United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 17, 2001
PITNEY BOWES INC.
Commission File Number: 1-3579
State of Incorporation IRS Employer Identification No.
Delaware 06-0495050
World Headquarters
Stamford, Connecticut 06926-0700
Telephone Number: (203) 356-5000
Item 5 - Other Events.
The registrant's press release dated July 17, 2001 regarding its financial
results for the period ended June 30, 2001, including consolidated statements of
income and selected segment data for the three and six months ended June 30,
2001 and 2000, and consolidated balance sheets at June 30, 2001, March 31, 2001
and June 30, 2000, are attached.
Item 7 - Financial Statements and Exhibits.
c. Exhibits.
The following exhibits are furnished in accordance with the provisions of Item
601 of Regulation S-K:
Exhibit Description
------- ---------------------------------------------------------
(1) Pitney Bowes Inc. press release dated July 17, 2001.
Signatures
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PITNEY BOWES INC.
July 19, 2001
/s/ B.P. Nolop
-----------------------------------
B. P. Nolop
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
/s/ A.F. Henock
-----------------------------------
A. F. Henock
Vice President - Finance
(Principal Accounting Officer)
EXHIBIT 1
---------
FOR IMMEDIATE RELEASE
---------------------
PITNEY BOWES MEETS SECOND QUARTER 2001 EARNINGS GUIDANCE
--------------------------------------------------------
o Excluding special items:
-- Diluted Earnings Per Share of 58 Cents
-- In excess of $168 million in Free Cash Flow
o Significant Strategic Activity during the Quarter
STAMFORD, Conn., July 17, 2001 - Pitney Bowes Inc. (NYSE: PBI) today announced
second quarter results that included diluted earnings per share from continuing
operations of 58 cents, an increase of three percent, excluding both special
gains and charges. Revenue grew two percent to $1.02 billion. Excluding both
special gains and charges, income from continuing operations was $144.6 million.
During the quarter, special gains and charges included: a $362 million
net pre-tax gain as a result of settling a lawsuit with Hewlett-Packard Company;
a non-cash $248 million pre-tax charge associated with the company's previously
announced plan to transition to the next generation of networked mailing
technology; and a $29 million pre-tax charge related to additional initiatives
under the company's previously announced restructuring plan.
Commenting on the quarter, Chairman and Chief Executive Officer Michael
J. Critelli said, "The second quarter was a remarkable period in the history of
Pitney Bowes. During the quarter, we met our earnings guidance despite the
backdrop of a weakening economic environment and significant strategic activity.
During the quarter, we initiated several major transactions which will extend
our market reach and enhance our ability to deliver advanced products and
services to customers worldwide. These included the acquisition of Danka
Services International (DSI) which closed at the end of June; the acquisition of
Bell & Howell's International Mail and Messaging Technologies business, which
closed in early June; and our intention to acquire Secap, a leading provider of
advanced mailing and metering technology in France. We solidified our plans to
transform the global mailing industry by making a long-term commitment to
develop a networked platform for our mailing systems. We also reaffirmed the
value of our ongoing investment in technology development, and our existing
intellectual property portfolio through an intellectual property settlement with
Hewlett-Packard. This settlement resulted in a $400 million cash payment, before
legal fees and related expenses, and an agreement to pursue future business and
commercial relationships.
(2)
"We believe all of these actions will deliver shareholder and customer
value as we strengthen our ability to provide leading-edge global, integrated
mail and document management solutions to organizations of all sizes."
The Global Mailing Segment includes worldwide revenues and related
expenses from the sale, rental and financing of mail finishing, mail creation
and shipping equipment, related supplies and services, postal payment solutions,
small business solutions and software. In the second quarter, Global Mailing
revenue was flat while operating profit increased four percent. As in the
previous three quarters, Global Mailing revenue comparisons to the prior year
were adversely impacted by the loss of revenues associated with the sale of the
credit card portfolio in the second quarter of last year and the impact from
unfavorable foreign currency during the quarter. Excluding the impact of these
two factors, Global Mailing revenues increased four percent and operating profit
increased seven percent.
During the quarter, traditional mailing products revenue grew despite
the slowing economy and its impact on the placement of higher value mail
creation and distribution solutions products. Operating profit continued to
benefit from the lower administrative costs from process improvements.
On a U.S. dollar basis, the Global Mailing segment revenue growth was
reduced by approximately one and one-half percent due to unfavorable foreign
currency impacts, principally the British Pound, the Canadian Dollar and the
Euro.
(3)
The Enterprise Solutions Segment includes Pitney Bowes Management
Services and Document Messaging Technologies (formerly Production Mail).
Revenues from Management Services include facilities management contracts for
advanced mailing, reprographic, document management and other added-value
services to large enterprises. Revenues from Document Messaging Technologies
include sales, service and financing of high speed, software-enabled production
mail systems, sorting equipment, incoming mail systems, electronic statement,
billing and payment solutions, and mailing software. The Enterprise Solutions
segment, which represents approximately one-quarter of consolidated revenue,
grew revenue 13 percent while operating profit declined two percent. Operating
profit comparisons, particularly for Document Messaging Technologies, were
adversely impacted by a previously reported settlement received from Bell &
Howell in the second quarter of 2000 and costs associated with the investments
in acquisition and growth initiatives during the second quarter of 2001.
Excluding these items, operating profit for the segment would have increased at
a double-digit rate.
Pitney Bowes Management Services achieved its seventh consecutive
quarter of improving revenue, recording a 14 percent increase over 2000.
Operating profit grew at an even faster pace. The growth in business came from
both new, value-added services for existing clients and new enterprise
contracts.
Document Messaging Technologies revenues grew 11 percent during the
quarter. Document Messaging Technologies growth has benefited from its
broadening portfolio of products and services, while worldwide demand for
high-speed, software enabled production mail equipment and mail processing
software has been tempered by slowing economic activity. DocSense continues to
be a recognized leader in the field of electronic bill and statement management.
Its growth has been enhanced by the acquisition of Alysis Technologies, a
leading provider of business-to-business and business-to-consumer digital
document delivery solutions.
Total Messaging Solutions, the combined results of the Global Mailing
and Enterprise Solutions segments, reported a three percent increase in both
revenues and operating profit.
The Capital Services Segment includes primarily asset- and fee-based
income generated by financing or arranging transactions for the acquisition of
non-Pitney Bowes equipment. Revenue for the quarter declined 10 percent,
consistent with the company's ongoing objective to shift to fee-based
transactions. Operating profit decreased three percent for the quarter.
(4)
As noted previously, during the quarter, the company recorded a $248
million pre-tax non-cash charge related to its plan to transition to the next
generation of networked mailing technology. The components of the charge are: 52
percent for the impairment of the equipment lease residual values; 29 percent
for the impairment in value of affected meter rental assets; 11 percent for
charges related to reduced inventory valuation; and 8 percent for additional
depreciation costs on meter rental assets.
Additionally, the company repurchased 1.8 million shares, leaving $156
million of authorization for future share repurchases. Free cash flow from
continuing operations, excluding payments associated with the restructuring plan
and proceeds from the legal settlement, totaled in excess of $168 million during
the quarter.
Compared to year 2000 results, the company expects revenue growth of
approximately four to six percent for the second half of the year, prior to the
inclusion of any revenues from the recently announced acquisitions. Diluted
earnings per share from continuing operations are expected to be in the range of
59 to 60 cents for the third quarter 2001 and $2.35 to $2.37 for the full year.
Second quarter 2001 revenue included $522.4 million from sales, up
seven percent from $488.3 million in the second quarter of 2000; $365.1 million
from rentals and financing, down six percent from $386.6 million; and $133.3
million from support services, up nine percent from $122.7 million. Income from
continuing operations for the period was $187.9 million, or 76 cents per diluted
share. Excluding both special gains and charges, income from continuing
operations during the quarter was $144.6 million, or 58 cents per diluted share
compared to second quarter 2000 income from continuing operations of $146.3
million, or 56 cents per diluted share. Second quarter 2001 net income was
$177.0 million or 71 cents per diluted share compared to second quarter 2000 net
income of $166.0 million or 64 cents per diluted share. Second quarter 2001 net
income includes a loss of $10.8 million from discontinued operations or
approximately five cents per diluted share, while second quarter 2000 net income
included income of $19.6 million from discontinued operations, or eight cents
per diluted share.
(5)
For the six-month period ended June 30, 2001, revenue was $1.987
billion, up two percent from $1.942 billion in 2000. Income from continuing
operations for 2001, excluding both special gains and charges, was $276.1
million, or $1.11 per diluted share compared to $279.8 million or $1.07 per
diluted share in 2000. Year-to-date restructuring charges total approximately
$104 million of which $71 million was related to continuing operations and $33
million was related to discontinued operations. Year-to-date net income for 2001
was $281.0 million or $1.13 per diluted share compared to $312.8 million or
$1.19 per diluted share in 2000. The year-to-date net income for 2001 included a
$10.8 million loss from discontinued operations, or four cents per diluted
share, compared to $37.7 million of income from discontinued operations or 14
cents per diluted share, and a $4.7 million charge from a change in accounting
or two cents per diluted share in 2000.
Pitney Bowes is a $4 billion global provider of integrated mail,
messaging and document management solutions headquartered in Stamford,
Connecticut. The company serves over 2 million businesses of all sizes through
dealer and direct operations. For additional information on the company, its
products and solutions visit www.pitneybowes.com.
The statements contained in this news release that are not purely
historical are forward-looking statements with the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
These statements may be identified by their use of forward-looking terminology
such as the words "expects," "anticipates," "intends" and other similar words.
Such forward-looking statements include, but are not limited to, statements
about restructuring charges and our future guidance, including our expected
revenue in the second half of 2001, and our expected diluted earnings per share
from continuing operations for the third quarter and for the full year 2001.
Such forward-looking statements involve risks and uncertainties that could cause
actual results to differ materially from those projected. These risks and
uncertainties include, but are not limited to: adverse changes in the economic
environment, timely development and acceptance of new products or gaining
product approval; successful entry into new markets; changes in interest rates;
and changes in postal regulations, as more fully outlined in the company's 2000
Form 10-K Annual Report filed with the Securities and Exchange Commission. In
addition, the forward-looking statements are subject to change based on the
timing and specific terms of the Office Systems spin-off and any announced or
proposed acquisitions. The forward-looking statements contained in this news
release are made as of the date hereof and we do not assume any obligation to
update the reasons why actual results could differ materially from those
projected in the forward-looking statements.
================================================================================
Note: Consolidated statements of income for the three and six months ended June
30, 2001 and 2000, and consolidated balance sheets at June 30, 2001, March 31,
2001, and June 30, 2000, are attached.
Pitney Bowes Inc.
Consolidated Statements of Income
(Unaudited)
-----------
(Dollars in thousands,
except per share data)
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- --------------------------
2001 2000 2001 2000
---------- ---------- ---------- ----------
Revenue from:
Sales $ 522,434 $ 488,301 $ 993,906 $ 929,495
Rentals and financing 365,098 386,648 733,090 767,319
Support services 133,332 122,676 260,191 245,576
---------- ---------- ---------- ----------
Total revenue 1,020,864 997,625 1,987,187 1,942,390
---------- ---------- ---------- ----------
Costs and expenses:
Cost of sales 303,961 280,211 582,311 538,305
Cost of rentals and financing 90,227 95,644 181,060 195,560
Cost of meter transition (*) 247,700 - 247,700 -
Selling, service and administrative 336,137 327,326 659,040 645,195
Research and development 34,865 30,528 66,467 60,039
Other income (*) (362,172) - (362,172) -
Interest, net 44,301 50,411 94,886 95,095
Restructuring charges (*) 27,609 - 70,760 -
---------- ---------- ---------- ----------
Total costs and expenses 722,628 784,120 1,540,052 1,534,194
---------- ---------- ---------- ----------
Income from continuing operations
before income taxes 298,236 213,505 447,135 408,196
Provision for income taxes 110,380 67,172 155,342 128,410
---------- ---------- ---------- ----------
Income from continuing operations 187,856 146,333 291,793 279,786
Discontinued operations (10,827) 19,624 (10,827) 37,724
Cumulative effect of accounting change (*) - - - (4,683)
---------- ---------- ---------- ----------
Net income $ 177,029 $ 165,957 $ 280,966 $ 312,827
========== ========== ========== ==========
Basic earnings per share
Continuing operations $ 0.76 $ 0.57 $ 1.18 $ 1.08
Discontinued operations (0.04) 0.07 (0.04) 0.14
Cumulative effect of accounting change - - - (0.02)
---------- ---------- ---------- ----------
Net income 0.72 0.64 1.14 1.20
Special gains and charges after-tax(*) (0.17) - (0.06) 0.02
Discontinued operations 0.04 (0.07) 0.04 (0.14)
---------- ---------- ---------- ----------
Income from continuing operations
excluding special gains and charges $ 0.59 $ 0.57 $ 1.12 $ 1.08
========== ========== ========== ==========
Diluted earnings per share
Continuing operations $ 0.76 $ 0.56 $ 1.17 $ 1.07
Discontinued operations (0.05) 0.08 (0.04) 0.14
Cumulative effect of accounting change - - - (0.02)
---------- ---------- ---------- ----------
Net income 0.71 0.64 1.13 1.19
Special gains and charges after-tax(*) (0.18) - (0.06) 0.02
Discontinued operations 0.05 (0.08) 0.04 (0.14)
---------- ---------- ---------- ----------
Income from continuing operations
excluding special gains and charges $ 0.58 $ 0.56 $ 1.11 $ 1.07
========== ========== ========== ==========
Average common and potential common
shares outstanding 248,420,347 259,702,184 249,146,896 262,624,456
=========== =========== =========== ===========
Note: Special gains and charges are indicated by the asterisk above. The total
of these items result in a net after-tax gain for the three and six months
ended June 30, 2001 of $43,306 and $15,689, respectively.
Pitney Bowes Inc.
Consolidated Balance Sheets
(Unaudited)
(Dollars in thousands, except per share data)
Assets 6/30/01 3/31/01 6/30/00
------ ----------- ----------- -----------
Current assets:
Cash and cash equivalents $ 199,609 $ 194,386 $ 296,695
Short-term investments, at cost which
approximates market 3,472 1,572 2,811
Accounts receivable, less allowances:
6/01 $30,356 3/01 $25,860 6/00 $25,767 385,799 323,135 427,944
Finance receivables, less allowances:
6/01 $56,779 3/01 $43,184 6/00 $40,927 1,463,061 1,539,414 1,431,588
Inventories 166,917 184,734 260,668
Other current assets and prepayments 157,086 168,177 173,013
Net assets of discontinued operations 223,578 215,594 -
----------- ----------- -----------
Total current assets 2,599,522 2,627,012 2,592,719
----------- ----------- -----------
Property, plant and equipment, net 516,943 492,749 486,140
Rental equipment and related inventories, net 477,230 586,340 789,369
Property leased under capital leases,net 2,121 2,098 2,640
Long-term finance receivables, less allowances:
6/01 $67,491 3/01 $53,681 6/00 $58,777 1,849,533 1,916,666 1,983,529
Investment in leveraged leases 1,221,143 1,169,389 1,043,118
Goodwill, net of amortization:
6/01 $62,177 3/01 $60,423 6/00 $58,426 568,258 219,859 229,039
Other assets 652,192 647,814 624,830
Net assets of discontinued operations 216,802 211,726 -
----------- ------------ -----------
Total assets $ 8,103,744 $ 7,873,653 $ 7,751,384
=========== ============ ===========
Liabilities and stockholders' equity
------------------------------------
Current liabilities:
Accounts payable and accrued liabilities $ 1,171,173 $ 1,004,469 $ 825,341
Income taxes payable 386,201 264,379 214,543
Notes payable and current portion of
long-term obligations 1,109,459 1,229,189 956,925
Advance billings 343,218 339,297 376,022
----------- ----------- -----------
Total current liabilities 3,010,051 2,837,334 2,372,831
----------- ----------- -----------
Deferred taxes on income 1,159,810 1,240,225 1,182,766
Long-term debt 2,006,964 1,911,636 2,201,591
Other noncurrent liabilities 325,015 321,913 326,588
----------- ----------- -----------
Total liabilities 6,501,840 6,311,108 6,083,776
----------- ----------- -----------
Preferred stockholders' equity in a
subsidiary company 310,000 310,000 310,000
Stockholders' equity:
Cumulative preferred stock, $50 par value,
4% convertible 24 29 29
Cumulative preference stock, no par value,
$2.12 convertible 1,632 1,695 1,796
Common stock, $1 par value 323,338 323,338 323,338
Capital in excess of par value 5,033 7,972 11,067
Retained earnings 3,904,437 3,798,924 3,601,747
Accumulated other comprehensive income (146,917) (135,815) (114,798)
Treasury stock, at cost (2,795,643) (2,743,598) (2,465,571)
----------- ---------- -----------
Total stockholders' equity 1,291,904 1,252,545 1,357,608
----------- ---------- -----------
Total liabilities and stockholders' equity $ 8,103,744 $ 7,873,653 $ 7,751,384
=========== =========== ===========
Pitney Bowes Inc.
Revenue and Operating Profit
By Business Segment
June 30, 2001
(Unaudited)
(Dollars in thousands)
%
2001 2000 Change
------------ ------------ ----------
Second Quarter
--------------
Revenue
-------
Global Mailing $ 731,264 $ 732,488 -
Enterprise Solutions 246,882 217,830 13%
------------ ------------ ----------
Total Messaging Solutions 978,146 950,318 3%
------------ ------------ ----------
Capital Services 42,718 47,307 (10%)
------------ ------------ ----------
Total Revenue $1,020,864 $ 997,625 2%
============ ============ ==========
Operating Profit (1)
--------------------
Global Mailing $ 229,418 $ 221,157 4%
Enterprise Solutions 19,405 19,786 (2%)
------------ ------------ ----------
Total Messaging Solutions 248,823 240,943 3%
------------ ------------ ----------
Capital Services 15,446 15,997 (3%)
------------ ------------ ----------
Total Operating Profit $ 264,269 $ 256,940 3%
============ ============ ==========
(1) Operating profit excludes general corporate expenses, income taxes and net
interest other than that related to finance operations.
Pitney Bowes Inc.
Revenue and Operating Profit
By Business Segment
June 30, 2001
(Unaudited)
(Dollars in thousands)
%
2001 2000 Change
------------ ------------ ----------
Year to Date
------------
Revenue
-------
Global Mailing $1,424,000 $1,430,539 -
Enterprise Solutions 477,472 419,367 14%
------------ ------------ ----------
Total Messaging Solutions 1,901,472 1,849,906 3%
------------ ------------ ----------
Capital Services 85,715 92,484 (7%)
------------ ------------ ----------
Total Revenue $1,987,187 $1,942,390 2%
============ ============ ==========
Operating Profit (1)
--------------------
Global Mailing $ 436,589 $ 418,334 4%
Enterprise Solutions 38,224 34,481 11%
------------ ------------ ----------
Total Messaging Solutions 474,813 452,815 5%
------------ ------------ ----------
Capital Services 30,151 29,118 4%
------------ ------------ ----------
Total Operating Profit $ 504,964 $ 481,933 5%
============ ============ ==========
(1) Operating profit excludes general corporate expenses, income taxes and net
interest other than that related to finance operations.