STAMFORD, Conn.--(BUSINESS WIRE)--Pitney Bowes Inc. (NYSE:PBI) today reported second quarter 2008 financial results.

Revenue increased 3 percent to $1.6 billion and adjusted income from continuing operations was $144 million. Adjusted income for the quarter excludes charges related to restructuring initiatives that the company announced on November 15, 2007 to reduce costs, accelerate operational improvements and transition its product line. On a Generally Accepted Accounting Principles (GAAP) basis, the company reported income from continuing operations of $131 million and net income of $128.5 million.

Adjusted earnings per diluted share from continuing operations for the second quarter was $0.69, which compares with $0.71 for the prior year, when the company benefited from sales of equipment that helped customers comply with the provisions of the U.S. Postal Service rate case, which requires that postage be based on shape as well as weight. On a GAAP basis, the company reported earnings per diluted share from continuing operations of $0.63 for the quarter, compared with $0.69 per diluted share for the prior year. Diluted earnings per share for the quarter was $0.61 including discontinued operations, compared with $0.68 in the prior year.

The company’s results for the quarter are further summarized in the table below:

Free cash flow for the quarter was $205 million, while cash from operations was $213 million. Year-to-date, free cash flow was $401 million, while cash from operations was $461 million.

During the quarter, the company used $73 million of cash for dividends and $92 million to buy back 2.6 million of its shares. The remaining authorization for future share repurchases was $134 million at the end of the second quarter. Year-to-date, the company has returned $419 million to shareholders in the form of dividends and share repurchases.

Commenting on the company’s performance, President and CEO Murray D. Martin noted, “We are pleased that we remain on target to deliver full-year financial results consistent with our original guidance despite difficult comparisons for the first half of the year, and the challenging economic environment. We continue to experience strengthening demand in key markets outside of the U.S. for a wide range of our solutions and services that help businesses target, personalize, produce and distribute relevant communications to their customers. As we did in the first quarter, we are pleased to again increase our annual free cash flow guidance based on the year-to-date strong generation of cash, and our continued focus on working capital and expense management for the balance of the year.

“At the end of the quarter we concluded our strategic review of the U.S. Management Services operations and decided to retain and grow this business. During the review, we identified and began to execute actions to enhance Management Services’ profitability and long-term performance. We have already begun to see the benefits of these actions reflected in the operation’s improving margins.”

Mailstream Solutions includes worldwide revenue and related expenses from the sale, rental, and financing of mail finishing, mail creation, shipping, and production mail equipment; supplies; mailing and multi-vendor support services; payment solutions; and mailing, customer communication, and location intelligence software.

In the second quarter, Mailstream Solutions revenue declined 1 percent to $1.1 billion compared with the prior year, and earnings before interest and taxes (EBIT) declined 10 percent to $294 million.

As anticipated, U.S. Mailing’s weaker revenue and unfavorable EBIT comparisons for the quarter reflected higher equipment sales in the prior year due to the 2007 postal rate case. This quarter’s results were also impacted by weak economic conditions and the slowing of the U.S. Postal Service’s mandated meter technology transition, which ends in December. The segment’s revenue declined 14 percent to $551 million due primarily to the decline in higher margin equipment sales related to shape-based pricing, resulting in a 16 percent EBIT decline to $221 million.

International Mailing’s revenue grew 20 percent to $302 million and EBIT increased 41 percent to $51 million. The segment’s revenue grew 6 percent, excluding the effects of currency and acquisitions. Revenue growth benefited by about 12 percent from favorable currency translation and by about 1 percent from acquisitions. Revenue growth also benefited from increased equipment sales in the UK and France, and continued good growth in supplies. EBIT margin comparisons with the prior year were favorably affected by an improving cost structure in Europe and a legal settlement during the quarter which increased margins by about 250 basis points.

Worldwide revenue for Production Mail grew 3 percent to $149 million while EBIT decreased 18 percent to $15 million. Favorable currency translation contributed about 5 percent to revenue growth. The revenue benefits from higher equipment placements in the UK and France were offset by lower equipment sales in the U.S. and parts of Europe. The EBIT margin declined primarily due to favorable net legal recoveries in Europe last year, which improved margins by about 200 basis points and a change in the geographic mix of business this year.

Software revenue increased 23 percent to $102 million, while EBIT decreased 27 percent to $6 million. Software sales grew at a double-digit pace outside of the U.S., but declined within the U.S. as a result of weak economic conditions, causing some large enterprise accounts to defer their purchase decisions. Revenue grew 3 percent, excluding the effects of currency and acquisitions. Acquisitions, including MapInfo, contributed 16 percent to revenue growth and favorable currency translation contributed about 4 percent. The decline in EBIT margin was due to the timing of the acquisition of MapInfo in mid-April 2007, product mix, and the planned global investment in sales, marketing and research and development.

Mailstream Services includes worldwide revenue and related expenses from facilities management contracts, reprographics, document management, and other value-added services for targeted customer markets; mail services operations, which include presort mail services and international mail services; and marketing services.

For the quarter, Mailstream Services reported revenue growth of 14 percent to $484 million, and an EBIT increase of 37 percent to $38 million versus the prior year.

Management Services’ revenue increased 9 percent to $300 million for the quarter while EBIT increased 14 percent to $18 million. The segment’s revenue growth for the quarter benefited from last year’s acquisition of a French business services company, which added about 9 percent to revenue growth, and favorable currency translation, which added about 3 percent to revenue growth. The segment’s revenue was further affected by lower transaction volumes for some U.S. financial services customers. EBIT margin in the segment benefited from improvements in the U.S., where the company focused on reducing costs, particularly through several productivity initiatives. The margin benefits from the U.S. actions were partially offset by the costs associated with the acquisition in France.

During its recently concluded strategic review of the U.S. Management Services operations, the company identified several opportunities to drive future growth and enhance profitability by deploying new solutions, bringing greater technology to traditional mail and print management services, and driving further integration of end-to-end solutions that incorporate more of the full suite of Pitney Bowes capabilities.

Mail Services revenue grew 23 percent to $135 million and EBIT grew 46 percent to $16 million. Revenue growth was driven by both presort and international mail services. EBIT benefited from operating leverage from the increase in mail volume processed and increased operating efficiencies. Acquisitions added about 8 percent to revenue growth.

Marketing Services revenue increased 21 percent to $48 million. The segment’s results benefited from the continued expansion of marketing services programs, and acquisitions which added about 11 percent to revenue growth. The segment’s EBIT margin improved by approximately 4 percentage points versus the prior year as a result of the company’s phased exit from the motor vehicle registration services program.

Based upon the first half-year results and the outlook for the remainder of the year, the company increased full-year free cash flow guidance to a range of $675 to $750 million and reaffirmed 2008 expected revenue growth of 6 to 9 percent, and adjusted earnings per diluted share from continuing operations of $2.80 to $2.90.

Adjusted earnings per diluted share excludes charges related to the initiatives that the company announced on November 15, 2007 to reduce costs, accelerate improvements in operational efficiency, and transition its product line. Adjusted earnings per diluted share also excludes a first quarter tax adjustment associated with a UK leasing program that ended in 2002. The company anticipates that the restructuring and asset impairment charges in 2008 in connection with the transition initiatives will be in the range of $50 million to $100 million ($0.15 to $0.30 per diluted share).

On a GAAP basis, earnings per diluted share from continuing operations is expected to be in the range of $2.47 to $2.72.

Management of Pitney Bowes will discuss the company’s results in a broadcast over the Internet today at 5:00 p.m. EST. Instructions for listening to the earnings results via the Web are available on the Investor Relations page of the company’s web site at www.pb.com/investorrelations.

Pitney Bowes engineers the flow of communication. The company is a $6.3 billion global leader of mailstream solutions headquartered in Stamford, Connecticut. For more information about the company, its products, services and solutions, visit www.pitneybowes.com.

Pitney Bowes has presented in this earnings release diluted earnings per share on an adjusted basis. Also, management has included a presentation of free cash flow on an adjusted basis, adjusted income from continuing operations, and earnings before interest and taxes (EBIT). Management believes this presentation provides a reasonable basis on which to present the adjusted financial information, and is provided to assist in investors' understanding of the company's results of operations. The company's financial results are reported in accordance with generally accepted accounting principles (GAAP). However, earnings per share, income from continuing operations, and free cash flow results are adjusted to exclude the impact of special items such as transition initiatives, restructuring charges, accounting adjustments and write downs of assets, which materially impact the comparability of the company's results of operations. Although transition initiatives and restructuring charges represent actual expenses to the company, these charges might mask the periodic income and financial and operating trends associated with our business. The use of free cash flow has limitations. GAAP cash flow has the advantage of including all cash available to the company after actual expenditures for all purposes. Free cash flow permits a shareholder insight into the amount of cash that management could have available for discretionary uses if it made different decisions about employing its cash. It adjusts for long-term commitments such as capital expenditures, as well as special items like cash used for restructuring charges, unusual tax payments and contributions to its pension funds. Of course, these items use cash that is not otherwise available to the company and are important expenditures. Management compensates for these limitations by using a combination of GAAP cash flow and free cash flow in doing its planning.

The adjusted financial information and certain financial measures such as EBIT are intended to be more indicative of the ongoing operations and economic results of the company. EBIT excludes interest payments and taxes, both cash expenses to the company, and as a result, has the effect of showing a greater amount of earnings than net income. The company uses EBIT, in addition to net income and income from continuing operations, for purposes of measuring the performance of its unit management team. The interest rates and tax rates applicable to the company generally are outside the control of management, and it can be useful to judge performance independent of those variables.

The adjusted financial information should be viewed as a supplement to, rather than a replacement for, the financial results reported in accordance with GAAP. Further, our definition of this adjusted financial information may differ from similarly titled measures used by other companies.

Pitney Bowes has provided in supplemental schedules attached for reference adjusted financial information and a quantitative reconciliation of the differences between the adjusted financial measures with the financial measures calculated and presented in accordance with GAAP, except with respect to our guidance because it would not be meaningful. Additional reconciliation of adjusted financial measures to financial measures calculated and presented in accordance with GAAP may be found at the company's web site www.pb.com/investorrelations in the Investor Relations section.

The information contained in this document is as of June 30, 2008. Quarterly results are preliminary and unaudited. This document contains “forward-looking statements” about our expected future business and financial performance. Pitney Bowes assumes no obligation to update any forward-looking statements contained in this document as a result of new information or future events or developments. Words such as “estimate,” “project,” “plan,” “believe,” "expect," "anticipate," “intend,” and similar expressions may identify forward-looking statements. For us forward-looking statements include, but are not limited to, statements about possible restructuring charges and our future guidance, including our expected revenue, and our expected diluted earnings per share for the full year 2008. 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: negative developments in economic conditions, including adverse impacts on customer demand, 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 2007 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 acquisitions or dispositions.

Note: Consolidated statements of income; revenue and EBIT by business segment; and reconciliation of GAAP to non-GAAP measures for the three and six months ended June 30, 2008 and 2007, and consolidated balance sheets at June 30, 2008 and March 31, 2008, 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,
		2008			2007			2008		2007
Revenue from:
	Equipment sales	$	311,650		$	360,361		$	614,363	$	653,971
	Supplies		101,286			96,398			208,886		196,700
	Software		109,120			88,242			214,525		131,324
	Rentals		185,855			180,911			370,808		368,981
	Financing		197,263			194,837			396,202		385,417
	Support services		194,955			192,773			386,480		379,077
	Business services		487,957			429,512			970,779		841,801

	Total revenue		1,588,086			1,543,034			3,162,043		2,957,271

Costs and expenses:
	Cost of equipment sales		166,282			168,958			327,395		317,214
	Cost of supplies		26,419			24,725			54,291		50,848
	Cost of software		26,453			21,076			54,190		32,624
	Cost of rentals		39,671			43,261			77,975		85,682
	Cost of support services		115,931			107,317			229,926		212,821
	Cost of business services		383,009			339,972			762,300		663,623
	Selling, general and administrative		497,689			488,115			994,184		913,517
	Research and development		53,168			47,104			103,168		90,673
	Interest, net		54,127			62,541			112,904		119,268
	Restructuring and asset impairments		18,815			-			35,908		-

	Total costs and expenses		1,381,564			1,303,069			2,752,241		2,486,270

Income from continuing operations
before income taxes			206,522			239,965			409,802		471,001

Provision for income taxes			70,386			81,588			145,933		161,294
Minority interest			4,796			4,796			9,594		9,542

Income from continuing operations			131,340			153,581			254,275		300,165
Discontinued operations			(2,831	)		(1,342	)		(6,663)		(3,130	)

Net income		$	128,509		$	152,239		$	247,612	$	297,035

Basic earnings per share
Continuing operations		$	0.63		$	0.70		$	1.21	$	1.37
Discontinued operations			(0.01	)		(0.01	)		(0.03)		(0.01	)

Net income		$	0.62		$	0.69		$	1.18	$	1.35

Diluted earnings per share
Continuing operations		$	0.63		$	0.69		$	1.20	$	1.35
Discontinued operations			(0.01	)		(0.01	)		(0.03)		(0.01	)

Net income		$	0.61		$	0.68		$	1.17	$	1.33

Average common and potential common
	shares outstanding		209,543,013			222,481,360			211,481,391		222,968,478


Note: The sum of the earnings per share amounts may not equal the totals above due to rounding.

Pitney Bowes Inc.
Revenue and EBIT
Business Segments
June 30, 2008
(Unaudited)

(Dollars in thousands)
								%
		2008			2007			Change
Second Quarter

	Revenue

	U.S. Mailing	$	550,849		$	638,045		(14	%)
	International Mailing		302,085			252,390		20	%
	Production Mail		149,400			145,235		3	%
	Software		102,250			82,821		23	%
	Mailstream Solutions		1,104,584			1,118,491		(1	%)

	Management Services		300,454			275,052		9	%
	Mail Services		134,764			109,455		23	%
	Marketing Services		48,284			40,036		21	%
	Mailstream Services		483,502			424,543		14	%

	Total Revenue	$	1,588,086		$	1,543,034		3	%

	EBIT (1)

	U.S. Mailing	$	220,526		$	263,729		(16	%)
	International Mailing		51,462			36,621		41	%
	Production Mail		15,350			18,702		(18	%)
	Software		6,317			8,617		(27	%)
	Mailstream Solutions		293,655			327,669		(10	%)

	Management Services		18,230			16,005		14	%
	Mail Services		15,980			10,961		46	%
	Marketing Services		3,527			619		470	%
	Mailstream Services		37,737			27,585		37	%

	Total EBIT	$	331,392		$	355,254		(7	%)

	Unallocated amounts:
	Interest, net		(54,127	)		(62,541	)
	Corporate expense		(51,928	)		(52,748	)
	Restructuring charges		(18,815	)		-
	Income before income taxes	$	206,522		$	239,965


(1)	Earnings before interest and taxes (EBIT) excludes general corporate expenses and restructuring and asset impairment charges.

Pitney Bowes Inc.
Revenue and EBIT
Business Segments
June 30, 2008
(Unaudited)

(Dollars in thousands)
								%
		2008			2007			Change
Year To Date

	Revenue

	U.S. Mailing	$	1,103,434		$	1,218,048		(9	%)
	International Mailing		610,418			510,240		20	%
	Production Mail		284,804			274,536		4	%
	Software		201,913			121,372		66	%
	Mailstream Solutions		2,200,569			2,124,196		4	%

	Management Services		603,089			547,711		10	%
	Mail Services		260,186			210,057		24	%
	Marketing Services		98,199			75,307		30	%
	Mailstream Services		961,474			833,075		15	%

	Total Revenue	$	3,162,043		$	2,957,271		7	%

	EBIT (1)

	U.S. Mailing	$	444,481		$	508,147		(13	%)
	International Mailing		101,397			82,887		22	%
	Production Mail		23,933			25,585		(6	%)
	Software		12,795			11,874		8	%
	Mailstream Solutions		582,606			628,493		(7	%)

	Management Services		36,867			36,789		0	%
	Mail Services		34,369			22,770		51	%
	Marketing Services		5,279			1,139		364	%
	Mailstream Services		76,515			60,698		26	%

	Total EBIT	$	659,121		$	689,191		(4	%)

	Unallocated amounts:
	Interest, net		(112,904	)		(119,268	)
	Corporate expense		(100,507	)		(98,922	)
	Restructuring charges		(35,908	)		-

	Income before income taxes	$	409,802		$	471,001


(1)	Earnings before interest and taxes (EBIT) excludes general corporate expenses and restructuring and asset impairment charges.

Pitney Bowes Inc.
Consolidated Balance Sheets
(Unaudited)

(Dollars in thousands, except per share data)

Assets			06/30/08			03/31/08
Current assets:
	Cash and cash equivalents		$	429,412		$	397,786
	Short-term investments			26,842			68,112
	Accounts receivable, less allowances:
		06/08 $51,406 03/08 $52,537		880,918			853,236
	Finance receivables, less allowances:
		06/08 $43,985 03/08 $44,017		1,481,158			1,484,342
	Inventories			214,110			218,036
	Current income taxes			92,392			89,409
	Other current assets and prepayments			263,806			268,401

		Total current assets		3,388,638			3,379,322

Property, plant and equipment, net				610,080			613,590
Rental property and equipment, net				430,255			434,624
Long-term finance receivables, less allowances:
		06/08 $28,803 03/08 $30,932		1,506,636			1,522,087
Investment in leveraged leases				242,853			239,847
Goodwill				2,393,229			2,343,049
Intangible assets, net				439,405			444,120
Non-current income taxes				31,659			31,014
Other assets				610,884			621,897

Total assets			$	9,653,639		$	9,629,550

Liabilities and stockholders' equity
Current liabilities:
	Accounts payable and accrued liabilities		$	1,915,896		$	1,893,884
	Current income taxes			112,639			140,876
	Notes payable and current portion of long-term obligations			866,862			818,503
	Advance billings			593,666			597,935

		Total current liabilities		3,489,063			3,451,198

Deferred taxes on income				495,828			473,342
FIN 48 uncertainties and other income tax liabilities				298,962			291,859
Long-term debt				4,013,910			4,047,013
Other noncurrent liabilities				427,993			428,339

		Total liabilities		8,725,756			8,691,751

Preferred stockholders' equity in a subsidiary company
Preferred stockholders' equity in a subsidiary company				384,165			384,165

Stockholders' equity:
	Cumulative preferred stock, $50 par value, 4% convertible			7			7
	Cumulative preference stock, no par value, $2.12 convertible			983			987
	Common stock, $1 par value			323,338			323,338
	Capital in excess of par value			248,681			246,992
	Retained earnings			4,234,666			4,178,725
	Accumulated other comprehensive income			134,629			130,163
	Treasury stock, at cost			(4,398,586	)		(4,326,578	)

		Total stockholders' equity		543,718			553,634

Total liabilities and stockholders' equity			$	9,653,639		$	9,629,550

Pitney Bowes Inc.
Reconciliation of Reported Consolidated Results to Adjusted Results
(Unaudited)

(Dollars in thousands, except per share amounts)

	Three months ended June 30,						Six months ended June 30,
	2008				2007		2008			2007

GAAP income from continuing operations
after income taxes, as reported	$	131,340		$	153,581		$	254,275		$	300,165
Restructuring and asset impairments		12,393			-			22,745			-
Tax adjustment		-			-			6,480			-
MapInfo Purchase accounting		-			5,214			322			5,214
Income from continuing operations
after income taxes, as adjusted	$	143,733		$	158,795		$	283,822		$	305,379


GAAP diluted earnings per share from
continuing operations, as reported	$	0.63		$	0.69		$	1.20		$	1.35
Restructuring and asset impairments		0.06			-			0.11			-
Tax adjustment		-			-			0.03			-
MapInfo Purchase accounting		-			0.02			0.00			0.02
Diluted earnings per share from continuing
operations, as adjusted	$	0.69		$	0.71		$	1.34		$	1.37


GAAP net cash provided by operating activities, as reported
GAAP net cash provided by operating activities, as reported	$	212,517		$	186,751		$	460,854		$	406,976
Capital expenditures		(58,413	)		(60,850	)		(115,346	)		(128,421	)
Restructuring payments and discontinued operations		24,817			8,983			37,510			22,389
Reserve account deposits		25,685			20,456			18,452			9,504

Free cash flow, as adjusted	$	204,606		$	155,340		$	401,470		$	310,448



Note: The sum of the earnings per share amounts may not equal the totals above due to rounding.

CONTACT:
Pitney Bowes Inc.
Editorial:
Sheryl Y. Battles, 203-351-6808
VP, Corp. Communications
or
Financial:
Charles F. McBride, 203-351-6349
VP, Investor Relations
www.pitneybowes.com


	Second Quarter
Adjusted EPS	$0.69
Restructuring & Asset Impairments	($0.06)
GAAP EPS from Continuing Operations	$0.63
Discontinued Operations	($0.01)
GAAP EPS	$0.61*

* Note: The sum of the EPS amounts do not equal the totals above due to rounding


Continuing Operations	Full Year 2008	Full Year 2007
Adjusted EPS	$2.80 to $2.90	$2.72
Restructuring & Asset Impairments	($0.15 to $0.30)	($0.87)
Tax Adjustments	($0.03)	($0.16)
MapInfo Accounting	N/A	($0.05)
GAAP EPS	$2.47 to $2.72	$1.63*

* Note: The sum of the EPS amounts do not equal the totals above due to rounding