Item 1. Business --------
Pitney Bowes Inc. and its subsidiaries (the company) operate in three reportable segments: Global Mailing, Enterprise Solutions and Capital Services. The company operates in the United States and outside the U.S. Financial information concerning revenue, operating profit and identifiable assets by reportable segment and geographic area appears on pages 61 to 63 of the Pitney Bowes Inc. 2000 Annual Report to Stockholders and is incorporated herein by reference.
Global Mailing. Global Mailing includes worldwide revenues from the rental of - -------------- postage meters and the sale, rental and financing of mailing equipment, including mail finishing and software-based mail creation equipment, software- based shipping, transportation and logistics systems, and related supplies and services. Products are sold, rented or financed by the company, while supplies and services are sold. Some of the company's products are sold through dealers outside the U.S.
Products include postage meters, mailing machines, address hygiene software, manifest systems, letter and parcel scales, mail openers, mailroom furniture, folders, paper handling, shipping equipment and software-based shipping and logistics systems.
Enterprise Solutions. Enterprise Solutions includes Pitney Bowes Management - -------------------- Services and Document Messaging Technologies. Pitney Bowes Management Services includes revenues from facilities management contracts for advanced mailing, reprographic, document management and other high-value services. Document Messaging Technologies includes revenues from the sale, service and financing of high speed, software-enabled production mail systems, sortation equipment, incoming mail systems, electronic statement, billing and payment solutions, and mailing software. Products are sold, rented or financed by the company, while supplies and services are sold.
Facilities management services are provided by the company's Pitney Bowes Management Services, Inc. subsidiary (P.B.M.S.). P.B.M.S. provides customers with a variety of business support services to manage copy, reprographic and mail centers, facsimile, electronic printing and imaging services, and records management. P.B.M.S. is a major provider of on- and off-site services which help customers manage the creation, processing, storage, retrieval, distribution and tracking of documents and messages in both paper and digital form.
The financial services operations provide lease financing for the company's products (for both the Global Mailing and Enterprise Solutions segments) in the U.S., Canada, the United Kingdom, Germany, France, Norway, Ireland, Australia, Austria, Spain, Italy, Switzerland and Sweden. Consolidated financial services operations financed 37 percent of consolidated sales in 2000, 37 percent in 1999, and 39 percent in 1998. Consolidated financial services operations financed approximately 76 percent, 73 percent and 76 percent of leasable sales in 2000, 1999, and 1998, respectively.
Capital Services. Capital Services provides large-ticket financing and fee- - ---------------- based programs covering a broad range of products and other financial services.
Products financed include both commercial and non-commercial aircraft, over-the- road trucks and trailers, locomotives, railcars, rail and bus facilities, office equipment and high-technology equipment such as data processing and communications equipment. The finance operations have also participated, on a select basis, in certain other types of financial transactions including: sales of lease transactions, senior secured loans in connection with acquisitions, leveraged buyout and recapitalization financings and certain project financings.
Discontinued Operations. On December 11, 2000, the company announced that its - ------------------------ Board of Directors approved a formal plan to spin off the company's Office Systems business to stockholders as an independent, publicly-traded company. The transaction is expected to be completed by the end of the third quarter 2001. Operating results of Office Systems have been segregated and reported as discontinued operations in the Consolidated Statements of Income. Prior year results have been reclassified to conform to the current year presentation.
On January 14, 2000, the company sold its mortgage servicing business, Atlantic Mortgage & Investment Corporation (AMIC), a wholly-owned subsidiary of the company, to ABN AMRO North America. The company received approximately $484 million in cash at closing. Accordingly, operating results of AMIC have been segregated and reported as discontinued operations in the Consolidated Statements of Income. Prior year results have been reclassified to conform to the current year presentation. In connection with the sale, the company recorded a loss of approximately $27.6 million (net of taxes of $18.4 million) for the year ended December 31, 1999. The transaction is subject to post-closing adjustments.
As part of the company's strategy to reduce the capital committed to asset-based financing, while increasing fee-based income, in 1998 the company sold its broker-oriented small-ticket leasing business to General Electric Capital Corporation (GECC), a subsidiary of General Electric Company. As part of the sale, the operations, employees and substantially all the assets of Colonial Pacific Leasing Corporation (CPLC) were transferred to GECC. The company received approximately $790 million at closing, which approximates the book value of the net assets sold or otherwise disposed of and related transaction costs. Accordingly, operating results of CPLC have been segregated and reported as discontinued operations in the Consolidated Statements of Income. In connection with this transaction, the company recorded a gain of approximately $3.7 million (net of taxes of $2.0 million) for the year ended December 31, 1999. This gain resulted from the settlement of post-closing adjustments in 1999 related to the sale, offset by the cost of settlement with regard to a dispute with GECC over certain assets that were included in the sale.
Support Services. The company maintains extensive field service organizations - ---------------- in the U.S. and certain other countries to provide support services to customers who have rented, leased or purchased equipment. Such support services, provided primarily on the basis of annual maintenance contracts, accounted for approximately 13 percent of revenue in 2000, and 12 percent in 1999 and 1998.
Marketing. The company's products and services are marketed through an - --------- extensive network of offices in the U.S. and through a number of subsidiaries and independent distributors and dealers in many countries throughout the world as well as through direct marketing, outbound telemarketing, and the Internet. The company sells to a variety of business, governmental, institutional and other organizations. It has a broad base of customers, and is not dependent upon any one customer or type of customer for a significant part of its business. The company does not have significant backlog or seasonality relating to its businesses.
Operations Outside the United States. The company's manufacturing operations - ------------------------------------ outside the U.S. are in the United Kingdom.
Competition. The company has historically been a leading supplier of certain - ----------- products and services in its business segments, particularly postage meters and mailing machines. However, all of its segments have strong competition from a number of companies. In particular, the company is facing competition in many countries for new placements from several postage meter and mailing machine suppliers, and its mailing systems products face competition from products and services offered as alternative means of message communications. P.B.M.S., a major provider of business support services to the corporate, financial services, and professional services markets, competes against national, regional and local firms specializing in facilities management. The company believes that its long experience and reputation for product quality, and its sales and support service organizations are important factors in influencing customer choices with respect to its products and services.
The financing business is highly competitive with aggressive rate competition. Leasing companies, commercial finance companies, commercial banks and other financial institutions compete, in varying degrees, in the several markets in which the finance operations do business and range from very large, diversified financial institutions to many small, specialized firms. In view of the market fragmentation and absence of any dominant competitors which result from such competition, it is not possible to provide a meaningful description of the finance operations' competitive position in these markets.
Research and Development/Patents. The company has research and development - -------------------------------- programs that are directed towards developing new products and service methods. Expenditures on research and development totaled $120.5 million, $108.9 million, and $100.8 million in 2000, 1999, and 1998, respectively.
As a result of its research and development efforts, the company has been awarded a number of patents with respect to several of its existing and planned products. However, the company believes its businesses are not materially dependent on any one patent or any group of related patents. The company also believes its businesses are not materially dependent on any one license or any group of related licenses.
Material Supplies. The company believes it has adequate sources for most parts - ----------------- and materials for the products it manufactures. However, products manufactured by the company rely to an increasing extent on microelectronic components, and temporary shortages of these components have occurred from time to time due to the demands by many users of such components.
Environmental Regulation. The company is subject to federal, state and local - ------------------------ laws and regulations relating to the environment and is currently named as a member of various groups of potentially responsible parties in administrative or court proceedings. As we previously announced, in 1996 the Environmental Protection Agency (EPA) issued an administrative order directing the company to be part of a soil cleanup program at the Sarney Farm site in Amenia, New York. The site was operated as a landfill between the years 1968 and 1970 by parties unrelated to the company, and wastes from a number of industrial sources were disposed there. The company does not concede liability for the condition of the site, but is working with the EPA and other potentially responsible parties to evaluate remediation options and negotiate allocation of past and future remediation costs. Based on the facts presently known, we estimate the total cost of our remediation effort to be approximately $5 million. This amount has been recorded as a liability in the Consolidated Balance Sheet at December 31, 2000.
The administrative and court proceedings referred to above are in different states. It is difficult to estimate with any certainty the total cost of remediating, the timing or extent of remedial actions which may be required by governmental authorities. However, the company believes that the outcome of any current proceeding will not have a material adverse effect on its financial condition or results of operations.
Regulatory Matters. In 2000, the U.S. Postal Service (U.S.P.S.) issued a - ------------------ proposed schedule for the phaseout of manually reset electronic meters in the U.S. as follows:
. As of February 1, 2000, new placements of manually reset electronic meters are no longer permitted. . Current users of manually reset electronic meters can continue to use these meters for the term of their current rental and lease agreements. Leases or rentals due to expire in the year 2000 can be extended to December 31, 2001.
In August 2000, the U.S.P.S. also issued a proposal to cease placements of non- digital, or letterpress, meters as follows:
. New placements of non-digital meters with a "timeout" feature that enables the meters to be automatically disabled, if not reset within a specified time period, are no longer permitted after December 2003. . New placements of non-digital meters without the "timeout" feature are no longer permitted after June 2001.
The company has submitted comments to the U.S.P.S.'s proposed schedules described above. Based on the proposed schedules, the company believes that the phaseout of manually reset electronic meters will not cause a material adverse financial impact on the company. The company is working with the U.S.P.S. to meet the non-digital meter phaseout schedule and is currently evaluating the potential financial impact on the company.
As a result of the company's aggressive efforts to meet the U.S.P.S's mechanical meter migration phaseout schedule combined with the company's ongoing and continuing investment in advanced postage evidencing technologies, mechanical meters represented less than 1% of the company's installed U.S. meter base at December 31, 2000 and 1999. The company continues to work in close cooperation with the U.S.P.S., to convert those mechanical meter customers who have not migrated to digital or electronic meters.
In May 1995, the U.S.P.S. publicly announced its concept of its Information Based Indicia Program (IBIP) for future postage evidencing devices. As initially stated by the U.S.P.S., the purpose of the program was to develop a new standard for future digital postage evidencing devices which would significantly enhance postal revenue security and support expanded U.S.P.S. value-added services to mailers. The program would consist of the development of four separate specifications:
. the Indicium specification - the technical specifications for the indicium to be printed . a Postal Security Device specification - the technical specification for the device that would contain the accounting and security features of the system . a Host specification . a Vendor Infrastructure specification
During the period from May 1995 through December 31, 2000, the company has submitted extensive comments to a series of proposed IBIP specifications issued by the U.S.P.S. In March 2000, the U.S.P.S. issued the latest set of proposed specifications, entitled "Performance Criteria for Information-Based Indicia and Security Architecture for Open IBI Postage Evidencing Systems" (the IBI Performance Criteria). The company has submitted comments to the IBI Performance Criteria. In September and October 2000, the U.S.P.S. issued further proposed regulations regarding postage evidencing systems using Information Based Indicia, titled "Refunds and Exchanges" and "Production, Distribution and Use of Postal Security Devices and Information-Based Indicia." The company has submitted comments regarding those proposed regulations.
In March 2000, the company received approval from the U.S.P.S. for the commercial launch of the Internet version of a product which satisfies the proposed IBI Performance Criteria, ClickStamp(TM) Online.
In June 1999, the company was served with a Civil Investigative Demand (CID) from the Justice Department's Antitrust Division. A CID is a tool used by the Antitrust Division for gathering information and documents. The company believes that the Justice Department may be reviewing the company's efforts to protect its intellectual property rights. The company believes it has complied fully with the antitrust laws and is cooperating fully with the department's investigation.
Employee Relations. At December 31, 2000, 23,335 persons were employed by the - ------------------ company in the U.S. and 5,207 outside the U.S. Employee relations are considered to be satisfactory. The majority of employees are not represented by any labor union. Management follows the policy of keeping employees informed of its decisions, and encourages and implements employee suggestions whenever practicable.
Item 2.
Item 2. Properties ----------
The company's World Headquarters and certain other office and manufacturing facilities are located in Stamford, Connecticut. Additional office facilities are located in Shelton, Connecticut. The company maintains research and development operations at a corporate engineering and technology center in Shelton, Connecticut. A sales and service training center is located near Atlanta, Georgia. The company believes that its current manufacturing, administrative and sales office properties are adequate for the needs of all of its operations.
Global Mailing. Global Mailing products are manufactured in a number of plants - -------------- principally in Connecticut, as well as in Harlow, England. Most of these facilities are owned by the company. At December 31, 2000, there were 134 sales, support services, and finance offices, substantially all of which are leased, located throughout the U.S. and in a number of other countries.
Enterprise Solutions. The company's Document Messaging Technologies (DMT) - --------------------- business is headquartered in Danbury, Connecticut. DMT leases 5 facilities located throughout the U.S. The company's management services subsidiary is headquartered in Stamford, Connecticut and leases 36 facilities located throughout the U.S., and a facility in Toronto, Ontario, Canada, and London, England.
Executive and administrative offices of the financing operations (for both the Global Mailing and Enterprise Solutions segments) within the U.S. are located in Shelton, Connecticut. Offices of the financing operations outside the U.S. are maintained in Mississauga, Ontario, Canada; London, England; Heppenheim, Germany; Paris, France; Oslo, Norway; Dublin, Ireland; French's Forest, Australia; Vienna, Austria; Effretikon, Switzerland; Milan, Italy; Barcelona, Spain; and Stockholm, Sweden.
Capital Services. Pitney Bowes Credit Corporation (PBCC) leases an executive and - ---------------- administrative office in Shelton, Connecticut, which is owned by Pitney Bowes Inc. There are nine leased regional and district sales offices located throughout the U.S.
Item 3.
Item 3. Legal Proceedings -----------------
In the course of normal business, the company is occasionally party to lawsuits. These may involve litigation by or against the company relating to, among other things:
. contractual rights under vendor, insurance or other contracts . intellectual property or patent rights . equipment, service or payment disputes with customers . disputes with employees
The company is currently a plaintiff or a defendant in a number of lawsuits, none of which should have, in the opinion of management and legal counsel, a material adverse effect on the company's financial position or results of operations.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders ---------------------------------------------------
None.
There is no family relationship among the above officers, all of which have served in various corporate, division or subsidiary positions with the company for at least the past five years except G.E. Buoncontri, L.A. Jimenez, S.E. Moss, B.P. Nolop, M.L. Reichenstein and J.E. Wall.
Mr. Buoncontri was formerly the Vice President, Information Technology and Chief Information Officer of Novartis Pharmaceuticals Corp. (merger of Sandoz and Ciba Geigy). Prior to the merger, he also served as the Vice President, Information Systems and Chief Information Officer for Sandoz Pharmaceuticals Company. Mr. Buoncontri also served as Vice President, Information Management Services and Chief Information Officer of Asea Brown Boveri, Inc.
Mr. Jimenez joined the company from Arthur D. Little, an international management consulting company, with over 25 years of experience. Mr. Jimenez was appointed worldwide practice leader for postal organizations in 1990, Corporate Vice President in 1991, and served most recently on the firm's global board for telecommunications and media and as Manager of the Latin American practice.
Ms. Moss joined the company from the New York law firm of Howard, Darby & Levin, where she had been a Senior Partner since 1985. Before joining Howard, Darby & Levin, Ms. Moss was an Assistant United States Attorney in the Southern District of New York. Ms. Moss served as a law clerk for the Honorable Constance Baker Motley, United States District Judge, Southern District of New York.
Mr. Nolop joined the company from Wasserstein Perella & Co., an investment bank and one of Pitney Bowes' financial advisors, where he had served as managing director since 1993. Prior to joining Wasserstein Perella & Co., Mr. Nolop held senior positions with Goldman Sachs & Co., Kimberly-Clark Corporation and Morgan Stanley & Co.
Mr. Reichenstein, who was previously Vice President and Chief Financial Officer of Pitney Bowes Inc. since 1996, joined the company with over 31 years of experience with Ford Motor Company. During his time with Ford, Mr. Reichenstein held a variety of positions of increasing responsibility in the U.S. and Europe, including Director of Manufacturing Services, Vice President, Car Product Planning, and Chief Financial Officer, Ford Europe; Vice President & Controller of Ford Automotive Operations Worldwide; and Vice President & Controller of Ford Motor Company.
Dr. Wall was most recently Vice President - Technology of Emerson Electric, which he joined in 1986 as Director of Research and Development for its since- divested Rosemount Aerospace Division. Prior to joining Emerson, Dr. Wall held positions of increasing responsibility at Honeywell, including Section Chief and Senior Principal Research Engineer.
PART II -------
Item 5.
Item 5. Market for the Registrant's Common Stock and Related Stockholders' ------------------------------------------------------------------ Matters - -------
The sections entitled "Stock Exchanges" and "Stock Information" on page 66 of the Pitney Bowes Inc. 2000 Annual Report to Stockholders are incorporated herein by reference. At December 31, 2000, the company had 32,231 common stockholders of record.
Item 6.
Item 6. Selected Financial Data -----------------------
The section entitled "Summary of Selected Financial Data" on page 43 of the Pitney Bowes Inc. 2000 Annual Report to Stockholders is incorporated herein by reference.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and --------------------------------------------------------------- Results of Operations ---------------------
The section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 33 to 42 of the Pitney Bowes Inc. 2000 Annual Report to Stockholders is incorporated herein by reference, except for the section on page 42 relating to "Dividend Policy".
The section under "Legal, Environmental and Regulatory Matters" titled "Regulation" on pages 40 and 41 of the "Management's Discussion and Analysis of Financial Condition and Results of Operations" incorporated herein by reference as mentioned above should be read in conjunction with the discussion under "Regulatory Matters" in Part I, Item 1 on page 5 of this Annual Report on Form 10-K.
The company wants to caution readers that any forward-looking statements with the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (those which talk about the company's or management's current expectations as to the future and include, but are not limited to, statements about possible restructuring charges and future guidance) in this Form 10-K, other reports or press releases or made by the company's management involve risks and uncertainties which may change based on various important factors. Words such as "estimate", "project", "plan", "believe", "expect", "anticipate", "intend", and similar expressions may identify such forward-looking statements. Some of the factors which could cause future financial performance to differ materially from the expectations as expressed in any forward-looking statement made by or on behalf of the company include:
. changes in postal regulations . timely development and acceptance of new products . success in gaining product approval in new markets where regulatory approval is required . successful entry into new markets . mailers' utilization of alternative means of communication or competitors' products . our success at managing customer credit risk . changes in interest rates . foreign currency fluctuations . terms and timing of the spin-off of Office Systems
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk ----------------------------------------------------------
The section entitled "Market Risk" on page 40 of the "Management's Discussion and Analysis of Financial Condition and Results of Operations" of the Pitney Bowes Inc. 2000 Annual Report to Stockholders is incorporated herein by reference.
Item 8.
Item 8. Financial Statements and Supplementary Data -------------------------------------------
The financial statements, together with the report thereon of PricewaterhouseCoopers LLP dated January 22, 2001, appearing on pages 44 to 65 of the Pitney Bowes Inc. 2000 Annual Report to Stockholders are incorporated herein by reference.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and --------------------------------------------------------------- Financial Disclosure --------------------
None.
PART III --------
Item 10.
Item 10. Directors and Executive Officers of the Registrant --------------------------------------------------
Except for information regarding the company's executive officers (see "Executive Officers of the Registrant" on page 7 of this Form 10-K), the information called for by this Item is incorporated herein by reference to the sections entitled "Election of Directors", "How much stock is owned by directors, nominees and executive officers?" and "Security Ownership" on pages 7 to 9 and 4 to 5 of the Pitney Bowes Inc. Notice of the 2001 Annual Meeting and Proxy Statement.
Item 11.
Item 11. Executive Compensation ----------------------
The sections entitled "Directors' Compensation", "Executive Officer Compensation", "Severance and Change of Control Arrangements" and "Pension Benefits" on pages 10 to 16, and 19 to 21 of the Pitney Bowes Inc. Notice of the 2001 Annual Meeting and Proxy Statement are incorporated herein by reference.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management --------------------------------------------------------------
The section entitled "How much stock is owned by directors, nominees and executive officers?" and "Security Ownership" on pages 4 to 5 of the Pitney Bowes Inc. Notice of the 2001 Annual Meeting and Proxy Statement is incorporated herein by reference.
Item 13.
Item 13. Certain Relationships and Related Transactions ----------------------------------------------
None.
PART IV -------
Item 14.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K ---------------------------------------------------------------
(a) 1. Financial statements - see Item 8 on page 9 and "Index to Financial Schedules" on page 18.
2. Financial statement schedules - see "Index to Financial Schedules" on page 18.
3. Exhibits (numbered in accordance with Item 601 of Regulation S-K).
The company has outstanding certain other long-term indebtedness. Such long-term indebtedness does not exceed 10% of the total assets of the company; therefore, copies of instruments defining the rights of holders of such indebtedness are not included as exhibits. The company agrees to furnish copies of such instruments to the Securities and Exchange Commission upon request.
Executive Compensation Plans: - ----------------------------
(b) Reports on Form 8-K
On December 11, 2000, the company filed a current report on Form 8-K pursuant to Item 5 thereof, reporting the Press Release dated December 11, 2000, regarding its announcement to spin off the company's Office System business to stockholders.
On October 19, 2000, the company filed a current report on Form 8-K pursuant to Item 5 thereof, reporting the Press Release dated October 17, 2000, regarding its financial results for the period ended September 30, 2000.
On October 5, 2000, the company filed a current report on Form 8-K pursuant to Item 5 thereof, reporting the Press Release dated October 4, 2000 for the revised financial outlook for the periods ended September 30, 2000 and December 31, 2000.
SIGNATURES ----------
Pursuant to the requirements of Section 13 or 15(d) 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.
By /s/ Michael J. Critelli ----------------------- (Michael J. Critelli) Chairman and Chief Executive Officer
Date March 26, 2001 --------------
SIGNATURES ----------
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature Title Date - --------- ----- ----
/s/ Michael J. Critelli Chairman and Chief March 26, 2001 - ------------------------- -------------- Michael J. Critelli Executive Officer - Director
/s/ Marc C. Breslawsky President and Chief March 26, 2001 - ------------------------- -------------- Marc C. Breslawsky Operating Officer - Director
/s/ Bruce P. Nolop Executive Vice President and March 26, 2001 - ------------------------- -------------- Bruce P. Nolop Chief Financial Officer (principal financial officer)
/s/ Arlen F. Henock Vice President - Finance March 26, 2001 - ------------------------- -------------- Arlen F. Henock (principal accounting officer)
/s/ Linda G. Alvarado Director March 26, 2001 - ------------------------- -------------- Linda G. Alvarado
/s/ William E. Butler Director March 26, 2001 - ------------------------- -------------- William E. Butler
/s/ Colin G. Campbell Director March 26, 2001 - ------------------------- -------------- Colin G. Campbell
/s/ Jessica P. Einhorn Director March 26, 2001 - ------------------------- -------------- Jessica P. Einhorn
/s/ Ernie Green Director March 26, 2001 - ------------------------- -------------- Ernie Green
/s/ Herbert L. Henkel Director March 26, 2001 - ------------------------- -------------- Herbert L. Henkel
/s/ James H. Keyes Director March 26, 2001 - ------------------------- -------------- James H. Keyes
/s/ John S. McFarlane Director March 26, 2001 - ------------------------- -------------- John S. McFarlane
/s/ Michael I. Roth Director March 26, 2001 - ------------------------- -------------- Michael I. Roth
/s/ Phyllis S. Sewell Director March 26, 2001 - ------------------------- -------------- Phyllis S. Sewell
INDEX TO FINANCIAL SCHEDULES ----------------------------
The financial schedules should be read in conjunction with the financial statements in the Pitney Bowes Inc. 2000 Annual Report to Stockholders. Schedules not included herein have been omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. Also, separate financial statements of less than 100 percent owned companies, which are accounted for by the equity method, have been omitted because they do not constitute significant subsidiaries.
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE
To the Board of Directors of Pitney Bowes Inc.:
Our audits of the consolidated financial statements referred to in our report dated January 22, 2001 appearing on page 65 of the Pitney Bowes Inc. 2000 Annual Report to Stockholders (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the financial statement schedule listed in Item 14(a)2 of this Form 10- K. In our opinion, this financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.
/s/ PricewaterhouseCoopers LLP - ------------------------------ PricewaterhouseCoopers LLP
Stamford, Connecticut January 22, 2001
PITNEY BOWES INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEARS ENDED DECEMBER 31, 1998 TO 2000
(Dollars in thousands)
(1) Included in balance sheet as a liability. (2) Principally uncollectible accounts written off. (3) Amounts include the write-off of finance receivables retained in connection with the disposal of our small-ticket external leasing business against previously established allowance for credit losses recorded at the time of disposal of this business in 1998.