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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
JULY 20, 2006 (JULY 14, 2006)
Date of Report (Date of earliest event reported)
PITNEY BOWES INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-3579 06-0495050
(State or other jurisdiction of (Commission file number) (I.R.S. Employer
incorporation or organization) Identification No.)
WORLD HEADQUARTERS
1 ELMCROFT ROAD
STAMFORD, CONNECTICUT 06926-0700
(Address of principal executive offices)
(203) 356-5000
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[_] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
SECTION 2 - FINANCIAL INFORMATION
ITEM 2.01. COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
On July 14, 2006, Pitney Bowes Inc. ("Pitney Bowes") completed the sale of its
Capital Services external financing business pursuant to the sale of all of the
outstanding shares of Pitney Bowes Credit Corporation (PBCC), which was a
wholly-owned subsidiary of Pitney Bowes to JCC Management LLC, an affiliate of
Cerberus Capital Management L.P. (the "Purchaser").
Net of transaction expenses, Pitney Bowes received approximately $750 million
from the disposition of the business. In addition, the Purchaser assumed
approximately $470 million of Pitney Bowes' non-recourse debt and other
liabilities in connection with this transaction. The sale was completed in
accordance with the terms of the Stock Purchase Agreement, dated May 16, 2006,
by and between Pitney Bowes and the Purchaser (the "Purchase Agreement").
Other than in respect of the Purchase Agreement and the agreements entered into
in connection therewith, there are no material relationships between Pitney
Bowes and its affiliates, on the one hand, and the Purchaser, and its respective
affiliates, on the other hand.
Pitney Bowes' press release dated July 17, 2006 announcing the completion of the
sale is attached hereto as Exhibit 99.1 and incorporated herein by reference.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
(b) Proforma Financial Information
The following unaudited pro forma consolidated balance sheet as of March 31,
2006 and the unaudited consolidated statements of income for the years ended
December 31, 2005, 2004, and 2003 and the three months ended March 31, 2006 and
2005, have been prepared to present the consolidated financial position and the
consolidated results of operations of Pitney Bowes as if the sale of its Capital
Services external financing business had occurred on March 31, 2006 for the
unaudited pro forma consolidated balance sheet and at the beginning of each
period presented for the unaudited pro forma consolidated statements of income.
The unaudited pro forma financial information was prepared in accordance with
Article 11 of Regulation S-X.
The unaudited pro forma consolidated financial statements should be read
together with Pitney Bowes' historical consolidated financial statements in the
Quarterly Report on Form 10-Q for the three months ended March 31, 2006 and in
the Annual Report on Form 10-K for the year ended December 31, 2005.
The unaudited pro forma consolidated financial statements are presented for
illustrative purposes only and, therefore, are not necessarily indicative of the
operating results and financial position that may occur in the future.
PITNEY BOWES INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 2006
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
As reported Capital Services As adjusted
-----------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 195,341 $ (727,930)(A) $ 923,271
Short-term investments 70,795 70,795
Accounts receivables, less allowances: --
3/06, $46,646; 12/05, $46,261 660,270 660,270
Finance receivables, less allowances: --
3/06, $56,488; 12/05, $52,622 . 1,425,953 52,500 1,373,453
Inventories 225,870 225,870
Other current assets and prepayments 215,225 3,011 212,214
----------------------------------------------------
Total current assets 2,793,454 (672,419) 3,465,873
Property, plant and equipment, net 615,544 143 615,401
Rental property and equipment, net 1,006,466 535,931 470,535
Property leased under capital leases, net 2,673 2,673
Long-term finance receivables, less allowances: --
3/06, $70,133; 12/05, $76,240 1,831,442 186,133 1,645,309
Investment in leveraged leases 1,413,717 1,169,379 244,338
Goodwill 1,646,883 1,646,883
Intangible assets, net 349,564 349,564
Other assets 928,719 1,941 926,778
----------------------------------------------------
Total assets $10,588,462 $ 1,221,108 $ 9,367,354
====================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 1,453,641 $ 16,812 $ 1,436,829
Income taxes payable 85,806 (977,000)(B) 1,062,806
Notes payable and current portion of long-term obligations 894,232 33,820 860,412
Advance billings 496,534 496,534
----------------------------------------------------
Total current liabilities 2,930,213 (926,368) 3,856,581
Deferred taxes on income 1,907,769 1,260,000 647,769
Long-term debt 3,778,208 434,381 3,343,827
Other noncurrent liabilities 313,673 32,890 280,783
----------------------------------------------------
Total liabilities 8,929,863 800,903 8,128,960
----------------------------------------------------
Preferred stockholders' equity in a subsidiary company 310,000 310,000
Total stockholders' equity 1,348,599 420,205(C) 928,394
----------------------------------------------------
Total liabilities and stockholders' equity $10,588,462 $ 1,221,108 $ 9,367,354
====================================================
See accompanying notes to unaudited pro forma consolidated financial statements.
PITNEY BOWES INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2005
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
As reported Capital Services(D) Adjustments(E) As adjusted
------------------------------------------------------------------------
Revenue from:
Sales $ 1,633,348 $ -- $ -- $ 1,633,348
Rentals 801,285 -- -- 801,285
Financing 650,226 -- -- 650,226
Support services 791,360 -- -- 791,360
Business services 1,477,459 -- -- 1,477,459
Capital Services 138,505 81,725 -- 56,780
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Total revenue 5,492,183 81,725 -- 5,410,458
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Costs and expenses:
Cost of sales 711,373 -- 1,844 713,217
Cost of rentals 165,963 -- -- 165,963
Cost of support services 407,044 -- 796 407,840
Cost of business services 1,194,649 -- 1,112 1,195,761
Selling, general and administrative 1,685,419 35,150 22,526 1,672,795
Research and development 164,806 -- 945 165,751
Restructuring charge 53,650 -- -- 53,650
Other expense 33,897 25,226 -- 8,671
Interest, net 208,258 11,465 -- 196,793
------------------------------------------------------------------------
Total costs and expenses 4,625,059 71,841 27,223 4,580,441
------------------------------------------------------------------------
Income from continuing operations before income taxes 867,124 9,884 (27,223) 830,017
Provision for income taxes 340,546 (7,279) (9,256) 338,569
------------------------------------------------------------------------
Income from continuing operations $ 526,578 $ 17,163 $ (17,967) $ 491,448
EPS Impact:
Basic $ 2.30 $ 0.07 $ (0.08) $ 2.15
Diluted $ 2.27 $ 0.07 $ (0.08) $ 2.12
See accompanying notes to unaudited pro forma consolidated financial statements.
PITNEY BOWES INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2004
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
As reported Capital Services(D) Adjustments(E) As adjusted
----------------------------------------------------------------------------
Revenue from:
Sales $ 1,462,967 $ -- $ -- $ 1,462,967
Rentals 804,351 -- -- 804,351
Financing 597,792 -- -- 597,792
Support services 680,702 -- -- 680,702
Business services 1,270,113 -- -- 1,270,113
Capital Services 141,515 84,652 -- 56,863
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Total revenue 4,957,440 84,652 -- 4,872,788
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Costs and expenses:
Cost of sales 663,584 -- 2,025 665,609
Cost of rentals 164,074 -- -- 164,074
Cost of support services 353,658 -- 874 354,532
Cost of business services 1,046,747 -- 1,220 1,047,967
Cost of Capital Services 13,017 13,017 -- --
Selling, general and administrative 1,506,308 20,637 24,732 1,510,403
Research and development 159,835 -- 1,038 160,873
Restructuring charge 157,634 -- -- 157,634
Other expense 19,666 -- -- 19,666
Interest, net 173,469 10,753 -- 162,716
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Total costs and expenses 4,257,992 44,407 29,889 4,243,474
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Income from continuing operations before income taxes 699,448 40,245 (29,889) 629,314
Provision for income taxes 218,922 2,538 (11,358) 205,026
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Income from continuing operations $ 480,526 $ 37,707 $ (18,531) $ 424,288
EPS Impact:
Basic $ 2.08 $ 0.16 $ (0.08) $ 1.84
Diluted $ 2.05 $ 0.16 $ (0.08) $ 1.81
See accompanying notes to unaudited pro forma consolidated financial statements.
PITNEY BOWES INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2003
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
As reported Capital Services(D) Adjustments(E) As adjusted
--------------------------------------------------------------------------
Revenue from:
Sales $ 1,325,490 $ -- $ -- $ 1,325,490
Rentals 785,130 -- -- 785,130
Financing 575,574 -- -- 575,574
Support services 617,800 -- -- 617,800
Business services 1,119,146 -- -- 1,119,146
Capital Services 153,713 98,380 -- 55,333
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Total revenue 4,576,853 98,380 -- 4,478,473
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Costs and expenses:
Cost of sales 611,620 -- 2,385 614,005
Cost of rentals 170,557 -- -- 170,557
Cost of support services 323,279 -- 1,030 324,309
Cost of business services 921,027 -- 1,438 922,465
Selling, general and administrative 1,396,848 29,959 29,140 1,396,029
Research and development 147,262 -- 1,222 148,484
Restructuring charge 116,713 -- -- 116,713
Other income (117) -- -- (117)
Interest, net 168,573 793 -- 167,780
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Total costs and expenses 3,855,762 30,752 35,215 3,860,225
--------------------------------------------------------------------------
Income from continuing operations before income taxes 721,091 67,628 (35,215) 618,248
Provision for income taxes 226,244 12,365 (13,910) 199,969
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Income from continuing operations $ 494,847 $ 55,263 $ (21,305) $ 418,279
EPS Impact:
Basic $ 2.12 $ 0.24 $ (0.09) $ 1.79
Diluted $ 2.09 $ 0.23 $ (0.09) $ 1.77
See accompanying notes to unaudited pro forma consolidated financial statements.
PITNEY BOWES INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2006
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
As reported Capital Services(D) As adjusted
---------------------------------------------------------------
Revenue from:
Sales $ 405,778 $ -- $ 405,778
Rentals 196,812 -- 196,812
Financing 174,996 -- 174,996
Support services 194,543 -- 194,543
Business services 386,368 -- 386,368
Capital Services 45,607 28,865 16,742
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Total revenue 1,404,104 28,865 1,375,239
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Costs and expenses:
Cost of sales 177,446 -- 177,446
Cost of rentals 43,539 -- 43,539
Cost of support services 102,615 -- 102,615
Cost of business services 306,326 -- 306,326
Selling, general and administrative 439,865 16,123 423,742
Research and development 41,536 -- 41,536
Restructuring charge 5,597 -- 5,597
Other income (10,599) (10,599) --
Interest, net 65,330 9,071 56,259
---------------------------------------------------------------
Total costs and expenses 1,171,655 14,595 1,157,060
---------------------------------------------------------------
Income from continuing operations before income taxes 232,449 14,270 218,179
Provision for income taxes 78,921 4,532 74,389
---------------------------------------------------------------
Income from continuing operations $ 153,528 $ 9,738 $ 143,790
EPS Impact:
Basic $ 0.68 $ 0.04 $ 0.64
Diluted $ 0.67 $ 0.04 $ 0.63
See accompanying notes to unaudited pro forma consolidated financial statements.
PITNEY BOWES INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2005
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
As reported Capital Services(D) As adjusted
----------------------------------------------------------------------
Revenue from:
Sales $ 381,427 $ -- $ 381,427
Rentals 201,641 -- 201,641
Financing 157,275 -- 157,275
Support services 194,934 -- 194,934
Business services 349,103 -- 349,103
Capital Services 33,408 18,992 14,416
----------------------------------------------------------------------
Total revenue 1,317,788 18,992 1,298,796
----------------------------------------------------------------------
Costs and expenses:
Cost of sales 168,221 -- 168,221
Cost of rentals 42,317 -- 42,317
Cost of support services 100,366 -- 100,366
Cost of business services 289,110 -- 289,110
Selling, general and administrative 413,810 7,601 406,209
Research and development 41,778 -- 41,778
Restructuring gain (15,840) -- (15,840)
Other expense 10,000 -- 10,000
Interest, net 46,816 3,148 43,668
----------------------------------------------------------------------
Total costs and expenses 1,096,578 10,749 1,085,829
----------------------------------------------------------------------
Income from continuing operations before income taxes 221,210 8,243 212,967
Provision for income taxes 75,935 2,865 73,070
----------------------------------------------------------------------
Income from continuing operations $ 145,275 $ 5,378 $ 139,897
EPS Impact:
Basic $ 0.63 $ 0.02 $ 0.61
Diluted $ 0.62 $ 0.02 $ 0.60
See accompanying notes to unaudited pro forma consolidated financial statements.
PITNEY BOWES INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
A. Includes net cash proceeds from the sale of approximately $750 million.
B. Reflects the current taxes payable of approximately $977 million
resulting from the sale.
C. Reflects the net after-tax loss upon sale.
D. Reflects the removal of Capital Services' results for the period.
E. The Company adopted the provisions of SFAS No. 123 (R) (revised 2004),
"Share-Based Payments" on January 1, 2006 using the modified
retrospective application. These adjustments reflect the impact of SFAS
No. 123 (R) as if the adoption had occurred at the beginning of the
respective period.
(c) Exhibits
99.1 Press release of Pitney Bowes Inc. dated July 17, 2006
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.
July 20, 2006
/s/ B.P. Nolop
-------------------------------
B.P. Nolop
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
/s/ S.J. Green
-------------------------------
S.J. Green
Vice President - Finance and
Chief Accounting Officer
(Principal Accounting Officer)