STAMFORD, Conn.--(BUSINESS WIRE)--November 3, 2008--Pitney Bowes Inc. (NYSE:PBI) today reported third quarter 2008 financial results.

The company’s third quarter revenue increased 3 percent to $1.5 billion and adjusted income from continuing operations was $139 million. Adjusted income for the quarter excludes pre-tax charges of $40 million related to previously announced restructuring initiatives to reduce costs, accelerate operational improvements and transition the company’s product lines. Adjusted income also excludes $9 million of pre-tax charges related to impairments of certain intangible assets in the Management Services and Marketing Services segments. On a Generally Accepted Accounting Principles (GAAP) basis, the company reported income from continuing operations of $100 million and net income of $98 million.

Adjusted earnings per diluted share from continuing operations for the third quarter was $0.67, which compares with $0.63 for the prior year. On a GAAP basis, the company reported earnings per diluted share from continuing operations of $0.48 for the quarter, compared with $0.58 per diluted share for the prior year. Earnings per diluted share for the quarter was $0.47 including discontinued operations, compared with $0.58 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 $252 million, while on a GAAP basis cash from operations was $281 million. Year-to-date, free cash flow was $653 million, while on a GAAP basis cash from operations was $742 million.

During the quarter, the company used $73 million of cash for dividends and $61 million to buy back 1.7 million of its shares. The remaining authorization for future share repurchases was $73 million at the end of the third quarter. Year-to-date, the company has returned $553 million to shareholders in the form of dividends and share repurchases.

Commenting on the company’s performance, President and CEO Murray D. Martin noted, “Our business model of high recurring revenue and our diverse customer base provide us with a measure of stability as these turbulent economic events unfold around the world. The rapid and significant appreciation of the U.S. dollar near the end of the quarter resulted in a slightly negative impact on earnings versus the prior year and had a $0.03 negative impact on the third quarter versus the second quarter earnings.

“Concerns about the availability of credit and the status of the economy have delayed some customers’ buying decisions, particularly for large ticket sales in our software and production mail businesses. However, aggressive cost management, as part of the transition initiatives we began at the end of last year, reduced our cost structure as a percent of revenue, and improved our year-over-year EBIT margins in U.S. Mailing, International Mailing, U.S. Management Services, Production Mail, and Marketing Services.

“We continue to generate very strong free cash flow and expect that trend to continue. In fact, we are forecasting annual free cash flow in excess of $800 million, marking our third and largest increase in our outlook this year.

“The combination of our business model, strong free cash flow, and excellent credit ratings has allowed us continuous access to the commercial paper markets. We have issued commercial paper at more normal maturity levels and at favorable interest rates, even during this period of market uncertainty. Our strong liquidity position enables us to satisfy all of our financing needs. We will continue to be prudent on how we spend and invest our cash to maximize shareholder return.”

Mailstream Solutions revenue was $1.1 billion which was equal to last year, while earnings before interest and taxes (EBIT) grew 3 percent to $291 million when compared with the prior year.

U.S. Mailing’s revenue declined 5 percent to $549 million and EBIT declined one percent to $223 million. Because of actions the company has taken to reduce costs, the EBIT margin for U.S. Mailing improved to 40.6 percent. The decline in revenue was due primarily to lower mailing equipment and supplies sales as many government and major account customers deferred upgrade decisions for new equipment or extended leases on existing equipment.

International Mailing’s revenue grew 7 percent to $272 million and EBIT increased 23 percent to $41 million. Revenue growth benefited from increased rentals in France; increased equipment sales in Norway, other parts of Europe, and Asia; and continued good growth in supplies. Revenue growth also benefited by about 4 percent from favorable currency translation and by about 2 percent from acquisitions. EBIT margin comparisons with the prior year were favorably affected by an improving administrative cost structure in Europe.

Worldwide revenue for Production Mail grew 2 percent to $155 million and EBIT increased 37 percent to $23 million. Favorable currency translation contributed about 2 percent to revenue growth. Revenue growth from higher equipment placements in the UK, Germany and other parts of Europe was offset by lower equipment sales in the U.S., where economic uncertainty has slowed large-ticket capital investment for many large financial services companies. The EBIT margin improved due to aggressive cost actions in anticipation of delayed buying decisions.

Software revenue increased 7 percent to $94 million while EBIT decreased 39 percent to $3 million. Revenue was flat, when compared with the prior year, after excluding the effect of acquisitions, which contributed about 7 percent to revenue growth. Software sales were adversely affected by the ongoing weak economic conditions worldwide causing some large enterprise accounts to continue to postpone their purchase decisions. The decline in EBIT margin was due to the planned global investment in sales and marketing, increased investment in research and development, as well as lower revenue growth.

Mailstream Services reported revenue growth of 9 percent to $478 million, while EBIT declined one percent to $38 million when compared with the prior year.

Management Services’ revenue increased 4 percent to $288 million while EBIT decreased 6 percent to $16 million. The segment’s revenue growth for the quarter benefited from last year’s acquisition of a French business services company, which added about 6 percent to revenue growth, and favorable currency translation, which added about one percent to revenue growth. Revenue growth was adversely affected by lower transaction volumes for some customers, especially in the U.S. financial services sector. EBIT margin in the segment benefited from improvements in the U.S., where the margin increased to our near-term target of 10 percent because of the company’s focus on productivity initiatives. However, the margin benefits from the U.S. actions were more than offset by the costs associated with the acquisition in France.

Mail Services revenue grew 25 percent to $140 million, while EBIT decreased one percent to $15 million. Revenue growth was driven by both presort and international mail services. Acquisitions added about 14 percent to revenue growth. As has been the case in past expansion periods, the EBIT benefits from operating leverage were more than offset in the quarter by the costs associated with the acquisition of a multi-site presort operation in the U.S. and two UK international mail services sites. The company expects positive EBIT margin contributions from these sites in 2009 as they become fully integrated.

Marketing Services revenue increased 4 percent to $50 million and EBIT increased 15 percent to $6 million. The company’s phased exit from the motor vehicle registration services program adversely affected the segment’s revenue growth, while positively impacting EBIT margin versus the prior year.

Based upon the year-to-date results and the outlook for the remainder of the year, the company’s full-year free cash flow is expected to exceed $800 million. The company has revised its revenue growth expectations for the year to 2 to 4 percent and its expected adjusted earnings per diluted share from continuing operations for the year to $2.75 to $2.82, primarily due to the rapid and significant strengthening of the U.S. dollar, as well as the uncertainty resulting from the weak economic environment. This guidance is based on exchange rates in effect on October 31, 2008.

Based on actions identified to date, the company expects to incur full-year pre-tax charges for restructuring and asset impairments of approximately $100 million or $0.35 per diluted share, of which $85 million or $0.30 per diluted share has been recorded during the first nine months of the year. The company is identifying further actions before the end of the year to reduce its cost structure and improve operational efficiency.

On a GAAP basis, earnings per diluted share from continuing operations is expected to be in the range of $2.37 to $2.44.

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

In conclusion Mr. Martin noted, “While we anticipate continued economic uncertainty for the remainder of 2008 and into 2009, our products and services are designed to provide efficiencies, cost savings and revenue growth opportunities for our customers. We will also continue to aggressively manage our cost structure. As a result, we believe we are well positioned to continue to grow our earnings in the fourth quarter and during 2009 despite these market challenges.”

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 $6.4 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 these 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 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 September 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: the uncertain economic environment, 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; changes in foreign currency exchange rates; changes in tax rates; and changes in postal regulations, as more fully outlined in the company's 2007 Form 10-K Annual Report and other reports 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 nine months ended September 30, 2008 and 2007, and consolidated balance sheets at September 30 and June 30, 2008, 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,
	2008			2007			2008				2007
Revenue:
Equipment sales	$	296,520		$	307,897		$	910,883		$	961,868
Supplies		96,864			95,497			305,750			292,197
Software		100,092			92,256			314,617			223,580
Rentals		182,850			183,452			553,658			552,433
Financing		195,632			201,241			591,834			586,658
Support services		193,516			185,520			579,996			564,597
Business services		482,199			442,414			1,452,978			1,284,215

Total revenue		1,547,673			1,508,277			4,709,716			4,465,548

Costs and expenses:
Cost of equipment sales		157,593			164,659			484,988			481,873
Cost of supplies		26,382			27,061			80,673			77,909
Cost of software		25,917			21,749			80,107			54,373
Cost of rentals		36,252			42,630			114,227			128,312
Cost of support services		113,581			108,011			343,507			320,832
Cost of business services		375,949			345,024			1,138,249			1,008,647
Selling, general and administrative		478,914			479,772			1,473,098			1,393,289
Research and development		53,008			47,691			156,176			138,364
Interest, net		54,560			60,386			167,464			179,654
Restructuring charges and asset impairments		49,229			4,300			85,137			4,300
Other expense (income)		-			(380	)		-			(380	)

Total costs and expenses		1,371,385			1,300,903			4,123,626			3,787,173

Income from continuing operations
before income taxes and minority interest		176,288			207,374			586,090			678,375

Provision for income taxes		69,456			73,272			215,389			234,566
Minority interest (preferred stock dividends of subsidiaries)
		6,540			4,862			16,134			14,404

Income from continuing operations		100,292			129,240			354,567			429,405
Loss from discontinued operations, net of tax		(2,063	)		(1,565	)		(8,726	)		(4,695	)

Net income	$	98,229		$	127,675		$	345,841		$	424,710

Basic earnings per share of common stock:
Continuing operations	$	0.48		$	0.59		$	1.70		$	1.96
Discontinued operations		(0.01	)		(0.01	)		(0.04	)		(0.02	)

Net income	$	0.47		$	0.58		$	1.65		$	1.94

Diluted earnings per share of common stock:
Continuing operations	$	0.48		$	0.58		$	1.68		$	1.93
Discontinued operations		(0.01	)		(0.01	)		(0.04	)		(0.02	)

Net income	$	0.47		$	0.58		$	1.64		$	1.91

Average common and potential common shares outstanding
Average common and potential common shares outstanding		208,655,671			221,027,506			210,586,568			222,280,355


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
September 30, 2008
(Unaudited)

(Dollars in thousands)
								%
		2008			2007			Change
Third Quarter

	Revenue

	U.S. Mailing	$	549,360		$	575,782		(5%)
	International Mailing		271,727			254,001		7%
	Production Mail		154,554			151,857		2%
	Software		94,221			88,437		7%
	Mailstream Solutions		1,069,862			1,070,077		(0%)

	Management Services		287,989			278,167		4%
	Mail Services		139,689			111,785		25%
	Marketing Services		50,133			48,248		4%
	Mailstream Services		477,811			438,200		9%

	Total Revenue	$	1,547,673		$	1,508,277		3%

	EBIT (1)

	U.S. Mailing	$	223,141		$	226,061		(1%)
	International Mailing		41,123			33,424		23%
	Production Mail		23,183			16,877		37%
	Software		3,167			5,159		(39%)
	Mailstream Solutions		290,614			281,521		3%

	Management Services		16,064			17,140		(6%)
	Mail Services		15,467			15,702		(1%)
	Marketing Services		6,126			5,310		15%
	Mailstream Services		37,657			38,152		(1%)

	Total EBIT		328,271			319,673		3%

	Unallocated amounts:
	Interest, net		(54,560	)		(60,386	)
	Corporate expense		(48,194	)		(47,993	)
	Restructuring charges and
	asset impairments		(49,229	)		(4,300	)
	Other income, net		-			380
	Income before income taxes	$	176,288		$	207,374


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

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

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

	Revenue

	U.S. Mailing	$	1,652,794		$	1,793,830		(8%)
	International Mailing		882,145			764,241		15%
	Production Mail		439,358			426,393		3%
	Software		296,134			209,809		41%
	Mailstream Solutions		3,270,431			3,194,273		2%

	Management Services		891,078			825,878		8%
	Mail Services		399,875			321,842		24%
	Marketing Services		148,332			123,555		20%
	Mailstream Services		1,439,285			1,271,275		13%

	Total Revenue	$	4,709,716		$	4,465,548		5%

	EBIT (1)

	U.S. Mailing	$	667,622		$	734,208		(9%)
	International Mailing		142,520			116,311		23%
	Production Mail		47,116			42,462		11%
	Software		15,962			17,033		(6%)
	Mailstream Solutions		873,220			910,014		(4%)

	Management Services		52,931			53,929		(2%)
	Mail Services		49,836			38,472		30%
	Marketing Services		11,405			6,449		77%
	Mailstream Services		114,172			98,850		16%

	Total EBIT		987,392			1,008,864		(2%)

	Unallocated amounts:
	Interest, net		(167,464	)		(179,654	)
	Corporate expense		(148,701	)		(146,915	)
	Restructuring charges and
	asset impairments		(85,137	)		(4,300	)
	Other income, net		-			380

	Income before income taxes	$	586,090		$	678,375


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

Pitney Bowes Inc.
Consolidated Balance Sheets
(Unaudited)

	(Dollars in thousands, except per share data)

	Assets									09/30/08			06/30/08
	Current assets:
		Cash and cash equivalents							$	458,786		$	429,412
		Short-term investments								22,597			26,842
		Accounts receivable, less allowances:
			09/08	$	47,871	06/08	$	51,406		829,963			880,918
		Finance receivables, less allowances:
			09/08	$	42,227	06/08	$	43,985		1,450,981			1,481,158
		Inventories								204,606			214,110
		Current income taxes								76,633			92,392
		Other current assets and prepayments								256,346			263,806

			Total current assets							3,299,912			3,388,638

	Property, plant and equipment, net									591,940			610,080
	Rental property and equipment, net									407,220			430,255
	Long-term finance receivables, less allowances:
			09/08	$	26,189	06/08	$	28,803		1,459,957			1,506,636
	Investment in leveraged leases									237,417			242,853
	Goodwill									2,311,588			2,393,229
	Intangible assets, net									411,086			439,405
	Non-current income taxes									43,580			31,659
	Other assets									611,678			610,884

	Total assets								$	9,374,378		$	9,653,639

	Liabilities and stockholders' equity
	Current liabilities:
		Accounts payable and accrued liabilities							$	1,876,174		$	1,915,896
		Current income taxes								159,939			112,639
		Notes payable and current portion of long-term obligations								985,196			866,862
		Advance billings								547,401			593,666

			Total current liabilities							3,568,710			3,489,063

	Deferred taxes on income									470,506			495,828
	FIN 48 uncertainties and other income tax liabilities									303,881			298,962
	Long-term debt									3,872,580			4,013,910
	Other non-current liabilities									408,823			427,993

			Total liabilities							8,624,500			8,725,756

	Preferred stockholders' equity in
		subsidiaries								374,165			384,165

	Stockholders' equity:
		Cumulative preferred stock, $50 par value, 4% convertible								7			7
		Cumulative preference stock, no par value, $2.12 convertible								977			983
		Common stock, $1 par value								323,338			323,338
		Capital in excess of par value								253,993			248,681
		Retained earnings								4,260,150			4,234,666
		Accumulated other comprehensive income								(7,112	)		134,629
		Treasury stock, at cost								(4,455,640	)		(4,398,586	)

			Total stockholders' equity							375,713			543,718

	Total liabilities and stockholders' equity								$	9,374,378		$	9,653,639


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

(Dollars in thousands, except per share amounts)

		Three months ended September 30,						Nine months ended September 30,
		2008			2007			2008			2007

	GAAP income from continuing operations after income taxes, as reported
		$	100,292		$	129,240		$	354,567		$	429,405
	Restructuring charges and asset impairments		39,117			2,460			61,862			2,460
	Tax adjustment		-			3,602			6,480			3,602
	MapInfo Purchase accounting		-			3,864			322			9,079
	Other items, net		-			(219	)		-			(219	)
	Income from continuing operations after income taxes, as adjusted
		$	139,409		$	138,947		$	423,231		$	444,327


	GAAP diluted earnings per share from continuing operations, as reported
		$	0.48		$	0.58		$	1.68		$	1.93
	Restructuring charges and asset impairments		0.19			0.01			0.29			0.01
	Tax adjustment		-			0.02			0.03			0.02
	MapInfo Purchase accounting		-			0.02			0.00			0.04
	Other items, net		-			(0.00	)		-			(0.00	)
	Diluted earnings per share from continuing operations, as adjusted
		$	0.67		$	0.63		$	2.01		$	2.00


	GAAP net cash provided by operating activities, as reported
	GAAP net cash provided by operating activities, as reported	$	280,848		$	289,789		$	741,702		$	696,765
	Capital expenditures		(54,632	)		(73,592	)		(169,978	)		(202,013	)
	Restructuring payments and discontinued operations		28,941			6,142			66,451			28,532
	Loss on redemption of preferred stock issued by a subsidiary
			(1,777	)		-			(1,777	)		-
	Reserve account deposits		(1,835	)		17,002			16,617			26,506

	Free cash flow, as adjusted	$	251,545		$	239,341		$	653,015		$	549,790



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

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


	Third Quarter
Adjusted EPS	$0.67
Restructuring & Asset Impairments	($0.19)
GAAP EPS from Continuing Operations	$0.48
Discontinued Operations	($0.01)
GAAP EPS	$0.47


Continuing Operations	Full Year 2008	Full Year 2007
Adjusted EPS	$2.75 to $2.82	$2.72
Restructuring & Asset Impairments	($0.35)	($0.87)
Tax Adjustments	($0.03)	($0.16)
MapInfo Accounting	N/A	($0.05)
GAAP EPS	$2.37 to $2.44	$1.63*