8-K 1 ed101801.txt THIRD QUARTER PRESS RELEASE - 9/01 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): October 18, 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 October 18, 2001 regarding its financial results for the period ended September 30, 2001, including consolidated statements of income and selected segment data for the three and nine months ended September 30, 2001 and 2000, and consolidated balance sheets at September 30, 2001, June 30, 2001 and September 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 October 18, 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. October 23, 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 REPORTS THIRD QUARTER 2001 EARNINGS ------------------------------------------------ o Excluding Special Items: -- Diluted Earnings Per Share of 57 Cents -- Approximately $179 Million in Free Cash Flow o 1.7 Million Shares Repurchased During The Quarter STAMFORD, Conn., October 18, 2001 - Pitney Bowes Inc. (NYSE: PBI) today announced third quarter results that included income from continuing operations of $140.2 million and diluted earnings per share from continuing operations of 57 cents, excluding special items. Revenue grew nine percent to $1.04 billion when compared to third quarter 2000. As previously announced, special items in the third quarter of 2001 included: a non-cash pre-tax charge of $10 million associated with the company's plan to transition to the next generation of digital, networked mailing technology; and, a pre-tax charge related to incremental restructuring plan initiatives of $18 million. Commenting on the quarter, Pitney Bowes Chairman and CEO Michael J. Critelli said, "Recent extraordinary events have dampened an already weakening economy, slowing or delaying the decision making of many of our customers, and causing some to renew current equipment leases or continue existing rental programs rather than upgrading to more functional, higher-value equipment. While we believe that businesses, large and small, will continue to recognize and demand the benefits of our products and services, we are seeing some softness in many parts of our business as our customers reevaluate their operating and capital spending in a slowing economic environment." (2) Mr. Critelli also addressed recent heightened concerns over mail safety and security, including the sending of biological agents. "As the leader in secure mail handling and processing, we and the U.S. Postal Service are working with our common customers, especially through Pitney Bowes Global Mailing Systems and Pitney Bowes Management Services, to strengthen safety and security protocols which protect both our employees and our customers. We are actively exploring additional processes and technologies to further enhance the integrity of mail and package handling, even at our most secure customer sites." 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 third quarter, Global Mailing revenue was flat when compared to the prior year while operating profit declined four percent. Excluding the impact of unfavorable foreign currency, Global Mailing revenues increased one percent. The mailing business in the U.S. experienced a marked slow-down towards the end of the quarter, as recent events coupled with a slowing economy resulted in many customers delaying purchasing or upgrade decisions. This was particularly true for higher value mail creation and shipping products. Within the Global Mailing segment, international operations posted double-digit revenue growth on a local currency basis. Although revenue growth was adversely affected by continued weakness in the U.K. and Canada, international revenues were helped by strong growth in most European operations, which were stimulated by meter migration mandates and market share gains, as well as revenues from our recent acquisition of Bell & Howell's international operations in Europe and Asia. The Enterprise Solutions Segment includes Pitney Bowes Management Services and Document Messaging Technologies. Revenues from Management Services include facilities management contracts for advanced mailing, reprographic, document management and other value-added 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 more than one-quarter of consolidated revenue, reported revenue growth of 39 percent and operating profit growth of 23 percent. Revenue and operating profit comparisons include a full quarter of contribution from the recently completed Danka Services International (DSI) acquisition. (3) Pitney Bowes Management Services achieved its eighth consecutive quarter of improving revenue, recording a 54 percent increase over 2000. Excluding DSI, Pitney Bowes Management Services revenues grew 12 percent while operating profit grew at an even faster pace. The growth in business resulted from new, value-added services for existing clients and new contracts for large enterprise organizations. These positive contributions were offset somewhat by the impacts of the slowing economy on volume based business in the financial and legal markets. Document Messaging Technologies revenues grew one percent during the quarter. Worldwide demand for high-speed, software enabled production mail equipment and mail processing software has slowed as worldwide business capital spending slows. The placement of incoming mail and sortation equipment offset some of this revenue softness. The market continues to develop for this innovative and efficient means to automate the incoming mail process. Operating profit for Document Messaging Technologies was adversely impacted by expenses associated with the introduction and marketing of new products and the lower placements of higher margin customized production mail equipment. Total Messaging Solutions, the combined results of the Global Mailing and Enterprise Solutions segments, reported a nine percent increase in revenues and a two percent decrease in operating profit. Excluding foreign currency impacts and the revenues from recent acquisitions (DSI and the European and Asian operations of Bell & Howell), Total Messaging Solutions revenues increased one percent. (4) The Capital Services Segment includes primarily asset- and fee-based income generated by financing or arranging transactions of critical large-ticket customer assets. Revenue for the quarter increased eight percent and operating profit increased 14 percent. The increase in revenues and operating profit were driven by higher asset sales and related fee income compared to the prior year. During the quarter, the Company repurchased 1.7 million shares, leaving $83.8 million of authorization for future share repurchases. Free cash flow from continuing operations, excluding payments associated with special items, was approximately $179 million during the quarter. Also during the quarter, the company announced that it has completed the steps necessary to receive the regulatory and tax approvals required for a tax-free 100 percent spin-off of its Office Systems operations to its shareholders, which is anticipated to occur in the fourth quarter 2001. As a result of the slowdown in the economy and the considerable uncertainty concerning future economic activity, the company is revising its earnings guidance. For the fourth quarter, the company expects revenue growth to be in a range of eight to ten percent, and diluted earnings per share from continuing operations to be in a range of 56 cents to 59 cents. Diluted earnings per share from continuing operations for the full year 2001 are estimated at $2.24 to $2.27. Given the assumption that difficult economic conditions will persist in 2002, the company is projecting that diluted earnings per share from continuing operations will be in the range of $2.35 to $2.40, excluding the impact of any changes in accounting for goodwill amortization. Third quarter 2001 revenue included $541.9 million from sales, up 15 percent from $469.8 million in the third quarter of 2000; $365.7 million from rentals and financing, almost flat with the prior year which was $366.8 million; and $136.8 million from support services, up 11 percent from $123.4 million. Income from continuing operations for the period was $122.1 million, or 49 cents per diluted share. Excluding special items in the third quarter 2001 and 2000, income from continuing operations was $140.2 million, or 57 cents per diluted share compared to third quarter 2000 income from continuing operations of $144.9 million, or 57 cents per diluted share. Special items in the third quarter of 2000 included: an after-tax charge of approximately $11 million related to the consolidation of information technology staff and infrastructure, as well as a $12 million tax benefit related to state tax law changes. Third quarter 2001 net income was $117.2 million or 47 cents per diluted share compared to third quarter 2000 net income of $161.4 million or 63 cents per diluted share. Third quarter 2001 net income includes a loss of $4.9 million from discontinued operations or two cents per diluted share, while third quarter 2000 net income included $15.7 million of income from discontinued operations, or six cents per diluted share. (5) For the nine-month period ended September 30, 2001, revenue was $3.032 billion, up four percent from $2.902 billion in 2000. Income from continuing operations for 2001, before special items in both periods, was $416.3 million, or $1.68 per diluted share compared to $424.7 million or $1.63 per diluted share in 2000. Year-to-date net income for 2001 was $398.2 million or $1.60 per diluted share compared to $474.3 million or $1.82 per diluted share in 2000. The year-to-date net income for 2001 included a $15.7 million loss from discontinued operations, or six cents per diluted share, compared to $53.5 million in income from discontinued operations or 21 cents per diluted share, less a $4.7 million charge from a change in accounting or two cents per diluted share in 2000. Management of Pitney Bowes will discuss the company's financial results in a conference call today, scheduled for 5 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.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. For additional information on the company, its products and solutions visit www.pitneybowes.com. (6) 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," "projects," "estimates," "anticipates," "intends" and other similar words. Such forward-looking statements include, but are not limited to, statements about our restructuring plan and our future guidance, including our expected revenue in the fourth quarter and full year 2001, and our expected diluted earnings per share from continuing operations for the fourth quarter and for the full years 2001 and 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: severe adverse changes in the economic environment, changes in international or national political or economic conditions, 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 spin-off and any announced 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 nine months ended September 30, 2001 and 2000, and consolidated balance sheets at September 30, 2001, June 30, 2001, and September 30, 2000, are attached. Pitney Bowes Inc. Consolidated Statements of Income (Unaudited)
(Dollars in thousands, except per share data) Three Months Ended September 30, Nine Months Ended September 30, -------------------------------- ------------------------------- 2001 2000 2001 2000 ---------- ---------- ----------- ----------- Revenue from: Sales $ 541,947 $ 469,838 $ 1,535,853 $ 1,399,333 Rentals and financing 365,684 366,763 1,098,774 1,134,082 Support services 136,849 123,393 397,040 368,969 ---------- ---------- ----------- ----------- Total revenue 1,044,480 959,994 3,031,667 2,902,384 ---------- ---------- ----------- ----------- Costs and expenses: Cost of sales 332,909 264,320 915,220 802,625 Cost of rentals and financing 85,169 86,608 266,229 282,168 Cost of meter transition (*) 10,300 - 258,000 - Selling, service and administrative 344,850 320,515 1,003,890 965,710 Research and development 31,554 27,640 98,021 87,679 Other income (*) - - (362,172) - Interest, net 45,315 49,021 140,201 144,116 Restructuring charges (*) 17,879 18,667 88,639 18,667 ----------- ----------- ----------- ----------- Total costs and expenses 867,976 766,771 2,408,028 2,300,965 ----------- ----------- ----------- ----------- Income from continuing operations before income taxes 176,504 193,223 623,639 601,419 Provision for income taxes 54,406 47,538 209,748 175,948 ----------- ----------- ----------- ----------- Income from continuing operations 122,098 145,685 413,891 425,471 Discontinued operations (4,884) 15,748 (15,711) 53,472 Cumulative effect of accounting change (*) - - - (4,683) ----------- ----------- ----------- ----------- Net income $ 117,214 $ 161,433 $ 398,180 $ 474,260 =========== =========== =========== =========== Basic earnings per share Continuing operations $ 0.50 $ 0.57 $ 1.68 $ 1.65 Discontinued operations (0.02) 0.06 (0.06) 0.21 Cumulative effect of accounting change - - - (0.02) ----------- ----------- ----------- ----------- Net income 0.48 0.63 1.61 1.84 Special items after-tax (*) 0.07 0.01 0.02 Discontinued operations 0.02 (0.06) 0.06 (0.21) ----------- ----------- ----------- ----------- Income from continuing operations excluding special items $ 0.57 $ 0.57 $ 1.69 $ 1.64 =========== =========== =========== =========== Diluted earnings per share Continuing operations $ 0.49 $ 0.57 $ 1.67 $ 1.63 Discontinued operations (0.02) 0.06 (0.06) 0.21 Cumulative effect of accounting change - - - (0.02) ----------- ----------- ----------- ----------- Net income 0.47 0.63 1.60 1.82 Special items after-tax (*) 0.07 - 0.01 0.01 Discontinued operations 0.02 (0.06) 0.06 (0.21) ----------- ----------- ----------- ----------- Income from continuing operations excluding special items $ 0.57 $ 0.57 $ 1.68 $ 1.63 =========== =========== =========== =========== Average common and potential common shares outstanding 247,279,863 256,113,963 248,527,220 260,574,362 =========== =========== =========== ===========
Note: Special items are indicated by the asterisks above or are otherwise explained in the press release. Special items in the three and nine months ended September 30, 2001 resulted in a net after-tax charge of $18,110 and $2,421, 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 9/30/01 6/30/01 9/30/00 ------ ----------- ---------- ---------- Current assets: Cash and cash equivalents $ 292,312 $ 199,609 $ 265,403 Short-term investments, at cost which approximates market 8,107 3,472 3,740 Accounts receivable, less allowances: 9/01 $30,349 6/01 $30,356 9/00 $25,629 386,885 385,799 430,852 Finance receivables, less allowances: 9/01 $57,825 6/01 $56,779 9/00 $38,773 1,486,910 1,463,061 1,406,638 Inventories 164,630 166,917 287,451 Other current assets and prepayments 151,398 157,086 138,740 Net assets of discontinued operations 230,789 223,578 - ----------- ---------- ---------- Total current 2,721,031 2,599,522 2,532,824 ----------- ---------- ---------- Property, plant and equipment, net 509,850 516,943 491,661 Rental equipment and related inventories, net 469,387 477,230 777,360 Property leased under capital leases, net 1,691 2,121 2,498 Long-term finance receivables, less allowances: 9/01 $67,879 6/01 $67,491 9/00 $55,394 1,790,647 1,849,533 2,027,359 Investment in leveraged leases 1,260,955 1,221,143 1,086,556 Goodwill, net of amortization: 9/01 $66,451 6/01 $62,177 9/00 $60,239 566,075 568,258 227,557 Other assets 691,149 652,192 615,280 Net assets of discontinued operations 219,121 216,802 - ----------- ---------- ---------- Total assets $8,229,906 $8,103,744 $7,761,095 =========== ========== ========== Liabilities and stockholders' equity ------------------------------------ Current liabilities: Accounts payable and accrued liabilities $1,191,435 $1,171,173 $ 937,159 Income taxes payable 378,926 386,201 264,601 Notes payable and current portion of long-term obligations 756,579 1,109,459 955,707 Advance billings 333,532 343,218 380,899 ---------- ---------- ---------- Total current liabilities 2,660,472 3,010,051 2,538,366 ---------- ---------- ---------- Deferred taxes on income 1,218,881 1,159,810 1,171,575 Long-term debt 2,436,358 2,006,964 2,070,058 Other noncurrent liabilities 338,076 325,015 325,998 ---------- ---------- ---------- Total liabilities 6,653,787 6,501,840 6,105,997 ---------- ---------- ---------- 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 29 Cumulative preference stock, no par value, $2.12 convertible 1,609 1,632 1,776 Common stock, $1 par value 323,338 323,338 323,338 Capital in excess of par value 3,471 5,033 9,936 Retained earnings 3,950,435 3,904,437 3,690,257 Accumulated other comprehensive income (148,132) (146,917) (113,687) Treasury stock, at cost (2,864,626) (2,795,643) (2,566,551) ---------- ---------- ---------- Total stockholders' equity 1,266,119 1,291,904 1,345,098 ---------- ---------- ---------- Total liabilities and stockholders' equity $8,229,906 $8,103,744 $7,761,095 ========== ========== ==========
Pitney Bowes Inc. Revenue and Operating Profit By Business Segment September 30, 2001 (Unaudited) (Dollars in thousands) % 2001 2000 Change -------------- ------------- ---------- Third Quarter ------------- Revenue ------- Global Mailing $ 698,416 $ 700,448 - Enterprise Solutions 294,881 212,080 39% -------------- ------------- ---------- Total Messaging Solutions 993,297 912,528 9% -------------- ------------- ---------- Capital Services 51,183 47,466 8% -------------- ------------- ---------- Total Revenue $ 1,044,480 $ 959,994 9% ============== ============= ========== Operating Profit (1) ---------------- Global Mailing $ 208,430 $ 217,542 (4%) Enterprise Solutions 18,332 14,903 23% -------------- ------------- ---------- Total Messaging Solutions 226,762 232,445 (2%) -------------- ------------- ---------- Capital Services 20,018 17,517 14% -------------- ------------- ---------- Total Operating Profit $ 246,780 $ 249,962 (1%) ============== ============= ========== (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 September 30, 2001 (Unaudited) (Dollars in thousands) % 2001 2000 Change ------------ ------------ ---------- Year to Date ------------ Revenue ------- Global Mailing $2,122,416 $2,130,987 - Enterprise Solutions 772,353 631,447 22% ------------ ------------ ---------- Total Messaging Solutions 2,894,769 2,762,434 5% ------------ ------------ ---------- Capital Services 136,898 139,950 (2%) ------------ ------------ ---------- Total Revenue $3,031,667 $2,902,384 4% ============ ============ ========== Operating Profit (1) ---------------- Global Mailing $ 645,019 $ 635,876 1% Enterprise Solutions 56,556 49,384 15% ------------ ------------ ---------- Total Messaging Solutions 701,575 685,260 2% ------------ ------------ ---------- Capital Services 50,169 46,635 8% ------------ ------------ ---------- Total Operating Profit $ 751,744 $ 731,895 3% ============ ============ ========== (1) Operating profit excludes general corporate expenses, income taxes and net interest other than that related to finance operations.