferred taxes on income.......... 13,526 13,526
Other current assets and prepayments...... 8,501 8,501
-------- --------
Total current assets..................... 311,494 311,494
Property, plant and equipment, net......... 22,016 22,016
Rental equipment and related inventories,
net....................................... 133,569 133,569
Goodwill, net.............................. 52,958 52,958
Other assets............................... 410 4,800 (f) 5,210
-------- -------- --------
Total assets............................... $520,447 4,800 $525,247
======== ======== ========
Liabilities and invested/shareholders'
equity
Current liabilities:
Accounts payable and accrued liabilities.. $ 46,826 $ 46,826
Due to Pitney Bowes....................... 115,239 (115,239) (f) --
Advance billings.......................... 28,975 28,975
-------- -------- --------
Total current liabilities................ 191,040 (115,239) 75,801
Deferred taxes on income................... 12,069 12,069
Long-term debt............................. -- 155,000 (f) 155,000
Other noncurrent liabilities............... 2,370 2,370
-------- -------- --------
Total liabilities........................ 205,479 39,761 245,240
-------- -------- --------
Commitments and contingencies.............. -- --
Invested/shareholders' equity:
Preferred stock, par value $1.00 per
share, no shares authorized, issued and
outstanding historical; 10,000,000 shares
authorized, no shares issued and
outstanding pro forma.................... -- --
Common stock, par value $.01 per share, no
shares authorized, issued and outstanding
historical; 150,000,000 shares
authorized; 19,525,297 shares issued and
outstanding pro forma.................... -- 195 (g) 195
Additional paid in capital................ -- 282,427 (h) 282,427
Owner's net investment.................... 317,583 (34,961) (i)
(282,622) (h) --
Accumulated other comprehensive loss...... (2,615) (2,615)
-------- -------- --------
Total invested/shareholders' equity...... 314,968 (34,961) 280,007
-------- -------- --------
Total liabilities and
invested/shareholders' equity............. $520,447 4,800 $525,247
======== ======== ========

See notes to unaudited pro forma combined financial statements.

Notes to Unaudited Pro Forma Combined Financial Statements

Combined Statement of Income

(a) We have entered into a credit facility and have borrowed $150 million
under that facility. We will use borrowings of up to $155 million and may use a
portion of our cash balance to repay Pitney Bowes for all intercompany
borrowings (including amounts relating to income taxes payable) and to pay a
dividend to Pitney Bowes, as our sole stockholder. For purposes of adjustments
to the combined financial statements, we have assumed an interest rate of 7%.
We will likely pay a higher interest rate under our credit facility than the
rate historically charged by Pitney Bowes. If the interest rate on our
borrowing under our expected credit facility fluctuates by .125 of a percentage
point, interest expense would fluctuate by approximately $0.2 million on an
annual basis.

(b) Represents amortization of deferred financing costs associated with the
credit facility discussed in (a) above. The deferred financing costs are
amortized over the 5 year term of the credit facility using the straight-line
method (which approximates the effective interest method).

(c) The pro forma adjustment to provision for income taxes represents the
estimated income tax benefit of pro forma adjustment (a) and (b) above at an
effective tax rate of 40%.

Note: The pro forma combined statements of income do not include adjustments
to selling, service and administrative expenses associated with our being a
stand-alone public company. We estimate that stand-alone public company
incremental administrative overhead costs (including accounting, treasury, tax,
legal, human resources and corporate governance) to be approximately $16
million on an annual basis.

Pro Forma Basic and Diluted Earnings Per Share

(d) Basic and diluted earnings per share is computed by dividing pro forma
net income by the pro forma weighted average number of common shares
outstanding. Historical basic and diluted earnings per share is not presented,
as our historical capital structure is not comparable to periods subsequent to
the spin-off.

(e) The pro forma weighted average common shares outstanding represents our
current estimate of the number of shares to be outstanding after the spin-off
assuming these shares were outstanding as of January 1, 2000. The pro forma
number of shares of common stock is based on each holder of Pitney Bowes common
stock receiving a dividend of one share of our common stock for every 12.5
shares of Pitney Bowes common stock and there being 244,066,217 shares of
Pitney Bowes common stock outstanding and assuming no exercise of outstanding
options or other awards. Management's estimate of shares outstanding is subject
to change as a result of normal issuance and repurchases of Pitney Bowes common
stock prior to the spin-off.

Combined Balance Sheet

(f) The pro forma adjustments to amounts due to Pitney Bowes (including
amounts relating to income taxes payable) reflect the borrowings to be incurred
in connection with the spin-off. We have entered into a credit facility and
have borrowed $150 million under that facility. We will use borrowings of up to
$155 million and may use a portion of our cash balance to (i) repay Pitney
Bowes for all intercompany borrowings (including amounts relating to income
taxes payable), (ii) pay a dividend to Pitney Bowes, as our sole stockholder
and (iii) pay deferred financing fees of approximately $4.8 million.

(g) The pro forma number of shares of common stock is based on each holder
of Pitney Bowes' common stock receiving a dividend of one share of our common
stock for every 12.5 shares of Pitney Bowes common stock and there being
244,066,217 shares of Pitney Bowes common stock outstanding and assuming no
exercise of outstanding options or other awards.

(h) On a historical basis, the amount of Pitney Bowes' net investment in us
was recorded as owner's net investment in our historical combined financial
statements.

(i) Reflects a cash dividend to Pitney Bowes, as our sole stockholder.

CAPITALIZATION

The following table presents our historical combined capitalization at
September 30, 2001 and pro forma for the spin-off and the related transactions
and events described in the notes to our unaudited pro forma combined balance
sheet under the "Unaudited Pro Forma Combined Financial Statements" as if the
spin-off and the related transactions and events had been consummated on
September 30, 2001.

You should read the capitalization table below together with "Management's
Discussion and Analysis of Financial Condition and Results of Operations," our
historical combined financial statements and the "Unaudited Pro Forma Combined
Financial Statements" and the notes to those combined financial statements
included in this information statement.

We are providing the capitalization table below for informational purposes
only. You should not construe it to be indicative of our capitalization or
financial condition had the spin-off and the related transactions and events
been completed on the date assumed. The capitalization table below may not
reflect the capitalization or financial condition which would have resulted had
we been operated as a separate, independent entity at that date and is not
necessarily indicative of our future capitalization or financial condition.

September 30, 2001
--------------------
Historical Pro Forma
---------- ---------
(Dollars in
thousands)

Due to Pitney Bowes....................................... $115,239 --
Long-term debt............................................ -- $155,000
Invested/shareholders' equity:
Preferred stock, par value $1.00 per share, no shares
authorized, issued and outstanding historical; 10,000,000
authorized, no shares issued and outstanding pro forma... -- --
Common stock, par value $.01 per share, no shares
authorized, issued and outstanding historical;
150,000,000 shares authorized, 19,525,297 shares issued
and outstanding pro forma................................ -- 195
Additional paid in capital................................ -- 282,427
Owner's net investment.................................... 317,583 --
Accumulated other comprehensive loss...................... (2,615) (2,615)
-------- --------
Total invested/shareholders' equity...................... 314,968 280,007
-------- --------
Total capitalization.................................... $430,207 $435,007
======== ========

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion in conjunction with the combined
financial statements and the notes thereto, and the unaudited pro forma
combined financial statements and the notes thereto, included elsewhere in this
information statement. This Management's Discussion and Analysis of Financial
Condition and Results of Operations contains forward-looking statements that
involve risks and uncertainties. Please see "Special Note About Forward-Looking
Statements" for a discussion of the uncertainties, risks and assumptions
associated with these statements. Our actual results could differ materially
from those discussed in this section. For the purposes of the following
discussion, unless the context otherwise requires, "Imagistics International
Inc.," "Imagistics," "we," "our" and "us" refer to Imagistics International
Inc. and our subsidiaries.

Overview

We are a large direct sales, service and marketing organization offering
document imaging solutions, including copiers, facsimile machines and multi-
functional products, primarily to large corporate and government customers or,
major accounts, as well as to small- to mid-sized businesses or, commercial
users. In addition, we offer specialized document imaging options including
digital, analog, color and/or networked products and systems.

Revenues

Our revenues include revenues from the sale, rental and service of copiers,
facsimile machines, multi-functional products and other document imaging
equipment including related supplies. Sales revenue is recognized when the
risks of ownership have been transferred to the buyer, which is when title and
risk of loss have been transferred to the customer and collection of the
resulting receivable is reasonably assured. Rental revenue is invoiced in
advance; the billed revenue is deferred and recognized as earned revenue over
the rental term, which ranges from three months to three years. Support
services revenue is recognized over the term of the service contract.

Separation from Pitney Bowes

On December 11, 2000, the board of directors of Pitney Bowes approved the
spin-off of the U.S. and U.K. operations of its office systems business to its
stockholders as an independent, publicly-traded company. Prior to the spin-off,
Pitney Bowes plans to transfer substantially all of the assets and liabilities
associated with its office systems business to us. Pitney Bowes has received a
ruling from the IRS stating that, subject to certain representations, the spin-
off qualifies as tax-free to Pitney Bowes and its stockholders for United
States federal income tax purposes.

Immediately following the spin-off, Pitney Bowes will no longer have a
financial investment in our business except as described below. We have entered
into a transition services agreement with Pitney Bowes providing for certain
essential services to us for a limited period following the spin-off,
agreements with Pitney Bowes Management Services and Pitney Bowes of Canada,
under which they may choose to continue to purchase and use our products and,
in the case of Pitney Bowes Management Services, our services, a vendor
financing agreement providing for Pitney Bowes Credit Corporation to continue
as our primary lease vendor on a multi-year basis after the spin-off, an
intellectual property agreement with Pitney Bowes allowing us to continue using
the "Pitney Bowes" brand name in the United States and the United Kingdom for a
period of up to two years following the spin-off, a tax separation agreement
and other agreements described in the section entitled "Relationship with
Pitney Bowes." Pitney Bowes Credit Corporation is a lender under our credit
facility. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources--Credit Facility."

In addition, we have entered into a credit facility. We will use
substantially all of the proceeds from initial borrowings under that facility
and may use available cash to repay certain amounts due to Pitney Bowes and to
pay a dividend to Pitney Bowes. The combined financial statements included in
this information statement do not reflect any changes that may occur in our
financing and operations as a result of the spin-off.

The combined financial statements include allocations of certain Pitney
Bowes corporate expenses. Corporate expense allocations have been charged based
generally on the ratio of our costs and expenses to Pitney Bowes' costs and
expenses. Pitney Bowes' allocated expenses primarily include administrative
expenses such as accounting services, real estate costs, customer service
support in remote geographic areas and information technology and amounted to
$25.7 million, $25.3 million, $26.3 million, $20.9 million and $19.7 million in
1998, 1999, 2000 and for the nine months ended September 30, 2000 and 2001,
respectively. We believe the costs of these services charged to us are a
reasonable representation of the services provided or benefit received by us.
However, the financial information included in this information statement may
not reflect the combined financial position, operating results, changes in
invested equity and our cash flows in the future or what they would have been
had we been a separate stand-alone entity during the periods presented.

In connection with the spin-off, we must also negotiate new agreements with
various third parties as a separate independent entity. There can be no
assurance that the terms we will be able to negotiate for these agreements will
be as favorable as those we obtained while part of Pitney Bowes. In addition,
as part of Pitney Bowes, we benefitted from various economies of scale
including shared global administrative functions and shared facilities. We
expect that our costs and expenses will increase as a result of the loss of
these economies of scale, although the amount is not determinable at this time.
Pitney Bowes has been and is expected to continue to be a significant customer;
however, we cannot assure you that Pitney Bowes will continue to purchase our
products and services. In 2000, revenues from Pitney Bowes, exclusive of sales
to Pitney Bowes Credit Corporation for lease to the end user, accounted for
approximately 3% of our total revenue.

Results of Operations

The following table shows our statement of income data, expressed as a
percentage of total revenue, for the periods indicated. The table also shows
cost of sales as a percentage of sales revenue and cost of rentals as a
percentage of rental revenue:

As a percentage of total revenue, except
as noted
----------------------------------------------
For the year ended For the nine months
December 31, ended September 30,
---------------------- ----------------------
1998 1999 2000 2000 2001
------ ------ ------ ---------- ----------

Revenue
Sales........................ 50.8% 51.6% 50.7% 50.9% 49.4%
Rentals...................... 33.8 33.7 35.4 35.1 37.3
Support services............. 15.4 14.7 13.9 14.0 13.3
------ ------ ------ ---------- ----------
Total revenue............... 100.0% 100.0% 100.0% 100.0% 100.0%
------ ------ ------ ---------- ----------
Costs and expenses:
Cost of sales................ 24.3 25.1 29.0 27.8 30.6
Cost of rentals.............. 11.7 11.9 13.8 14.3 14.9
Selling, service and
administrative.............. 36.2 37.1 39.3 39.0 47.7
Interest expense, net........ 1.0 1.4 1.7 1.7 1.8
------ ------ ------ ---------- ----------
Total costs and expenses.... 73.2 75.5 83.8 82.8 95.0
------ ------ ------ ---------- ----------
Income before income taxes.... 26.8 24.5 16.2 17.2 5.0
Provision for income taxes.... 10.8 9.8 6.4 6.8 2.0
------ ------ ------ ---------- ----------
Net income.................... 16.0% 14.7% 9.8% 10.4% 3.0%
====== ====== ====== ========== ==========
Cost of sales as a percentage
of sales revenue............. 47.8% 48.7% 57.1% 54.7% 61.8%
Cost of rentals as a
percentage of rental
revenue...................... 34.5% 35.1% 38.9% 40.7% 40.1%

Nine months ended September 30, 2001 and September 30, 2000

Revenue. For the nine months ended September 30, 2001, total revenue
decreased 3% to $467.3 million from $482.1 million for the nine months ended
September 30, 2000, reflecting decreased sales and support service revenue
partially offset by higher rental revenue. The weakening of the U.S. economy
continues to negatively impact our revenue growth. In addition, the terrorist
attacks of September 11, 2001, while not materially impacting the Company's
performance for the period under discussion, could cause further weakening of
the economy which may continue to adversely impact our revenues.

Sales revenue decreased 6% to $231.0 million due to the strategic decision
to focus on renting, rather than selling our copier and multi-functional
products. Industry-wide pricing pressures, particularly on copier and multi-
functional product sales, also adversely impacted sales revenue.

Rental revenue increased 3% to $174.2 million, reflecting the shift in our
copier marketing focus toward large national accounts, which is a market that
requires a rental placement strategy similar to that of our facsimile product
placement strategy. We continued to implement this strategic shift in our
copier systems product line by increasing the focus on renting our copiers,
responding to a need for financing flexibility in the major account
marketplace. During the nine months ended September 30, 2001, rental revenue
derived from our copier product line increased 9% and reflected growth in the
overall installed rental population and the impact of increased placements of
our high-end digital products. Rental revenue derived from our facsimile
product line increased 1% versus the prior year as slightly higher revenue in
the U.S. due to increased placements were offset by declining revenue in the
United Kingdom due largely to the impact of currency exchange rates. The
current overall economic environment as well as industry-wide pricing pressures
on both new placements and on contract renewals continue to adversely impact
revenue growth.

Support service revenue decreased 8% to $62.1 million, reflecting the
strategic decision to focus on renting, rather than selling our copier and
multi-functional products with the associated service contracts.

Cost of sales. The cost of sales ratio, or cost of sales expressed as a
percentage of sales revenue, increased to 62% for the nine months ended
September 30, 2001 from 55% for the nine months ended September 30, 2000. This
increase resulted from the impact of increased industry-wide pricing pressures,
particularly on copier and multi-functional product sales as well as increased
obsolescence reserves, primarily on aging sales demonstration and analog
equipment in response to the continuing market shift from analog to digital
product.

Cost of rentals. The cost of rental ratio, or cost of rentals expressed as a
percentage of rental revenue, was 40% for the nine months ended September 30,
2001 down 1 percentage point versus 2000.

Selling, service and administrative expenses. Selling, service and
administrative expenses were 48% of total revenue for the nine months ended
September 30, 2001 compared with 39% for the nine months ended September 30,
2000. Selling, service and administrative expenses increased 19% to $222.7
million reflecting costs associated with geographic expansion of sales and
service capabilities, higher compensation, travel and employee-related expenses
due to increased sales and service headcount, severance costs associated with
employee acceptance of voluntary severance arrangements, increased consulting
fees associated with the enhancement of our information systems infrastructure
and with the spin-off from Pitney Bowes and incremental finance and
administrative expenses associated with being a stand-alone public company.
Included in selling, service and administrative expenses are allocated amounts
from Pitney Bowes, reflecting our share of overhead costs related to shared
selling, service and administrative expenses. Operating expenses of field sales
and service offices are included in selling, service and administrative
expenses because no meaningful allocation of these expenses to cost of sales,
rentals or support services is practicable. We expect to continue to incur
additional expenses associated with being a stand-alone public company. See the
notes to the "Unaudited Pro Forma Combined Financial Statements."

Net interest expense. Interest expense allocated by Pitney Bowes to us was
$8.5 million and $8.3 million, for the nine months ended September 30, 2001 and
2000, respectively. Interest expense has been allocated based on a relationship
between our net assets and Pitney Bowes' net assets and reflect interest
expense charged at Pitney Bowes' weighted average borrowing rate of 6.70% and
6.75% in 2001 and 2000, respectively. We believe the interest expense
allocations are a reasonable representation of the costs of financing our
assets and operations in the past. However, we may not be able to obtain
financing at interest rates similar to those used for the interest expense
calculation. Accordingly, our interest expense as a stand-alone entity will
likely be higher than that reflected in the combined financial statements.

Effective tax rate. Our effective tax rate was 39.4% and 39.5% for the nine
months ended September 30, 2001 and 2000, respectively. Income tax was
calculated as if we filed separate income tax returns. Pitney Bowes manages its
tax position on a combined basis, which takes into account the results of all
of its businesses. Our future effective tax rate will largely depend on our
structure and tax strategies as a separate, independent entity and could vary
from our historical effective tax rates.

Years ended December 31, 2000 and December 31, 1999

Revenue. In 2000, total revenue increased 3% over the prior year, reflecting
increased sales and rental revenue partially offset by lower support services
revenue.

Sales revenue increased 1% in 2000 due to an increase in copier equipment
sales and additional copier supply sales. The increase in copier equipment
sales is directly related to our expansion into new geographic markets in the
U.S. particularly through the acquisition of various small independent dealers
for sales and service capabilities in remote geographic areas. Without these
acquisitions, sales revenue would have decreased by 1%. Higher facsimile
equipment sales were offset by a decline in consumable supply sales (primarily
toner). Supply sales have decreased, despite unit placement increases, due
primarily to lower page volume per machine caused by other new technologies,
such as e-mail.

Rental revenue increased 8% in 2000, reflecting a shift in our copier
marketing focus toward large national accounts, which is a market that requires
a rental placement strategy similar to that of our facsimile product placement
strategy. We continued to implement this strategic shift in our copier systems
product line by increasing the focus on renting our copiers, responding to a
need for financing flexibility in the major account marketplace. During 2000,
rental revenue derived from our copier product line increased 20% and reflected
growth in the overall installed rental population and the impact of increased
placements of our high-end digital products. Contribution to rental revenue
growth also came from our facsimile product line, where rental revenue
increased 3% over the prior year. The growth in the facsimile installed base
was driven by placements of high speed and high volume machines geared toward
the major account customer. The revenue growth was moderated by industry-wide
pricing pressures on both new placements and on contract renewals.

Support services revenue decreased 4% in 2000, reflecting the strategic
decision to focus on renting, rather than selling, our copier and multi-
functional products with service contracts to our national account customers.

Cost of sales. The cost of sales ratio, or cost of sales expressed as a
percentage of sales revenue, increased to 57% in 2000 from 49% in 1999. This
increase primarily resulted from an increase in our product costs from
suppliers located in Japan, reflecting the strengthening of the yen against the
dollar in 2000. The cost of sales ratio was also unfavorably impacted by lower
industry-wide pricing, particularly on copier and multi-functional product
sales.

Cost of rentals. The cost of rentals ratio, or cost of rentals expressed as
a percentage of rental revenue, increased to 39% in 2000 from 35% in 1999. The
higher cost of rentals ratio in 2000 reflects the impact of lower industry-wide
pricing on new rental additions and contract renewals and increased costs
associated with maintaining the growing installed rental population.

Selling, service and administrative expenses. Selling, service and
administrative expenses were 39% of total revenue in 2000 compared with 37% in
1999. Selling, service and administrative expenses increased 9% over the prior
year reflecting costs associated with geographic expansion of sales and service
capabilities and sales force training. We expect to incur additional expenses
associated with becoming a stand-alone public company. See the notes to the
"Unaudited Pro Forma Combined Financial Statements."

Net interest expense. Interest expense allocated by Pitney Bowes to us was
$11.3 million and $8.7 million, respectively, in 2000 and 1999. Interest
expense has been allocated based on a relationship between our net assets and
Pitney Bowes' net assets and reflects interest expense charged at Pitney Bowes'
weighted average borrowing rate of 6.87% and 5.83% in 2000 and 1999,
respectively.

Effective tax rate. Our effective tax rate was 39.6% in 2000 and 40.1% in
1999. Income tax expense was calculated as if we filed separate income tax
returns. Pitney Bowes manages its tax position on a combined basis, which takes
into account the results of all of its businesses. Our future effective tax
rate will largely depend on our structure and tax strategies as a separate,
independent entity and could vary from our historical effective tax rates.

Years ended December 31, 1999 and December 31, 1998

Revenue. In 1999, total revenue increased 6% over the prior year. Product
sales revenue, which increased 8%, along with rental revenue, which increased
6%, were the primary drivers of revenue growth.

Sales revenue increased 8% in 1999 due to growth in placements of our
copiers and multifunctional products. Our enhanced nationwide distribution
capabilities resulting from our expansion into new geographic markets in the
U.S., particularly through the acquisition of sales and service capabilities,
was the primary driver of product sales growth. Without these acquisitions,
sales revenue would have increased 2%. Copier supply sales were also higher.
Facsimile consumable supply sales (primarily toner) also contributed to sales
growth. However, the rate of growth in facsimile supply sales was moderated
even while unit placements increased, due primarily to lower page volume per
machine caused by other new technologies, such as e-mail.

Rental revenue increased 6% in 1999, driven by a shift in our copier and
multifunctional product placements from sales towards rentals and by steady
growth in our installed base of facsimile and multifunctional systems. During
1999, we made a strategic shift in the marketing of our copier product lines by
increasing the focus on renting rather than selling our broadened range of
analog and digital imaging solutions, responding to a perceived need for
financing flexibility from our customers. Rental revenues in the latter part of
the year showed substantial gains as our major account strategy added to our
installed rental base. Contribution to rental revenue growth also came from our
facsimile product line, where rental revenue increased 5% over the prior year.
At year-end 1999, our installed population of facsimile machines exceeded
200,000 units, which represented a 13% increase over year-end 1998. The growth
in the installed base was driven by placements of high speed and high volume
machines geared toward the major account customer. The revenue growth was
moderated by industry-wide pricing pressure on both new placements and on
contract renewals. Our base of multifunctional systems also grew as we
broadened our offerings in the market.

Support services revenue increased only 2% in 1999, reflecting the strategic
decision to focus on renting, rather than selling, our copier and
multifunctional products with service contracts to our major account customers.

Cost of sales. The cost of sales ratio, or cost of sales expressed as a
percentage of sales revenue, was 49% in 1999 and increased slightly from 48% in
1998. This increase primarily resulted from lower industry-wide pricing,
particularly on facsimile consumable supply sales.

Cost of rentals. The cost of rentals ratio, or cost of rentals expressed as
a percentage of rental revenue, increased to 35% in 1999 from 34% in 1998 due
primarily to the shift to digital equipment which has a higher cost than analog
equipment.

Selling, service and administrative expenses. Selling, service and
administrative expenses were 37% of total revenue in 1999 and 36% in 1998.

Net interest expense. Interest expense allocated by Pitney Bowes to us was
$8.7 million and $5.8 million, respectively, in 1999 and 1998. Interest expense
has been allocated based on a relationship between our net assets and Pitney
Bowes' net assets and reflects interest expense charged at Pitney Bowes'
weighted average borrowing rate of 5.83% and 4.72% in 1999 and 1998,
respectively.

Effective tax rate. Our effective tax rate was 40.1% in 1999 and 1998.
Income tax expense was calculated as if we filed separate income tax returns.
Pitney Bowes manages its tax position on a combined basis, which takes into
account the results of all of its businesses. Our future effective tax rate
will largely depend on our structure and tax strategies as a separate,
independent entity and could vary from our historical effective tax rates.

Expansion of Sales and Service Capabilities

During 1998, 1999, 2000 and the first nine months of 2001, we acquired
certain assets and assumed certain liabilities of various independent dealers
for sales and service capabilities in remote geographic areas. These
acquisitions, individually or in the aggregate, were not significant to our
financial position or results of operations. These acquisitions were accounted
for using the purchase method of accounting. The purchase price, including
direct costs of the acquisitions, was allocated to acquired assets and assumed
liabilities. The excess of the purchase price over the net tangible assets
acquired is recorded as goodwill and amortized using the straight-line method
over 40 years. The operating results of these acquisitions are included in our
financial statements from the date of the respective acquisition.

Recent Accounting Pronouncements

In 1998, Financial Accounting Standard ("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 and losses depends on the intended use of the derivative and the
resulting designation. FAS No. 133, as amended, is effective January 1, 2001
for us. Adoption of this accounting standard did not have a material impact on
our financial position or results of operations.

In 1999, the SEC issued Staff Accounting Bulletin ("SAB") No. 101 "Revenue
Recognition in Financial Statements," summarizing certain guidance in applying
generally accepted accounting principles to revenue recognition in financial
statements. We are in compliance with SAB No. 101.

In July 2001, the Financial Accounting Standards Board issued FAS No. 141
"Business Combinations" and FAS No. 142 "Goodwill and Other Intangible Assets."
FAS No. 141 requires business combinations initiated after June 30, 2001 to be
accounted for using the purchase method of accounting, and broadens the
criteria for recording intangible assets separate from goodwill. FAS No. 142
requires the use of a nonamortization approach to account for purchased
goodwill and certain intangibles. Under a nonamortization approach, goodwill
and certain intangibles will not be amortized into results of operations, but
instead would be reviewed for impairment and written down and charged to
results of operations only in the periods in which the recorded value of
goodwill and certain intangibles is more than its fair value. The provisions of
each statement which apply to goodwill and intangible assets acquired prior to
June 30, 2001, will be adopted by us on January 1, 2002. We are currently
assessing the financial statement impact of adopting these statements.

In August 2001, the Financial Accounting Standards Board issued FAS No. 143,
"Accounting for Asset Retirement Obligations." FAS No. 143 addresses financial
accounting and reporting for obligations and costs associated with the
retirement of tangible long-lived assets. The Company will adopt FAS No. 143 on
January 1, 2003. We are currently assessing the financial statement impact of
adopting this standard.

In October 2001, the Financial Accounting Standards Board issued FAS No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets." FAS 144
supercedes FAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
of Long-Lived Assets to be Disposed Of" and establishes accounting and
reporting standards for long-lived assets to be disposed of by sale. The
Company will adopt FAS No. 144 on January 1, 2002. We are currently assessing
the financial statement impact of adopting this standard.

In September 2001, the Financial Accounting Standards Board's Emerging
Issues Task Force ("EITF") reached a consensus on Issue 01-10, "Accounting for
the Impact of the Terrorist Attacks of September 11, 2001." EITF 01-10 provides
guidance for accounting for the effects of the events of September 11, 2001 in
financial statements. The Company had approximately 3,000 facsimile rental
assets and 750 copier rental assets located in various customer locations in
the World Trade Center Complex in New York City. As a result of the terrorist
attacks of September 11, 2001, the Company has suffered property damage losses
relating to these rental assets. While it is too early to determine the full
extent of all damages and losses, management believes it is probable that
insurance programs substantially cover these losses. Accordingly, in compliance
with EITF No. 01-10, the Company has reduced rental assets and included in Due
to Pitney Bowes approximately $2.0 million representing the net book value of
the facsimile and copier products expected to be covered under property
insurance claims filed by Pitney Bowes. In addition, Pitney Bowes expects to
submit an insurance claim under the provisions of its business interruption
policy that includes a claim for our lost revenue under leases for facsimile
and copier products destroyed during the terrorist attacks. In accordance with
EITF 01-10, as the likelihood of collection under this claim cannot yet be
determined, we have not recorded any gain contingency related to this matter.

Liquidity and Capital Resources

Our net cash flow provided by operating activities was $99.5 million, $96.6
million, $114.6 million, $108.0 million and $108.9 million for the nine months
ended September 30, 2001 and 2000 and for the years ended December 31, 2000,
1999 and 1998, respectively. We used $56.4 million, $73.2 million, $92.4
million, $107.3 million and $93.4 million in investing activities for the nine
months ended September 30, 2001 and 2000 and for the years ended December 31,
2000, 1999 and 1998, respectively. Investment in rental assets for the nine
months ended September 30, 2001 and 2000 totalled $45.1 million and $62.0
million, respectively. During 2000, $77.2 million was used for investment in
rental equipment assets compared to $92.0 million and $70.3 million in 1999 and
1998, respectively. Capital expenditures for property, plant and equipment were
$7.9 million, $2.0 million, $3.6 million, $2.1 million and $3.6 million for the
nine months ended September 30, 2001 and 2000, and for the years ended December
31, 2000, 1999 and 1998, respectively. Cash used in financing activities was
$7.3 million, $20.5 million, $23.2 million, $6.7 million and $11.7 million for
the nine months ended September 30, 2001 and 2000 and for the years ended
December 31, 2000, 1999 and 1998, respectively, reflecting borrowings from, and
payments to, Pitney Bowes.

Our ratio of current assets to current liabilities at September 30, 2001
remained constant at 1.63 to 1 versus December 31, 2000. Our ratio of current
assets to current liabilities decreased to 1.63 to 1 at December 31, 2000
compared to 1.89 to 1 at December 31, 1999 due to the increase in the amount
due to Pitney Bowes and accounts payable and accrued liabilities, partially
offset by increases in accounts receivable and inventories. For the nine months
ended September 30, 2001 and 2000, we generated $46.5 million and $32.5
million, respectively in free cash flow (defined as net cash provided by
operating activities less net investment in fixed assets). In 2000, we
generated $33.8 million in free cash flow compared to $13.9 million in 1999.

We had no material commitments other than our supply agreements with our
vendors. These commitments extend only to equipment ordered under purchase
orders; there are no long-term purchase requirements.

We will continue to make additional investments in facilities, equipment,
computer systems and equipment and our distribution network as required to
support our revenue growth. We anticipate investments in rental equipment
assets for new and replacement programs in amounts consistent with prior years.
We estimate that we will invest approximately $20 million to $30 million over
the next 24 months to enhance our information

systems infrastructure. Our cash flow from operations, together with
anticipated borrowing arrangements is expected to adequately finance our
operating cash requirements and capital expenditures for the next twelve
months. We expect to fund further expansion and long-term growth primarily with
cash flows from operations, borrowings under the credit facility described
below and possible future sales of additional equity or debt securities.

Credit Facility

Following the spin-off, Pitney Bowes will no longer be providing funds to
finance our operations except as described below. We have entered into a senior
secured credit facility in the amount of $225 million, providing for both term
and revolving credit borrowings and the issuance of letters of credit which
allows us to borrow funds for general corporate purposes, including the
repayment of other debt, working capital and acquisitions. The availability of
the revolving loans and letters of credit is subject to a borrowing base as
defined in the credit facility. The credit facility contains customary
affirmative, negative and financial covenants with which we will be required to
comply, including a minimum EBITDA (earnings before interest, taxes,
depreciation and amortization) covenant and a maximum debt to EBITDA ratio
covenant. The credit facility also contains covenants that, among other things,
limit our ability to: declare and pay dividends on our shares, incur
indebtedness or liens, make investments, enter into mergers, acquisitions and
asset sales (including sale and leaseback transactions), change our business,
make capital expenditures and enter into transactions with our affiliates.
Failure to comply with these covenants will result in our default under the
credit facility, which will allow the lenders to accelerate the maturity of the
borrowings under the credit facility and sell or otherwise exercise remedies
with respect to their collateral.

Our obligations under the credit facility are guaranteed by each of our
present and future domestic subsidiaries and secured by (i) a perfected lien on
and a security interest in substantially all of our (and our present and future
domestic subsidiaries') tangible and intangible property and assets and (ii) a
perfected lien on and pledge of all of the capital stock of any present and
future domestic subsidiary and 65% of the capital stock of any present and
future foreign subsidiary which is owned by us or any of our present or future
domestic subsidiaries. The lenders' obligation to make loans and issue letters
of credit to us are subject to certain conditions, including the absence of any
default under the credit facility, the truth as of each date of borrowing or
issuance of our representations under the credit facility and the absence of
any material adverse change to our business.

We will use borrowings of up to $155 million under the credit facility, and
may use a portion of our cash balance, to (i) repay Pitney Bowes for all
intercompany borrowings (including amounts relating to income taxes payable),
(ii) pay a dividend to Pitney Bowes, as our sole stockholder and (iii) pay
deferred financing fees of approximately $4.8 million.

Market Risk

We are exposed to the impact of interest rate changes and foreign currency
fluctuations due to our investing and funding activities and operations in
different foreign currencies.

Historically, our exposure to exchange rate risk has been managed on an
enterprise-wide basis as part of Pitney Bowes' risk management strategy. This
strategy employs derivative financial instruments, primarily spot forward
foreign exchange contracts, to hedge certain foreign currency exposures. We are
currently evaluating our exchange rate risk management strategy. We do not
currently and do not intend in the future to utilize derivative financial
instruments for speculative purposes.

Effects of Inflation and Foreign Exchange

Inflation, although moderate in recent years, continues to affect worldwide
economies and the way companies operate. It increases labor costs and operating
expenses, and raises costs associated with replacement of fixed assets such as
rental equipment. Despite these growing costs and industry-wide pricing
pressures, we have generally been able to partially offset declining profit
margins through productivity, efficiency improvements and controlling operating
expense levels.

Much of our international business is transacted in local currency. For
example, our margins were negatively impacted in 2000 because of the increase
in product costs from our Japanese vendors reflected in the strength of the
Japanese yen. In 2000, approximately 77% of our total product purchases, based
on costs, were denominated in yen.

The impact of translating the assets and liabilities of our United Kingdom
operations to U.S. dollars is included in accumulated other comprehensive loss
as a component of invested equity. The increase in accumulated other
comprehensive loss from $59,000 at December 31, 1999 to $2.7 million at
December 31, 2000 is due to currency fluctuations between the U.S. Dollar and
the British Pound in 2000. We generally view our investment in the United
Kingdom operations as long-term. Based on the long-term nature of the
investment, as well as the level of operations in the United States, the impact
of currency rate fluctuations between the U.S. dollar and the British Pound
does not have a material effect on our financial position, results of
operations or cash flows.

European Monetary Union--Euro

Several member countries of the European Union have established fixed
conversion rates between their existing sovereign currencies and the Euro, and
have adopted the Euro as their single legal currency. The legacy currencies
will remain legal tender in the participating countries for a transition period
between January 1, 1999 and January 1, 2002. During the transition period,
cashless payments can be made in the Euro. Between January 1, 2002 and February
28, 2002, the participating countries will introduce Euro notes and coins and
withdraw all legacy currencies so they will no longer be available.

We are evaluating Euro-related issues affecting us that include our pricing
strategies, conversion of information technology systems and existing
contracts. We will continue to evaluate issues involving introduction of the
Euro as further accounting, tax, legal and regulatory guidance is available.
Based on current information and our current assessment, we do not expect that
the Euro conversion will have a material adverse effect on our financial
position, results of operations or cash flows.

BUSINESS

General

Imagistics International Inc. is a large direct sales, service and marketing
organization offering document imaging solutions--including copiers, facsimile
machines and multi-functional products--in the United States and the United
Kingdom. We strive to provide our customers with flexible, comprehensive
document imaging products and services at competitive market prices. We market
our products to large corporate and government customers, which we refer to as
major accounts, as well as to small- to mid-sized businesses which we refer to
as commercial users. Historically, we have focused our marketing efforts on
major account customers for facsimile machines and commercial customers for
copiers. We are seeking to capitalize on our proven leadership position with
major accounts in the facsimile market to expand our sales of copier products,
both in the United States and abroad.

Our direct sales and service network, located throughout the United States
and the United Kingdom, provides a broad range of document imaging products and
services. We currently have an installed base of over 320,000 copier and
facsimile products in use. We consider products in use if they are subject to a
current rental or service agreement. Based on the needs of our customers, our
representatives offer specialized document imaging options including digital,
analog, color and/or networked products and systems. We offer a full array of
copiers and facsimile machines that satisfy our customers' needs ranging from a
few copies to hundreds of thousands of copies per month. We have historically
offered our products under the brand name "Pitney Bowes," which we believe is
internationally recognized and associated with quality products. In 2002, we
will begin introducing products under the "Imagistics" brand name, which will
be used in conjunction with the "Pitney Bowes Office Systems" name. We also
provide aftermarket support to our customers through service and supply
contracts, as well as the sale of consumable supplies, primarily toner, for all
of our products. In addition, we offer document management software systems and
network controllers to serve our digital copiers. We have approximately 2,500
fully-trained sales and service representatives in nearly 150 locations who
assist customers with all of their product and service needs.

For maximum flexibility in product development, we do not manufacture any of
our products, but rather we purchase equipment and software from a number of
different firms. We impose high quality standards on all of the equipment that
we offer. Historically, we have used manufacturers such as Minolta, Matsushita,
Heidelberg and Kyocera Mita to produce our copier equipment and Matsushita,
Muratec, Oki and Brother to produce our facsimile equipment. We believe that
our market position and long-term relationships with many of the top
manufacturers allow us to negotiate favorable contracts, and in many cases
manufacturers agree to provide features and functionality exclusively in
products delivered to us. Examples of products that are specially manufactured
for us include the Model 2050 facsimile machine, which incorporates an
intuitive LCD touch screen, and Connex(TM), a platform controller for digital
copiers that functions within the computer network and allows users to print
and fax directly from their networked desktop computers.

Our primary targets are large corporate customers and government entities.
Our client base consists of over 70% of the Fortune 500 companies and over 60%
of the Fortune 1000 companies. We serve major companies in the automotive,
financial services and information technology industries as well as others.
While continuing to strengthen and expand our relationships with our current
customers, we are also establishing new marketing initiatives geared
specifically toward more efficiently serving small- to mid-sized companies or
commercial users. Beginning in 1996, we expanded our sales and service coverage
into geographic areas where we did not have a significant presence. We plan to
maintain our relationships with commercial users through the use of our trained
team of commercial sales representatives. Due to our diverse customer base and
the recurring nature of our rental and service revenues, seasonal variations do
not significantly impact our business.

We have benefitted from our relationship with Pitney Bowes. In connection
with the spin-off, we have entered into arrangements with Pitney Bowes that
will:

. allow us to continue using the Pitney Bowes brand name in the United
States and the United Kingdom for a period of up to two years, and we
may request the ability to use the name in additional geographic areas,
subject to Pitney Bowes' consent, not to be unreasonably withheld,

. continue our relationship as a provider of products to the Pitney Bowes
Management Services division, which provides on-site document and copier
fleet management services, and Pitney Bowes' Canadian office products
operations, in each case for a period of two years,

. continue using Pitney Bowes Credit Corporation as the primary lease
vendor for our equipment on a multi-year basis after the spin-off, and

. permit us to use Pitney Bowes' information technology systems until the
end of 2002.

Industry Overview

The document imaging and management industry consists of the production and
supply of various imaging products, as well as the provision of pre-sale and
after-market product services. We have been a leader in the facsimile machine
segment of this industry for nearly 20 years. Our competitors include the
distribution units of large office equipment manufacturers such as Ricoh, Canon
and Xerox and other independent distributors such as Ikon and Danka.

Companies in the document imaging industry sell products primarily through
three channels of distribution: direct sales, independent dealer sales and
retail sales. Direct sales involve the marketing of products by sales
representatives working directly for the company whose products they offer.
Independent dealer sales result from customer calls performed by independent
dealer outlets that generally sell manufacturer-branded products. Retail sales
include sales of low-end products, typically through national retail outlets or
local smaller retailers.

The document imaging industry is rapidly changing. Whereas most corporate
customers have relied upon products that utilize analog technology in the past,
we believe that a significant number of our customers will require products
that utilize digital technology in the near future. According to industry
sources, approximately 378,000 digital copiers, representing 19.6% of all new
copiers, were sold in the United States in 1998. This figure is more than 12
times the number of digital copiers sold in 1996. In 1999, digital units
represented almost half of the new copiers placed in the United States.
Industry sources predict that, by the end of 2004, approximately 96% of all new
copier placements will be digital machines. Digital products, unlike analog
products, can connect with computer networks and communicate with other office
imaging equipment, enabling customers to more efficiently connect and utilize
their document management solutions over a wide array of more useful features,
such as higher quality copies, color capability, finishing capability and
multi-functional capability. The move toward digital products has spurred
larger document imaging providers to hire and train sales, service and
maintenance personnel with respect to these digital products.

Copiers and facsimile machines are no longer the only options available to
corporate customers. The use of e-mail, Internet faxing and desktop and stand-
alone printers that offer a range of document imaging options has changed the
manner in which documents are reproduced and distributed within the workplace.
As a result of recent technological advances in electronic communication and
document sharing, greater options for document imaging and management exist
within the corporate workplace. These events, in turn, have created a new
opportunity and challenge for document image providers to develop new options
and cost-conscious solutions for the workplace and provide their customers with
multi-faceted products in order to remain competitive.

Today's busy corporate environment demands office machines and systems that
work faster and more efficiently than ever before, while providing high-quality
imaging solutions. The current proliferation of multi-functional machines
designed to address copying, faxing, printing and scanning needs in the
workplace is a direct result of these demands. Multi-functional products
efficiently send, receive and print documents, thus eliminating office
bottlenecks, improving employee productivity and saving valuable workspace in
offices of all sizes. As workplaces increasingly rely on computer networks,
document imaging providers are also developing more products that allow for
shared communication and that work seamlessly with other office systems. These
networked solutions offer greater speed and, by diverting print streams to more
efficient output devices, can lower a company's imaging costs significantly.
The cost of managing documents is high for most companies and increased use of
the Internet for desktop research and printing has further increased the volume
and cost of imaging activity for most businesses. In addition to searching for
ways to minimize imaging costs, customers continue to demand high-performance
machines that produce well-finished products. In addition, corporations
struggle with the issue of how to deploy new technology and get users to
embrace it. Currently, the industry is producing a greater number of color
machines to offer customers a range of options for their copying needs. Color
machines allow companies to increase their level of in-house document
production and produce "finished" copies for meetings, presentations and
mailings. The use of color machines minimizes or eliminates the need for
outside document production services and can offer tremendous savings to
companies.

Corporate customers are also searching for new ways to manage their document
imaging needs. Corporations are increasingly outsourcing non-core competencies,
including document imaging. This is especially true as the complexity of these
solutions increases and corporations seek to avoid hiring, training and
retraining personnel to use new machines. In recent years, many large document
imaging providers have developed management services capabilities to address
this need. Through management services relationships, document imaging
providers offer a full range of services, from installation and training of
employees to complete on-site document imaging management, including selection
of equipment and provision of personnel, allowing corporate customers to choose
the solution that is best for them.

Strategy

Our goal is to be a leading provider of document imaging products and
services. To that end, we plan to build on our strengths and pursue the
following initiatives:

Maintain and Further Strengthen Major Account Relationships. We have
maintained successful relationships in the facsimile area with many large
Fortune 500 companies for nearly 20 years. We believe that our strong personal
relationships with many of these customers, as well as our integrated sales and
service organization and the broad national reach of our organization, have
been the keys to our success in acquiring new business and retaining our
current customers. We plan to leverage our success in the facsimile market to
sell copier products to these major accounts.

In light of current economic pressures, technological advances and changes
in the corporate workplace, we must strive to meet our customers' needs in new
ways. As many corporate customers seek to reduce administrative expenses
through centralized purchasing and consolidation of their vendors, we believe
that we are well positioned to offer a range of products and services,
including technological innovations and new options, from one single source.
Because we enjoy continuity with so many of our long-standing major accounts
customers, we believe they will seek to expand their relationships with us by
purchasing additional products and services.

Expand Our Product Offerings Through Our Sourcing and Distribution
Relationships. We believe that one of our greatest strengths is our strategy of
sourcing cost-effective "families" of products from different manufacturers to
best suit our customers' requirements. We seek to form relationships with
various manufacturers, each with different specialties and different strengths.
Although we source from multiple vendors, all of our products meet demanding
specifications consistent with the "Pitney Bowes" brand. In

addition, we supplement our product offerings with value-added software and
service offerings to optimize ease of training, service and operation.

We continuously evaluate various imaging products from multiple
manufacturers. We believe that our supply contracts provide us access to the
best products. Nearly all of our equipment is branded under the same "Pitney
Bowes" brand which we believe is well-known and associated with quality and
service. We believe that our continued use of the "Pitney Bowes" brand in
conjunction with the "Imagistics" brand name for two years following the spin-
off will provide stability in our business as we work to establish the
"Imagistics" brand. Because of the strength of our relationships with
manufacturers, in some cases, manufacturers agree to provide features and
functions exclusively in products delivered to us, allowing us to pass these
benefits directly to our customers.

We believe that the transition to digital copier products provides an
important opportunity for us to reach new customers as manufacturers develop
machines with increased capabilities. Recently, we launched several new digital
products that offer faster, more efficient multi-functional service for our
heavy-volume corporate customers. These new digital products offer increased
document imaging options and capabilities as well as overall savings. We will
continue to expand our digital document imaging product offerings in order to
meet the needs of our current customers and to allow us to reach a new customer
base. In order to remain competitive in light of the many technological options
that are available to our customers, we will continue to collaborate with
companies that develop integrated document solutions such as Connex(TM), a
platform controller that was developed for our digital copiers.

Increase Outreach of Our Direct Sales and Service Force to the Copier
Market. Our sales and service business aims to provide major account customers
with one point of contact for their product needs. Regardless of their location
in the United States, our customers can contact one of our representatives in
their geographic area and receive consistent sales and service assistance. This
allows us to control the quality of our sales and service effort and ensure a
consistent experience for our customers. It also provides us with an
opportunity to keep in regular contact with our customers, which we believe
often leads to future sales. We believe that we are the only document imaging
company offering a full line of its own branded products that uses its own
employees for both sales and service of its products. In some remote areas,
however, we rely on Imagistics-trained Pitney Bowes employees for service of
our products and will continue to do so following the spin-off. Our marketing
strategy is to not only offer an extensive portfolio of product offerings and
diverse technology to our Fortune 500 customers, but to establish the same kind
of long-term, copier-based relationships with our customers by utilizing our
national direct sales and service organization to meet their needs as well.

Focus on Customer Needs. Our goal is to meet all of our customers' needs
for analog and digital systems. Although many of our customers use digital
products and have reacted favorably to the digital products we offer and we
expect that they will continue to grow in the future, not all of our customers
have migrated to digital systems at the fast pace that many in our industry
predicted. Because of our purchasing structure, we believe that we will be able
to provide both analog and digital machines as our customers require them. We
will continue to provide a full range of both analog and digital offerings
which we believe will satisfy our customers as well as allow us to manage our
inventory at a consistent rate. Because we source digital products and train
our workforce on the sales, use and service of these products, and because we
continue to research and source new products, we believe that we will be able
to respond effectively as the industry changes in the future.

Pursue an Expansion Strategy. In order to remain competitive, we will
continue to expand both our copier and our facsimile businesses in geographic
markets in the United States and abroad. We are expanding our national customer
base by leveraging our sales and service capabilities with both our major
account and commercial users. Our direct sales and service strategy has been an
effective method for attracting and retaining customers and we believe we can
use it to further expand our copier business. We currently supply document
imaging products and services to a variety of large corporations, many of which
have an international

presence and seek global sourcing of their document imaging needs. In order to
serve these clients more effectively, we intend to use our United Kingdom
operation as a platform for expansion of our business into the larger European
market. We believe that the experience of our management team and the new
incentives we will provide to our employees as a result of the spin-off will
assist us in the expansion of our business both in the United States and
abroad.

Business Segments

We operate in two reportable segments based on geographic area: the United
States and the United Kingdom. Revenues from external customers and from Pitney
Bowes are attributed to geographic regions based on where the revenues are
derived.

See Note 11 of our Notes to our audited combined financial statements for
more information.

Management

Following the spin-off, our management team will be led by Marc C.
Breslawsky, our Chairman and Chief Executive Officer. Mr. Breslawsky currently
serves as the President and Chief Operating Officer of Pitney Bowes and has
over 30 years of experience in the office systems market. Mr. Breslawsky
started the facsimile business for Pitney Bowes in 1982. Other key members of
the management team will be:

. Joseph D. Skrzypczak, Chief Financial Officer;

. Mark S. Flynn, Vice President, General Counsel and Secretary;

. Nathaniel M. Gifford, Vice President, Product Development and Strategic
Marketing;

. John C. Chillock, Vice President, Customer Service Operations;

. Chris C. Dewart, Vice President, Commercial Sales; and

. Joseph W. Higgins, Vice President, National Sales.

See "Management" for more information.

Products

We offer a broad range of copiers/printers and facsimile machines and
related products to major account customers, government entities and small- to
mid-sized commercial users.

Copier and Multi-functional Products

We offer a broad range of copier and multi-functional products including
black and white, color, analog, digital, networked and stand-alone copiers.
The following table provides a representative list of our current copier and
multi-functional product line:

[GRAPHIC]

Our product line extends from a 12 page-per-minute multi-functional copier
to a 110 page-per-minute production system. In addition to our more traditional
line of products, we have worked with third party developers to introduce
additional document imaging functions that complement our other product
offerings. One example is Connex(TM), a platform controller for digital copiers
that functions within the computer network and allows customers to print and
fax directly from their own networked desktop computers and instantly produce
"finished" copies that are, for example, collated, stapled or produced in
multiple sets, or scan documents at the digital copier into electronic format
for delivery to the network or desktop.

In 1998 and 1999, we were honored with the prestigious "Copier Line of the
Year" award and in 1999 we were awarded eight "Pick of the Year" awards from
Buyers Laboratory Inc., a leading independent office products testing
organization. In 2000, our DL520 copier was honored with Buyers Laboratory
Inc.'s Special award for digital imaging system of the year in 1999/2000. This
is a new award bestowed by Buyers Laboratory Inc. and we were the first
recipient. In addition, three of our copier products--the DL520 Publisher/DL520
with Finisher, the DL620/DL620 with Finisher, and the CD6100--were recognized
with Buyers Laboratory Inc.'s "Pick of the Year" awards for outstanding
products. A few years ago, we introduced the award-winning Universal Access
Copier System (recently inducted into the permanent collection of the
Smithsonian Institution), the first significant office product designed for
people with disabilities.

Facsimile Machine Products

We are also a leader in workgroup facsimile systems and related product
offerings and we are currently the largest supplier of facsimile equipment to
the Fortune 500. The following table shows a representative sample of our
current facsimile machine product line:

[GRAPHIC]

- -------------
(1) A greater number of dots per inch creates a sharper copy.

(2) Graphical Driver Interface, or GDI, is one method of using the facsimile
machine as a computer printer.

(3) A faster method of using the facsimile machine as a computer printer than
GDI.

(4) The most current and efficient method for compressing data for
transmission.

(5) Allows for a second modem so the facsimile machine can simultaneously send
and receive data, simultaneously send data to two distinct destinations or
simultaneously receive data from two distinct destinations.

(6) This feature allows the machine to retain information in the event of loss
of power.

(7) Facilitates use of all machine features.

We believe we were among the first document imaging providers to offer plain
paper facsimile products as an option to the slower and less efficient thermal
facsimile machines. We were the first company to offer the 14,400 bits per
second and 33,600 bits per second plain paper facsimile machines to customers.
The 33,600 bits per second machines continue to be among our most popular
products. We currently offer a full range of plain paper facsimile machines.
These machines range from more traditional products to multi-functional
machines. We also customize applications for facsimile networks to fit our
corporate enterprise customers' special needs.

Because telecommunication expenses are one of the most costly components in
operating a facsimile system in the corporate workplace, we strive to provide
our customers with the fastest available facsimile

machines so that they can minimize their telecommunication costs. Recently, we
introduced the highly-acclaimed Model 2050 facsimile machine system that
incorporates an intuitive LCD touch screen for exceptional ease of use. The
machine's display shows all features and functions at a glance and its "photo"
option allows users to optimize half-tone images. Buyers Laboratory Inc.
recognized the Model 2050 with a Certificate of Recommendation. In addition,
the Model 2050 facsimile machine scans originals at 67 pages per minute and is
one of the fastest machines in the industry.

We have also introduced a number of customer-specific features for our
customers. As part of our agreements with our key suppliers, we receive source
code for the facsimile software. Our engineers are then able to modify
facsimile machines to satisfy individual customer requirements. Some examples
of these custom modifications are:

. Many large investment banks use our "Archival" software. The SEC and the
New York Stock Exchange require all customer correspondence and trading
records to be reviewed by a superior. Our software creates an archive
copy of each facsimile prior to its being transmitted so that a copy of
each facsimile is saved as evidence in any future disputes.

. A large bank uses a custom-developed "Auto Secure Access" feature to
limit who is authorized to send facsimiles after normal business hours.

. A large manufacturing company uses our "Timer Receive to Memory"
software. This software allows the facsimile machine to print documents
received during normal business hours, while storing in memory incoming
documents received after normal business hours.

Multi-Functional Products

We offer a number of new multi-functional devices that provide total office
solutions to our major account customers. With the reliance of today's
businesses on the Internet, e-commerce and associated technologies, our multi-
functional products allow companies to efficiently share information among
small or large corporate workgroups.

The table under "Copier Products" above lists a representative sample of
some of our multi-functional products as well. The new Model DL170 is a
digital, multi-functional desktop device that combines high-speed facsimile,
copy and optional network printing capabilities. With 3 second-per-page
facsimile transmission and high-volume memory, the Model DL170 performs
multiple tasks such as printing, sending and receiving faxes simultaneously.
The DL170 offers significantly improved appearance of graphic images and photos
as well as shortened facsimile time. The DL170 has a 17 page-per-minute digital
copier and a multi-copy capacity of 99 sets that is well-suited for most small
workgroup copy applications. The DL170 has options that allow it to function as
a network printer.

The introduction of the new Model DL260/360 series of digital multi-
functional devices offers benefits unavailable in older analog copiers, such as
lower enterprise-wide print costs, full network integration, and the added
convenience of supplemental faxing and scanning. The DL260/360 series offers
customers many different application options as it can be installed as a stand-
alone copier or factory-equipped to handle walk-up faxing needs. In networked
installations, the DL260/360 series also functions as a high-volume laser
printer that offers finishing features such as stapling and hole-punching,
while controlling print jobs directly from the desktop. This system offers
seamless transition from analog-to-digital technology without slowdowns or
compatibility issues.

Supplies

We also offer a full complement of consumable supplies for our products,
such as copier and facsimile toner and cartridges and paper. Supplies are an
important component of our overall business and accounted for $165 million, or
25.7%, of our 2000 revenues.

Many of our copier customers enter into cost-per-copy rental and/or
maintenance agreement plans which include the use of supplies. This accounts
for a constant source of copier supply revenue. Demand for facsimile supplies
has decreased with the use of e-mail and the availability of third-party
refilled toner cartridges. In response to this decrease in demand, we
introduced our own line of refilled cartridges under the "ECO" brand. Refilled
ECO cartridges work with all of our own facsimile machines and also with many
competitive fax machines and laser printers.

Service

Our continued commitment to our products and customers is evident in the
many aftermarket service options that we provide. Our copier products are
serviced by a nationwide service organization of approximately 1,200
representatives. We believe that this dedicated service force provides us with
a distinct advantage over our competitors. These representatives are trained to
service our product line and are managed through a central dispatch system to
meet strict customer response time requirements. These representatives provide
a full range of preventative maintenance and repair services to major account
customers and commercial users.

Pitney Bowes Management Services also provides on-site management of
corporate copier fleets in conjunction with its strategy of integrated mail and
document management. We have entered into an agreement with Pitney Bowes that
allows us to continue our relationship as a provider of products to Pitney
Bowes Management Services for a period of two years. This agreement will
provide Pitney Bowes with the option to continue purchasing office products
from us. As a result, we will be responsible for meeting agreed upon service
levels. See "Relationship with Pitney Bowes--Reseller Agreements."

We support our facsimile machine customers primarily through our 24 hour-a-
day, 7 day-a-week diagnostic center. Located in Melbourne, Florida, the
diagnostic center is staffed with Imagistics employees who are experts in the
use and servicing of our facsimile products and who help minimize any downtime
or disruption to our customers. The diagnostic center usually handles over
2,500 calls each day from customers regarding use of facsimile products and 75
percent of the time our employees are able to handle customers' service calls
without a technician being dispatched. We successfully manage a number of these
calls with our automated services which include recorded tutorials for machine
operations and programming. We currently have over 40,000 individual customer
machine programs archived in our diagnostic center database, which are able to
be delivered remotely. We are able to respond to a number of calls requiring
programming assistance by remotely programming customers' units. When repair or
refurbishment of our facsimile equipment is necessary, the customer can be
talked through the corrective action remotely, or we will send a service
representative to repair the product. The diagnostic center also provides
support to our customers using networked digital copiers.

Financing Options

We provide our customers with flexible financing options that allow for the
sale, lease or rental of our products. Historically, we have sold products to
commercial users either directly to the end user or to a leasing company that,
in turn, leases the product to the end user. Where leasing is involved, we sell
equipment to either Pitney Bowes' wholly-owned subsidiary, Pitney Bowes Credit
Corporation, or to other finance companies. Currently, Pitney Bowes Credit
Corporation is the primary source of lease financing for our products.

We have entered into an agreement with Pitney Bowes Credit Corporation which
provides for an ongoing lease-purchase equipment financing program for our
products. In 2000, approximately 14% of our revenues were derived from sales to
Pitney Bowes Credit Corporation for lease to the end user. See "Relationship
with Pitney Bowes-Vendor Financing Agreement."

Historically, in offering products to our major account customers, we have
used a rental strategy. Our major account customers generally are customers of
our facsimile products. Most often, we rent our facsimile machines at a flat
rate. We are increasingly renting copier products to our large major account
customers as well. We generally rent our copiers on either a cost-per-copy
basis or at a flat rate with allowance plans for certain services and other
options. In the case of rentals, we negotiate a master rental contract with our
customers which can be revised to reflect rental of additional products and
upgrades to current products or additional services. Generally, our rental
contracts are for 36-month terms with renewal options that are automatic unless
the customer gives prior notice of cancellation. These rental contracts also
cover service and, in many cases, include supplies for use with our equipment.
We believe that this approach provides the flexibility this customer base
requires.

Customers

We market and distribute our products to the following customers:

. major account customers,

. government entities and

. commercial users.

Major account customers are major national and international corporations
that require full document imaging and management throughout the customer's
entire organization, whether that organization is regional or national. Because
we began our business by serving major account customers in the facsimile
market nearly 20 years ago and have maintained steady relationships with many
of these same customers, our major accounts provide us with recurring rental
revenues over longer-term contracts. In addition, because of their individual
and complex needs, we are able to provide our major account customers with
specially-developed and cutting-edge products as well as customized approaches
to their specific needs.

We target a range of governmental entities from large federal bureaus to
small local government offices. These customers generally provide a long-term
source of business and, because of our experience, we can anticipate their
document imaging needs. Federal government entities may source products through
the competitive bidding process or through flat rate contracts. The federal
government may also issue a separate bid for large placements pertaining to a
specific department or location. Our government contracts are generally for a
period of four to five years. State and local government entities generally
acquire products through their own varied bidding processes. Although many of
these contracts are terminable for non-appropriations of funds by our
customers, historically we have not generally had a significant number of early
terminations of these contracts.

We also target commercial users, which generally have more discrete document
imaging needs for one specific area or portion of their business or workplace.
We customarily sell or lease equipment to these customers and, in most
instances, our contracts provide ongoing supplies and service to them.

Because of our approach of providing a system of national direct sales and
service, our ability to provide a range of products, system options and after-
market arrangements to our major account customers and our attention to
maintaining our relationships with customers through consistent product
service, we believe that we can expand these markets in the future.

Case Study

The United States Military Academy at West Point has been a customer for
five years and recently renewed its agreement for an additional four-year
period. We supplied the USMA with a fleet of digital copiers, some of which are
networked, to provide adaptability and to help achieve the long-term goal of
controlling each copier in the multi-copier installation from any personal
computer on the campus. Additionally, we worked with the USMA to supply copiers
for the academy's summer camp in remote locations. We believe that the USMA has
been satisfied not only with the product, but with our service and support as
well. Our service representatives perform diagnostic testing and routine
maintenance on the USMA's copiers in order to anticipate potential problems
before they occur.

Sales and Marketing

We believe that our sales and marketing approach is rare in our industry.
While many of our competitors offer products either by dealer sales or retail
sales, we rely solely on direct sales. Our direct sales and service personnel
are located throughout the United States. These employees market and service
our products to our major account companies all over the nation. Our
representatives use national sales and service standards so that our customers
receive consistent and reliable assistance regardless of where they are located
or which one of our locations they call. In addition, we market our products to
commercial users through dedicated sales personnel. We employ over 1,000 sales
representatives.

In addition to our United States business, we currently operate in the
United Kingdom. Our U.K. customers include Deutsche Bank, Orion Media, ICL and
the United Kingdom Ministry of Defence. We plan to increase the international
marketing of our products following the spin-off. Our goal is to increase our
service to our current customers as well as broaden our existing customer base
by providing our products throughout Europe over time. Our U.K. business is
headquartered in Harlow, England. We plan to make this location the
headquarters of our European operations. Our products are also offered in
Canada through Pitney Bowes of Canada, a subsidiary of Pitney Bowes. In
connection with the spin-off, we intend to enter into an agreement with Pitney
Bowes of Canada which will provide for a supply relationship with Pitney Bowes'
Canadian operations. See "Relationship with Pitney Bowes--Reseller Agreements."

Suppliers and Distribution

We source our equipment from suppliers throughout the world including
Minolta, Matsushita, Muratec, Oki, Brother, Heidelberg and Kyocera Mita. In
addition, suppliers such as EFI, Advanced Hi-Tech and Cypress provide us with
controllers and document management software for use in our products. We have
contractual relationships with these manufacturers, although we continue to
search for the best products and do not enter into exclusive relationships with
any of our suppliers.

Using third-party suppliers allows us to offer our customers products with
the most current features and technologies. We believe that this sourcing
strategy also offers us maximum flexibility. As we expand or upgrade our
product line, we are able to choose from the best available products for each
product range. We select products by balancing costs and availability of
features with ease of customer use, service personnel training, parts
availability and serviceability. Because of these benefits, in most cases, we
purchase similar products from one manufacturer to cover several product
levels.

Although we do not have minimum order quantities with any of our suppliers,
Minolta currently supplies a significant portion of our new copier equipment.
If Minolta were unable to deliver products for a significant period of time, we
would be required to find replacement products, which may not be available on a
timely or cost-effective basis. This could have a material adverse effect on
our business, financial condition and results of operations. We do not believe
that we are materially dependent upon any other supplier of products, whether

new products, parts or consumable supplies. To mitigate against disruptions to
our business, we generally keep an adequate level of inventory on hand to meet
the needs of our customers for several months.

We generally require manufacturers to build our products to order with 90
day or less lead times. We usually take title to the goods at the factory, or
in the case of Asian factories, at the closest seaport. Finished goods are
shipped directly to one of approximately 10 contract warehouses in the United
States. When a customer order is received, equipment is unpacked, set up and
tested in the warehouse prior to shipping to the customer location by air-ride
truck. Supplies are stored primarily at two warehouse locations and are shipped
via UPS or overnight delivery directly to our customers. Parts are warehoused
at a single location and are delivered via UPS to replenish our service
representatives car stocks or shipped overnight for emergency repairs. The
United Kingdom business uses similar manufacturing and shipping procedures and
finished goods are shipped directly to one of two contract warehouses in the
United Kingdom.

Patents, Trademarks and Copyrights

We have historically distributed our products principally under the Pitney
Bowes trademark. We will transition to the use of the "Imagistics" brand name
and we have filed applications to register "Imagistics" as a trademark in the
United States and the European Community. We make use of several unexpired
patents and pending patent applications that relate to our business, none of
which we believe are material to our business. In connection with the spin-off,
we have entered into a trademark license, patent license and copyright license
agreement that provides us with a non-exclusive license to the Pitney Bowes
trademark for a period of up to two years. In addition, the agreement provides
for us to license the patents and patent applications on a non-exclusive basis
in connection with our business in the United States and the United Kingdom,
for the term of the relevant patents. Finally, the agreement provides for us to
license all copyrighted material used in connection with our business in the
United States and the United Kingdom for the term of the relevant copyrights.
We and Pitney Bowes are obtaining the required consents with respect to
copyrighted material currently licensed to Pitney Bowes but used by us as a
division of Pitney Bowes. See "Relationship with Pitney Bowes--Intellectual
Property Agreement."

Employees

We employ approximately 3,500 individuals throughout the world including
approximately 1,000 sales personnel. We employ approximately 120 people in the
United Kingdom, almost all of whom are subject to the European Works Council
regulations. None of our other employees is covered by a collective bargaining
agreement. We believe that we have good relations with our employees.

Competition

We are primarily involved in the supply of document imaging equipment to
corporate, governmental and commercial customers. The document imaging
equipment supply industry is highly competitive.

Although certain of our competitors are experiencing financial difficulties
and the overall number of our competitors has decreased due to ongoing industry
consolidation, the industry remains highly competitive. Customers rigorously
evaluate suppliers on the basis of product reliability and quality, service
expertise, geographic reach and price competitiveness. Many of our competitors
manufacture their own products. Although we believe that our reliance on third
parties for manufacturing provides us with certain benefits, it is possible
that our competitors' guaranteed access to product supply through captive
manufacturing operations may provide them with a competitive advantage. In
addition, some of our competitors have substantially greater financial
resources than we will have after the spin-off.

Our primary competitors in the workgroup facsimile machine market are Canon,
Ricoh and Xerox. Our primary competitors in the copier market are Xerox, Ikon,
Danka, Canon, Ricoh and Global Imaging.

Properties

Our headquarters are in Trumbull, Connecticut consisting of 74,000 square
feet of owned space. In addition we conduct operations from facilities in
Beacon Falls, Connecticut, Milford, Connecticut, Denver, Colorado, and
Melbourne, Florida. The Beacon Falls facility is a 66,050 square foot leased
warehouse. The Milford facility is an owned warehouse totaling 41,000 square
feet. The leased Denver account administration and customer support call center
totals 22,000 square feet. The leased Melbourne diagnostic call and
refurbishing center totals 17,000 square feet. We lease space in 154 other
sales and service locations throughout the United States totaling 595,498
square feet. Leases relating to approximately 25 of our sales and service
offices will expire in the remainder of 2001 or 2002. We plan to renew or
replace these leases to the extent they are for stand-alone facilities. We do
not plan to renew the leases that pertain to space that is shared with Pitney
Bowes. Instead, we intend to enter into new leases at separate locations for
sales and service spaces with less square footage.

In the United Kingdom, we lease two facilities from Pitney Bowes in which we
are the sole occupant. These facilities are used for our United Kingdom
headquarters and sales office space, and together total approximately 14,000
square feet. These leases will expire in 2002. We will replace these facilities
with one smaller, more efficient facility upon lease expiration. In addition,
we operate in five small field offices in the United Kingdom.

We believe that our properties are adequate and suitable for the purposes
for which we utilize them. In addition, we do not expect any material
difficulties in renewing any of the leases that expire in the foreseeable
future, or in finding suitable replacement facilities.

Legal Proceedings

In the course of normal business, Pitney Bowes has been party to occasional
lawsuits relating to our business. These may involve litigation by or against
Pitney Bowes (or us) relating to, among other things:

. contractual rights under vendor, insurance or other contracts,

. intellectual property or patent rights,

. equipment, service or payment disputes with customers, and

. disputes with employees.

Pitney Bowes is currently a plaintiff or a defendant in lawsuits, relating
to the business or products of the office systems division, which liabilities,
will be transferred to us in connection with the spin-off. None of these
lawsuits, individually or in the aggregate, should have, in the opinion of
management, a material adverse effect on our financial position, cash flows or
results of operations.

RELATIONSHIP WITH PITNEY BOWES

This section of the information statement summarizes material agreements
between us and Pitney Bowes that will govern the ongoing relationships between
the two companies after the spin-off and will provide for an orderly transition
to our status as a separate, independent, company. Additional or modified
agreements, arrangements and transactions, which will be negotiated at arm's
length, may be entered into between Pitney Bowes and us after the spin-off. Our
business consists of the businesses previously conducted by the office systems
division of Pitney Bowes, except that Pitney Bowes is retaining the Canadian-
based operations of that division. On an overall basis, our business will
constitute substantially the same business as that previously conducted by the
office systems division of Pitney Bowes. You should also read the agreements,
forms of which have been filed as exhibits to the registration statement on
Form 10 of which this information statement forms a part.

For the year ended December 31, 2000 and for the nine months ended September
30, 2001, $21.5 million and $16.7 million, respectively, of our revenue was
derived from products sold to Pitney Bowes. In addition, for the year ended
December 31, 2000 and for the nine months ended September 30, 2001, we financed
$90.1 million and $71.7 million, respectively, of our sales through Pitney
Bowes Credit Corporation, a wholly-owned subsidiary of Pitney Bowes.

Distribution Agreement

The distribution agreement provides for:

. the principal corporate transactions and procedures required to effect
the spin-off,

. the transfer of assets and liabilities relating to our business from
Pitney Bowes to us on or before on the date of the spin-off, and

. certain other agreements relating to the continuing relationship between
Pitney Bowes and us after the spin-off, as described below.

The assets and liabilities to be transferred to us by Pitney Bowes are those
assets relating solely to our business, together with associated liabilities.
The transfer of our United Kingdom operations will be provided for under a
separate agreement, as described below under "--United Kingdom Operations." We
refer to this agreement, together with the distribution agreement described
above, as the "distribution agreement." If we or Pitney Bowes are unable to
obtain any necessary governmental or other consents relating to these
transfers, we will work with Pitney Bowes to enter into arrangements that will
allow us, as nearly as possible, to obtain the benefits and assume the
obligations that otherwise would have been transferred.

Conditions to the Spin-Off

The distribution agreement provides that the following conditions must be
satisfied or waived before or as of the date of the spin-off for the spin-off
to occur:

. the SEC must have declared the registration statement on Form 10
effective under the Securities Exchange Act of 1934,

. the New York Stock Exchange must have approved the listing of our common
stock, subject to official notice of issuance,

. Pitney Bowes' board of directors must be satisfied that the spin-off
will be paid out of Pitney Bowes' surplus in accordance with Section 170
of the Delaware General Corporation Law,

. Pitney Bowes' board of directors must have approved the spin-off and
must not have abandoned, deferred or modified the spin-off at any time
before the record date for the spin-off,

. Pitney Bowes must have contributed the necessary operations, assets and
liabilities to us, as provided in the distribution agreement,

. Pitney Bowes, as our sole stockholder, must have elected our board of
directors, as described in this information statement,

. our certificate of incorporation and bylaws, as described in this
information statement, must be in effect,

. Pitney Bowes and we must have entered into the various ancillary
agreements described in this section, and

. Pitney Bowes must have received a ruling from the IRS or a legal opinion
from its counsel, Davis Polk & Wardwell, or another nationally
recognized law firm, stating that the spin-off qualifies as tax-free to
Pitney Bowes and its stockholders for United States federal income tax
purposes.

Cross-Indemnification

We and Pitney Bowes have agreed to indemnify each other against certain
liabilities. We have agreed to indemnify Pitney Bowes and parties related to
Pitney Bowes from and against:

. any and all damage, loss, liability and expense arising out of, or due
to, our failure to discharge any obligations or liabilities of our
subsidiaries and us under the distribution agreement,

. any and all damage, loss, liability and expense arising out of any other
liability or obligation, whether arising before, on or after the spin-
off, arising from or in connection with the conduct of our business or
the use of our assets,

. certain employee benefit related costs, expenses and fees relating to
medical, dental and certain other employment benefits provided under
Pitney Bowes' plans to our employees after the spin-off and certain
administrative expenses associated with the provision of those benefits,
and

. any and all damage, loss, liability and expense relating to
misstatements contained in this information statement or the
registration statement of which it is a part, except to the extent
arising out of information furnished to us in writing by Pitney Bowes
expressly for use in this information statement or the registration
statement.

Pitney Bowes has agreed to indemnify us and parties related to us from and
against:

. any and all damage, loss, liability and expense arising out of, or due
to, Pitney Bowes' failure to discharge any obligations or liabilities of
it and its subsidiaries under the distribution agreement,

. any and all damage, loss, liability and expense relating to
misstatements contained in this information statement or the
registration statement of which it is a part, but only to the extent
arising out of information furnished to us in writing by Pitney Bowes
expressly for use in this information statement or the registration
statement.

None of these indemnities applies to indemnification for income tax
liabilities, which are addressed in the tax separation agreement described
below under "Tax Separation Agreement." We do not believe that any of these
indemnities will have a material adverse effect on our business, financial
condition or results of operations.

The distribution agreement also includes procedures for notice and payment
of indemnification claims and generally provides that the indemnifying party
may assume the defense of a claim or suit brought by a third party. Any
indemnification amount paid under the indemnities will be paid net of the
amount of any insurance or other amounts that would be payable by any third
party to the indemnified party in the absence of the indemnity. In addition,
the distribution agreement provides that if indemnification is unavailable or
insufficient to hold the indemnified party harmless, the indemnifying party
will contribute to the amount paid or payable in a manner appropriate to
reflect all relevant equitable considerations.

Employee Benefits

The distribution agreement includes the following provisions relating to
employee matters:

Treatment of Employees and Plans in General. At the time of completion of
the spin-off, Pitney Bowes will generally retain responsibility for all its
current and former employees, including former employees who worked in the
Imagistics business, whom we refer to as Pitney Bowes employees. We will
generally be responsible for individuals employed by us at the time of the
completion of the spin-off (including persons absent from active service by
reason of disability or otherwise), whom we collectively refer to as our
employees, Imagistics employees or Transferred Employees.

In connection with the spin-off, we will adopt employee benefit plans that
will be substantially similar to certain plans provided to our employees by
Pitney Bowes, such as the Pitney Bowes 401(k) Plan, medical and dental plans,
disability plans, life insurance plans and severance plan. Pitney Bowes has
agreed that our employees will continue to participate, at no cost to Pitney
Bowes, in its medical and dental plans, disability plans and life insurance
plans through December 31, 2001.

Our active employees who participate in the Pitney Bowes 401(k) Plan will
cease active participation in the plan on the date of the spin-off and will be
given the opportunity to participate in the new Imagistics 401(k) Plan. They
will be given credit for vesting and eligibility under the new plan for their
service at Pitney Bowes and will have their account balances under the Pitney
Bowes 401(k) Plan transferred to the Imagistics 401(k) Plan without forfeiting
any portion of their existing account balance.

We will not offer a defined benefit pension plan. At the time of the spin-
off, most of our employees will stop receiving accruals under the Pitney Bowes
Pension Plan and no plan assets or liabilities of the pension plan will be
transferred to us prior to or following the spin-off. Certain of our employees
whose combined age and service with Pitney Bowes totaled more than 50 points
will continue to participate in the Pitney Bowes Pension Plan following the
spin-off for up to 3 years. In addition, our employees who have completed less
than 5 years of service as of the date of the spin-off will have their service
at Imagistics counted toward completion of the 5-year vesting schedule in the
Pitney Bowes Pension Plan, with full vesting occurring no later than December
31, 2003, subject to their continued employment with us.

Pitney Bowes has agreed to permit our employees who have attained age 55 and
completed at least 10 years of service (after age 45) as of the spin-off or
within 3 years of the spin-off (crediting service with both Pitney Bowes and
us) to be eligible for retiree medical benefits under the Pitney Bowes Retiree
Medical Plan when they retire from Imagistics. Except for employees who meet
the 55/10 requirements as of the spin-off date, an eligible employee described
above must meet the eligibility requirements of the Pitney Bowes Retiree
Medical Plan in effect at the time they retire and seek benefits. For example,
if the Pitney Bowes eligibility requirements are modified to require attainment
of age 60 with at least 15 years of service, the eligible employee must satisfy
the 60/15 requirements. In addition, any of our employees who are at least age
45 at the

time of the spin-off and complete at least 10 years of service (between Pitney
Bowes and us) will be able to participate, at their expense, in the Pitney
Bowes Retiree Medical Plan when they retire from Imagistics after attaining age
55. Any of our employees who are permitted to be covered by the Pitney Bowes
Retiree Medical Plan will be subject to any amendments or modifications to the
Plan, including termination, that also apply to Pitney Bowes employees.

Our employees working in the United Kingdom participate in local Pitney
Bowes employee plans. We expect that they will also continue to participate in
substantially similar plans to be provided by us after the spin-off.

Equity-Based Compensation. In connection with the spin-off and effective as
of the completion of the spin-off, options granted under the Pitney Bowes Stock
Plan will be equitably adjusted as follows:

. for options held by employees of Pitney Bowes who will continue as
Pitney Bowes employees after the spin-off, the exercise price and the
number of options will be adjusted so that each employee's options will
have the same intrinsic value after the spin-off--these employees will
not receive options exercisable for Imagistics common stock, and

. for options held by Imagistics employees, the exercise price (but not
the number of options) will be adjusted to reflect the spin-off in a
similar manner to the option price adjustment made for Pitney Bowes
employees and, in order to maintain their intrinsic value, each such
employee will receive new options, exercisable for Imagistics common
stock.

Non-Competition Provisions

The distribution agreement provides that, with respect to the current or
future products or business of Pitney Bowes as reflected in its most recent
strategic plans, we will not, and we will cause our subsidiaries not to,
directly or indirectly, compete with Pitney Bowes in the United States, the
United Kingdom, Canada and Europe (except for any past practices mutually
agreed to by Pitney Bowes and us) for a period of two years without the consent
of Pitney Bowes. The agreement also provides that Pitney Bowes will not, and it
will cause its subsidiaries not to, directly or indirectly, compete, with
respect to our current products or business, with us in the United States, the
United Kingdom or Europe (except for past practices mutually agreed to by
Pitney Bowes and us including the marketing and maintenance of copiers in the
United Kingdom) for a period of two years without our consent. Although Pitney
Bowes is engaged in the facilities management business,

. we may, within the facilities management business, engage in the
business of selling, maintenance of and placing copier, facsimile and
multi-functional products that fax, copy, print and scan and related
sales of software and supplies, even if this business competes with
Pitney Bowes' business; provided that

. such competing business is the only activity of ours within the
facilities management business and

. such business is operated in a manner and on a scale substantially
consistent with past practice and our business as of the spin-off;

. we may engage in such competing business to the extent required so that
we may fulfill our obligations under our existing contracts as of the
date of the spin-off; and

. to the extent that we notify Pitney Bowes of our desire to enter into a
business, pursuant to a specific contract or customer requirement, not
otherwise permitted to be engaged in by us pursuant to the non-
competition provisions of the distribution agreement, Pitney Bowes may
consent to our engaging in such competing business; provided that such
consent shall not be unreasonably withheld if but only if such competing
business is limited to such specific contract or customer requirement
and is determined by Pitney Bowes to be outside the scale and scope of
its facilities management business. In such case, Pitney Bowes will use
reasonable efforts to respond to our request in a timely manner.

Restriction on Solicitation or Employment of Employees

For a period of two years after the spin-off, we and Pitney Bowes have
agreed not to, and to cause our subsidiaries not to, directly or indirectly:

. solicit or otherwise attempt to induce or influence any employee of the
other party or a subsidiary to leave employment with his or her then-
current employer, or

. employ any employee of the other party or a subsidiary of the other
party,

in each case without the consent of the other party.

However, if an employee of Pitney Bowes or us is terminated or terminates
employment within such two year period, the terminated employee shall be
eligible to be hired by Pitney Bowes or by us, as the case may be, at any time
after 180 days following such employee's termination; provided that the new
employer did not violate the non-solicitation provision noted above with
respect to that employee.

Access to Information; Provision of Witnesses; Confidentiality

Under the distribution agreement, we and Pitney Bowes will, for a reasonable
period of time and with specified exceptions, allow the other party and their
specified representatives reasonable access to all records in our or its
possession relating to the business and affairs of the other party as
reasonably required. Access will be allowed for such purposes as auditing,
accounting, litigation, disclosure, reporting and regulatory compliance. Each
party will also use reasonable efforts to make available to the other its
officers, directors, employees and representatives as witnesses and will
otherwise cooperate with the other party in connection with any proceeding
arising out of its or the other party's business before the spin-off.

Subject to limited exceptions, we, Pitney Bowes and our respective officers,
directors, employees, agents and representatives will hold all confidential
information in our, its or their possession concerning the other party in
strict confidence.

Transaction Expenses

The distribution agreement provides for each of Pitney Bowes and us to pay
our own expenses in connection with the spin-off. We will be responsible for
all fees and expenses (including the fees and expenses of our counsel in
connection with the preparation and negotiation of all related documentation)
incurred in connection with our new credit facility, which is described under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources--Credit Facility."

Termination

Except as noted below, neither party will be able to terminate the
distribution agreement for a period of three years after the date of the spin-
off, except upon mutual consent by us and Pitney Bowes. After that, either
party will be able to terminate the distribution agreement with six months'
prior written notice. The distribution agreement will provide that either party
may terminate the agreement (except that the non-competition and non-
solicitation of employees provisions will remain in effect) upon a material
default by the other party in its obligations under the agreement subject to a
cure period of 60 days. In addition, a default by one party with respect to the
non-competition provisions will free the other party from its obligation to
comply with those provisions, without relieving the defaulting party from
liability for its default. Each party may, at its option, terminate the non-
competition provisions of the agreement on or after the one-year anniversary of
the spin-off, provided that the terminating party has given six months prior
written notice of termination to the other party.

Upon termination,

. the non-competition provisions will cease to apply to either party,

. the license of the "Pitney Bowes" name (and the associated trademarks)
to us under the intellectual property agreement will terminate and

. the reseller agreement with Pitney Bowes of Canada shall be
automatically amended, upon notice of termination to permit Pitney Bowes
of Canada to source its equipment from alternative suppliers and to
require us to continue to fulfill our obligations to supply product, as
provided under the reseller agreement with Pitney Bowes of Canada for an
interim period not to exceed nine months from the date of such notice to
permit Pitney Bowes of Canada to make alternate supply arrangements.

United Kingdom Operations

Separately from the transfers of assets and liabilities described above, we
and Pitney Bowes have entered into an agreement providing for:

. the principal corporate transactions and procedures required to effect
the spin-off in the United Kingdom and

. the transfer of assets and liabilities relating to our United Kingdom
business from Pitney Bowes to us prior to the date of the spin-off.

This agreement is subject to substantially similar conditions and other
terms set forth in the distribution agreement described above.

Transition Services Agreement

The transition services agreement provides for Pitney Bowes to provide
certain services to us, on a transitional basis, consistent with the historical
provision of these services and the other terms of the transition services
agreement, otherwise upon pricing and other terms and conditions reasonably
acceptable to Pitney Bowes and to us. These services will include information
technology, computing, telecommunications, benefits, accounting, payroll, field
service of equipment and dispatch call center services. In each case, Pitney
Bowes will provide services to the extent that:

. Pitney Bowes provided them to us in the ordinary course prior to the
spin-off,

. they are identified by us within 45 days of the spin-off, or

. they are reasonably necessary for us to conduct our operations as
conducted in the ordinary course prior to the spin-off.

Generally, we will pay Pitney Bowes for its actual out-of-pocket costs for
the services provided, including a proportionate share of its overhead, if
applicable, computed in accordance with Pitney Bowes' internal chargeback
practices. All payments between parties can be netted against payments made
under any agreement described in this section. We may also agree with Pitney
Bowes on the scope and terms of any additional services to be provided.

Pitney Bowes has agreed to provide each of these services for approximately
one year (until the end of 2002 in the case of information technology services)
following the spin-off, subject in each case to an extension period not to
exceed six months if:

. required by a governmental entity,

. we or Pitney Bowes fail to perform any of our respective obligations
under the agreement, at the discretion of the non-breaching party, but
only to the extent of the failure to perform, or

. we and Pitney Bowes are unable to obtain a suitable replacement for the
services provided after applying reasonable efforts.

We and Pitney Bowes have agreed to negotiate with the intent to enter into an
agreement covering continuing field service of our products in non-core
geographic areas beyond the term of the transition services agreement, although
we cannot assure you that we will reach such an agreement.

We may terminate Pitney Bowes' provision of any or all services under the
transition services agreement upon 180 days' notice to Pitney Bowes. In
addition, either party may terminate any service provided under the transition
services agreement at any time if the other party fails to perform any of its
material obligations under the transition services agreement relating to that
service, the party has notified the other party of the failure, and the failure
has continued for a period of 60 days after the other party's receipt of the
notice.

We and Pitney Bowes will establish an operating committee, consisting of
three employees from each company, to oversee the implementation and ongoing
operation of the transition services agreement. The operating committee will
meet quarterly for a period of two years following the spin-off.

Tax Separation Agreement

Until the spin-off occurs, we will be included in Pitney Bowes' U.S. federal
consolidated income tax group, and our federal income tax liability thus will
be included in the consolidated federal income tax liability of Pitney Bowes
and its subsidiaries. We also will be included with Pitney Bowes or some of its
subsidiaries in consolidated or combined income tax groups for state and local
tax purposes until the spin-off occurs.

Pursuant to a tax separation agreement with Pitney Bowes, we generally are
required to make payments to Pitney Bowes on account of all U.S. federal income
taxes as well as all state and local taxes attributable to our business for the
period between the date of the transfer of our business to us and the date of
the spin-off.

For this purpose, the tax attributable to our business will be determined on
a stand-alone basis as though we were not a consolidated subsidiary of Pitney
Bowes with respect to federal, state and local income taxes. In determining the
amount of income tax attributable to our business, Pitney Bowes will prepare
and provide to us portions of its tax returns relating to us that reflect the
same positions and elections used by Pitney Bowes in preparing the returns for
the Pitney Bowes consolidated group. Pitney Bowes is responsible for any
increase (and will receive the benefit of any decrease) in the income tax of
the Pitney Bowes consolidated or combined group as well as in the separately
determined state or local income tax of any member of that group for periods
prior to the spin-off that results from an audit by a tax authority (or other
tax adjustment) related to us.

We have agreed, until two years after the completion of the spin-off, not to
take, or permit any of our subsidiaries to take, any actions or enter into any
transaction or series of transactions that would cause the spin-off not to
qualify as tax-free under Section 355 of the Internal Revenue Code.

For example, we have agreed not to take some actions for two years following
the spin-off, unless we and Pitney Bowes obtain an IRS ruling or unless we
obtain a legal opinion from counsel satisfactory to Pitney Bowes to the effect
that these actions will not affect the tax-free nature of the spin-off. These
actions include: some issuances of our stock; a liquidation or merger of our
company; and dispositions of our assets and those of our affiliates outside the
ordinary course of business.

If any of these transactions were to occur, the spin-off could be deemed to
have been a taxable distribution by Pitney Bowes. This would subject Pitney
Bowes to a substantial tax liability. We have agreed to indemnify Pitney Bowes
and its affiliates to the extent that any action we take or fail to take gives
rise to a tax incurred by Pitney Bowes or any of its affiliates with respect to
the spin-off. In addition, we have agreed to indemnify Pitney Bowes for any tax
resulting from an acquisition by one or more persons of a 50% or greater
interest in our company.

Intellectual Property Agreement

The intellectual property agreement confirms the ownership of certain
trademarks, patents and copyrights by Pitney Bowes, and provides for us to
license from Pitney Bowes the right to use such trademarks, patents, copyrights
and technology as reasonably required for us to operate our business
substantially in accordance with our past practices, including the use of the
"Pitney Bowes" brand name in connection with our business in the United States
and the United Kingdom.

The trademark license with respect to the use of the "Pitney Bowes" name has
a term of two years, is non-exclusive, royalty-free, non-transferable and
limited to certain geographic areas. We may subsequently request Pitney Bowes'
consent, which may not be unreasonably withheld, for our use of the "Pitney
Bowes" brand name in any additional geographic markets that we may enter in the
future.

In addition, the agreement allows us to license on a non-exclusive basis (i)
certain the patents and patent applications in connection with our business,
for the term of the relevant patents, (ii) all copyrighted material used in
connection with our business for the term of the relevant copyrights and (iii)
certain technology used in our business for an indefinite period. Separately,
we and Pitney Bowes are obtaining the required consents with respect to
copyrighted material currently licensed to Pitney Bowes, but used by us as a
division of Pitney Bowes.

We have agreed not to use the licensed trademarks, patents, copyrights or
technology in connection with any products or services other than our products,
or in any manner which is deceptive or misleading, which ridicules or is
derogatory to the trademarks, patents or copyrights, or which reflects
unfavorably upon the goodwill, good name, reputation or image of Pitney Bowes
or the licensed trademarks, patents, copyrights or technology, or which might
jeopardize or limit Pitney Bowes' proprietary interest in those trademarks,
patents, copyrights or technology. Under the agreement, Pitney Bowes will have
the right to inspect our distribution facilities and an opportunity to review
and approve our advertising.

We have agreed not to use or register in any country any trademark, patent
or copyright that infringes Pitney Bowes' rights in the licensed trademarks,
patents, copyrights or technology or any element of those trademarks, patents,
copyrights or technology.

The intellectual property agreement provides for Pitney Bowes' right to
terminate our right to use the "Pitney Bowes" name if we materially default on
our obligations under any of the agreements described in this "Relationship
with Pitney Bowes" section and do not cure such default within a period of 60
days after receipt of notice of such default, we become bankrupt or insolvent,
or we experience a change of control. Our right to use the "Pitney Bowes" name
will automatically terminate if we or Pitney Bowes terminates the non-compete
covenant of the distribution agreement, as described above.

Reseller Agreements

Pitney Bowes Management Services

Currently, we have a relationship with Pitney Bowes Management Services,
which provides management services to Pitney Bowes customers using our products
and other products. In 2000, we recorded revenues of approximately $17 million
or 3% of our total revenue, from Pitney Bowes Management Services.

In connection with the spin-off, we and Pitney Bowes Management Services
have entered into a reseller agreement providing for the continuation of this
relationship for two years after the spin-off. The reseller agreement provides
that:

. Pitney Bowes Management Services, at its option, will continue to
purchase or rent office products through us,

. a manufacturer's warranty on all products will be provided to Pitney
Bowes Management Services, which will be passed on to the end customers,
and

. we will be responsible for meeting agreed upon service level thresholds.

Pitney Bowes Management Services does not have any minimum purchase
requirements and the agreement is not exclusive; Pitney Bowes Management
Services is able to purchase or rent products from any other vendor. Either
party has the right to terminate the agreement immediately upon a default by
the other party in its obligations under the agreement subject to a cure period
of 60 days.

Pitney Bowes of Canada Ltd.

Pitney Bowes of Canada currently offers our products to its customers. In
2000, we recorded revenues of approximately $4 million, 0.6% of our total
revenues, from Pitney Bowes of Canada. We have entered into a reseller
agreement with Pitney Bowes of Canada. The agreement provides for the
continuation of our relationship with Pitney Bowes of Canada for two years
after the spin-off. The agreement is renewable for a period of one year
provided that the renewal is at arm's length and we and Pitney Bowes of Canada
agree to the renewal at least 9 months prior to the end of the initial term.
This agreement provides for product purchasing and warranty terms. We will be
the exclusive provider of Pitney Bowes of Canada for at least 90% of its total
product sourcing requirements, provided that our equipment meets all related
specifications, is priced competitively with similar equipment available in
Canada, meets Pitney Bowes of Canada's delivery requirements and the non-
competition provisions of the distribution agreement have not been terminated.

Vendor Financing Agreement

Pitney Bowes Credit Corporation has historically been the primary lease
vendor for our business. In 2000, we recorded revenues of approximately $90.1
million, 14% of our total revenue, from Pitney Bowes Credit Corporation. In
connection with the spin-off, we have entered into a vendor financing agreement
with Pitney Bowes Credit Corporation, providing for the continuation of this
relationship on a multi-year basis after the spin-off. The vendor financing
agreement:

. provides for a total competitive offering that includes but is not
limited to rates, including provisions for defaults, lease cancellation
requests, end-of-lease purchase and buy outs,

. provides for billing and payment terms,

. outlines the credit approval process and required lease documentation as
well as service level agreements for credit approvals for prospective
lessees,

. provides for 45 days' review of changes in pricing policy,

. provides that we will be responsible for installation and technical
services, while Pitney Bowes Credit Corporation will be responsible for
invoicing of rent and additional charges, and

. provides for administrative, sales and marketing support
responsibilities.

The agreement provides that either party may terminate the agreement
immediately upon a default by the other party in any of its obligations under
the agreement, subject to a cure period, and upon 90 days' notice to the other
party in all other cases.

Pitney Bowes Credit Corporation is a lender under our credit facility. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Credit Facility."

Real Estate Agreements

We will have entered into sublease, sublease and license and assignment and
novation agreements with Pitney Bowes to sublease, license or otherwise assume
space from Pitney Bowes relating to facilities where Pitney Bowes is the tenant
under the prime lease with a third-party lessor. There are approximately 84
locations where we and Pitney Bowes currently share space and Pitney Bowes is
the sole tenant with a third-party lessor. In these situations and subject to
the prime landlord's consent when required, Pitney Bowes will have subleased to
us those areas that have historically been used exclusively by us and will have
licensed to us those areas that have historically been shared by us and Pitney
Bowes. In addition, there are approximately 75 locations where Pitney Bowes is
the tenant under the prime lease with a third-party lessor and we are the sole
occupant. In these situations and subject to the prime landlord's consent when
required, Pitney Bowes will have subleased to us the entire leased premises or,
with respect to 30 locations, we and Pitney Bowes will have entered into
assignment and novation agreements with the applicable landlord such that
Imagistics International Inc. will have been substituted for Pitney Bowes as
tenant under the lease. With respect to the subleased locations, we will not
have the option to renew or expand, and will be restricted from further
assigning or subletting, these premises in order to limit Pitney Bowes' ongoing
liabilities in relation to our leasing activity. With respect to any locations
where we and Pitney Bowes currently share space, and where unutilized or
underutilized space exists, Pitney Bowes will have the right to terminate our
right to license/sublease such space upon 120 days' notice. This may include
the exercise of cancellation options where available without penalty. Further,
Pitney Bowes will endeavor to novate additional leases where possible, with a
goal of installing Imagistics as lessee wherever possible. Finally the
agreements set forth guidelines, rules and regulations relating to operation of
the shared facilities, including restricting access, confidentiality and
related matters.

Credit Agreement

MANAGEMENT

Executive Officers and Directors

The following table provides material information concerning our board of
directors, proposed directors and our executive officers who will be serving or
in office as of the date of the spin-off. All ages are as of September 30,
2001.

Name Age Position
- ---- --- --------

Marc C. Breslawsky...... 59 Chairman and Chief Executive Officer; Proposed Director
Joseph D. Skrzypczak.... 45 Chief Financial Officer
Mark S. Flynn........... 47 Vice President, General Counsel and Secretary
Nathaniel M. Gifford.... 49 Vice President, Product Development and Strategic Marketing
John C. Chillock........ 44 Vice President, Customer Service Operations
Chris C. Dewart......... 46 Vice President, Commercial Sales
Joseph W. Higgins....... 50 Vice President, National Sales
Amy C. Corn............. 48 Director
Michael Monahan......... 40 Director
Michael J. Critelli..... 52 Proposed Director
Thelma R. Albright...... 54 Proposed Director
T. Kevin Dunnigan....... 63 Proposed Director
Ira D. Hall............. 57 Proposed Director
James A. Thomas......... 62 Proposed Director

Marc C. Breslawsky. Mr. Breslawsky has served as our Chairman and Chief
Executive Officer since January 2001. In connection with the spin-off, Mr.
Breslawsky will be elected to our board of directors as Chairman. From 1996 to
2001, he was President and Chief Operating Officer of Pitney Bowes. From 1994
to 1996, he was Vice Chairman of Pitney Bowes. Mr. Breslawsky is a director of
C. R. Bard, Inc., The Pittston Company, and United Illuminating Company. Until
May 14, 2001, Mr. Breslawsky was also a director of Pitney Bowes.

Joseph D. Skrzypczak. Mr. Skrzypczak has served as our Chief Financial
Officer since January 2001. Prior to assuming this position, Mr. Skrzypczak was
the Chief Operating Officer and acting Chief Financial Officer at Dictaphone
Corporation from October 1998 until December 2000. Prior to being elected Chief
Operating Officer, Mr. Skrzypczak served as Senior Vice President and Chief
Financial Officer from October 1997 to October 1998 and served as Vice
President and Chief Financial Officer from May 1994 to October 1997 at
Dictaphone. After being acquired by Lernout & Hauspie in May 2000, Dictaphone
declared bankruptcy in November 2000, as part of Lernout & Hauspie's overall
bankruptcy filing. Mr. Skrzypczak initially joined Pitney Bowes in 1981 and
held various management positions until May 1994. Prior to working for
Dictaphone Corporation, Mr. Skrzypczak served as Vice President of Finance for
Pitney Bowes' office systems division, and was directly responsible for all
financial and administrative activities. Prior to initially joining Pitney
Bowes in 1981, Mr. Skrzypczak worked for Price Waterhouse. He is a certified
public accountant.

Mark S. Flynn. Mr. Flynn became our Vice President, General Counsel and
Secretary on April 2, 2001. Most recently, he was a partner in the business
practice group of the law firm Wiggin & Dana from 1999 to 2001. From 1997 to
1999, Mr. Flynn served as Senior Deputy General Counsel to Olin Corporation.
Mr. Flynn held the position of Executive Vice President, General Counsel and
Secretary at ServiceMaster Diversified Health Services, a subsidiary of the
ServiceMaster Company, from 1993 to 1997 and Vice President, General Counsel
and Secretary at Arcadian Corporation/Arcadian Partners, L.P. from 1989 to
1993. Prior to those positions, Mr. Flynn served in various counsel positions
at Olin Corporation from 1986 to 1989, as an attorney at Intercontinental
Hotels Corporation from 1983 to 1986 and as an associate at the law firm of
Hughes Hubbard & Reed from 1980 to 1983. Mr. Flynn serves on the advisory board
of Integra Ventures, a Seattle-based venture fund specializing in life sciences
and health care services.

Nathaniel M. Gifford. Mr. Gifford has been employed by Pitney Bowes for
nearly twenty-three years. He is currently Vice President, Product Development
and Strategic Marketing for Pitney Bowes Office Systems. He has been associated
with the office products business of Pitney Bowes since 1983 in varying
capacities pertaining to product management, planning and marketing.

John C. Chillock. In October 2000, Mr. Chillock assumed the role of our Vice
President, Customer Service Operations. Mr. Chillock joined Pitney Bowes,
office systems division in 1998 as Vice President, Field Operations. Prior to
joining office systems, Mr. Chillock served in various management positions at
Dictaphone Corporation from 1977 to 1998. Prior to joining Dictaphone
Corporation, Mr. Chillock was a Director of Operations for Intellisys
Electronic Commerce, a division of the Chase Manhattan Bank.

Chris C. Dewart. Mr. Dewart has been employed by Pitney Bowes in the office
systems division since 1983, and has served as Vice President since 1990. Mr.
Dewart served as Vice President of European Operations--facsimile systems
division from 1990 to 1991, Vice President and General Manager of Canadian
Operations from 1991 to 1998 and Vice President of U.S. Sales for Facsimile
Systems from 1998 to August 2000. In August 2000, he assumed the position of
Vice President of Sales for Commercial Markets. Prior to joining office
systems, Mr. Dewart held various positions at General Electric Corporation and
Monroe/Litton.

Joseph W. Higgins. Mr. Higgins has been employed by Pitney Bowes in the
office systems division for nearly 20 years, and has served as Vice President
in sales for more than 13 years. He currently serves as Vice President of
National Accounts, a position which he assumed in August 2000. Previously, he
served as Vice President of U.S. Facsimile Sales from 1988 through July 1998
and as Vice President of U.S. Copier Sales from July 1998 to August 2000. Prior
to joining Pitney Bowes, Mr. Higgins held various management positions with
Burroughs Office Products.

Amy C. Corn. Ms. Corn is currently one of our directors. She has served as
Vice President and Corporate Secretary of Pitney Bowes since 2000. Prior to
assuming this position, she served as Corporate Secretary and Senior Associate
General Counsel beginning in 1996. She has worked for Pitney Bowes in various
positions as an attorney since 1983. Prior to the spin-off, Ms. Corn will
resign as a director of Imagistics.

Michael Monahan. Mr. Monahan is currently one of our directors. He has
served as Vice President of Corporate Development of Pitney Bowes since April,
2001. Formerly, he served as Vice President of Investor Relations and Financial
Research of Pitney Bowes. He has worked for Pitney Bowes in various financial
positions since 1988. Prior to the spin-off, Mr. Monahan will resign as a
director of Imagistics.

Michael J. Critelli. We expect that Mr. Critelli will be elected to our
board of directors prior to the spin-off. Mr. Critelli has served as the
Chairman and Chief Executive Officer of Pitney Bowes since 1997. Mr. Critelli
was formerly Vice Chairman and Chief Executive Officer of Pitney Bowes from
1996-1997, and Vice Chairman of Pitney Bowes from 1994-1996. He has served as a
director of Pitney Bowes since 1994. Mr. Critelli is also a director of Eaton
Corporation.

Thelma R. Albright. We expect that Mrs. Albright will be elected to our
board of directors prior to the spin-off. Mrs. Albright served as the President
of the Carter Products Division of Carter-Wallace, Inc. from 1995 until her
retirement in 2001. Mrs. Albright was formerly Executive Vice President of
Marketing for the Carter Products Division of Carter-Wallace, Inc. from 1992-
93. Mrs. Albright has held a variety of marketing and management positions for
companies such as The Procter & Gamble Company, Cheesebrough-Pond's, Inc.,
Richardson-Merrell, Inc., Marketing Corporation of America and Revlon, Inc.
Mrs. Albright is a director of United Illuminating Company.

T. Kevin Dunnigan. We expect that Mr. Dunnigan will be elected to our board
of directors prior to the spin-off. Mr. Dunnigan is the Chairman of the board
of directors, President and Chief Executive Officer of Thomas & Betts
Corporation. Mr. Dunnigan began his career with Thomas & Betts in 1962 as a
sales

representative for the company's Canadian subsidiary. Mr. Dunnigan held
positions of increasing responsibility and was promoted to President and Chief
Operating Officer of the parent company in 1980. He was named Chief Executive
Officer in 1985. In 1992, Mr. Dunnigan was elected Chairman of the board of
directors of Thomas & Betts. In 1996, he retired from active management. Mr.
Dunnigan returned to active management in 2000. Mr. Dunnigan is also a director
of C.R. Bard, Pro Mach, Inc. and the John Deere Company.

Ira D. Hall. We expect that Mr. Hall will be elected to our board of
directors prior to the spin-off. Mr. Hall was Treasurer of Texaco Inc. and head
of Texaco Inc.'s Finance Department until his retirement in 2001. Previously,
Hall was General Manager of Alliance Management of Texaco Inc. Prior to joining
Texaco Inc in 1998, Mr. Hall held positions with IBM Corporation and was a
Senior Vice President of the investment banking firm of L.F. Rothschild,
Unterberg, Towbin, Inc. Mr. Hall is a director of American Express Funds, the
Jackie Robinson Foundation and TECO Energy, Inc.

James A. Thomas. We expect that Mr. Thomas will be elected to our board of
directors prior to the spin-off. Mr. Thomas currently serves as Associate Dean
of Yale Law School, a position he has held since 1970. Mr. Thomas also held the
position of Master of Saybrook College, Yale University from 1990 to 1996.
Prior to his employment at Yale, Mr. Thomas served as Assistant Counsel for the
Subcommittee on Administrative Practice & Procedures, U.S. Senate Judiciary
Committee, as a Liaison Officer for the Equal Employment Opportunity Commission
and a attorney with the U.S. Department of Justice. Mr. Thomas has served on
numerous boards of corporations, foundations and educational institutions. He
is currently the Chairman of the board of trustees of Peoples Bank Holding
Company and a director of Peoples Bank, Sea Research Foundation, Inc., Yale-New
Haven Hospital and United Illuminating Company.

Board of Directors

After the spin-off, we will have a classified board consisting of a total of
three to nine directors, a majority of whom will be outside directors. Members
of our board will be divided into three classes and will serve staggered three-
year terms. The term of office of our first class of directors will expire at
the 2002 annual meeting of stockholders (expected to occur in the second
quarter of 2002). The term of office of our second class of directors will
expire at the 2003 annual meeting of stockholders. The term of office of our
third class of directors will expire at the 2004 annual meeting of
stockholders.

We expect that at the time of the spin-off or shortly thereafter the
Imagistics board of directors will have seven members. Six of these directors,
who are named above, will be elected immediately prior to the spin-off by
Pitney Bowes as the sole stockholder of Imagistics. Also as noted above, Ms.
Corn and Mr. Monahan will resign as directors of Imagistics immediately prior
to the spin-off. Also as noted above, Mr. Breslawsky was formerly a director of
Pitney Bowes, but his term on that board expired on May 14, 2001.

Our board will have the following committees:

The audit committee, which will monitor our financial reporting standards
and practices and our internal financial controls to ensure compliance with the
policies and objectives established by the board of directors. The committee
will recommend to the board for stockholder approval an independent accounting
firm to conduct the annual audit, and will discuss with our independent
accountants the scope of their examinations, with particular attention to areas
where either the committee or the independent accountants believe special
emphasis should be directed. The committee will review the quarterly and annual
financial statements and the annual independent accountants' report, invite the
accountants' recommendations on internal controls and on other matters, and
review the evaluation given and corrective action taken by management. It will
review the independence of the accountants and their fees. It also will review
our internal accounting controls and the scope and results of our internal
auditing activities, and will submit reports and proposals on these matters to
the board.

The executive compensation and development committee, which will oversee our
executive compensation program, including establishing our executive
compensation policies and annually reviewing all components of compensation to
ensure that our objectives are appropriately achieved. The committee is also
responsible for certain administrative aspects of our compensation plans and
stock plans, and recommends changes in such plans. It also recommends
performance targets and grants under our incentive plans and our stock plan.
The committee will also review officers' potential for growth, and, with the
chief executive officer, will be responsible for succession planning and
ensuring management continuity.

The governance committee, which will recommend nominees for election to the
board of directors and recommend membership and duties of the board committees.
The committee will also review and evaluate the effectiveness of corporate
administration and our governing documents, and will review and monitor our
programs and policies relating to directors.

Compensation of Directors

Each director who is not also our employee will receive an annual retainer
of $24,000 per year plus a fee of $1,000 for each board and committee meeting
attended. Committee chairs will also receive an additional $500 for each
committee meeting that they chair. Directors who are our employees receive no
additional compensation for serving as a director. All directors are reimbursed
for their out-of-pocket expenses incurred in attending board and committee
meetings.

In addition, each of our non-employee directors will receive an award of
2,000 shares of our restricted stock on the date of their initial election to
the board and, after the spin-off, awards of 2,000 restricted shares on the
date of each annual meeting. Each restricted stock award will vest in three
equal annual installments commencing on the first anniversary of the award
date.

Agreements with Executive Officers

In October 2000, Pitney Bowes entered into a letter agreement with Marc C.
Breslawsky that provides that he will be offered the position of Chief
Executive Officer of Imagistics immediately prior to the spin-off.
Mr. Breslawsky's agreement offers him an annual base salary of $825,000, and
for the first fiscal year of his employment, a minimum incentive award of
$577,500 and a maximum award opportunity of $1,072,500 based upon the
achievement of certain performance targets. Mr. Breslawsky's agreement also
provides for a minimum award of $625,000 and a maximum annual incentive award
opportunity of $1,250,000 under the Imagistics Key Employee Incentive Plan if
Imagistics meets certain performance targets for multi-year cycles. Mr.
Breslawsky is also party to a separation agreement with Pitney Bowes under
which, upon termination of his Pitney Bowes employment in connection with the
spin-off, he will be entitled to a severance benefit from Pitney Bowes of
$2,805,000 and payment of his outstanding cash incentive awards under the
Pitney Bowes Key Employee Incentive Award Plan, prorated for his period of
actual service in the relevant award cycle. Mr. Breslawsky will also be
entitled to certain perquisites from Pitney Bowes for a limited duration
following his separation from Pitney Bowes.

In December 2000, Pitney Bowes entered into a letter agreement with Joseph
D. Skrzypczak that provides that he will be offered the position of Chief
Financial Officer of Imagistics immediately prior to the spin-off with an
annual base salary of $371,000 and an incentive award target opportunity of 55%
of his annual base salary and a maximum annual incentive award opportunity of
110% of his annual base salary, subject to individual performance and
achievement of certain annual performance targets. Mr. Skrzypczak's agreement
also provides for a target award opportunity of $260,000 and a maximum award
opportunity of $520,000 under the Imagistics Key Employee Incentive Plan,
subject to achievement of certain performance targets for multi-year cycles. In
the event the spin-off is not completed, Mr. Skrzypczak will generally be
entitled to a severance benefit of one year's base salary. Mr. Skrzypczak was
previously employed by Pitney Bowes from 1981 to 1994.

In March 2001, Pitney Bowes entered into a letter agreement with Mark S.
Flynn. The agreement with Mr. Flynn provides that he will be offered the
position of General Counsel of Imagistics immediately prior to the spin-off.
Mr. Flynn will be entitled to an annual base salary of $225,000 and an annual
incentive award target of 35% of his base salary and a maximum annual incentive
award of 70% of base salary if specific individual and unit performance
objectives are met. In addition, Mr. Flynn's agreement provides for a target
award of $50,000 under the Imagistics Key Employee Incentive Plan if we meet
certain performance targets for multi-year cycles.

Messrs. Breslawsky, Skrzypczak and Flynn's compensation packages are subject
to the approval of our board of directors. We will assume each of Messrs.
Breslawsky, Skrzypczak and Flynn's letter agreements in connection with the
spin-off.

EXECUTIVE COMPENSATION

General

The following table presents specific information regarding the compensation
that Pitney Bowes has paid for the periods indicated to:

. Marc C. Breslawsky, our Chairman and Chief Executive Officer

. Joseph D. Skrzypczak, our Chief Financial Officer

. Mark S. Flynn, our Vice President, General Counsel and Secretary

. Nathaniel M. Gifford, our Vice President, Product Development and
Strategic Marketing

. John C. Chillock, our Vice President, Customer Service Operations

. Chris C. Dewart, our Vice President, Commercial Sales

. Joseph W. Higgins, our Vice President, National Sales

Before the named individuals became our executive officers they were associates
of Pitney Bowes. The named executive officers will not continue their
employment with Pitney Bowes after the spin-off. After the spin-off, we
anticipate that we will make future awards of options to purchase our common
stock and restricted shares of our common stock to a number of our executive
officers, including the named executive officers, under the Imagistics Stock
Plan described below. Pitney Bowes paid the compensation stated below to these
individuals because of their employment with Pitney Bowes.

The principal components of each named executive officer's cash compensation
from Pitney Bowes have been:

. the annual base salary

. an annual performance based incentive award

. a long term performance based incentive award (in the case of Mr.
Breslawsky)

as shown in the "Summary Compensation Table" below. The annual incentive
amounts represent amounts that the executive compensation committee of Pitney
Bowes' board approved for each named individual, other than Mr. Skrzypczak and
Mr. Flynn, based on their individual performance and the performance of Pitney
Bowes and the office systems business during 2000. Mr. Breslawsky's cash
compensation also included a long-term cash incentive payout from Pitney Bowes
for the year 2000.

Immediately after the spin-off, the annual base salaries, and annual and
long-term incentive opportunities, of the named executive officers will be at
the levels as determined by Pitney Bowes' executive compensation committee and,
in some cases, pursuant to the written agreements summarized above.
Subsequently, the annual base salary, annual incentive opportunity and long-
term incentive opportunity of the named executive officers will be determined
by our executive compensation and development committee. We anticipate that the
base salary that we pay to the named executive officers and to all other
executive officers will initially be generally comparable to present levels of
base salary received from Pitney Bowes, subject to such adjustments as may be
determined in the normal course of business.

In addition, in connection with the spin-off, we anticipate that we will
issue performance based annual compensation incentives and cash incentive units
to the named executive officers pursuant to our Key

Employee Incentive Plan, described below. We anticipate that, in connection
with the spin-off, options exercisable for Pitney Bowes common stock will be
equitably adjusted as follows:

. for options held by employees of Pitney Bowes who will continue as
Pitney Bowes employees after the spin-off, the exercise price and the
number of options will be adjusted so that each employee's options will
have the same intrinsic value after the spin-off--these employees will
not receive options exercisable for Imagistics common stock, and

. for options held by Imagistics employees, the exercise price (but not
the number of options) will be adjusted to reflect the spin-off in a
similar manner to the option price adjustment made for Pitney Bowes
employees and, in order to maintain the aggregate intrinsic value of
their options, each such employee will receive new options (which we
refer to as Adjustment Options), exercisable for Imagistics common
stock.

The following table provides information concerning compensation paid by
Pitney Bowes to each of our named executive officers for the last fiscal year.

Summary Compensation Table(1)

Annual Compensation Long-Term Compensation Awards
------------------------------------------- -----------------------------------------
Long-term
Other Annual Incentive Plan All Other
Salary Annual Incentive Compensation Stock Options Payouts Compensation
Name and Principal Position Year ($) ($) ($) (#)(4) ($)(5) ($)(6)
- --------------------------- ---- -------- ---------------- ------------ ------------- -------------- ------------

Marc C. Breslawsky, 2000 $820,417 $525,000 -- 375,000 $ 806,250 $87,300
Chairman and Chief 1999 766,250 766,300 125,000 1,086,300 78,900
Executive Officer....... 1998 718,750 950,000 120,000 1,511,500 94,500
Joseph D. Skrzypczak,
Chief Financial
Officer(2)............. 2000 -- -- -- -- -- --
Mark S. Flynn,
Vice President, General
Counsel and
Secretary(3)........... 2000 -- -- -- -- -- --
Nathaniel M. Gifford,
Vice President, Product
Development and
Strategic
Marketing............... 2000 161,270 54,000 -- 13,200 -- 8,226
John C. Chillock,
Vice President, Customer
Service Operations...... 2000 125,542 37,035 -- 7,800 -- --
Chris C. Dewart,
Vice President,
Commercial Sales........ 2000 130,358 52,795 -- 12,000 -- 6,400
Joseph W. Higgins,
Vice President,
National Sales.......... 2000 168,900 68,407 -- 12,000 -- 9,873

- -------------
(1) Under SEC rules, since we were not a reporting company during any of the
three immediately preceding fiscal years, only the information with
respect to the last completed fiscal year is noted in the table, except
for information that was previously required to be filed with the SEC.

(2) Mr. Skrzypczak began employment with Pitney Bowes on January 16, 2001.
Please see "Management--Executive Officers and Directors--Agreements with
Executive Officers" for a summary of his current compensatory
arrangements.

(3) Mr. Flynn began employment with Pitney Bowes on April 2, 2001. Please see
"Management--Executive Officers and Directors--Agreements with Executive
Officers" for a summary of his current compensatory arrangements.

(4) All options granted relate to shares of Pitney Bowes common stock, and
have not been adjusted to reflect the spin-off.

(5) The value shown for 2000 is the value of the payout of Pitney Bowes Cash
Incentive Units granted during 1998 to Mr. Breslawsky. The payout was
based on the magnitude of achievement against the financial performance
criteria over the three-year period ended December 31, 2000. Outstanding
Pitney Bowes Cash Incentive Units held by Mr. Breslawsky will be paid on a
prorated basis based on his service with Pitney Bowes.

(6) Amounts shown for 2000 include, for Mr. Breslawsky, contributions to the
Pitney Bowes 401(k) Plan (a tax-qualified plan under Internal Revenue Code
Section 401(k)) ($6,120) and the Pitney Bowes Restoration Plan (a non-
qualified deferred compensation matching program) ($61,802), and an
allowance for financial counseling, including income taxes payable with
respect to such allowance ($19,334). The amounts shown for Messrs.
Gifford, Dewart and Higgins include contributions to the Pitney Bowes
401(K) Plan ($5,760; $6,400; and $6,400, respectively) and, for Messrs.
Gifford and Higgins, contributions to the Pitney Bowes Restoration Plan
($2,466 and $3,473, respectively).

Stock Options

The following table provides material information regarding options to
acquire Pitney Bowes common stock that Pitney Bowes granted to the named
executive officers during Pitney Bowes' 2000 fiscal year.

Stock Option Grants in 2000 Fiscal Year(1)

Net Potential Realizable
Number of Percentage of Value at Assumed Annual
Securities Total Options Rates of Stock Price
Underlying Granted to Exercise Appreciation for Option Term(2)
Options Employees in Price Per Expiration -------------------------------
Name Granted(#) Fiscal Year Share($/sh) Date 5%($) 10%($)
- ---- ---------- ------------- ----------- ---------- --------------- ----------------

Marc C. Breslawsky...... 125,000 1.375% $47.53(3) 2/13/2010 $ 3,736,420 $ 9,468,822
250,000 2.750 27.66(4) 10/19/2010 4,348,806 11,020,079

Joseph D. Skrzypczak.... -- -- -- -- -- --

Mark S. Flynn........... -- -- -- -- -- --

Nathaniel M. Gifford.... 5,200 0.057 47.53(3) 2/13/2010 155,435 393,903
1,184(5) 0.012 47.53(3) 2/13/2010 35,391 89,689
8,000 0.088 27.66(4) 10/19/2010 139,162 352,663

John C. Chillock........ 2,200 0.024 47.53(3) 2/13/2010 65,761 166,651
5,600 0.062 27.66(4) 10/19/2010 97,413 246,864

Chris C. Dewart......... 4,000 0.044 47.53(3) 2/13/2010 119,565 303,002
8,000 0.088 27.66(4) 10/19/2010 139,162 352,663

Joseph W. Higgins....... 4,000 0.044 47.53(3) 2/13/2010 119,565 303,002
1,411(5) 0.14 47.53(3) 2/13/2004 42,177 106,884
8,000 0.088 27.66(4) 10/13/2010 139,162 352,663

- -------------
(1) All options granted relate to shares of Pitney Bowes common stock, and
have not been adjusted to reflect the spin-off.
(2) The 5 and 10 percent growth rates are specified by the SEC and intended
for illustration only and are not intended to be predictive of future
growth; the actual value, if any, that may be realized by any named
executive officer will depend on the market price of Pitney Bowes' common
stock on the date of exercise.
(3) The exercise price for each option equals the market price of a share of
Pitney Bowes common stock on the date of grant. The options become
exercisable in installments over a three-year period; one-third after the
first year, an additional one-third after the second year, and the
remaining one-third after the third year.
(4) The exercise price for each option equals the market price of a share of
Pitney Bowes common stock on the date of grant. The options vest over a
four-year period, with one-sixth of the options vesting in 2002, one-third
in 2003, one-third in 2004, and the remaining one-sixth in 2005.
(5) Represents options granted as a result of the executive officer's election
under the Pitney Bowes Deferred Incentive Savings Plan. All of these
options become exercisable three years after the date of grant. The
expiration date for these options is based on the deferral period elected
by the executive.

The following table provides information relating to the number and value of
shares of Pitney Bowes common stock subject to options held by the named
executive officers as of December 31, 2000.

Aggregated Option Exercises in 2000 Fiscal Year
and Fiscal Year-End Option Values(1)

Number of Securities
Underlying Unexercised Net Value of Unexercised
Options at Fiscal In-the-Money Options at
Year-End(#) Fiscal Year-End($)(3)
Shares Acquired ------------------------- -------------------------
Name on Exercise(#) Net Value Realized($)(2) Exercisable Unexercisable Exercisable Unexercisable
- ---- --------------- ------------------------ ----------- ------------- ----------- -------------

Marc C. Breslawsky...... 72,000 $2,641,000 432,266 498,334 $3,671,623 $1,366,250
Joseph D. Skrzypczak.... -- -- -- -- -- --
Mark S. Flynn........... -- -- -- -- -- --
Nathaniel M. Gifford.... 2,000 55,438 29,397 14,946 239,207 58,720
John C. Chillock........ -- -- 4,200 8,066 -- 30,604
Chris C. Dewart......... 2,868 37,384 4,967 17,133 -- 43,720
Joseph W. Higgins....... -- -- 17,642 19,053 122,879 43,720

- -------------
(1) All options relate to shares of Pitney Bowes common stock, and have not
been adjusted to reflect the spin-off.
(2) Calculated on the basis of the number of shares exercised, multiplied by
the excess of the fair market value of a share of Pitney Bowes common
stock on the date of exercise over the exercise price of such option.
(3) These values are based on $33.125 per share, the market price of a share
of Pitney Bowes common stock as of December 31, 2000, net of exercise
prices, which range from $14.8107 to $65.7190 per share (adjusted to
reflect the 1992 and 1997 stock splits). In all cases, the exercise price
equaled the market price of a share at the date of grant.

Employee Benefits

We anticipate that prior to and in connection with the spin-off, we will
enter into one or more agreements with Pitney Bowes relating to employee
matters. We anticipate that these agreements will generally contain the
provisions relating to employee matters as summarized above, see "Relationship
with Pitney Bowes--Distribution Agreement--Employee Benefits." Summarized below
are certain benefit arrangements, other than arrangements applicable to all
employees generally, that will affect one or more of our named executive
officers.

As noted above, we will not offer a defined benefit pension plan, and most
of our employees will not receive accruals under the Pitney Bowes Pension Plan
after the spin-off. However, our employees whose age and service with Pitney
Bowes totaled more than 50 years as of September 1, 1997, including Messrs.
Chillock, Dewart, Higgins and Gifford, will continue to participate in the
Pitney Bowes Pension Plan following the spin-off for up to 3 years. In
addition, our employees who have completed less than 5 years of service as of
the spin date, will have their service at Imagistics counted toward completion
of the 5 year vesting schedule in the Pitney Bowes Pension Plan with vesting
occurring on December 31, 2003, subject to their continued employment with us.
Mr. Breslawsky has entered into a separate agreement with Pitney Bowes in
connection with his separation from Pitney Bowes under which he will continue
to accrue benefits under the Pitney Bowes Pension Plan for the period over
which he is paid the agreed-upon severance payments from Pitney Bowes.

Our employees who have attained age 55 and completed at least 10 years of
service (after age 45) as of the spin-off or within 3 years of the spin-off,
will be eligible for retiree medical benefits under the Pitney Bowes Retiree
Medical Plan when they retire from Imagistics. Any of our employees who are at
least age 45 at the time of the spin-off and complete at least 10 years of
service (between Pitney Bowes and Imagistics after age 45), including Messrs.
Skrzypczak, Flynn, Dewart, Higgins and Gifford will be able to participate, at
their expense, in the Pitney Bowes Retiree Medical Plan when they retire from
Imagistics after attaining age 55. Under Mr. Breslawsky's separation agreement
he is entitled, at his election, to receive retiree medical benefits from
Pitney Bowes upon his separation from Pitney Bowes.

Pitney Bowes maintains a deferred incentive savings plan (which we refer to
as the DISP) to allow executives, including Messrs. Breslawsky, Gifford,
Dewart, Higgins and Chillock, to defer all or a portion of

their Pitney Bowes annual incentive award and CIUs until a specific date in
the future, i.e., termination of employment, retirement or a stated number of
years. In addition, Pitney Bowes maintains the Pitney Bowes Restoration Plan
which entitles certain executives, including Messrs. Breslawsky, Gifford,
Dewart, Higgins and Chillock, to receive an employer matching amount above the
IRS limits permitted by the Pitney Bowes 401(k) Plan. Our employees who have
deferral in the DISP and the Restoration Plan will be permitted to maintain
their deferrals in these plans. We do not currently intend to offer a non-
qualified deferred compensation plan to our executives.

Imagistics Stock Plan

We anticipate that, prior to the spin-off, we will adopt, and Pitney Bowes,
as our sole stockholder, will approve, the Imagistics Stock Plan (which we
will refer to as the Stock Plan), substantially in the form summarized below.

Introduction. Set forth below is a summary of certain important features of
the Stock Plan. This description is qualified in its entirety by reference to
the complete text of the Stock Plan which, following its adoption and
approval, will be on file with the SEC.

The purposes of the Stock Plan, which is generally modeled on the 1991
Pitney Bowes Stock Plan, are:

. to make available to our key employees, certain compensatory
arrangements related to the growth in value of our common stock so as to
generate an increased incentive to contribute to our future financial
success and prosperity,

. to enhance our ability to attract and retain exceptionally qualified
individuals whose efforts can affect our financial growth and
profitability, and

. align generally the interests of our key employees with the interests of
our stockholders.

Principal Features of the Stock Plan. Awards that may be granted under the
Stock Plan include options, restricted stock and restricted stock units,
dividend equivalents, and other stock-based awards (which we refer to
collectively as Awards).

Administration of Stock Plan. A committee (which will likely be our
executive compensation and development committee and which we refer to as the
Compensation Committee) consisting of at least two of our directors chosen by
our board of directors, each of whom is a "disinterested person" within the
meaning of Rule 16b-3 under the Securities Exchange Act of 1934 and an
"outside director" within the meaning of Section 162(m) of the Internal
Revenue Code will, among other things, administer the Stock Plan, and will
determine which of our employees, officers and directors, including employee
officers and employee directors of any of our subsidiaries (whom we refer to
collectively as Eligible Employees) will receive Awards and the terms and
conditions of such Awards. The number of Eligible Employees who may receive
Awards under the Stock Plan will likely vary from year to year.

Shares Available for Issuance. Except as otherwise described in this
paragraph and under "Adjustments" below, the maximum number of shares of our
common stock that may be available under the Stock Plan will initially be 3
million shares, plus the number of shares of our common stock to be delivered
under the Stock Plan, if any, upon issuance of the Adjustment Options. In
addition, the number of shares of our common stock delivered under the Stock
Plan with respect to Awards of restricted stock and restricted stock units
shall not exceed 750,000 shares. It is expected that our shares delivered
under the Stock Plan will be authorized but unissued shares or shares that we
have reacquired. Shares of our common stock subject to Awards that are
forfeited, terminated, canceled or settled without the delivery of our common
stock under the Stock Plan will again be available for Awards under the Stock
Plan. Also, (x) shares tendered to us in satisfaction or partial satisfaction
of the exercise price of any Award under the Stock Plan and (y) remittances
from option exercises used to repurchase shares of our common stock on the
open market will increase the number of shares

available for delivery pursuant to Awards granted under the Stock Plan. In
addition, any shares of our common stock underlying Awards granted in
assumption of, or in substitution for, outstanding awards previously granted by
a company acquired by us, or with which we combine (which we refer to as
Substitute Awards) shall not be counted against the shares available for
delivery under the Stock Plan.

Adjustments

If a fundamental corporate event occurs, our Compensation Committee may, as
it deems appropriate, adjust the number and kind of our shares that may be
delivered under the Stock Plan in the future and the number and kind of shares
and the grant, exercise or conversion price, if applicable, under all
outstanding Awards to preserve, or to prevent the enlargement of, the benefits
made available under the Stock Plan. Cash payments may also be made.

Grants Under the Stock Plan

Stock Options. Our Compensation Committee may grant options under the Stock
Plan in the form of nonstatutory stock options (which we refer to as NSOs) and
incentive stock options (which we refer to as ISOs). These options may contain
any terms that our Compensation Committee determines. No Eligible Employee may
be granted Awards covering more than 700,000 shares of our common stock in
respect of any two year period in which the Stock Plan is in effect (subject to
adjustment as described above). Except in the case of Substitute Awards and
Imagistics options received as an adjustment of Pitney Bowes options in
connection with the spin-off, the exercise price shall not be less than 100% of
the fair market value on the date of grant. Our Compensation Committee shall
have the discretion to determine the terms and conditions upon which options
shall be exercisable.

Restricted Stock and Restricted Stock Units. Our Compensation Committee may
grant an Eligible Employee restricted stock units which provide a contractual
right to receive shares of our common stock or cash based on the fair market
value of the related shares at the end of a restricted period determined by our
Compensation Committee, which restricted period is generally expected to be
three years or more. Our Compensation Committee also may grant shares of
restricted stock that are nontransferable and subject to substantial risk of
forfeiture during the applicable restricted period. Our Compensation Committee
shall have the discretion to provide that Awards of restricted stock and
restricted stock units will vest, if at all, upon the (i) employee's continued
employment during the relevant restricted period as determined by our
Compensation Committee and/or (ii) attainment or partial attainment of
performance objectives determined by our Compensation Committee. In general, an
employee who has been granted restricted stock, the vesting restrictions of
which relate solely to the passage of time and continued employment, will from
the date of grant have the benefits of ownership in respect of such shares,
including the right to receive dividends and other distributions thereon,
subject to the restrictions set forth in the Stock Plan and in the instrument
evidencing such Award. With respect to any performance period, no executive
officer may be granted Awards of incentive stock or incentive units which vest
upon the achievement of performance objectives in respect of more than 750,000
shares of our common stock or, if such Awards are settled in cash, the fair
market value thereof determined at the time of payment (each subject to
adjustment as described above).

With respect to any Award of restricted stock or restricted stock units made
to one of our executive officers that our Compensation Committee determines
will vest based on the achievement of performance objectives, such performance
objectives shall relate to at least one of the following criteria, which may be
determined solely by reference to our performance or the performance of a
subsidiary or an affiliate (or any business unit thereof) or based on
comparative performance relative to other companies: (i) net income;
(ii) earnings before income taxes; (iii) earnings per share; (iv) return on
shareholders' equity; (v) expense management; (vi) profitability of an
identifiable business unit or product; (vii) revenue growth; (viii) earnings
growth; (ix) total shareholder return; (x) cash flow; (xi) return on assets;
(xii) pretax operating income; (xiii) net economic profit (operating earnings
minus a charge for capital); (xiv) customer satisfaction; (xv) provider

satisfaction; (xvi) employee satisfaction; (xvii) quality of networks; (xviii)
strategic innovation; or (xix) any combination of the foregoing.

Other Stock-Based Awards. The Stock Plan also authorizes our Compensation
Committee to grant other stock-based awards to Eligible Employees.

Dividends and Dividend Equivalents. Our Compensation Committee may provide
that any Award shall include dividends or dividend equivalents, payable in cash
or deemed reinvested in our common stock.

Effect of Awards on Termination of Employment

Our Compensation Committee generally has broad discretion as to the specific
terms and conditions of each Award and any rules applicable thereto, including
but not limited to the effect thereon of the death, retirement or other
termination of employment of the Eligible Employee or the effect, if any, of a
change in control.

General

Award Agreement. The terms of each Award are to be evidenced by a written
instrument delivered to the Eligible Employee.

Transferability. Unless our Compensation Committee expressly permits
transfers for the benefit of charity or of members of the Eligible Employee's
immediate family or trust or similar vehicle for their benefit, Awards under
the Stock Plan may not be assigned or transferred except by will or the laws of
descent and distribution.

Amendment or Termination. Our board of directors may terminate or suspend
the Stock Plan at any time, but the termination or suspension will not
adversely affect any Awards then outstanding under the Stock Plan. Unless
previously terminated by action of the board, no Award may be granted under the
Stock Plan after the tenth annual meeting of our stockholders after the date of
the spin-off. The Stock Plan may be amended or terminated at any time by our
board of directors, except that no amendment may be made without stockholder
approval if our Compensation Committee determines that such approval is
necessary to comply with any tax or regulatory requirement, including any
approval requirement that is a prerequisite for exemptive relief from Section
16 of the Securities Exchange Act of 1934, for which or with which our
Compensation Committee determines that it is desirable to qualify or comply.
Our Compensation Committee may amend the term of the Award granted,
retroactively or prospectively, but no amendment may adversely affect any Award
without the holder's consent.

Certain Federal Income Tax Consequences

The options described above are intended to comply with the requirements of
the Internal Revenue Code regarding the deductibility of certain performance
based compensation.

Under currently applicable federal income tax law, an Eligible Employee will
receive no taxable income upon the grant of an NSO or an ISO. When an Eligible
Employee exercises an NSO, the excess of the fair market value of the shares on
the date of exercise over the exercise price paid will be ordinary income to
the Eligible Employee and his or her employer generally will be allowed a
federal income tax deduction in the same amount. When an Eligible Employee
exercises an ISO while employed or within three months after termination of
employment (one year for disability), no income will be recognized upon
exercise of the ISO. If the Eligible Employee holds shares acquired for at
least one year after exercise and two years after the grant of the ISO, the
excess of the amount realized upon disposition of the shares over the exercise
price paid is treated as long-term capital gain for the Eligible Employee and
the Eligible Employee's employer is not allowed a federal income tax deduction.
A sale or other exchange of the underlying stock before the end of either of
the required holding periods will be a "disqualifying disposition" which will
generally result in the Eligible

Employee being taxed on the gain derived from the exercise of an ISO as though
it were an NSO and the Eligible Employee's employer generally will be allowed a
federal income tax deduction in the same amount. Special rules apply if the
exercise price is paid in shares.

New Plan Benefits

The amount or type of Stock Plan benefits, if any, that will be allocated to
or received by any person or group of persons cannot be determined at this
time.

Imagistics Non-Employee Directors' Stock Plan

We anticipate that, prior to the spin-off, we will adopt, and Pitney Bowes
as our sole stockholder, will approve, the Imagistics Non-Employee Directors'
Stock Plan (which we refer to as the Directors' Stock Plan), substantially in
the form summarized below.

Introduction. The following summary of certain important features of the
Directors' Stock Plan is qualified in its entirety by reference to the complete
text of the Directors' Stock Plan which, following its adoption and approval,
will be on file with the SEC.

The purpose of the Directors' Stock Plan, which is generally modeled on the
1991 Pitney Bowes Directors' Stock Plan, is to promote our interests and those
of our stockholders by increasing the proprietary interest of non-employee
directors in our growth and performance.

Awards. Under the Directors' Stock Plan, on the date of initial election to
our board, each director who is not one of our employees (whom we refer to as
an Eligible Director) shall receive an award of 2,000 shares of restricted
stock. Subsequently, on the day of each annual meeting of our stockholders
beginning after the spin-off, each Eligible Director will receive an annual
award of 2,000 shares of restricted stock. Each award will vest in three equal
annual installments beginning on the first anniversary of the grant date,
subject to each Eligible Director's continued service. The restricted shares
will carry full voting and dividend rights.

Shares Available for Issuance. We have authorized for issuance under the
Directors' Stock Plan a maximum of 100,000 shares of our common stock. It is
expected that our shares delivered under the Directors' Stock Plan will be
authorized but unissued shares or shares that we have reacquired. The number
and class of shares available under the plan may be adjusted by our board to
prevent dilution or enlargement of rights in the event of various changes in
our capitalization.

Transferability. The awards under the Directors' Stock Plan may not be
assigned or transferred except by will or the laws of descent and distribution.

Term of Plan. No award may be granted under the Directors' Stock Plan after
the tenth annual meeting of our stockholders after the date of the spin-off.

Amendments. Our board may amend or terminate the Directors' Stock Plan at
any time, except that no amendment may be made without stockholder approval if
our Compensation Committee determines that such approval is necessary to comply
with any tax or regulatory requirement, including any approval requirement that
is a prerequisite for exemptive relief from Section 16 of the Securities
Exchange Act of 1934, for which or with which our Compensation Committee
determines that it is desirable to comply. Our Compensation Committee may amend
the term of the award granted, retroactively or prospectively, but no amendment
may adversely affect any award without the holder's consent.

Imagistics Key Employee Incentive Plan

We anticipate that, prior to the spin-off, we will adopt, and Pitney Bowes,
as our sole stockholder, will approve the Imagistics Key Employee Incentive
Plan (which we refer to as the Incentive Plan) substantially in the form
summarized below. The following summary of certain important features of the
Incentive Plan is qualified by reference to the complete text of the Incentive
Plan which, following its adoption and approval, will be on file with the SEC.

Section 162(m) of the Internal Revenue Code generally denies a corporate tax
deduction for annual compensation exceeding $1 million paid to the chief
executive officer or any of the four other most highly compensated officers of
a public corporation. Certain types of compensation, including compensation
payable based upon the achievement of objective performance criteria that are
approved by the stockholders, are generally excluded from this deduction limit.
The Incentive Plan is designed so that, to the extent consistent with our
needs, grants under the Incentive Plan will qualify for the exclusion for
performance-based compensation.

The Incentive Plan will be administered by our Compensation Committee, which
will be comprised of members of our board of directors who are "disinterested
persons" within the meaning of Rule 16b-3 promulgated by the SEC under the
Securities Exchange Act of 1934.

Our Committee will determine the recipients of grants under the Incentive
Plan and the terms and amounts thereof. We anticipate that grants generally
take the form of performance based annual compensation incentives (which we
refer to as Annual Incentives) and cash incentive units (which we refer to as
CIUs). Annual Incentives are annual cash payments of specified percentages of
base salary, which are paid based upon the achievement of preestablished
corporate, unit and/or individual performance objectives. CIUs represent a
right to receive cash, the receipt and amount of which are entirely contingent
upon the extent to which specified performance criteria are achieved during the
related two-year period.

Grants made to participants in the Incentive Plan by our Compensation
Committee may be in the form of Annual Incentives, CIUs or any other form of
grant permitted under the Incentive Plan, and will be made subject to the
achievement of one or more preestablished performance goals (summarized below),
in accordance with procedures to be established by our Compensation Committee
from time to time. Our Compensation Committee will not have the discretion to
waive or amend such Performance Goals or to increase the amount payable
pursuant to such grants after the Performance Goals have been established, but
it will have the discretion to reduce the amount that would otherwise be
payable.

"Performance Goals" under the Incentive Plan will be one or more objective
performance goals, established by our Compensation Committee at the time a
grant is made, and based upon the attainment of targets for one or any
combination of the following criteria: (i) net income; (ii) earnings before
income taxes; (iii) earnings per share; (iv) return on shareholders' equity;
(v) expense management; (vi) profitability of an identifiable business unit or
product; (vii) revenue growth; (viii) earnings growth; (ix) shareholder return;
(x) cash flow; (xi) return on assets; (xii) pretax operating income; (xiii) net
economic profit (operating earnings minus a charge for capital); (xiv) customer
satisfaction; (xv) provider satisfaction; (xvi) employee satisfaction; (xvii)
quality of networks; or (xviii) strategic innovation. Performance Goals also
may consist of attainment of specified levels of Imagistics performance, based
upon one or more of the criteria described above relative to prior periods or
the performance of other corporations. Performance Goals will be set by our
Compensation Committee within any time period required to insure deductibility
under the Code. The maximum amount payable to any participant for any fiscal
year pursuant to grants made under the Incentive Plan is $2 million.

Our Compensation Committee will also have the authority to make grants under
the Incentive Plan that will not qualify as performance-based compensation for
purposes of 162(m) of the Internal Revenue Code. In

the event of a change in control, as defined in the Incentive Plan, grants that
would otherwise so qualify may result in the payment of compensation that is
not qualified under Section 162(m).

Under the Incentive Plan, the Compensation Committee may from time to time
establish procedures pursuant to which participants, or a class thereof, will
be permitted or required to defer receipt of amounts payable under grants made
under the Incentive Plan.

New Plan Benefits

The amount or type of Incentive Plan benefits, if any, that will be
allocated to or received by any person or group of persons cannot be determined
at this time.

SECURITY OWNERSHIP OF PITNEY BOWES AND IMAGISTICS

All of our common stock is currently owned by Pitney Bowes. Thus none of our
executive officers, directors or proposed directors own any of our common stock
prior to the spin-off. To the extent executive officers, directors or proposed
directors of Imagistics own shares of Pitney Bowes common stock at the time of
the spin-off, they will share in the spin-off on the same terms as other
holders of Pitney Bowes common stock.

The following table sets forth how much Pitney Bowes common stock was owned
by each executive officer or proposed director of Imagistics on December 31,
2000. No executive officer, director or proposed director of Imagistics
beneficially owned 1% or more of Pitney Bowes' total outstanding common stock,
nor do the executive officers, directors and proposed director as a group. The
table also sets forth information with respect to all stockholders of Pitney
Bowes known to have held 5% or more of Pitney Bowes' common stock on December
31, 2000. The following information with respect to 5% holders is based solely
upon Schedule 13Gs respectively filed by the entities shown with the SEC as of
the respective dates appearing below. Finally, the table sets forth the number
and percentage of shares of Imagistics common stock to be held by each such
person or entity after the spin-off.

Imagistics
Pitney Bowes Following the Spin-Off
------------------------------------- ------------------------
Number of Number of Number of
Shares Options Percent of Shares Percent of
Beneficially Beneficially Outstanding Beneficially Outstanding
Beneficial Owner Owned(1) Owned(2) Shares Owned(1)(3) Shares
- ---------------- ------------ ------------ ----------- ------------ -----------

Marc C. Breslawsky...... 259,572 555,600 * 20,765 *
Joseph D. Skrzypczak.... 72 -- * 5 *
Mark S. Flynn........... -- -- -- -- --
Nathaniel M. Gifford.... 112 29,397 * 8 *
John C. Chillock........ -- 4,200 * -- --
Chris C. Dewart......... 196 9,067 * 15 *
Joseph W. Higgins....... 1,013 22,851 * 81 *
Michael J. Critelli..... 274,925 417,524 * 21,994 *
Thelma R. Albright...... -- -- -- -- --
T. Kevin Dunnigan....... -- -- -- -- --
Ira D. Hall............. -- -- -- -- --
James A. Thomas......... -- -- -- -- --
All executive officers
and proposed directors
as a group (12
individuals)........... 535,890 1,038,639 * 42,871 *

5% holders:
Capital Research and
Management Company(4)
333 South Hope Street
Los Angeles, CA
90071................. 29,272,100 -- 11.6% 2,341,768 11.6%
FMR Corp.(5)
82 Devonshire Street
Boston, MA 02109...... 21,562,856 -- 8.6% 11,725,028 8.6%

- -------------
* Less than 1%.

(1) Includes shares that are held indirectly through the Pitney Bowes Inc.
401(k) plan and its related excess plan.

(2) Options exercisable within 60 days of December 31, 2000.

(3) Does not include Imagistics options that may be issued to compensate for a
reduction in the intrinsic value of Pitney Bowes options in connection with
the spin-off, as the determination of the amount of the required adjustment
cannot be made until after the spin-off. See "The Spin-Off--Description of
the Spin-Off."

(4) As of December 31, 2000, Capital Research and Management Company, an
investment advisor registered under Section 203 of the Investment Advisers
Act of 1940, had sole investment power and no voting power with respect to
such shares.

(5) As of December 31, 2000, FMR Corp., together with various affiliates, had
sole investment power as to such shares. In addition, as to 498,856 of such
shares, FMR Corp. has sole voting power. Additional information may be
obtained from the Schedule 13G filed by FMR Corp. and certain of its
affiliates on January 10, 2001.

DESCRIPTION OF CAPITAL STOCK

General

Our authorized capital stock will consist of 150,000,000 shares of common
stock, par value $.01 per share, and 10,000,000 shares of preferred stock, par
value $1.00 per share. Following the spin-off, we will have approximately 19.5
million shares of common stock outstanding, none of which will be owned by
Pitney Bowes. Immediately after the spin-off, all of the outstanding shares of
our common stock will be validly issued, fully paid and non-assessable. There
will be no preferred stock outstanding.

A description of the material terms and provisions of our certificate of
incorporation and bylaws affecting the rights of the common stock and the
preferred stock is set forth below. The following description of our capital
stock is intended as a summary and is qualified in its entirety by reference to
the forms of certificate of incorporation and bylaws filed as exhibits to the
registration statement on Form 10 of which this information statement forms a
part, and to Delaware corporate law.

Common Stock

Voting Rights

The holders of our common stock will be entitled to one vote per share on
all matters to be voted on by stockholders. Holders of our common stock will
not be entitled to cumulate their votes in the election of directors.
Generally, all matters on which stockholders will vote must be approved by a
majority of the votes entitled to be cast by all shares of common stock present
in person or represented by proxy, subject to any voting rights granted to
holders of any preferred stock. Except as otherwise provided by law, and
subject to any voting rights granted to holders of any outstanding preferred
stock, amendments to our certificate of incorporation must be approved by
holders of a majority of all outstanding shares of common stock.

Dividends

Holders of common stock will share ratably in any dividend declared by our
board of directors, subject to any preferential rights of any outstanding
preferred stock.

Other Rights

In the event of any merger or consolidation of Imagistics with or into
another company in connection with which shares of common stock are converted
into or exchangeable for shares of stock, other securities or property
(including cash), all holders of common stock will be entitled to receive the
same kind and amount of shares of stock and other securities and property
(including cash).

If we are liquidated, dissolved or wound up, we will pay the full amounts
required to be paid to holders of shares of any outstanding preferred stock
before we make any payments to holders of shares of our common stock. All
holders of shares of our common stock are entitled to share ratably in any
assets available for distribution to these holders, after all of our other
creditors have been satisfied.

No shares of our common stock may be redeemed. Holders of shares of our
common stock do not have any preemptive rights to purchase additional shares of
our common stock.

Preferred Stock

We may issue preferred stock in one or more classes or series and with the
terms of each class or series stated in our board's resolutions providing for
the designation and issue of that class or series. Our certificate of
incorporation authorizes our board to determine the dividend, voting,
conversion, redemption and liquidation preferences, rights, privileges and
limitations pertaining to each class or series of preferred stock that we
issue.

We believe that the ability of our board of directors to issue one or more
series of our preferred stock will provide us with flexibility in structuring
possible future financings and acquisitions, and in meeting other corporate
needs which might arise. The authorized shares of our preferred stock, as well
as authorized shares of our common stock, will be available for issuance
without further action by our stockholders, unless such action is required by
applicable law or the rules of any stock exchange or automated quotation system
on which our securities may be listed or traded. The New York Stock Exchange
currently requires stockholder approval as a prerequisite to listing shares in
several instances, including where the present or potential issuance of shares
could result in an increase in the number of shares of common stock, or in the
amount of voting securities, outstanding of at least 20%. If the approval of
our stockholders is not required for the issuance of shares of our preferred
stock or our common stock, our board of directors may determine not to seek
stockholder approval.

Series A Junior Participating Preferred Stock

As of the completion of this offering, shares of our Series A junior
participating preferred stock will be reserved for issuance upon exercise of
rights under our rights agreement. For a more detailed discussion of our rights
agreement and our Series A junior participating preferred stock, please see "--
Rights Agreement."

Certificate of Incorporation and Bylaw Provisions That May Have an Anti-
Takeover Effect

Some provisions of our certificate of incorporation and bylaws summarized
below may be deemed to have an anti-takeover effect and may delay, deter or
prevent a tender offer or takeover attempt that a stockholder might consider to
be in its best interest, including attempts that might result in a premium
being paid over the market price for the common stock.

Our certificate of incorporation will provide that, subject to any rights of
holders of preferred stock to elect additional directors under specified
circumstances, the number of directors of Imagistics shall be fixed from time
to time by resolution adopted by the affirmative vote of a majority of the
board of directors and shall be not less than the minimum required by Delaware
law or the rules of any exchange upon which our securities are listed. The
directors will be divided into three classes, as nearly equal in number as
possible, serving staggered three year terms so that the directors' initial
term will expire on the date of the annual meeting of stockholders held in
2002, 2003 and 2004. At each succeeding annual meeting of stockholders,
beginning in 2002, successors to the class of directors whose term expires at
that annual meeting will be elected for a three-year term. Under Delaware law,
when a company has a staggered board in place, directors may not be removed by
the stockholders except for cause, unless the certificate of incorporation
provides otherwise. Our certificate of incorporation does not provide
otherwise.

Therefore, at least two annual meetings of stockholders will generally be
required to effect a change in a majority of the members of the board; this has
the effect of delaying any attempt by a stockholder seeking a takeover of
Imagistics to elect a majority of directors to our board. The certificate of
incorporation and bylaws will provide that, subject to any rights of holders of
preferred stock to elect directors under specified circumstances, the number of
directors will be fixed from time to time exclusively by resolution of the
board of directors. In addition, the charter and bylaws will provide that,
subject to any rights of holders of preferred stock, and unless our board of
directors otherwise determines, any vacancy on the board of directors that
results from an increase in the number of directors may be filled by a majority
of the directors then in office, provided that a quorum is present, and any
other vacancy occurring on the board of directors may be filled by a majority

of the board of directors then in office, even if less than a quorum, or by a
sole remaining director; except as otherwise provided by law, any such vacancy
may not be filled by the stockholders.

Our bylaws will provide for an advance notice procedure for the nomination,
other than by or at the direction of the board of directors, of candidates for
election as directors as well as for other stockholder proposals to be
considered at annual meetings of stockholders. In general, notice of intent to
nominate a director or raise matters at such meetings will have to be received
in writing by us not less than 60 nor more than 90 days prior to the
anniversary of the previous year's annual meeting of stockholders, and must
contain information concerning the person to be nominated or the matters to be
brought before the meeting and concerning the stockholder submitting the
proposal. Our certificate of incorporation and bylaws will also provide that
special meetings of stockholders may be called only by specified officers of
Imagistics or by the board of directors. Any action required or permitted to be
taken by stockholders may be effected only at a duly called annual or special
meeting of stockholders and may not be effected by a written consent by
stockholders in lieu of such a meeting.

Our certificate of incorporation and bylaws generally provide that the
certificate of incorporation and bylaws may be altered, amended or repealed by
our board of directors or by the affirmative vote of the holders of a majority
of our common stock. The repeal or amendment of certain provisions of our
certificate of incorporation and bylaws require the affirmative vote of the
holders of two-thirds of our common stock. These provisions relate to the
number of and the manner of electing directors; action required to be taken at
annual meetings of stockholders; procedures for convening special meetings of
stockholders; liability and idemnification of directors.

Delaware General Corporation Law Section 203

Because we are a Delaware corporation, Section 203 of the Delaware General
Corporation Law applies to us. Section 203 provides that, except for
transactions specified in Section 203, a corporation will not engage in any
"business combination" with any "interested stockholder" for a three-year
period after the date that the stockholder became an interested stockholder
unless:

. before the date that the stockholder became an interested stockholder,
the board approved either the business combination or the transaction
which resulted in the stockholder becoming an interested stockholder,

. upon completion of the transaction which resulted in the stockholder
becoming an interested stockholder, the interested stockholder owned at
least 85% of the voting stock of the corporation outstanding at the time
the transaction commenced, excluding for purposes of determining the
number of shares outstanding, shares owned by:

. persons who are both directors and officers or

. employee stock plans in some circumstances, or

. on or after the date that the stockholder became an interested
stockholder, the business combination is approved by the board of the
corporation and authorized at an annual or special meeting of
stockholders by the affirmative vote of at least 66 2/3% of the
outstanding voting stock which is not owned by the interested
stockholder.

A "business combination" includes a merger, consolidation, asset sale or
other transaction resulting in a financial benefit to an interested
stockholder. An "interested stockholder" is a person who, together with
affiliates and associates, owns (or within three years, did own) 15% or more of
a corporation's outstanding voting stock.

Section 203 makes it more difficult under some circumstances for an
interested stockholder to effect a business combination with us for a three-
year period, although our stockholders may elect to exclude us from the
restrictions imposed under Section 203.

The restrictions imposed by Section 203 will not apply to a corporation in
some circumstances, including if:

. the corporation's original certificate of incorporation contains a
provision expressly electing not to be governed by Section 203 or

. twelve months have passed after the corporation, by action of its
stockholders holding a majority of the shares entitled to vote, amends
its certificate of incorporation expressly electing not to be governed
by Section 203.

We have not elected to opt out of Section 203. Thus, the restrictions
imposed by Section 203 will apply to us.

Rights Agreement

Our board of directors currently expects to adopt a rights agreement, with
EquiServe, as rights agent, on or prior to the completion of the spin-off. The
rights agreement is filed as an exhibit to the registration statement of which
this information statement is a part. For information on how to obtain a copy
of the rights agreement, please see "Where You Can Find More Information."

Description of Rights

Prior to the rights distribution date (as defined below), the rights will be
evidenced by the certificates for and will be transferred with our common
stock, and the registered holders of our common stock will be deemed to be the
registered holders of the rights. After the rights distribution date, the
rights agent will mail separate certificates evidencing the rights to each
record holder of our common stock as of the close of business on the rights
distribution date, and thereafter the rights will be transferable separately
from our common stock. The "rights distribution date" generally means the
earlier of

. the close of business on the 10th day after the date (the "stock
acquisition date") of the first public announcement that a person (other
than Imagistics or any of our subsidiaries or any of our or our
subsidiaries' employee benefit plans) has acquired beneficial ownership
of 15% or more of the outstanding shares of our common stock (an
"acquiring person") and

. the close of business on the 10th business day (or such later day as may
be designated by our board of directors before any person has become an
acquiring person) after the date of the commencement of a tender or
exchange offer by any person which would, if consummated, result in such
person becoming an acquiring person.

Prior to the rights distribution date, the rights will not be exercisable.
After the rights distribution date (but before any person has become an
acquiring person), each right will be exercisable to purchase, for a price (the
"purchase price") that will be established by our board of directors, and
approved by Pitney Bowes, as our sole stockholder, prior to the spin-off, one
one-hundredth of a share of Series A junior participating preferred stock, par
value $1.00 per share.

If any person has become an acquiring person (but none of the events
described in the second succeeding paragraph has occurred), each right (other
than rights beneficially owned by the acquiring person and certain affiliated
persons) will entitle the holder, after the rights distribution date, to
purchase, for the purchase price, a number of shares of common stock having a
market value of twice the purchase price.

At any time after any person has become an acquiring person (but before any
person becomes the beneficial owner of 50% or more of the outstanding shares of
our common stock or the occurrence of any of the events described in the next
paragraph), our board of directors may exchange all or part of the rights
(other

than rights beneficially owned by an acquiring person and certain affiliated
persons) for shares of common stock at an exchange ratio of one share of common
stock per right.

If, after any person has become an acquiring person,

. we are involved in a merger or other business combination in which we
are not the surviving corporation or our common stock is exchanged for
other securities or assets or

. we and/or one or more of our subsidiaries sell or otherwise transfer
assets or earning power aggregating more than 50% of the assets or
earning power of us and our subsidiaries, taken as a whole,

then each right will entitle the holder, after the rights distribution date, to
purchase, for the purchase price, a number of shares of common stock of the
other party to the business combination or sale (or in certain circumstances,
an affiliate) having a market value of twice the purchase price.

Our board of directors may redeem all of the rights at a price of $.01 per
right at any time before any person has become an acquiring person.

The rights will expire ten years after the date of the spin-off, unless
earlier exchanged or redeemed.

For so long as the rights are redeemable, the rights agreement may be
amended in any respect. At any time when the rights are no longer redeemable,
the rights agreement may be amended in any respect that does not adversely
affect rights holders (other than any acquiring person and certain affiliated
persons), cause the rights agreement to become amendable except as set forth in
this sentence or cause the rights again to become redeemable.

Rights holders have no rights as stockholders of Imagistics, including the
right to vote and to receive dividends.

The rights agreement includes antidilution provisions designed to prevent
efforts to diminish the effectiveness of the rights.

While the issuance of the rights will not be taxable to stockholders or to
us, we or our stockholders may, depending upon the circumstances, recognize
taxable income in the event that the rights become exercisable as set forth
above.

Series A Junior Participating Preferred Stock

In connection with the creation of the rights, as described above, our board
of directors has authorized the issuance of shares of preferred stock as Series
A junior participating preferred stock.

We have designed the dividend, liquidation, voting and redemption features
of our Series A junior participating preferred stock so that the value of one
one-hundredth of a share of our Series A junior participating preferred stock
approximates the value of one share of our common stock. Shares of our Series A
junior participating preferred stock may only be purchased after the rights
have become exercisable, and each share of the Series A junior participating
preferred stock:

. is nonredeemable and junior to all other series of preferred stock,
unless otherwise provided in the terms of those series of preferred
stock;

. will have a preferential dividend in an amount equal to the greater of
$1.00 or 100 times any dividend declared on each share of common stock;

. in the event of liquidation, will entitle its holder to receive a
preferred liquidation payment equal to 100 times the payment made per
share of common stock;

. will have 100 votes, voting together with the common stock and any other
capital stock with general voting rights; and

. in the event of any merger, consolidation or other transaction in which
shares of common stock are converted or exchanged, will be entitled to
receive 100 times the amount and type of consideration received per
share of common stock.

The purchase price in effect, and the number and kind of shares of Series A
junior participating preferred stock or other capital stock issuable in respect
of the rights, will be proportionately adjusted in the event of:

. the payment of dividends on the Series A junior participating preferred
stock payable in shares of Series A junior participating preferred
stock;

. a subdivision or combination of the Series A junior participating
preferred stock into a greater or smaller number of shares; and

. the issuance of any shares of our capital stock in a reclassification of
the Series A junior participating preferred stock (including any
reclassification in connection with a consolidation or merger involving
Imagistics).

No adjustments will be made until the adjustment would require an increase or
decrease of at least 1% in the purchase price.

Anti-takeover Effects

The rights may have anti-takeover effects. If the rights become exercisable,
the rights will, in most cases, cause substantial dilution to a person or group
that attempts to acquire or merge with us. Accordingly, the existence of the
rights may deter a potential acquiror from making a takeover proposal or tender
offer. The rights should not interfere with any merger or other business
combination approved by our board of directors since we may redeem the rights
as described above and since a transaction approved by our board of directors
would not cause the rights to become exercisable.

Liability and Indemnification of Directors and Officers

Delaware General Corporation Law, our certificate of incorporation and our
bylaws contain provisions relating to the limitation of liability and
indemnification of our directors and officers.

Our certificate of incorporation provides that our directors are not
personally liable to us or our stockholders for monetary damages for breach of
their fiduciary duties as directors to the fullest extent permitted by Delaware
law. Existing Delaware law permits the elimination or limitation of directors'
personal liability to us or our stockholders for monetary damages for breach of
their fiduciary duties as directors, except liability for:

. any breach of a director's duty of loyalty to us or our stockholders,

. acts or omissions not in good faith or involving intentional misconduct
or a knowing violation of law,

. any transaction from which a director derived improper personal benefit,

. the unlawful payment of dividends and

. unlawful stock repurchases or redemptions.

Because of these exculpation provisions, stockholders may be unable to
recover monetary damages against directors for actions taken by them that
constitute negligence or that otherwise violate their fiduciary duties as
directors, although it may be possible to obtain injunctive or other equitable
relief with respect to such actions. If equitable remedies are not available to
stockholders, stockholders may not have an effective remedy against a director
in connection with the director's conduct.

Our certificate of incorporation also provides that we will indemnify and
hold harmless any person who was or is a party or is threatened to be made a
party to, or is involved in, any threatened, pending or completed civil,
criminal, administrative or investigative action, suit or proceeding by reason
of the fact that the person:

. is or was one of our directors or officers, or

. is or was serving at our request as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise or as a member of any committee or similar body

to the fullest extent permitted by Delaware Law. We will also pay the expenses
incurred in connection with any such proceeding in advance of its final
disposition to the fullest extent authorized by Delaware Law. This right to
indemnification will be a contract right. We may, by action of our board,
provide indemnification to our employees and agents to the extent and to the
effect that our board determines to be appropriate and authorized by Delaware
law.

We intend to purchase and maintain insurance on behalf of any person who:

. is or was one of our directors, officers, employees or agents or

. is or was serving at our request as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise

against any liability asserted against or incurred by the person in any such
capacity, or arising out of the person's status as such, whether or not we
would have the power to indemnify the person against such liability under our
certificate of incorporation.

Transfer Agent

The transfer agent and registrar for our common stock is EquiServe. The
contact information for the transfer agent and registrar is:

EquiServe Trust Company, N.A.
525 Washington Blvd.
Jersey City, NJ 07310
(201) 222-5662

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a Form 10 with respect to the shares of our
common stock that Pitney Bowes' stockholders will receive in the spin-off. This
information statement does not contain all of the information contained in the
Form 10 and the exhibits and schedules to the Form 10. Some items are omitted
in accordance with the rules and regulations of the SEC. For additional
information relating to us and the spin-off, reference is made to the Form 10
and the exhibits to the Form 10, which are on file at the offices of the SEC.
Statements contained in this information statement as to the contents of any
contract or other document referred to are not necessarily complete and in each
instance, if the contract or document is filed as an exhibit, reference is made
to the copy of the contract or other documents filed as an exhibit to the Form
10. Each statement is qualified in all respects by the relevant reference.

You may inspect and copy the Form 10 and the exhibits to the Form 10 that we
have filed with the SEC at the SEC's Public Reference Room at 450 Fifth Street,
N.W., Washington, DC 20549, as well as at the Regional Offices of the SEC at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-
2511 and 233 Broadway, New York, New York 10007. Please call the SEC at 1-800-
SEC-0330 for further information on the Public Reference Room. In addition, the
SEC maintains an Internet site at http://www.sec.gov, from which you can
electronically access the Form 10, including the exhibits and schedules to the
Form 10.

Because of the spin-off, we will be required to comply with the full
informational requirements of the Securities Exchange Act of 1934. We will
fulfill our obligations with respect to these requirements by filing periodic
reports and other information with the SEC.

IMAGISTICS INTERNATIONAL INC.
(formerly known as Pitney Bowes Office Systems, Inc.)

Index to Combined Financial Statements

Combined Financial Statements:
Report of Independent Accountants........................................ F-2
Combined Statements of Income for the years ended December 31, 1998, 1999
and 2000 and the nine months ended September 30, 2000 and 2001
(unaudited)............................................................. F-3
Combined Balance Sheets at December 31, 1999 and 2000 and September 30,
2001 (unaudited)......................................................... F-4
Combined Statements of Changes in Invested Equity for the years ended
December 31, 1998, 1999 and 2000 and the nine months ended September 30,
2001 (unaudited) ....................................................... F-5
Combined Statements of Cash Flows for the years ended December 31, 1998,
1999 and 2000 and the nine months ended September 30, 2000 and 2001
(unaudited)............................................................. F-6
Notes to Combined Financial Statements................................... F-7

Financial Statement Schedule:
Schedule (II)--Valuation and Qualifying Accounts for the years ended
December 31, 1998, 1999 and 2000...................................... F-21

F-1

Report of Independent Accountants

To the Stockholders and Board of Directors of Pitney Bowes Inc.

In our opinion, the combined financial statements listed in the accompanying
index present fairly, in all material respects, the financial position of
Imagistics International Inc. (formerly known as Pitney Bowes Office Systems,
Inc.) (as described in Note 1 to the combined financial statements), at
December 31, 1999 and 2000, and the combined results of their operations and
their cash flows for each of the three years in the period ended December 31,
2000 in conformity with accounting principles generally accepted in the United
States of America. In addition, in our opinion, the financial statement
schedule listed in the accompanying index presents fairly, in all material
respects, the information set forth therein when read in conjunction with the
related combined financial statements. These financial statements and the
financial statement schedule are the responsibility of the company's
management; our responsibility is to express an opinion on these financial
statements and the financial statement schedule based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

PricewaterhouseCoopers LLP
Stamford, Connecticut
April 17, 2001, except for Notes 1 and 8,
as to which the date is October 31, 2001

F-2

IMAGISTICS INTERNATIONAL INC.

Combined Statements of Income
(Dollars in thousands)

Nine months ended
Years ended December 31, September 30,
-------------------------- -----------------
1998 1999 2000 2000 2001
-------- -------- -------- -------- --------
(unaudited)

Revenue:
Sales............................ $299,440 $322,947 $326,046 $245,352 $231,041
Rentals.......................... 199,525 211,353 227,790 169,432 174,179
Support services................. 90,736 92,177 88,922 67,308 62,121
-------- -------- -------- -------- --------
Total revenue................... 589,701 626,477 642,758 482,092 467,341
-------- -------- -------- -------- --------
Costs and expenses:
Cost of sales.................... 143,263 157,385 186,181 134,222 142,733
Cost of rentals.................. 68,819 74,245 88,506 68,943 69,837
Selling, service and
administrative.................. 213,712 232,627 252,799 187,753 222,718
Interest expense, net............ 5,780 8,646 11,281 8,324 8,484
-------- -------- -------- -------- --------
Total costs and expenses........ 431,574 472,903 538,767 399,242 443,772
-------- -------- -------- -------- --------
Income before income taxes........ 158,127 153,574 103,991 82,850 23,569
Provision for income taxes........ 63,452 61,638 41,144 32,750 9,293
-------- -------- -------- -------- --------
Net income........................ $ 94,675 $ 91,936 $ 62,847 $ 50,100 $ 14,276
======== ======== ======== ======== ========

See Notes to Combined Financial Statements

F-3

IMAGISTICS INTERNATIONAL INC.

Combined Balance Sheets
(Dollars in thousands)

December 31, September 30,
------------------ -------------
1999 2000 2001
-------- -------- -------------
(unaudited)

Assets
Current assets:
Cash........................................ $ 4,153 $ 3,100 $ 38,912
Accounts receivable, less allowances of $731
and $1,611 at December 31, 1999 and 2000
and $2,134 at September 30, 2001........... 112,576 126,225 120,399
Inventories................................. 127,277 154,449 130,156
Current deferred taxes on income............ 4,811 7,662 13,526
Other current assets and prepayments........ 4,132 1,790 8,501
-------- -------- --------
Total current assets....................... 252,949 293,226 311,494
Property, plant and equipment, net........... 13,763 15,614 22,016
Rental equipment and related inventories,
net......................................... 134,838 141,308 133,569
Goodwill, net of amortization of $2,098 and
$3,428 at December 31, 1999 and 2000 and
$4,496 at September 30, 2001................ 46,563 53,053 52,958
Other assets................................. 1,721 2,263 410
-------- -------- --------
Total assets............................... $449,834 $505,464 $520,447
======== ======== ========
Liabilities and invested equity
Current liabilities:
Accounts payable and accrued liabilities.... $ 24,083 $ 42,357 $ 46,826
Due to Pitney Bowes......................... 80,896 107,951 115,239
Advance billings............................ 28,691 29,780 28,975
-------- -------- --------
Total current liabilities.................. 133,670 180,088 191,040
Deferred taxes on income..................... 2,343 4,298 12,069
Other noncurrent liabilities................. 8,555 5,915 2,370
-------- -------- --------
Total liabilities.......................... 144,568 190,301 205,479
-------- -------- --------
Commitments and contingencies (See note 9)... -- -- --
Invested equity:
Owner's net investment...................... 305,325 317,886 317,583
Accumulated other comprehensive loss........ (59) (2,723) (2,615)
-------- -------- --------
Total invested equity...................... 305,266 315,163 314,968
-------- -------- --------
Total liabilities and invested equity........ $449,834 $505,464 $520,447
======== ======== ========

See Notes to Combined Financial Statements

F-4

IMAGISTICS INTERNATIONAL INC.

Combined Statements of Changes in Invested Equity
(Dollars in thousands)

Accumulated
other
Owner's net Comprehensive comprehensive
investment income income (loss)
----------- ------------- -------------

Balance, January 1, 1998.............. $211,341 $ 339
Net income............................ 94,675 $94,675
Other comprehensive income:
Translation adjustments.............. (33) (33)
-------
Comprehensive income.................. $94,642
=======
Advances to Pitney Bowes.............. (43,189)
-------- -------
Balance, December 31, 1998............ 262,827 306
Net income............................ 91,936 $91,936
Other comprehensive income:
Translation adjustments.............. (365) (365)
-------
Comprehensive income.................. $91,571
=======
Advances to Pitney Bowes.............. (49,438)
-------- -------
Balance, December 31, 1999............ 305,325 (59)
Net income............................ 62,847 $62,847
Other comprehensive income:
Translation adjustments.............. (2,664) (2,664)
-------
Comprehensive income.................. $60,183
=======
Advances to Pitney Bowes.............. (50,286)
-------- -------
Balance, December 31, 2000............ 317,886 (2,723)
Net income (unaudited)................ 14,276 $14,276
Other comprehensive income
(unaudited):.........................
Translation adjustments (unaudited).. 108 108
-------
Comprehensive income (unaudited)...... $14,384
=======
Advances to Pitney Bowes (unaudited).. (14,579)
-------- -------
Balance, September 30, 2001
(unaudited).......................... $317,583 $(2,615)
======== =======

See Notes to Combined Financial Statements

F-5

IMAGISTICS INTERNATIONAL INC.

Combined Statements of Cash Flows
(Dollars in thousands)

Nine months ended
Years ended December 31, September 30,
----------------------------- ------------------
1998 1999 2000 2000 2001
-------- --------- -------- -------- --------
(unaudited)

Cash flows from operating
activities:
Net income................. $ 94,675 $ 91,936 $ 62,847 $ 50,100 $ 14,276
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and
amortization............. 58,364 67,219 73,755 54,472 57,628
Deferred taxes on income.. (203) 3,599 (896) (2,042) 1,907
Change in assets and
liabilities; net of
acquisitions:
Accounts receivable...... (11,115) (16,537) (13,383) (1,736) 6,023
Inventories.............. (29,877) (17,558) (26,946) (15,989) 24,497
Other current assets and
prepayments............. 6,737 2,567 4,622 4,267 (6,711)
Accounts payable and
accrued liabilities..... (4,262) (20,459) 16,524 8,010 4,020
Advance billings......... (4,912) (26) (88) (1,488) (859)
Other, net................ (521) (2,753) (1,845) 966 (1,280)
-------- --------- -------- -------- --------
Net cash provided by
operating activities..... 108,886 107,988 114,590 96,560 99,501
-------- --------- -------- -------- --------
Cash flows from investing
activities:
Expenditures for fixed
assets.................... (78,566) (98,756) (89,183) (70,460) (57,777)
Proceeds from sale of fixed
assets.................... 4,660 4,643 8,428 6,439 4,800
Other investing
activities................ (19,475) (13,202) (11,657) (9,192) (3,421)
-------- --------- -------- -------- --------
Net cash used in investing
activities............... (93,381) (107,315) (92,412) (73,213) (56,398)
-------- --------- -------- -------- --------
Cash flows from financing
activities:
Due to Pitney Bowes........ 31,445 42,722 27,055 14,654 7,288
Advances to Pitney Bowes... (43,189) (49,438) (50,286) (35,184) (14,579)
-------- --------- -------- -------- --------
Net cash used in financing
activities............... (11,744) (6,716) (23,231) (20,530) (7,291)
-------- --------- -------- -------- --------
Increase (decrease) in
cash....................... 3,761 (6,043) (1,053) 2,817 35,812
Cash at beginning of
period..................... 6,435 10,196 4,153 4,153 3,100
-------- --------- -------- -------- --------
Cash at end of period....... $ 10,196 $ 4,153 $ 3,100 $ 6,970 $ 38,912
======== ========= ======== ======== ========

See Notes to Combined Financial Statements

F-6

IMAGISTICS INTERNATIONAL INC.

Notes to Combined Financial Statements
(Dollars in thousands, except as otherwise indicated)

1. Background and basis of presentation

Background

On December 11, 2000, the board of directors of Pitney Bowes Inc. ("Pitney
Bowes") initiated a plan to spin-off substantially all of its office systems
business to its stockholders as an independent, publicly traded company.
Imagistics International Inc. (formerly known as Pitney Bowes Office Systems,
Inc.) (the "Company"), which will own this business, is a large direct sales,
service and marketing organization offering document imaging solutions,
including copiers, facsimile machines and multi-functional products, primarily
to large corporate and government customers, as well as to small- to mid-sized
businesses. In addition, the Company offers specialized document imaging
options including digital, analog, color and/or networked products and systems.

The combined financial statements include certain historical assets,
liabilities and related operations of the United States and United Kingdom
office systems business, which will be transferred to the Company (the
"Contribution") from Pitney Bowes prior to the spin-off date. Since no direct
ownership relationship existed by the office systems business, Pitney Bowes'
investment in the Company is shown in lieu of shareholder's equity in the
combined financial statements.

The Company was incorporated in Delaware on February 28, 2001 as Pitney
Bowes Office Systems, Inc., a wholly-owned subsidiary of Pitney Bowes. On this
date, 100 shares of the Company's common stock, par value $.01 per share, were
authorized, issued and outstanding. On October 12, 2001, the Company changed
its name to Imagistics International Inc.

Pitney Bowes has announced its intention, subject to certain conditions, to
distribute all of its interest in the Company to Pitney Bowes' stockholders by
the end of the fiscal year ended December 31, 2001. On the date of the spin-
off, Pitney Bowes will distribute the stock of the Company to stockholders of
Pitney Bowes based on a distribution ratio which will be determined prior to
the spin-off.

Pitney Bowes has received a tax ruling from the Internal Revenue Service
stating that, subject to certain representations, the spin-off qualifies as
tax-free to Pitney Bowes and its stockholders for United States federal income
tax purposes.

Basis of presentation

The combined financial statements have been derived from the financial
statements and accounting records of Pitney Bowes using the historical results
of operations and historical basis of assets and liabilities of the United
States and United Kingdom office systems business. Management believes the
assumptions underlying the combined financial statements are reasonable.
However, the combined financial statements included herein may not necessarily
reflect the Company's results of operations, financial position and cash flows
in the future or what its results of operations, financial position and cash
flows would have been had the Company operated as a stand-alone entity during
the periods presented.

The combined financial statements include allocations of certain Pitney
Bowes corporate expenses. Corporate expense allocations have been primarily
charged based on the ratio of the Company's costs and expenses to Pitney Bowes
costs and expenses. The Company's allocated expenses primarily include
administrative expenses such as accounting services, real estate costs,
customer service support in remote geographic areas and information technology
and amounted to $25.7 million, $25.3 million and $26.3 million in 1998, 1999
and 2000, respectively. The Company's management believes the amount of these
services are a reasonable representation of the services performed or
benefitted by the Company.

F-7

IMAGISTICS INTERNATIONAL INC.

Notes to Combined Financial Statements--Continued
(Dollars in thousands, except as otherwise indicated)

Pitney Bowes uses a centralized approach to cash management and the finance
of its operations. Cash deposits from the Company are transferred to Pitney
Bowes on a regular basis and are netted against the owner's net investment
account or due to Pitney Bowes account. As a result, none of Pitney Bowes'
cash, cash equivalents or debt at the corporate level has been allocated to the
Company in the combined financial statements. Cash in the combined financial
statements represents amounts held locally by the Company's operations in
remote geographic areas.

The Company's combined financial statements include interest expense
totaling $5.8 million, $8.7 million and $11.3 million in 1998, 1999 and 2000,
respectively. The associated weighted average interest rate was 4.72%, 5.83%
and 6.87% in 1998, 1999 and 2000, respectively. Interest expense has been
allocated based on a relationship between the Company's net assets and Pitney
Bowes' net assets. The net asset balances used to calculate interest expense do
not necessarily reflect the level of indebtedness the Company will assume at
the spin-off or incur as a stand-alone entity. The Company believes these are
reasonable estimates of the cost of financing the Company's assets and
operations in the past. However, the Company may not be able to obtain
financing at interest rates similar to those used for the interest expense
calculation. Accordingly, the Company's interest expense as a stand-alone
entity may be higher than that reflected in the combined financial statements.

2. Summary of significant accounting policies

Principles of combination

The combined financial statements include the accounts of the United States
and United Kingdom operations of Pitney Bowes' office systems business. All
significant intercompany transactions have been eliminated. Transactions
between the Company and Pitney Bowes are included in these combined financial
statements.

Revenue recognition

Sales revenue is recognized when the risks of ownership have been
transferred to the buyer, which is when title and risk of loss have been
transferred to the customer and collection of the resulting receivable is
reasonably assured. Rental revenue is invoiced in advance; the billed revenue
is deferred and recognized as earned revenue over the rental term, which ranges
from three months to three years. The deferred revenue is included in advance
billings in the combined balance sheets. Support services revenue is recognized
over the term of the service contract.

Concentrations of credit risk

The Company places temporary cash with financial institutions and limits the
amount of credit exposure with any one financial institution. Concentrations of
credit risk with respect to accounts receivable are limited due to the large
number of customers and relatively small account balances within the majority
of the Company's customer base, and their dispersion across different
businesses. The Company periodically evaluates the financial strength of its
customers and believes that its credit risk exposure is limited.

Costs and expenses

Operating expenses of field sales and service offices are included in
selling, service and administrative expenses because no meaningful allocation
of such expenses to cost of sales, rentals or support services is practicable.

F-8

IMAGISTICS INTERNATIONAL INC.

Notes to Combined Financial Statements--Continued
(Dollars in thousands, except as otherwise indicated)

Inventory valuation

Inventories are valued at the lower of cost or market. Cost is determined on
the last-in, first-out (LIFO) basis for U.S. inventories, and on the first-in,
first-out (FIFO) basis for U.K. inventories. Provisions, when required, are
made to reduce excess and obsolete inventories to the estimated net realizable
values.

Fixed assets and depreciation

Property, plant and equipment are stated at cost and depreciated principally
using the straight-line method over appropriate periods: machinery and
equipment principally three to 15 years and buildings at 50 years. Major
improvements which add to productive capacity or extend the life of an asset
are capitalized while repairs and maintenance are charged to expense as
incurred. Rental equipment is depreciated on the straight-line method over
appropriate periods, principally three to five years.

Capitalized computer software costs

The Company capitalizes certain costs of internally developed software.
Capitalized costs include purchased materials and services and payroll and
payroll related costs. Costs for general and administrative, overhead,
maintenance and training, as well as the cost of software that does not add
functionality to the existing system, are expensed as incurred. The cost of
internally developed software is amortized on a straight-line basis over
appropriate periods, principally three to five years. The unamortized balance
of internally developed software is included in other assets in the combined
balance sheets.

Goodwill

Goodwill represents the excess of cost over the value of net tangible assets
acquired in business combinations and is amortized using the straight-line
method over 40 years. Goodwill amortization expense was $0.7 million, $1.1
million and $1.3 million for the years ended December 31, 1998, 1999 and 2000,
respectively.

Impairment of long-lived assets

The carrying value of long-lived assets, including property and equipment,
rental equipment, capitalized computer software costs and goodwill, are
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be fully recoverable. If such a change in
circumstances occurs, the related estimated future undiscounted cash flows
expected to result from the use of the asset and its eventual disposition are
compared to the carrying amount. If the sum of the expected cash flows is less
than the carrying amount, the Company records an impairment loss. The
impairment loss is measured as the amount by which the carrying amount exceeds
the fair value of the asset.

Income taxes

Historically, the Company's operations have been included in Pitney Bowes'
consolidated income tax returns. Income tax expense in the combined financial
statements has been calculated on a separate tax return basis. The deferred tax
provision is determined under the liability method. Deferred tax assets and
liabilities are recognized based on differences between the book and tax bases
of assets and liabilities using currently enacted tax rates. The provision for
income taxes is the sum of the amount of income tax paid or payable for the
year as determined by applying the provisions of enacted tax laws to the
taxable income for that year and the net change during the year in the
Company's deferred tax assets and liabilities.

F-9

IMAGISTICS INTERNATIONAL INC.

Notes to Combined Financial Statements--Continued
(Dollars in thousands, except as otherwise indicated)

Research and Development

Research and development costs, which are expensed as incurred, mainly
consist of salaries and consulting expenditures relating to customized software
applications for document imaging products. Research and development costs,
which are included in selling, service and administrative expenses in the
combined statements of income, were approximately $0.4 million in each of the
years ended December 31, 1998, 1999 and 2000, respectively.

Foreign exchange

Assets and liabilities of the Company's United Kingdom operation are
translated at rates in effect at the end of the period, and revenues and
expenses are translated at average rates during the period. Deferred
translation gains and losses are included in accumulated other comprehensive
income (loss) in invested equity. Gains and losses resulting from foreign
currency transactions (transactions denominated in a currency other than the
entity's functional currency) are included in the combined statements of
income.

Use of estimates

The preparation of combined financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Earnings per share

Historical earnings per share data has not been presented because the
Company did not operate as a separate legal entity of Pitney Bowes with its own
legal structure.

Unaudited interim financial statements

The unaudited financial data as of September 30, 2001 and for the nine
months ended September 30, 2000 and 2001 has been prepared on the same basis as
the annual combined financial statements and, in the opinion of the Company's
management, contains all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of its combined results of
operations, financial position and cash flows. Results for the nine months
ended September 30, 2001 are not necessarily indicative of results to be
expected for the entire fiscal year 2001 or any other interim period.

Recent accounting pronouncements

In 1998, Financial Accounting Standards ("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 and losses depends on the intended use of the derivative and the
resulting designation. FAS No. 133, as amended, is effective January 1, 2001
for the Company. Adoption of this accounting standard did not have an impact on
the financial position or results of operations of the Company.

F-10

IMAGISTICS INTERNATIONAL INC.

Notes to Combined Financial Statements--(Continued)
(Dollars in thousands, except as otherwise indicated)

In 1999, the SEC issued Staff Accounting Bulletin ("SAB") No. 101 "Revenue
Recognition in Financial Statements." summarizing certain guidance in applying
generally accepted accounting principles to revenue recognition in financial
statements. The Company is in compliance with SAB No. 101.

In July 2001, the Financial Accounting Standards Board issued FAS No. 141,
"Business Combinations" and FAS No. 142 "Goodwill and Other Intangible Assets."
FAS No. 141 requires business combinations initiated after June 30, 2001 to be
accounted for using the purchase method of accounting, and broadens the
criteria for recording intangible assets separate from goodwill. FAS No. 142
requires the use of a nonamortization approach to account for purchased
goodwill and certain intangibles. Under a nonamortization approach, goodwill
and certain intangibles will not be amortized into results of operations, but
instead would be reviewed for impairment and written down and charged to
results of operations only in the periods in which the recorded value of
goodwill and certain intangibles is more than its fair value. The provisions of
each statement which apply to goodwill and intangible assets acquired prior to
June 30, 2001, will be adopted by the Company on January 1, 2002. The Company
is currently assessing the financial statement impact of adopting these
statements.

In August 2001, the Financial Accounting Standards Board issued FAS No. 143,
"Accounting for Asset Retirement Obligations". FAS No. 143 addresses financial
accounting and reporting for obligations and costs associated with the
retirement of tangible long-lived assets. The Company will adopt FAS No. 143 on
January 1, 2003. The Company is currently assessing the financial statement
impact of adopting this statement.

In October 2001, the Financial Accounting Standards Board issued FAS No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets". FAS 144
supercedes FAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
of Long-Lived Assets to be Disposed Of" and establishes accounting and
reporting standards for long-lived assets to be disposed of by sale. The
Company will adopt FAS No. 144 on January 1, 2002. The Company is currently
assessing the financial statement impact of adopting this statement.

In September 2001, the Financial Accounting Standards Board's Emerging
Issues Task Force ("EITF") reached a consensus on Issue 01-10, "Accounting for
the Impact of the Terrorist Attacks of September 11, 2001". EITF 01-10 provides
guidance for accounting for the effects of the events of September 11, 2001 in
financial statements. The Company had approximately 3,000 facsimile rental
assets and 750 copier rental assets located in various customer locations in
the World Trade Center Complex in New York City. As a result of the terrorist
attacks of September 11, 2001, the Company has suffered property damage losses
relating to these rental assets. While it is too early to determine the full
extent of all damages and losses, management believes it is probable that
insurance programs substantially cover these losses. Accordingly, in compliance
with EITF No. 01-10, the Company has reduced rental assets and included in Due
to Pitney Bowes approximately $2.0 million representing the net book value of
the facsimile and copier products expected to be covered under property
insurance claims filed by Pitney Bowes. In addition, Pitney Bowes expects to
submit an insurance claim under the provisions of its business interruption
policy that includes a claim for the Company's lost revenue under leases for
facsimile and copier products destroyed during the terrorist attacks. In
accordance with EITF 01-10, as the likelihood of collection under this claim
cannot yet be determined, the Company has not recorded any gain contingency
related to this matter.

F-11

3. Inventories

Inventories consist of the following:

December 31, September 30
----------------- ------------
1999 2000 2001
-------- -------- ------------
(unaudited)

Supplies and service parts.................... $ 75,163 $ 81,703 $ 62,650
Finished products............................. 52,114 72,746 67,506
-------- -------- --------
Total......................................... $127,277 $154,449 $130,156
======== ======== ========

If all inventories valued at LIFO had been stated at current costs,
inventories would have been $6.2 million, $5.2 million and $6.9 million lower
than reported at December 31, 1999 and 2000 and September 30, 2001,
respectively.

4. Fixed assets

December 31, September 30,
-------------------- -------------
1999 2000 2001
--------- --------- -------------
(unaudited)

Land................................... $ 1,356 $ 1,356 $ 1,356
Buildings and leasehold improvements... 6,397 5,918 7,475
Machinery and equipment................ 22,884 25,039 31,232
--------- --------- ---------
30,637 32,313 40,063
Accumulated depreciation............... (16,874) (16,699) (18,047)
--------- --------- ---------
Property, plant and equipment, net..... $ 13,763 $ 15,614 $ 22,016
========= ========= =========
Rental equipment and related
inventories........................... $ 345,232 $ 378,161 $ 389,228
Accumulated depreciation............... (210,394) (236,853) (255,659)
--------- --------- ---------
Rental equipment and related
inventories, net...................... $ 134,838 $ 141,308 $ 133,569
========= ========= =========

Depreciation and amortization expense was $57.7 million, $66.1 million and
$72.4 million for the years ended December 31, 1998, 1999 and 2000,
respectively.

5. Acquisitions

During the year ended December 31, 2000, the Company acquired nine
independent dealers in remote geographic areas, for the expansion of sales and
service capabilities. The aggregate purchase price was $8.7 million, of which a
net $0.5 million was allocated to the assets acquired and the liabilities
assumed based on their fair values at the date of acquisition and $8.2 million
to goodwill.

During the year ended December 31, 1999, the Company acquired seven
independent dealers in remote geographic areas, for the expansion of sales and
service capabilities. The aggregate purchase price was $11.3 million, of which
a net $2.1 million was allocated to the assets acquired and the liabilities
assumed based on their fair values at the date of acquisition and $9.2 million
to goodwill.

During the year ended December 31, 1998, the Company acquired seventeen
independent dealers in remote geographic areas, for the expansion of sales and
service capabilities. The aggregate purchase price was $33.4 million, of which
a net $3.8 million was allocated to the assets acquired and the liabilities
assumed based on their fair values at the date of acquisition and $29.6 million
to goodwill.

The above acquisitions were accounted for using the purchase method of
accounting and, accordingly, the results of the acquired businesses have been
included in the Company's combined financial statements from the respective
date of acquisition.

F-12

IMAGISTICS INTERNATIONAL INC.

Notes to Combined Financial Statements--(Continued)
(Dollars in thousands, except as otherwise indicated)

The following table presents the unaudited pro forma combined results of
operations for the years ended December 31, 1999 and 2000 as if the
acquisitions completed in 1999 and 2000 had been completed on January 1, 1999:

December 31,
-----------------
1999 2000
-------- --------

Revenues................................................... $640,599 $645,290
Net income................................................. $ 92,524 $ 62,919

6. Current liabilities

Accounts payable and accrued liabilities are comprised as follows:

December 31, September 30,
--------------- -------------
1999 2000 2001
------- ------- -------------
(unaudited)

Accounts payable-trade....................... $11,513 $14,211 $14,437
Accrued salaries, wages and commissions...... 2,113 9,142 3,595
Miscellaneous accounts payable and accrued
liabilities................................. 10,457 19,004 28,794
------- ------- -------
Accounts payable and accrued liabilities..... $24,083 $42,357 $46,826
======= ======= =======

7. Taxes on income

Net income before income taxes and the provision for income taxes consist of
the following:

Years ended December 31,
---------------------------
1998 1999 2000
-------- -------- --------

Net income before income taxes
U.S............................................ $151,274 $145,062 $ 98,894
Outside the U.S................................ 6,853 8,512 5,097
-------- -------- --------
Total......................................... $158,127 $153,574 $103,991
======== ======== ========
Provision for income taxes
U.S. federal
Current....................................... $ 48,593 $ 44,333 $ 32,653
Deferred...................................... (163) 2,867 (696)
-------- -------- --------
48,430 47,200 31,957
U.S. state and local
Current....................................... 12,941 11,062 7,818
Deferred...................................... (40) 732 (200)
-------- -------- --------
12,901 11,794 7,618
Outside the U.S.
Current....................................... 2,121 2,644 1,569
Deferred...................................... -- -- --
-------- -------- --------
2,121 2,644 1,569
Total current................................. 63,655 58,039 42,040
Total deferred................................ (203) 3,599 (896)
-------- -------- --------
Total....................................... $ 63,452 $ 61,638 $ 41,144
======== ======== ========

F-13

IMAGISTICS INTERNATIONAL INC.

Notes to Combined Financial Statements--(Continued)
(Dollars in thousands, except as otherwise indicated)

A reconciliation of the U.S. federal statutory rate to the Company's
effective tax rate is as follows:

Years ended
December 31,
----------------
1998 1999 2000
---- ---- ----

U.S. federal statutory rate................................ 35.0% 35.0% 35.0%
State and local income taxes............................... 5.3 5.0 4.8
Other, net................................................. (0.2) 0.1 (0.2)
---- ---- ----
Effective income tax rate.................................. 40.1% 40.1% 39.6%
==== ==== ====

The components of deferred tax assets and liabilities as of December 31,
1999 and 2000 are as follows:

December 31,
-------------
1999 2000
------ ------

Deferred tax assets:
Inventory and equipment capitalization....................... $5,531 $6,396
State and local property taxes............................... 688 1,240
Employee benefits............................................ 1,807 1,072
Other........................................................ 273 444
------ ------
Deferred tax assets......................................... 8,299 9,152
------ ------
Deferred tax liabilities:
Depreciation................................................. 3,345 3,963
Goodwill..................................................... 805 1,407
Various accruals and other................................... 1,681 418
------ ------
Deferred tax liabilities.................................... 5,831 5,788
------ ------
Net deferred tax asset........................................ $2,468 $3,364
====== ======

8. Related party transactions

For the years ended December 31, 1998, 1999 and 2000, the Company had $15.0
million, $21.4 million and $21.5 million, respectively, of revenue from
products sold to Pitney Bowes. The Company sells equipment and supplies to
Pitney Bowes. For the years ended December 31, 1998, 1999 and 2000, the
Company financed $86.2 million, $89.4 million and $90.1 million, respectively
of the Company's sales through Pitney Bowes Credit Corporation, a wholly-owned
subsidiary of Pitney Bowes.

At December 31, 1999 and 2000 the Company had a payable due to Pitney Bowes
of $80.9 million and $108.0 million, respectively. The balance is primarily
the result of the Company's participation in Pitney Bowes' cash management
system as all excess cash was remitted to Pitney Bowes and cash disbursements
were made by Pitney Bowes.

In connection with the Contribution and the spin-off, the Company and
Pitney Bowes are expected to execute and deliver the distribution agreement
and certain related agreements which are summarized below. This summary is
qualified in all respects by the terms of the distribution agreement and such
related agreements.

F-14

IMAGISTICS INTERNATIONAL INC.

Notes to Combined Financial Statements--(Continued)
(Dollars in thousands, except as otherwise indicated)

Distribution agreement

Pursuant to the distribution agreement, Pitney Bowes expects to transfer to
the Company substantially all of the assets and liabilities associated with the
United States and United Kingdom office systems business. The distribution
agreement, among other things contains provisions governing indemnification.

Employee benefit agreements

The Company and Pitney Bowes are expected to enter into employee benefit
agreements which will outline how Pitney Bowes and the Company plan to allocate
responsibility and liability for Pitney Bowes employees who will become
employees of the Company.

Transition services agreement

The Company and Pitney Bowes are expected to enter into a transition
services agreement that provides for Pitney Bowes to provide certain services
to the Company, on a transitional basis. These services will include
information technology, computing, telecommunications, benefits, accounting,
payroll, field service of equipment and dispatch call center services.

The Company will pay Pitney Bowes for its actual out-of-pocket costs for the
services provided, including a proportionate share of its overhead, if
applicable, computed in accordance with Pitney Bowes' internal chargeback
practices.

Tax separation agreement

The Company and Pitney Bowes are expected to enter into a tax separation
agreement, which will govern the Company's and Pitney Bowes respective rights,
responsibilities and obligations after the spin-off with respect to taxes for
the periods ending on or before the spin-off. In addition, the tax separation
agreement generally obligates the Company not to enter into any transaction
that would adversely affect the tax-free nature of the spin-off for the two-
year period following the spin-off, and obligates the Company to indemnify
Pitney Bowes and affiliates to the extent that any action the Company takes or
fails to take gives rise to a tax liability with respect to the spin-off.

Intellectual property agreement

The Company and Pitney Bowes are expected to enter into a trademark license,
patent license and copyright license agreement, pursuant to which the Company
will have rights to continue to use the Pitney Bowes brand and rights to
patents and copyrights, for a specific transition period following the spin-
off.

Other commercial agreements

In addition to the above listed agreements, the Company and Pitney Bowes are
expected to enter into a number of other commercial agreements to govern
product resale and equipment financing arrangements between Pitney Bowes and
the Company. The pricing terms of the products and services covered by the
other commercial agreements will reflect negotiated prices.

F-15

IMAGISTICS INTERNATIONAL INC.

Notes to Combined Financial Statements--(Continued)
(Dollars in thousands, except as otherwise indicated)

Sublease/license agreements

The Company and Pitney Bowes are also expected to enter into various
sublease/license arrangements for the sharing of certain facilities for a
transitional period on commercial terms. A limited number of leases may be
terminated on 120 days' notice by Pitney Bowes in the case of subleased
facilities.

Credit agreement

It is likely that Pitney Bowes Credit Corporation, a wholly owned subsidiary
of Pitney Bowes, will be a participant in the credit facility the Company
expects to enter into in connection with the spin-off. The Company expects that
Pitney Bowes Credit Corporation (i) would provide less than 50 percent of the
credit facility and (ii) will cease to be a lender under the credit facility no
later than one year after the spin-off.

9. Commitments and contingencies

Legal matters

The Company did not exist as a separate entity before February 28, 2001, and
the assets and liabilities of Pitney Bowes' office systems division will not be
contributed to the Company until just before the spin-off. Therefore, the
Company has not been a party to any legal proceedings.

In connection with the spin-off, the Company has agreed to assume all
liabilities associated with its business, and to indemnify Pitney Bowes for all
claims relating to that business. In the course of normal business, Pitney
Bowes has been party to occasional lawsuits relating to the Company's business.
These may involve litigation by or against Pitney Bowes or the Company relating
to, among other things:

. contractual rights under vendor, insurance or other contracts,

. intellectual property or patent rights,

. equipment, service or payment disputes with customers and

. disputes with employees.

Pitney Bowes is currently a plaintiff or a defendant in lawsuits, relating
to the business or products of the Company, which liabilities will be
transferred to the Company in connection with the spin-off. The Company has not
recorded liabilities for loss contingencies since the ultimate resolution of
the legal matters are not probable and a minimum cost or amount of loss cannot
be reasonably estimated. In the opinion of the Company's management, none of
these proceedings, individually or in the aggregate, should have, a material
adverse effect on the Company's financial position, results of operations or
cash flows.

Risks and uncertainties

The Company has no history operating as an independent entity, may be unable
to make the changes necessary to operate as a stand-alone entity, or may incur
greater costs as a stand-alone entity that may cause the Company's
profitability to decline. Prior to the spin-off, the Company's business was
operated by Pitney Bowes as a segment of its broader corporate organization
rather than as a separate stand-alone entity. Pitney

F-16

IMAGISTICS INTERNATIONAL INC.

Notes to Combined Financial Statements--(Continued)
(Dollars in thousands, except as otherwise indicated)
Bowes assisted the Company by providing corporate functions such as legal and
tax functions. Following the spin-off, Pitney Bowes will have no obligation to
provide assistance to the Company other than the interim and transitional
services which will be provided by Pitney Bowes. Because the Company's business
has never been operated as a stand-alone entity, there can be no assurance that
the Company will be able to successfully implement the changes necessary to
operate independently or may incur additional costs as a result of operating
independently. Each of these events would cause the Company's profitability to
decline.

Although the Company currently sources products from a number of
manufacturers throughout the world, a significant portion of new copier
equipment is currently obtained from one supplier. If this supplier were unable
to deliver products for a significant period of time, the Company would be
required to find replacement products from an alternative supplier or
suppliers, which may not be available on a timely or cost effective basis. The
Company's operating results could be adversely affected if its significant
supplier is unable to deliver sufficient product.

10. Leases

In addition to owned distribution and office facilities, the Company leases
similar properties, as well as sales and service offices, equipment and other
properties, generally under long-term lease agreements extending from three to
15 years.

Future minimum lease payments under non-cancelable operating leases at
December 31, 2000 are as follows:

Operating
Years ending December 31, leases
------------------------- ---------

2001............................................................... $ 8,043
2002............................................................... 6,092
2003............................................................... 4,452
2004............................................................... 3,031
2005............................................................... 1,716
Thereafter......................................................... 2,743
--------
Total minimum lease payments....................................... $ 26,077
========

Rental expense was $4.6 million, $6.0 million and $7.3 million in 1998, 1999
and 2000, respectively.

F-17

IMAGISTICS INTERNATIONAL INC.

Notes to Combined Financial Statements--(Continued)
(Dollars in thousands, except as otherwise indicated)

11. Business Segment Information

Statement of Financial Accounting Standard No. 131, "Disclosure about
Segments of an Enterprise and Related Information," established standards for
reporting information about operating segments in financial statements and for
related disclosures about products and services, geographic areas and major
customers. The Company operates in two reportable segments based on geographic
area. Revenues are attributed to geographic regions based on where the revenues
are derived. Identifiable long-lived assets in the United States at December
31, 1999 and 2000 and at September 30, 2001 include goodwill of $46.6 million,
$53.1 million and $53.0 million, respectively.

Nine months ended
Year ended December 31, September 30,
-------------------------- -----------------
1998 1999 2000 2000 2001
-------- -------- -------- -------- --------
(unaudited)

Revenues:
United States:
Sales.......................... $284,551 $307,707 $313,750 $235,841 $221,963
Rentals........................ 192,902 203,197 219,469 162,473 168,914
Support Services............... 87,710 89,207 87,495 65,409 60,997
-------- -------- -------- -------- --------
565,163 600,111 620,714 463,723 451,874
United Kingdom:
Sales.......................... 14,889 15,240 12,296 9,511 9,078
Rentals........................ 6,623 8,156 8,321 6,959 5,265
Support Services............... 3,026 2,970 1,427 1,899 1,124
-------- -------- -------- -------- --------
24,538 26,366 22,044 18,369 15,467
-------- -------- -------- -------- --------
Total Revenues................... $589,701 $626,477 $642,758 $482,092 $467,341
======== ======== ======== ======== ========
Operating profit:
United States.................... $151,274 $145,062 $ 98,894 $ 77,744 $ 22,801
United Kingdom................... 6,853 8,512 5,097 5,106 768
-------- -------- -------- -------- --------
Total............................ $158,127 $153,574 $103,991 $ 82,850 $ 23,569
======== ======== ======== ======== ========

Revenues from external customers were approximately $488.5 million, $515.6
million and $531.2 million during the years ended December 31, 1998, 1999 and
2000, respectively. Revenues from Pitney Bowes, substantially all of which are
generated in the United States segment, were approximately $101.2 million,
$110.9 million and $111.6 million during the years ended December 31, 1998,
1999 and 2000.

December 31, September 30,
----------------- -------------
1999 2000 2001
-------- -------- -------------
(unaudited)

Identifiable long-lived assets:
United States................................. $191,025 $207,029 $203,575
United Kingdom................................ 5,860 5,209 5,378
-------- -------- --------
Total......................................... $196,885 $212,238 $208,953
======== ======== ========
Total assets:
United States................................. $428,618 $485,850 $505,413
United Kingdom................................ 21,216 19,614 15,034
-------- -------- --------
$449,834 $505,464 $520,447
======== ======== ========

F-18

IMAGISTICS INTERNATIONAL INC.

Notes to Combined Financial Statements--(Continued)
(Dollars in thousands, except as otherwise indicated)

12. Financial instruments

The carrying values of the Company's financial instruments, including cash,
accounts receivable, accounts payable and accrued liabilities and other
noncurrent liabilities, approximate fair value.

13. Employee benefit plans

Pension plan

Prior to the spin-off, the Company's employees participated in Pitney Bowes'
defined benefit pension plan which covers substantially all Pitney Bowes
employees. In general, those Pitney Bowes employees who accept employment with
the Company will terminate employment with Pitney Bowes but will maintain their
vested rights in the Pitney Bowes pension plan. Pitney Bowes' funding policy is
to contribute annual amounts as needed based on actuarial and economic
assumptions designed to achieve adequate funding of projected benefit
obligations. The net periodic pension benefit allocated to the Company
associated with the Pitney Bowes defined benefit pension plan was $0.9 million,
$1.4 million and $1.9 million during years ended December 31, 1998, 1999 and
2000, respectively. Benefits provided under Pitney Bowes' defined benefit
pension plan are primarily based on the employee's age, years of service and
compensation.

Post retirement plans

Prior to the spin-off, the Company's employees participated in Pitney Bowes'
postretirement plans that provide certain healthcare and life insurance
benefits to eligible retirees and their dependents. Substantially all of Pitney
Bowes' U.S. employees become eligible for these benefits if they have met
certain age and service requirements at retirement. The costs of these benefits
are recognized over the period the employee provides credited service to the
Company. Postretirement benefit costs incurred on behalf of employees of the
Company were $0.3 million, $0.7 million and $1.8 million during years ended
December 31, 1998, 1999 and 2000, respectively.

Profit sharing and savings plan

Prior to the spin-off, the Company's employees participated in Pitney Bowes'
profit sharing and savings plan. Substantially all of Pitney Bowes' domestic
employees are eligible to participate in the plan under which Pitney Bowes will
make matching contributions of at least 1% of a participant's contribution up
to 4% of the participant's eligible compensation, subject to limitations
required by government laws or regulations. In addition, Pitney Bowes will make
an employer contribution to all participants based upon the increase in the
stock price of Pitney Bowes shares from year to year. Contributions to the plan
on behalf of employees of the Company were $4.3 million, $2.4 million and $2.3
million during years ended December 31, 1998, 1999 and 2000, respectively.

Upon the spin-off, the Company will establish separate employee benefit
plans.

14. Stock plans

Employee stock option plans

Prior to the spin-off, the Company's employees participated in Pitney Bowes'
United States and United Kingdom stock option plans. Pursuant to FAS No. 123,
"Accounting for Stock-Based Compensation," companies can, but are not required
to, elect to recognize compensation expense for all stock-based awards

F-19

IMAGISTICS INTERNATIONAL INC.

Notes to Combined Financial Statements--(Continued)
(Dollars in thousands, except as otherwise indicated)
using a fair value methodology. The Company has adopted the disclosure-only
provisions, as permitted by FAS No. 123. The Company applies Accounting
Principles Board Opinion No. 25 and related interpretations in accounting for
its stock-based plans. If the Company had elected to recognize compensation
expense based on the fair value method as presented by FAS No. 123, net income
would have been reduced as follows:

1998 1999 2000
------- ------- -------

Net income
As reported........................................... $94,675 $91,936 $62,847
Pro forma............................................. $93,504 $89,647 $59,432

The fair value of Pitney Bowes' stock option grants to employees of the
Company were estimated on the date of grant using the Black-Scholes option-
pricing model with the following assumptions:

1998 1999 2000
---- ---- ----

Expected dividend yield....................................... 1.5% 2.0% 2.9%
Expected stock price volatility............................... 18% 21% 27%
Risk-free interest rate....................................... 5% 6% 6%
Expected life (years)......................................... 5 5 5

Employee stock purchase plans

Prior to the spin-off, the Company's employees participated in Pitney Bowes'
United States and United Kingdom Employee Stock Purchase Plans ("ESPP"). The
Pitney Bowes U.S. ESPP enables substantially all employees to purchase shares
of Pitney Bowes common stock at a discounted offering price. In 2000, the
offering price was 90% of the average closing price of Pitney Bowes common
stock on the New York Stock Exchange for the 30 day period preceding the
offering date. At no time will the exercise price be less than the lowest price
permitted under Section 423 of the Internal Revenue Code. The Pitney Bowes U.K.
ESPP enables eligible employees of participating U.K. subsidiaries to purchase
shares of the Pitney Bowes' stock at a discounted offering price. In 2000, the
offering price was 90% of the average closing price of Pitney Bowes' common
stock on the New York Stock Exchange for the 30 day period preceding the
offering date.

15. Quarterly financial data (unaudited)

Summarized quarterly financial data for 1999 and 2000 follows:

Three months ended
-----------------------------------
March 31 June 30 Sept. 30 Dec. 31
-------- -------- -------- --------

1999
Total revenue............................ $153,070 $157,228 $153,390 $162,789
Operating profit......................... $ 39,482 $ 40,069 $ 36,194 $ 37,829
Net income............................... $ 23,651 $ 23,954 $ 21,685 $ 22,646

2000
Total revenue............................ $157,087 $162,617 $162,388 $160,666
Operating profit......................... $ 28,023 $ 30,640 $ 24,187 $ 21,141
Net income............................... $ 16,975 $ 18,499 $ 14,626 $ 12,747

F-20

IMAGISTICS INTERNATIONAL INC.

Schedule (II)--Valuation and Qualifying Accounts for the years ended
December 31, 1998, 1999 and 2000

Balance at
beginning of Charges, costs Balance at end
period and expenses Deductions of period
------------ -------------- ---------- --------------

Allowance for doubtful
accounts
1998.................. $1,055 $1,717 $(2,240) $ 532
1999.................. 532 1,427 (1,228) 731
2000.................. 731 3,801 (2,921) 1,611

F-21