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 18, 2002
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 18, 2002 regarding its financial
results for the period ended June 30, 2002, including consolidated statements of
income and selected segment data for the three and six months ended June 30,
2002 and 2001, and consolidated balance sheets at June 30, 2002, March 31, 2002
and June 30, 2001, 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 18, 2002.
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, 2002
/s/ B.P. Nolop
---------------------------
B. P. Nolop
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
/s/ A.F. Henock
----------------------------
A. F. Henock
Vice President - Finance
(Principal Accounting Officer)
EXHIBIT 1
---------
FOR IMMEDIATE RELEASE
---------------------
PITNEY BOWES MEETS EARNINGS GUIDANCE FOR SECOND QUARTER 2002
-----------------------------------------------------------
o Diluted Earnings Per Share of 59 Cents
o Launch of New Digital Line of Mailing Systems
o Definitive Agreement to Acquire PSI Group, Inc.
STAMFORD, Conn., July 18, 2002 - Pitney Bowes Inc. (NYSE: PBI) today announced
second quarter 2002 results that included diluted earnings per share of 59
cents, compared to 58 cents from continuing operations for the second quarter of
2001, excluding special items.
Revenue grew six percent to $1.08 billion and income from continuing
operations for the quarter was $143.1 million. The income from continuing
operations compares with $144.5 million in last year's second quarter excluding
special items, and $187.9 million including special items.
During the quarter, the company repurchased 2.2 million of its shares
outstanding, leaving $139 million of authorization for future share repurchases.
Free cash flow for the quarter was $80 million excluding payments
related to special items, and $62 million including these payments. Free cash
flow was affected by the timing of tax payments during the quarter as well as
the build-up of receivables and inventory associated with the successful launch
of new products and an increase in receivables related to the U.S. postal rate
change. Year-to-date, free cash flow, excluding payments related to special
items, was $269 million. Including payments for special items, free cash flow
was $230 million.
(2)
As previously announced in June, the company signed a definitive
agreement to acquire 100% of the stock of the PSI Group, Inc. (PSI), the
nation's largest mail pre-sort company, for $130 million in cash. Subject to the
completion of certain conditions, the company expects the transaction to close
in the third quarter 2002.
Commenting on the quarter, Pitney Bowes Chairman and Chief Executive
Officer Michael J. Critelli said, "This quarter was representative of our year
thus far, where our underlying strength has enabled us to meet our earnings
targets despite weakened economic conditions, while still taking actions to
position us for continued, profitable growth into the future. Toward the end of
the quarter, our sales force began selling the most comprehensive and
technologically-advanced product line in Pitney Bowes' history. Currently
launched in the U.S., the U.K. and Canada, our unique DM line of digital,
networked mailing systems utilizes our patented Intellilink(TM) technology and
provides our U.S. customers with convenient access to discounted special mailing
services such as delivery confirmation and signature confirmation, among other
benefits. These systems, based on a global architecture, will be available to
the rest of the world shortly. We are very pleased with the reception they have
already received from our customers in the brief time they have been available.
"The agreement to acquire PSI Group is part of our strategy to further
expand our presence in the integrated mail and document management markets. The
acquisition of this premier mail pre-sort business will allow us to offer new,
value-added services to our customers and provide PSI customers access to the
many Pitney Bowes products and services that can help them operate more cost-
effectively.
"These actions, together with other pending initiatives, will further
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 revenue 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 increased one percent while operating profit declined less than one
percent. Excluding the revenue from the acquisition of Secap SA, Global Mailing
revenue declined two percent for the quarter.
(3)
Although results were impacted by a weak economy and a sales force that was in
training to prepare for the launch of the new DM line late in the quarter,
U.S. Global Mailing experienced strong demand for all of its products,
including the new digital, networked mailing systems.
International Global Mailing experienced double-digit revenue growth,
supported by acquisition revenue and improving business trends in the UK.
Excluding the revenue from the acquisition of Secap SA, international Global
Mailing revenue grew less than one percent despite the adverse impact of a weak
global economy and a related continued slow-down in orders for mailing
equipment in most of continental Europe.
The Enterprise Solutions Segment includes Pitney Bowes Management
Services (PBMS) and Document Messaging Technologies (DMT). Revenue from
Management Services includes facilities management contracts for advanced
mailing, reprographic, document management and other value-added services to
large enterprises. Revenue from DMT includes sales, service and financing of
high speed, software-enabled production mail systems, sorting equipment,
incoming mail systems, electronic statement, billing and payment solutions, and
mailing software in the U.S. The Enterprise Solutions segment reported revenue
growth of 21 percent and operating profit growth of 15 percent.
PBMS reported revenue growth of 38 percent to $241 million when
compared to the prior year, and operating profit growth of 48 percent.
Excluding the revenue from the acquisition of Danka Services International
(DSI), PBMS revenue increased two percent for the quarter. The weak economy
continues to have an adverse impact on some of our largest customers, which in
turn resulted in reduced revenue growth opportunities for PBMS.
DMT reported revenue of $58 million for the quarter, a decline of
20 percent from the prior year, with a greater decline in operating profit.
Continued slow placements of high margin equipment, an increase in lower margin
service revenue and investments in new product development contributed to the
decline in operating profit during the quarter.
The company's integrated mail and document management services offered
by its Enterprise Solutions organizations are especially valued by many large
enterprises in today's economic environment as a way to increase the impact and
reduce the costs of their integrated mail and document flow. The multi-year
agreement signed during the quarter with Aetna is an example of a company which
turned to Pitney Bowes to provide services and expertise that will contribute to
reductions in Aetna's operating costs for their document production.
(4)
Total Messaging Solutions, the combined results of the Global Mailing
and Enterprise Solutions segments, showed a six percent increase in revenue and
a marginal increase in 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 four percent and
operating profit increased 12 percent due to lower interest costs versus the
prior year.
The company expects revenue growth for the third quarter to be in a
range of five to seven percent and six to seven percent for the full year.
Diluted earnings per share are expected to be in the range of 60 to 62 cents
for the third quarter 2002 and $2.37 to $2.40 for the full year.
Second quarter 2002 revenue included $568.7 million from sales, up
nine percent from $522.4 million in the second quarter of 2001; $369.5 million
from rentals and financing, up one percent from $365.1 million; and $143.2
million from support services, up seven percent from $133.3 million. Net income
for the period was $143.1 million, or 59 cents per diluted share. Income from
continuing operations for the second quarter 2001 was $187.9 million or 76 cents
per diluted share which included the following special gains and charges: a $362
million net pre-tax gain as a result of settling a lawsuit with Hewlett-Packard;
a $248 million pre-tax charge associated with the company's transition to the
next generation of networked technology; and a $29 million pre-tax charge
related to initiatives associated with a restructuring plan. Excluding these
special gains and charges, second quarter 2001 income from continuing operations
was $144.5 million or 58 cents per diluted share and net income was $133.7
million or 54 cents per diluted share. Second quarter 2001 net income included a
loss of $10.8 million from discontinued operations or approximately four cents
per diluted share.
For the six-month period ended June 30, 2002, revenue was $2.131
billion, up seven percent from $1.987 billion in 2001. Net income for 2002 was
$272.6 million or $1.12 per diluted share compared to income from continuing
operations for 2001 which, excluding special gains and charges, was $276.1
million, or $1.11 per diluted share. Year-to-date pre-tax restructuring charges
for 2001 totaled approximately $104 million, of which $71 million was related to
continuing operations. Year-to-date net income for 2001, including special gains
and charges, was $281.0 million or $1.13 per diluted share. The year-to-date net
income for 2001 included a loss of $10.8 million from discontinued operations,
or four cents per diluted share.
(5)
Management of Pitney Bowes will discuss the company's financial results
in a conference call today scheduled for 5:00 p.m. EDT. Instructions for
listening to the conference call over the WEB are available on the Investor
Relations page of the company's web site at
www.investorrelations.pitneybowes.com.
-------------------------------------
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 in more than 130 countries. 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
pending and possible acquisitions, restructuring charges and our future
guidance, including our expected revenue for the third quarter and full year
2002, and our expected diluted earnings per share for the third quarter and full
year 2002. 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 further 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 2001 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 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, 2002 and 2001, and consolidated balance sheets at June 30, 2002, March 31,
2002, and June 30, 2001, 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,
---------------------------- ---------------------------
2002 2001 2002 2001
---------- ---------- ------------ ----------
Revenue from:
Sales and management services $ 568,688 $ 522,434 $ 1,109,887 $ 993,906
Rentals and financing 369,466 365,098 739,618 733,090
Support services 143,171 133,332 281,328 260,191
---------- ---------- ------------ ----------
Total revenue 1,081,325 1,020,864 2,130,833 1,987,187
---------- ---------- ------------ ----------
Costs and expenses:
Cost of sales and management services 339,654 303,961 673,924 582,311
Cost of rentals and financing 90,005 90,227 180,672 181,060
Cost of meter transition (*) - 247,700 - 247,700
Selling, service and administrative 361,930 336,137 718,598 659,040
Research and development 36,095 34,865 70,164 66,467
Other income (*) - (362,172) - (362,172)
Interest, net 45,327 44,301 90,625 94,886
Restructuring charges (*) - 27,609 - 70,760
---------- ---------- ------------ ----------
Total costs and expenses 873,011 722,628 1,733,983 1,540,052
---------- ---------- ------------ ----------
Income from continuing operations
before income taxes 208,314 298,236 396,850 447,135
Provision for income taxes 65,211 110,380 124,230 155,342
---------- ---------- ------------ ----------
Income from continuing operations 143,103 187,856 272,620 291,793
Discontinued operations - (10,827) - (10,827)
---------- ---------- ------------ ----------
Net income $ 143,103 $ 177,029 $ 272,620 $ 280,966
========== ========== ============ ==========
Basic earnings per share
Continuing operations $ 0.60 $ 0.76 $ 1.13 $ 1.18
Discontinued operations - (0.04) - (0.04)
---------- ---------- ------------ ----------
Net income 0.60 0.72 1.13 1.14
Special items after-tax (*) - (0.17) - (0.06)
Discontinued operations - 0.04 - 0.04
---------- ---------- ------------ ----------
Income from continuing operations
excluding special items $ 0.60 $ 0.59 $ 1.13 $ 1.12
========== ========== ============ ==========
Diluted earnings per share
Continuing operations $ 0.59 $ 0.76 $ 1.12 $ 1.17
Discontinued operations - (0.04) - (0.04)
---------- ---------- ------------ ----------
Net income 0.59 0.71 1.12 1.13
Special items after-tax (*) - (0.17) - (0.06)
Discontinued operations - 0.04 - 0.04
---------- ---------- ------------ ----------
Income from continuing operations
excluding special items $ 0.59 $ 0.58 $ 1.12 $ 1.11
========== ========== ============ ==========
Average common and potential common
shares outstanding 242,968,251 248,420,347 243,733,950 249,146,896
=========== =========== ============ ===========
Note: Special items are indicated by the asterisks above or are otherwise
explained in the press release. Special items for the three and six
months ended June 30, 2001 resulted in a net after-tax gain of
$43,306 and $15,689, respectively.
The sum of the earnings per share amounts may not equal the totals
above due to rounding.
Pitney Bowes Inc.
Consolidated Balance Sheets
(Unaudited)
-----------
(Dollars in thousands, except per share data)
Assets 6/30/02 3/31/02 6/30/01
------ ------------- ------------- -------------
Current assets:
Cash and cash equivalents $ 240,643 $ 264,323 $ 199,609
Short-term investments, at cost which
approximates market 11,946 10,545 3,472
Accounts receivable, less allowances:
6/02 $33,392 3/02 $32,199 6/01 $30,356 414,322 394,692 385,799
Finance receivables, less allowances:
6/02 $66,991 3/02 $64,427 6/01 $56,779 1,622,835 1,598,463 1,463,061
Inventories 193,533 172,804 166,917
Other current assets and prepayments 161,117 148,063 157,086
Net assets of discontinued operations - - 223,578
------------- ------------- -------------
Total current assets 2,644,396 2,588,890 2,599,522
------------- ------------- -------------
Property, plant and equipment, net 554,489 537,850 516,943
Rental equipment and related inventories, net 450,508 450,582 477,230
Property leased under capital leases, net 1,006 1,193 2,121
Long-term finance receivables, less allowances:
6/02 $66,143 3/02 $66,913 6/01 $67,491 1,780,539 1,816,210 1,849,533
Investment in leveraged leases 1,388,732 1,368,729 1,221,143
Goodwill 668,552 668,908 568,258
Other assets 818,336 818,002 652,192
Net assets of discontinued operations - - 216,802
------------- ------------- -------------
Total assets $ 8,306,558 $ 8,250,364 $ 8,103,744
============= ============= =============
Liabilities and stockholders' equity
------------------------------------
Current liabilities:
Accounts payable and accrued liabilities $ 1,280,707 $ 1,367,091 $ 1,171,173
Income taxes payable 237,225 290,024 386,201
Notes payable and current portion of
long-term obligations 1,459,165 1,234,773 1,109,459
Advance billings 339,587 321,264 343,218
------------- ------------- -------------
Total current liabilities 3,316,684 3,213,152 3,010,051
------------- ------------- -------------
Deferred taxes on income 1,284,301 1,260,820 1,159,810
Long-term debt 2,129,027 2,233,844 2,006,964
Other noncurrent liabilities 353,638 347,136 325,015
------------- ------------- -------------
Total liabilities 7,083,650 7,054,952 6,501,840
------------- ------------- -------------
Preferred stockholders' equity in a
subsidiary company 310,000 310,000 310,000
Stockholders' equity:
Cumulative preferred stock, $50 par value,
4% convertible 24 24 24
Cumulative preference stock, no par value,
$2.12 convertible 1,539 1,552 1,632
Common stock, $1 par value 323,338 323,338 323,338
Capital in excess of par value 960 2,013 5,033
Retained earnings 3,788,916 3,716,613 3,904,437
Accumulated other comprehensive income (132,796) (154,304) (146,917)
Treasury stock, at cost (3,069,073) (3,003,824) (2,795,643)
------------- ------------- -------------
Total stockholders' equity 912,908 885,412 1,291,904
------------- ------------- -------------
Total liabilities and stockholders' equity $ 8,306,558 $ 8,250,364 $ 8,103,744
============= ============= =============
Pitney Bowes Inc.
Revenue and Operating Profit
By Business Segment
June 30, 2002
(Unaudited)
(Dollars in thousands)
%
2002 2001(2) Change
---------- ---------- --------
Second Quarter
--------------
Revenue
-------
Global Mailing $ 737,203 $ 727,265 1%
Enterprise Solutions 299,131 246,882 21%
---------- ---------- ---------
Total Messaging Solutions 1,036,334 974,147 6%
---------- ---------- ---------
Capital Services 44,991 46,717 (4%)
---------- ---------- ---------
Total Revenue $1,081,325 $1,020,864 6%
========== ========== =========
Operating Profit (1)
--------------------
Global Mailing $ 225,087 $ 227,207 (1%)
Enterprise Solutions 22,354 19,405 15%
---------- ---------- ---------
Total Messaging Solutions 247,441 246,612 -
---------- ---------- ---------
Capital Services 19,859 17,657 12%
---------- ---------- ---------
Total Operating Profit $ 267,300 $ 264,269 1%
========== ========== =========
(1) Operating profit excludes general corporate expenses, income taxes and net
interest other than that related to finance operations.
(2) Prior year amounts have been reclassified to conform with the current year
presentation.
Pitney Bowes Inc.
Revenue and Operating Profit
By Business Segment
June 30, 2002
(Unaudited)
(Dollars in thousands)
%
2002 2001 (2) Change
---------- ---------- --------
Year to Date
------------
Revenue
-------
Global Mailing $1,449,294 $1,415,489 2%
Enterprise Solutions 590,521 477,472 24%
---------- ---------- ---------
Total Messaging Solutions 2,039,815 1,892,961 8%
---------- ---------- ---------
Capital Services 91,018 94,226 (3%)
---------- ---------- ----------
Total Revenue $2,130,833 $1,987,187 7%
========== ========== ==========
Operating Profit (1)
-------------------
Global Mailing $ 426,668 $ 431,536 (1%)
Enterprise Solutions 39,935 38,224 4%
---------- ---------- ----------
Total Messaging Solutions 466,603 469,760 (1%)
---------- ---------- ----------
Capital Services 39,566 35,204 12%
---------- ---------- ----------
Total Operating Profit $ 506,169 $ 504,964 -
========== ========== ==========
(1) Operating profit excludes general corporate expenses, income taxes and net
interest other than that related to finance operations.
(2) Prior year amounts have been reclassified to conform with the current year
presentation.