Pitney Bowes Reports 17th Consecutive Quarter of Double-Digit Earnings Per Share Growth

Business Wire, April 20, 1999

STAMFORD, Conn.--(BUSINESS WIRE)--April 20, 1999--

Pitney Bowes Inc. (NYSE: PBI) today announced first quarter results featuring a 15.7-percent growth in diluted earnings per share from continuing operations to 52 cents, and income from continuing operations growth of 12 percent to $142.3 million. This record performance represents the 17th consecutive quarter of double-digit, year-over-year diluted earnings per share growth from continuing operations. Revenue rose 11 percent to $1.1 billion during the quarter, which includes $10 million of revenue from the sale of PROM (memory) chips and scale charts associated with the United States Postal Service rate increase.

Pitney Bowes Chairman and Chief Executive Officer Michael J. Critelli assessed the company's first-quarter performance: "Our first quarter performance reflects the strength of our core business and our success in profitable expansion in new and existing markets. We are pleased that our ongoing focus on enhancing shareholder value continues to provide excellent financial results such as our year-over-year improvement in operating and income margins from continuing operations. We also experienced year-over-year operating margin improvements in our two largest business segments -- Mailing and Integrated Logistics and Office Solutions -- even as we continued to invest in and refine our operations.

"Fortune Magazine's annual rankings provide additional evidence of Pitney Bowes' consistent growth and superior returns, as we ranked number one for the third consecutive year in 'profits as a percent of revenue' in the Computers, Office Equipment Industry segment, and our 'profits as a percent of stockholders' equity' ranked 36 out of the entire Fortune 500."

The Mailing and Integrated Logistics Segment includes revenues and related expenses from the rental, sale and financing of mailing and shipping equipment, related supplies and service, and software. During the quarter, the segment posted strong revenue growth of 12 percent and a 20-percent increase in operating profit, which included significant improvements in operating profit from international operations. Excluding the sales of memory chips and scale charts related to the U.S. postal rate increase, revenue grew 10 percent. The market demand for Pitney Bowes' comprehensive portfolio of advanced mailing and logistics systems for businesses of all sizes remains strong. The value in providing solutions which address multiple parts of the end-to-end mailing and shipping cycle -- from creation to delivery -- was underscored by the contribution of several categories to the segment's solid performance:

-- Mail Creation, led by the award-winning Pitney Bowes

DocuMatch(TM), which prints and prepares customized, one-to-one

marketing materials

-- Integrated Logistics, which recently introduced Conquest(TM), a

software application for managing the integrated supply chain,

and

-- The 3 Series(TM) Desktop Inserting System, which allows low- to

mid-volume mailers to automate the collating, folding and

inserting of mail.

During the quarter, Pitney Bowes continued to aggressively leverage the opportunity presented by the U.S. Postal Service requirement that customers migrate to more advanced technology. As a result, Pitney Bowes leads the mailing industry in upgrading customers to more advanced mailing systems, with approximately 95 percent of our meter unit base now electronic or digital, as compared to 78 percent of our meter unit base at the end of the first quarter 1998, and 90 percent of our meter unit base at year-end 1998. The company also continues to be the undisputed leader in digital mailing systems, with this category comprising almost 40 percent of our meter unit base. This broadening population of digital meters, in turn, continued to benefit the segment's performance because of the increasing stream of recurring supplies revenues that it generates.

The Office Solutions Segment includes Pitney Bowes Office Systems and Pitney Bowes Management Services. First-quarter performance in this segment featured an eight percent growth in revenue and a 12-percent increase in operating profit.

During the quarter, Office Systems' revenue grew by eight percent excluding the impact of foreign currency as operating profits continued to increase at a double-digit rate. The organization continues to leverage relationships with Fortune 1000 facsimile customers to increase the mix of major and national accounts in its copier base. To this end, the sales and service organizations are accelerating their transition to support the digital and networked products and systems these high-end customers require.

Pitney Bowes Management Services' revenue grew nine percent during the quarter as the company pursued its strategy of disciplined, profitable expansion, while providing superior customer service. These efforts, in conjunction with improved operating efficiencies, continued to drive operating profit growth at a faster pace than revenue growth. Our primary business challenge continues to center on account-by-account profitability.