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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
MAY 18, 2006 (MAY 12, 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))
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On May 16, 2006, Pitney Bowes Inc. ("Pitney Bowes") entered into a Stock
Purchase Agreement (the "Agreement") with JCC Management LLC, an affiliate of
Cerberus Capital Management L.P. (the "Purchaser"), in connection with the sale
of its Capital Services external financing business. Pursuant to the Agreement,
the Purchaser will purchase all of the outstanding shares of Pitney Bowes Credit
Corporation, a wholly-owned subsidiary of Pitney Bowes ("PBCC") for
approximately $766 million.
The transaction is subject to certain specified closing conditions. In addition,
Pitney Bowes has agreed that it will transfer the internal financing assets of
PBCC (which are not part of the contemplated sale) to other Pitney Bowes
entities. In the event that the closing of the transaction has not occurred by
July 14, 2006 both parties have a right to terminate the Agreement on that date,
provided that if the transfer of the internal financing assets of PBCC has not
been completed by that date, the termination date will, at the option of Pitney
Bowes, be extended until August 28, 2006.
The Agreement is attached hereto as Exhibit 10.1 and is incorporated herein by
reference. The description of the Agreement contained herein is qualified in its
entirety by reference to the Agreement.
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ITEM 1.02. TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT
On May 12, 2006, PBCC provided a notice of termination of the Subscription
Agreement entered into on March 31, 2005 with an affiliate of Cerberus Capital
Management, L.P. in connection with the previously proposed spin-off of its
Capital Services external financing business. This notification was provided to
facilitate the sale of the Capital Services external financing business, as
disclosed under Item 1.01 of this form 8-K.
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ITEM 2.05. COSTS ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES
On May 16, 2006, Pitney Bowes signed a definitive agreement with an affiliate of
Cerberus Capital Management, L.P. for the sale of its Capital Services external
financing business. The transaction is expected to close within 90 days subject
to customary conditions.
Separately, Pitney Bowes also reached a tentative settlement with the Internal
Revenue Service on all outstanding tax audit issues currently in dispute, most
of which are related to the Capital Services external financing business. Pitney
Bowes expects to reach a final settlement with the IRS within 45 days.
As a result of the sale of its Capital Services external financing business and
the settlement of outstanding tax issues, Pitney Bowes estimates that it will
incur an after-tax charge in discontinued operations of about $480 million, and
a charge of about $20 million in continuing operations.
The total estimated after-tax charge consists of the following:
o A loss on the sale of Capital Services of about $425 million.
o Transaction expenses related to the sale of Capital Services of
about $15 million.
o Additional tax reserves related to the tentative settlement of
outstanding tax issues of about $60 million.
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ITEM 7.01. REGULATION FD DISCLOSURE
As noted in its press release dated May 17, 2006, Pitney Bowes will account for
the Capital Services external financing business in discontinued operations
beginning in the second quarter of 2006.
Accordingly, Pitney Bowes' earnings per share from continuing operations for
2005 and expected earnings for 2006 are estimated to be as follows:
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2005 2006
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ADJUSTED EPS - CONTINUING OPERATIONS $2.46 $2.64 to $2.72
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RESTRUCTURING ($0.16) ($0.05 to $0.10)
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FOUNDATION CONTRIBUTIONS ($0.03) N/A
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TAX RESERVE INCREASE ($0.24) ($0.09)
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GAAP EPS - CONTINUING OPERATIONS $2.03 $2.45 to $2.58
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Capital Services contributed approximately $125 million to revenue in 2005. For
the full year 2006, Pitney Bowes is maintaining its previous guidance for
revenue growth of 5 to 7 percent.
The press release dated May 17, 2006 is attached hereto as Exhibit 99.1 and
incorporated herein by reference.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
10.1 Stock Purchase Agreement, dated as of May 16, 2006, among Pitney
Bowes Inc., JCC Management LLC and Pitney Bowes Credit
Corporation (for the purposes of Section 10.07 thereof only)
99.1 Press release of Pitney Bowes Inc. dated May 17, 2006
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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.
May 18, 2006
/s/ B.P. Nolop
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B.P. Nolop
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
/s/ S.J. Green
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S.J. Green
Vice President - Finance and
Chief Accounting Officer
(Principal Accounting Officer)
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