SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549-1004 F O R M 1 0 - Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1994 OR ___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to _____________ Commission File Number: 1-3579 PITNEY BOWES INC. State of Incorporation IRS Employer Identification No. Delaware 06-0495050 World Headquarters Stamford, Connecticut 06926-0700 Telephone Number: (203) 356-5000 The Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No_____ Number of shares of common stock, $2 par value, outstanding as of June 30, 1994 is 157,536,593. Pitney Bowes Inc. - Form 10-Q Six Months Ended June 30, 1994 Page 2 of 15 Pitney Bowes Inc. Index Page Number Part I - Financial Information: Consolidated Statement of Income - Three and Six Months Ended June 30, 1994 and 1993. . . . . . . . . . . . . . . 3 Consolidated Balance Sheet - June 30, 1994 and December 31, 1993. . . . . . . . . . . . . . . . . . . . . . 4 Consolidated Statement of Cash Flows - Six Months Ended June 30, 1994 and 1993. . . . . . . . . . . . . 5 Notes to Consolidated Financial Statements . . . . . . . . . . . . 6 - 7 Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . . . . . 8 - 11 Part II - Other Information: Item 4: Submission of Matters to a Vote of Security Holders. . . . . . . . . . . . . . . . . . . . 12 Item 6: Exhibits and Reports on Form 8-K. . . . . . . . . . . . . 12 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Exhibit (i) - Computation of Earnings per Share. . . . . . . . . . . 14 Exhibit (ii) - Computation of Ratio of Earnings to Fixed Charges. . . . . . . . . . . . . . . . . . 15 Pitney Bowes Inc. - Form 10-Q Six Months Ended June 30, 1994 Page 3 of 15 Part I - Financial Information Pitney Bowes Inc. Consolidated Statement of Income (Unaudited) (Dollars in thousands, except per share data)
Three Months Ended June 30, Six Months Ended June 30, 1994 1993 1994 1993 Revenue from: Sales. . . . . . . . . . . . . . . . . . . . . . $ 454,130 $ 403,082 $ 870,734 $ 782,400 Rentals and financing. . . . . . . . . . . . . . 369,275 339,820 699,995 664,698 Support services . . . . . . . . . . . . . . . . 131,456 131,455 260,909 260,683 Total revenue. . . . . . . . . . . . . . . . . 954,861 874,357 1,831,638 1,707,781 Costs and expenses: Cost of sales. . . . . . . . . . . . . . . . . . 252,862 215,975 485,523 423,389 Cost of rentals and financing. . . . . . . . . . 129,462 117,114 232,653 218,825 Selling, service and administrative. . . . . . . 347,341 335,478 676,180 654,630 Research and development . . . . . . . . . . . . 23,149 23,293 46,878 49,299 Interest, net. . . . . . . . . . . . . . . . . . 45,427 43,744 86,926 92,506 Total costs and expenses . . . . . . . . . . . 798,241 735,604 1,528,160 1,438,649 Income before income taxes . . . . . . . . . . . . 156,620 138,753 303,478 269,132 Provision for income taxes . . . . . . . . . . . . 58,002 51,447 112,998 99,766 Income before effect of a change in accounting for postemployment benefits. . . . . . . . . . . 98,618 87,306 190,480 169,366 Effect of a change in accounting for postemployment benefits. . . . . . . . . . . . . - - (119,532) - Net income . . . . . . . . . . . . . . . . . . . . $ 98,618 $ 87,306 $ 70,948 $ 169,366 Income per common and common equivalent share: Income before effect of a change in accounting for postemployment benefits . . . . $ .62 $ .55 $ 1.20 $ 1.07 Effect of a change in accounting for postemployment benefits. . . . . . . . . . . . - - (.75) - Net income . . . . . . . . . . . . . . . . . . . $ .62 $ .55 $ .45 $ 1.07 Average common and common equivalent shares outstanding. . . . . . . . . . . . . . . . . . . 159,117,094 159,001,965 159,349,831 158,958,754 Dividends declared per share of common stock . . . $ .26 $ .225 $ .52 $ .45 Ratio of earnings to fixed charges . . . . . . . . 3.69 3.45 3.66 3.32 Pitney Bowes Inc. - Form 10-Q Six Months Ended June 30, 1994 Page 4 of 15 Pitney Bowes Inc. Consolidated Balance Sheet (Unaudited) (Dollars in thousands) June 30, December 31,
1994 1993 Assets Current assets: Cash and cash equivalents. . . . . . . . . . . . . $ 79,793 $ 54,653 Short-term investments, at cost which approximates market. . . . . . . . . . . . . . . 1,351 1,153 Accounts receivable, less allowances: 6/94, $17,202; 12/93, $16,691. . . . . . . . . . 403,822 411,810 Finance receivables, less allowances: 6/94, $35,967; 12/93, $39,488. . . . . . . . . . 978,664 994,998 Inventories (Note 2) . . . . . . . . . . . . . . . 431,796 394,744 Other current assets and prepayments . . . . . . . 73,414 79,391 Total current assets . . . . . . . . . . . . . . 1,968,840 1,936,749 Property, plant and equipment, net (Note 3). . . . . 554,855 555,038 Rental equipment and related inventories, net (Note 3). . . . . . . . . . . . . 650,127 641,588 Property leased under capital leases, net (Note 3) . . . . . . . . . . . . . . . 13,200 15,451 Long-term finance receivables, less allowances: 6/94, $80,723; 12/93, $77,024. . . . . . . . . . . 2,868,978 2,895,952 Goodwill, net of amortization: 6/94, $37,608; 12/93, $33,640. . . . . . . . . . . 228,144 231,309 Other assets . . . . . . . . . . . . . . . . . . . . 551,580 517,729 Total assets . . . . . . . . . . . . . . . . . . . . $6,835,724 $6,793,816 Liabilities and stockholders' equity Current liabilities: Accounts payable and accrued liabilities (Note 4) . . . . . . . . . . $ 619,049 $ 675,559 Income taxes payable . . . . . . . . . . . . . . . 230,564 200,110 Notes payable and current portion of long-term obligations (Note 4) . . . . . . . . . 2,099,356 2,081,872 Advance billings . . . . . . . . . . . . . . . . . 329,051 315,840 Total current liabilities. . . . . . . . . . . . 3,278,020 3,273,381 Deferred taxes on income . . . . . . . . . . . . . . 353,100 409,660 Long-term debt . . . . . . . . . . . . . . . . . . . 803,489 847,316 Other noncurrent liabilities (Note 5). . . . . . . . 573,502 391,864 Total liabilities. . . . . . . . . . . . . . . . 5,008,111 4,922,221 Stockholders' equity: Cumulative preferred stock, $50 par value, 4% convertible. . . . . . . . . . . . . . 53 68 Cumulative preference stock, no par value, $2.12 convertible . . . . . . . . . . . . 2,857 2,969 Common stock, $2 par value . . . . . . . . . . . . 323,338 323,338 Capital in excess of par value . . . . . . . . . . 35,098 36,762 Retained earnings. . . . . . . . . . . . . . . . . 1,663,041 1,674,168 Cumulative translation adjustments . . . . . . . . (51,765) (47,319) Treasury stock, at cost. . . . . . . . . . . . . . (145,009) (118,391) Total stockholders' equity . . . . . . . . . . . 1,827,613 1,871,595 Total liabilities and stockholders' equity . . . . . $6,835,724 $6,793,816 Pitney Bowes Inc. - Form 10-Q Six Months Ended June 30, 1994 Page 5 of 15 Pitney Bowes Inc. Consolidated Statement of Cash Flows (Unaudited) (Dollars in thousands)
Six Months Ended June 30, 1994 1993 Cash flows from operating activities: Net income . . . . . . . . . . . . . . . . . . . . $ 70,948 $ 169,366 Effect of a change in accounting for postemployment benefits. . . . . . . . . . . . . 119,532 - Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization. . . . . . . . . 141,380 128,931 Nonrecurring charges, net. . . . . . . . . . . (344) (1,552) Increase in deferred taxes on income . . . . . 20,094 28,206 Change in assets and liabilities: Accounts receivable. . . . . . . . . . . . . 7,802 14,968 Sales-type lease receivables . . . . . . . . (38,510) (22,798) Inventories. . . . . . . . . . . . . . . . . (37,797) (36,542) Other current assets and prepayments . . . . 7,399 (5,073) Accounts payable and accrued liabilities. . . . . . . . . . . . . . . . (72,216) (18,462) Income taxes payable . . . . . . . . . . . . 36,372 (33,102) Advance billings . . . . . . . . . . . . . . 13,636 2,785 Other, net . . . . . . . . . . . . . . . . . . (43,247) (13,987) Net cash provided by operating activities . . . . . . . . . . . . . . . . 225,049 212,740 Cash flows from investing activities: Short-term investments . . . . . . . . . . . . . . (198) 255 Net investment in fixed assets . . . . . . . . . . (146,779) (122,485) Net investment in direct-finance lease receivables. . . . . . . . . . . . . . . . . . . 73,462 171,107 Investment in leveraged leases . . . . . . . . . . 966 5,267 Net cash (used in) provided by investing activities . . . . . . . . . . . (72,549) 54,144 Cash flows from financing activities: Decrease in notes payable. . . . . . . . . . . . . (77,042) (7,605) Proceeds from long-term obligations. . . . . . . . 200,000 - Principal payments on long-term obligations. . . . (138,713) (200,292) Proceeds from issuance of stock. . . . . . . . . . 18,008 18,007 Stock repurchases. . . . . . . . . . . . . . . . . (48,183) (5,144) Dividends paid . . . . . . . . . . . . . . . . . . (82,075) (70,841) Net cash used in financing activities. . . . (128,005) (265,875) Effect of exchange rate changes on cash. . . . . . . 645 6 Increase in cash and cash equivalents. . . . . . . . 25,140 1,015 Cash and cash equivalents at beginning of period. . . . . . . . . . . . . . . . . . . . . 54,653 71,016 Cash and cash equivalents at end of period . . . . . $ 79,793 $ 72,031 Interest paid. . . . . . . . . . . . . . . . . . . . $ 89,962 $ 106,111 Income taxes paid. . . . . . . . . . . . . . . . . . $ 54,695 $ 99,960 Pitney Bowes Inc. - Form 10-Q Six Months Ended June 30, 1994 Page 6 of 15 Pitney Bowes Inc. Notes to Consolidated Financial Statements Note 1: The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of Pitney Bowes Inc. (the Company), all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the financial position of the Company as of June 30, 1994 and the results of its operations and cash flows for the six months ended June 30, 1994 and 1993 have been included. Operating results for the six months ended June 30, 1994 are not necessarily indicative of the results that may be expected for the year ending December 31, 1994. These statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report to Stockholders and Form 10-K Annual Report for the year ended December 31, 1993. Note 2: Inventories are comprised of the following:
Note 3:(Dollars in thousands) June 30, December 31, 1994 1993 Raw materials and work in process . . . . . . . $ 110,031 $ 98,647 Supplies and service parts. . . . . . . . . . . 106,945 98,773 Finished products . . . . . . . . . . . . . . . 214,820 197,324 Total . . . . . . . . . . . . . . . . . . . . . $ 431,796 $ 394,744 Fixed assets are comprised of the following:
(Dollars in thousands) June 30, December 31, 1994 1993 Property, plant and equipment . . . . . . . . . $1,172,310 $1,136,849 Accumulated depreciation. . . . . . . . . . . . (617,455) (581,811) Property, plant and equipment, net. . . . . . . $ 554,855 $ 555,038 Rental equipment and related inventories . . . . . . . . . . . . . . . . . $1,448,412 $1,426,395 Accumulated depreciation. . . . . . . . . . . . (798,285) (784,807) Rental equipment and related inventories, net. . . . . . . . . . . . . . . $ 650,127 $ 641,588 Property leased under capital leases. . . . . . . . . . . . . . . . . . . . $ 40,990 $ 48,792 Accumulated amortization. . . . . . . . . . . . (27,790) (33,341) Property leased under capital leases, net . . . . . . . . . . . . . . . . . $ 13,200 $ 15,451 Pitney Bowes Inc. - Form 10-Q Six Months Ended June 30, 1994 Page 7 of 15 Note 4: Current liabilities include the following:
Note 5:(Dollars in thousands) June 30, December 31, 1994 1993 Accounts payable and accrued liabilities: Accounts payable - trade . . . . . . . . . . . . . $ 133,859 $ 187,480 Accrued salaries, wages and commissions. . . . . . . . . . . . . . . . . 64,066 94,092 Accrued pension benefits . . . . . . . . . . . . . 102,649 80,898 Miscellaneous accounts payable and accrued liabilities. . . . . . . . . . . . . 318,475 313,089 Total. . . . . . . . . . . . . . . . . . . . . . $ 619,049 $ 675,559 Notes payable and current portion of long-term obligations: Notes payable and overdrafts . . . . . . . . . . . $1,921,604 $2,000,364 Current portion of long-term debt. . . . . . . . . 175,242 78,222 Current portion of capital lease obligations. . . . . . . . . . . . . . . . . . . 2,510 3,286 Total. . . . . . . . . . . . . . . . . . . . . . $2,099,356 $2,081,872 Other noncurrent liabilities include the following:
Note 6: The Company adopted Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits" (FAS 112) as of January 1, 1994. FAS 112 requires that postemployment benefits be recognized on the accrual basis of accounting for fiscal years beginning after December 15, 1993. Postemployment benefits include primarily Company provided medical benefits to disabled employees and Company provided life insurance as well as other disability- and death-related benefits to former or inactive employees, their beneficiaries and covered dependents. The one-time effect of adopting FAS 112 was a non-cash, after-tax charge of $119.5 million (net of approximately $80.5 million of income taxes), or 75 cents per share. Application of this new standard had no significant effect on the Company's 1994 expense.June 30, December 31, (Dollars in thousands) 1994 1993 Accrued nonpension postretirement benefits . . . . . . . . . . . . . . . . . . . . $ 357,407 $ 362,402 Accrued postemployment benefits. . . . . . . . . . 188,735 - Long-term capital lease obligations. . . . . . . . 27,360 29,462 Total. . . . . . . . . . . . . . . . . . . . . . . $ 573,502 $ 391,864 Pitney Bowes Inc. - Form 10-Q Six Months Ended June 30, 1994 Page 8 of 15 Pitney Bowes Inc. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations - second quarter 1994 vs. second quarter 1993 Revenue increased nine percent to $954.9 million in 1994 while net income increased 13 percent to $98.6 million. The second quarter revenue increase included nine percent from growth in volume and one percent from price increases offset, in part, by a one percent unfavorable foreign currency exchange rate impact. Sales revenue increased 13 percent in 1994 primarily due to the acquisition of Ameriscribe Corporation, a nationwide provider of on-site reprographics, mailroom and other office services, in the fourth quarter of 1993. The sales revenue of the business equipment segment was favorably impacted by strong growth in domestic facsimile supplies to support our growing plain paper equipment base, domestic copier and mailing product placements and improved performance in the mailing business in the U.K. Higher communications recording systems placements were offset by slower dictation equipment and systems sales. Sales revenue from the business supplies and services segment increased significantly reflecting the growth of the facilities management business and the demand for new marking systems products. Rentals and financing revenue, substantially all of which is in the business equipment and financial services segments, increased nine percent reflecting a greater contribution from sales of finance assets this year than in the prior year's second quarter. In the second quarter of 1994, operating lease assets were sold which produced approximately $27 million in revenue. Financing revenue in 1994 was also impacted by the Company's 1993 decision to phase out the business of financing non- Pitney Bowes equipment outside of the United States. Rental revenue growth reflects higher numbers of postage meters on rental, especially higher yielding Postage By Phone(R) and electronic meters and facsimile machines in service as well as price increases. Support services revenue, most of which is derived from the business equipment segment, was unchanged from the prior year. Expansion of the U.S. mailing and shipping service bases was offset by a decline in the number of low-end copier equipment maintenance agreements. Price increases were offset by unfavorable foreign currency exchange rate impacts. The cost of sales to sales revenue ratio increased to 55.7 percent in 1994 from 53.6 percent in 1993 primarily due to the increased significance of the Company's facilities management business which includes most of its expenses in cost of sales, offset to a degree by favorable overhead absorption in the business equipment segment. The cost of rentals and financing to rentals and financing revenue ratio increased to 35.1 percent from 34.5 percent as a result of asset sales which included $25.2 million of cost from sales of operating lease assets in 1994. In the second quarter of 1993, gains on the sales of finance assets substantially offset additional loss provisions of $14.4 million required for the Company's German leasing business. Pitney Bowes Inc. - Form 10-Q Six Months Ended June 30, 1994 Page 9 of 15 The Company has completed its inquiry and evaluation, begun in 1993, of the assets and liabilities of its German leasing business. At this time, the Company believes that sufficient reserves for credit losses are in place to provide for currently expected losses. As part of the orderly liquidation of assets from leasing non-Pitney Bowes products in Germany, the Company continues to bill and collect accounts and repossess and remarket collateral where possible. These activities are expected to continue for the remainder of the lease terms. The Company is scrutinizing the circumstances surrounding the losses. German authorities have undertaken criminal proceedings with respect to the conduct of certain German lessees of non-Pitney Bowes products and, at the request of the Company, with respect to the disposition of the Company's German leasing business assets. These proceedings include the former general manager of the Company's German leasing business and others involved in that business. The principals of one of the Company's large German leasing accounts have been convicted of fraud against the Company and others. The Company is examining and evaluating additional actions it may take against former management personnel of its German leasing business. The Company's management continues to believe there are sufficient opportunities for profitable growth in its domestic external financing business and plans to make future external investments solely in the U.S. market. Selling, service and administrative expenses were 36.4 percent of revenue in 1994 compared with 38.4 percent in 1993. This improvement reflects the increased significance of the Company's facilities management business which includes most of its expenses in cost of sales coupled with favorable benefit costs and continued cost containment programs throughout the Company. Research and development expenses decreased one percent to $23.1 million in 1994 from $23.3 million in 1993. This decline primarily reflects higher engineering support for recently introduced products which costs are included in cost of sales. These expenses reflect continued investment in advanced product development with continued focus on electronic technology and software development. Net interest expense increased four percent to $45.4 million in 1994 from $43.7 million in 1993 due to higher short-term interest rates and average borrowing levels in 1994. It is anticipated that this unfavorable comparison will continue as interest rates rise. The second quarter 1994 effective tax rate was 37.0 percent compared with 37.1 percent in the second quarter of 1993. Higher levels of tax-exempt income were offset, in large part, by the higher U.S. statutory rate. Results of Operations - first six months of 1994 vs. first six months of 1993 For the first six months of 1994 compared with the same period of 1993, revenue increased seven percent while income before the one-time effect of a change in accounting for postemployment benefits increased 12 percent to $190.5 million. The current year period reflects the impact Pitney Bowes Inc. - Form 10-Q Six Months Ended June 30, 1994 Page 10 of 15 of adopting Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits" (FAS 112) as of January 1, 1994. FAS 112 requires that postemployment benefit costs be recognized on the accrual basis of accounting for fiscal years beginning after December 15, 1993. Postemployment benefits include primarily Company provided medical benefits to disabled employees and Company provided life insurance as well as other disability- and death-related benefits to former or inactive employees, their beneficiaries and covered dependents. The one-time effect of adopting FAS 112 was a non-cash, after-tax charge of $119.5 million, or 75 cents per share. The factors that affected revenue and earnings performance included those cited for the second quarter 1994 versus 1993. Additionally, in the first quarter of 1993, the business equipment segment's performance was enhanced by PROM sales primarily resulting from parcel rate changes. Liquidity and Capital Resources The current ratio reflects the Company's practice of utilizing a balanced mix of debt maturities to fund finance assets. At June 30, 1994, this ratio was .60 to 1 compared to .59 to 1 at year-end 1993. The increase in this ratio resulted primarily from an increase in inventory levels. As part of the Company's non-financial services shelf registrations, a medium-term note facility was established permitting issuance of up to $100 million in debt securities with maturities ranging from more than one year up to 30 years of which $32 million remain available at June 30, 1994. The Company also has an additional $300 million remaining on shelf registrations filed with the Securities and Exchange Commission. Pitney Bowes Credit Corporation (PBCC) has $400 million available from a $500 million shelf registration statement filed with the Securities and Exchange Commission. This registration statement should meet PBCC's long-term financing needs for the next two years. In March 1994, PBCC issued $200 million of 5.625 percent notes due in February 1997. In April 1994, PBCC redeemed $100 million of 10.65 percent notes due in April 1999. PBCC had previously sold an option on a notional principal amount of $100 million to enable a counterparty to require PBCC to pay a fixed rate of 10.67 percent for five years starting April 1, 1994. The counterparty has exercised that option. In July 1994, PBCC exercised the option to redeem $100 million of 10.125 percent notes due in 1997, on September 15, 1994. Accordingly, the Company reclassified this amount to the current portion of long-term debt. PBCC currently anticipates funding this redemption through short-term borrowings. The Company continues to use a balanced mix of debt maturities, variable- and fixed- rate debt and interest rate swaps to control the sensitivity of interest rate volatility. In January 1994, the Company sold approximately $88 million of finance assets in a privately-placed transaction with a third-party investor. Proceeds from the sale of these assets were used to repay a portion of the Company's commercial paper borrowings. This transaction had no material effect on the Company's results. Pitney Bowes Inc. - Form 10-Q Six Months Ended June 30, 1994 Page 11 of 15 The ratio of total debt to total debt and stockholders' equity was 61.6 percent at June 30, 1994 compared to 61.3 percent at year-end 1993. This ratio was unfavorably impacted by the Company's first quarter 1994 adoption of FAS 112, as required, which resulted in a one-time, after-tax charge of $119.5 million and the repurchase of $48.2 million of common stock partly offset by the reduction in overall borrowing levels. Book value per common share declined to $11.58 at June 30, 1994 from $11.81 at year-end 1993 primarily as a result of the first quarter 1994 adoption of FAS 112. During the period August 1 to August 10, 1994 the Company repurchased approximately 630,000 shares of common stock at a total cost approximating $23 million. It is anticipated that the repurchased shares will be used for issuances under the Company's stock and dividend reinvestment plans, conversion requirements and other corporate purposes. Capital Investments In the first six months of 1994, net investments in fixed assets included $49.1 million in net additions to property, plant and equipment and $87.6 million in net additions to rental equipment and related inventories compared with $44.3 million and $78.1 million, respectively, in the same period in 1993. These additions included expenditures for a new facility the Company is building to house its Shipping and Weighing Division in Shelton, Connecticut as well as normal plant and manufacturing equipment. In the case of rental equipment, the additions included the production of postage meters for both new placement and upgrade programs. At June 30, 1994, commitments for the acquisition of property, plant and equipment included plant and manufacturing equipment improvements as well as rental equipment for new and replacement programs. Also, it includes the above mentioned new Shipping and Weighing facility which is expected to be completed in 1995. As previously reported, the Company's financial services segment has made senior secured loans and commitments in connection with acquisition, leveraged buyout and recapitalization financing. At June 30, 1994, the Company had a total of $2.5 million of such senior secured loans and commitments outstanding compared to $13.9 million at December 31, 1993. In March 1994, the Company sold $11.3 million of its senior secured loan and commitment with a company that had previously filed under Chapter 11 of the Federal Bankruptcy Code and recovered 100 percent of its carrying value. The Company has not participated in unsecured or subordinated debt financing in any highly leveraged transactions. Pitney Bowes Inc. - Form 10-Q Six Months Ended June 30, 1994 Page 12 of 15 Part II - Other Information Item 4: Submission of Matters to a Vote of Security Holders. Below are the final results of the voting at the annual meeting of shareholders held on May 9, 1994: Proposal 1 - Election of Directors Nominee For Withheld William E. Butler 133,462,058 834,414 David T. Kimball 133,462,914 833,558 Leroy D. Nunery 133,402,924 893,548 Arthur R. Taylor 133,493,768 802,704 Proposal 2 - Appointment of Price Waterhouse as Independent Accountants For Against Abstain 133,637,568 237,244 421,660 There were no broker non-votes on either proposal. The following other directors continued their term of office after the annual meeting: Linda G. Alvarado George B. Harvey Colin G. Campbell Charles E. Hugel John C. Emery, Jr. Phyllis S. Sewell Item 6: Exhibits and Reports on Form 8-K. (a) Exhibits (numbered in accordance with Item 601 of Regulation S-K) Reg. S-K Status or Incorporation Exhibits Description by Reference (11) Computation of earnings See Exhibit (i) per share. on page 14. (12) Computation of ratio of See Exhibit (ii) earnings to fixed charges. on page 15. (b) Reports on Form 8-K. No reports on Form 8-K were filed for the three months ended June 30, 1994. Pitney Bowes Inc. - Form 10-Q Six Months Ended June 30, 1994 Page 13 of 15 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 thereunto duly authorized. PITNEY BOWES INC. August 15, 1994 /s/ C. F. Adimando C. F. Adimando Vice President - Finance and Administration, and Treasurer (Principal Financial Officer) /s/ S. J. Green S. J. Green Vice President - Controller (Principal Accounting Officer)
Pitney Bowes Inc. - Form 10-Q Pitney Bowes Inc. Six Months Ended June 30, 1994 Computation of Earnings per Share Exhibit (i) Page 14 of 15 Three Months Ended June 30, Six Months Ended June 30, (Dollars in thousands, except per share data) 1994 1993 1994 1993
Primary Income before effect of a change in accounting for postemployment benefits (1). . . . . . . . . . . . . . . . . . $ 98,618 $ 87,305 $ 190,479 $ 169,364 Effect of accounting change. . . . . . . . . . . . . . . . . . . - - (119,532) - Net income applicable to common stock. . . . . . . . . . . . . . $ 98,618 $ 87,305 $ 70,947 $ 169,364 Weighted average number of common shares outstanding . . . . . . 157,752,918 157,314,349 157,918,406 157,250,716 Preference stock, $2.12 cumulative convertible . . . . . . . . . 850,662 911,918 860,118 920,598 Stock option and purchase plans. . . . . . . . . . . . . . . . . 513,514 775,698 571,307 787,440 Total common and common equivalent shares outstanding. . . . . . 159,117,094 159,001,965 159,349,831 158,958,754 Income per common and common equivalent share - primary: Income before effect of a change in accounting for postemployment benefits. . . . . . . . . . . . . . . . . . . $ .62 $ .55 $ 1.20 $ 1.07 Effect of accounting change. . . . . . . . . . . . . . . . . . - - (.75) - Net income . . . . . . . . . . . . . . . . . . . . . . . . . . $ .62 $ .55 $ .45 $ 1.07 Fully Diluted Income before effect of a change in accounting for postemployment benefits. . . . . . . . . . . . . . . . . . . . $ 98,618 $ 87,306 $ 190,480 $ 169,366 Effect of accounting change. . . . . . . . . . . . . . . . . . . - - (119,532) - Net income applicable to common stock. . . . . . . . . . . . . . $ 98,618 $ 87,306 $ 70,948 $ 169,366 Weighted average number of common shares outstanding . . . . . . 157,752,918 157,314,349 157,918,406 157,250,716 Preference stock, $2.12 cumulative convertible . . . . . . . . . 850,662 911,918 860,118 920,598 Stock option and purchase plans. . . . . . . . . . . . . . . . . 522,388 780,932 592,135 794,162 Preferred stock, 4% cumulative convertible . . . . . . . . . . . 15,235 25,888 15,804 25,925 Total common and common equivalent shares outstanding. . . . . . 159,141,203 159,033,087 159,386,463 158,991,401 Income per common and common equivalent share - fully diluted: Income before effect of a change in accounting for postemployment benefits. . . . . . . . . . . . . . . . . . . $ .62 $ .55 $ 1.20 $ 1.07 Effect of accounting change. . . . . . . . . . . . . . . . . . - - (.75) - Net income . . . . . . . . . . . . . . . . . . . . . . . . . . $ .62 $ .55 $ .45 $ 1.07 (1) Income before effect of a change in accounting for postemployment benefits was adjusted for preferred dividends.
Pitney Bowes Inc. - Form 10-Q Six Months Ended June 30, 1994 Page 15 of 15 Exhibit (ii) Pitney Bowes Inc. Computation of Ratio of Earnings to Fixed Charges (1) (Dollars in thousands)
Three Months Ended Six Months Ended June 30, June 30, 1994 1993 1994 1993 Income before income taxes . . . . . . . $156,620 $138,753 $303,478 $269,132 Add: Interest expense . . . . . . . . . . . 46,703 47,010 90,437 97,236 Portion of rents representative of the interest factor. . . . . . . . . . . 11,558 9,709 23,712 19,124 Amortization of capitalized interest . . . . . . . . . . . . . . 231 231 463 463 Income as adjusted . . . . . . . . . . . $215,112 $195,703 $418,090 $385,955 Fixed charges: Interest expense . . . . . . . . . . . $ 46,703 $ 47,010 $ 90,437 $ 97,236 Capitalized interest . . . . . . . . . 110 - 172 - Portion of rents representative of the interest factor. . . . . . . . . . . 11,558 9,709 23,712 19,124 $ 58,371 $ 56,719 $114,321 $116,360 Ratio of earnings to fixed charges. . . . . . . . . . . . . . . . 3.69 3.45 3.66 3.32 (1) The computation of the ratio of earnings to fixed charges has been computed by dividing income before income taxes and fixed charges by fixed charges. Included in fixed charges is one-third of rental expense as the representative portion of interest.