Filed Pursuant to Rule 424(b)(5)
Registration No. 333-72304
PROSPECTUS SUPPLEMENT
TO PROSPECTUS DATED NOVEMBER 21, 2001
[Graphic Omitted] PITNEY BOWES
$400,000,000
4 5/8% NOTES DUE 2012
ISSUE PRICE: 99.453%
Interest on the notes will be payable by Pitney Bowes Inc. semiannually on April
1 and October 1 of each year, beginning April 1, 2003. The notes will mature on
October 1, 2012. Pitney Bowes may redeem the notes in whole or in part at any
time prior to their maturity at the redemption price described in this
prospectus supplement.
Interest on the notes will accrue from September 27, 2002 to the date of
delivery.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the notes or determined if this
prospectus supplement or the accompanying prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
================================================================================
Price to Discounts and Proceeds to
Public Commissions Pitney Bowes
--------------------------------------------------------------------------------
Per Note 99.453% 0.650% 98.803%
--------------------------------------------------------------------------------
Total $397,812,000 $2,600,000 $395,212,000
--------------------------------------------------------------------------------
We expect to deliver the notes to investors in registered book-entry form only
through the facilities of The Depository Trust Company, Euroclear and
Clearstream, Luxembourg on or about September 27, 2002.
JOINT BOOK-RUNNING MANAGERS
DEUTSCHE BANK SECURITIES JPMORGAN
BARCLAYS CAPITAL MERRILL LYNCH & CO.
RBC CAPITAL MARKETS SUNTRUST ROBINSON HUMPHREY
The date of this prospectus supplement is September 24, 2002.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS. PITNEY
BOWES AND THE UNDERWRITERS HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
DIFFERENT INFORMATION. PITNEY BOWES AND THE UNDERWRITERS ARE NOT MAKING AN OFFER
OF THESE SECURITIES IN ANY STATE WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD
NOT ASSUME THAT THE INFORMATION PROVIDED BY THIS PROSPECTUS SUPPLEMENT OR THE
ACCOMPANYING PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE
FRONT OF THIS PROSPECTUS SUPPLEMENT.
----------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PAGE
----
Use of Proceeds .......................................................... S-3
Ratio of Earnings to Fixed Charges ....................................... S-3
Description of Notes ..................................................... S-3
Underwriting ............................................................. S-6
Experts .................................................................. S-7
Where You Can Find More Information ...................................... S-7
PROSPECTUS
About This Prospectus .................................................... 2
Special Note Regarding Forward-Looking Statements ........................ 2
Pitney Bowes Inc. ........................................................ 3
Use of Proceeds .......................................................... 3
Ratio of Earnings to Fixed Charges and Ratio of Earnings to Fixed Charges
and Preferred and Preference Stock Dividends ........................... 3
Description of Debt Securities ........................................... 4
Description of Preferred Stock and Preference Stock ...................... 13
Description of Common Stock .............................................. 16
Description of Depositary Shares ......................................... 22
Plan of Distribution ..................................................... 24
Validity of the Securities ............................................... 24
Experts .................................................................. 24
Where You Can Find More Information ...................................... 25
S-2
USE OF PROCEEDS
We will use the net proceeds from the offering of the notes, estimated at
approximately $395.1 million, for general corporate purposes, which may include
repaying commercial paper in anticipation of repayments of debt maturing in
early 2003. At September 24, 2002, our outstanding commercial paper had an
average weighted remaining term of 13 days with maturities ranging from 1 to 62
days and had an average weighted annualized interest rate of 1.74%. The proceeds
from these commercial paper borrowings were used for working capital and our
general corporate purposes and those of our consolidated subsidiaries. Pending
these uses, we may invest the net proceeds in short-term interest-bearing
obligations.
RATIO OF EARNINGS TO FIXED CHARGES
The following table presents the ratio of our earnings to fixed charges
excluding minority interest for the periods indicated:
YEAR ENDED DECEMBER 31,
-------------------------------------------------- SIX MONTHS
ENDED JUNE 30,
1997 1998 1999 2000 2001 2002
------ ------ ------ ------ ------ --------------
4.10 4.42 4.92 4.37 4.35 4.38
For the purpose of computing the ratio of earnings to fixed charges
excluding minority interest, earnings have been calculated by adding to income
from continuing operations before income taxes the amount of fixed charges.
Fixed charges consist of interest on debt and a portion of net rental expense
deemed to represent interest.
These ratios have been reclassified to reflect the discontinued operations
associated with the spin-off of Pitney Bowes' Office Systems business, now known
as Imagistics International Inc., on December 3, 2001; the sale of Atlantic
Mortgage & Investment Corporation in 2000; and the sale of operations and assets
of Colonial Pacific Leasing Corporation in 1998. Interest expense and the
portion of rent which is representative of the interest factor of these
discontinued operations have been excluded from fixed charges in the
computation. If these amounts had been included, the ratio of earnings to fixed
charges excluding minority interest would be 4.19 for 2001, 4.21 for 2000, 4.66
for 1999, 3.78 for 1998 and 4.00 for 1997.
DESCRIPTION OF NOTES
THE FOLLOWING DESCRIPTION OF THE PARTICULAR TERMS OF THE NOTES OFFERED BY
THIS PROSPECTUS SUPPLEMENT SUPPLEMENTS THE DESCRIPTION OF THE GENERAL TERMS AND
PROVISIONS OF THE DEBT SECURITIES IN THE ACCOMPANYING PROSPECTUS.
The notes will be issued under an indenture, dated as of February 15, 2002,
between us and SunTrust Bank, as trustee, and will be limited initially to
$400,000,000 aggregate principal amount. The notes will be issued in
denominations of $1,000 and integral multiples of $1,000. The notes are
unsecured, will mature on October 1, 2012 and will rank equally with all our
other unsecured and unsubordinated indebtedness.
The notes will bear interest from September 27, 2002 at the annual rate
stated on the cover of this prospectus supplement, payable on April 1 and
October 1 of each year, commencing April 1, 2003, to the person in whose name
the notes are registered at the close of business on March 15 and September 15,
as the case may be, immediately preceding that April 1 or October 1. Interest on
the notes will be computed on the basis of a 360-day year composed of twelve
30-day months. If any payment date for notes is not a business day, we will make
the payment on the next business day, but we will not be liable for any
additional interest as a result of the delay in payment. By business day, we
mean any Monday, Tuesday, Wednesday, Thursday or Friday which is not a day when
banking institutions in New York City and the place of payment are authorized or
obligated by law to be closed.
We may issue additional notes of the same series with the same terms in the
future, without obtaining the consent of any holders of these notes.
S-3
OPTIONAL REDEMPTION
We may redeem the notes, in whole or in part, at our option at any time, at
a redemption price equal to the greater of (1) 100% of the principal amount of
the notes to be redeemed or (2) as determined by the quotation agent described
below, the sum of the present values of the remaining scheduled payments of
principal and interest on the notes to be redeemed, not including any portion of
these payments of interest accrued as of the date on which the notes are to be
redeemed, discounted to the date on which the notes are to be redeemed on a
semi-annual basis, assuming a 360-day year consisting of twelve 30-day months,
at the adjusted treasury rate described below plus 15 basis points, plus, in
each case, accrued interest on the notes to be redeemed to the date on which the
notes are to be redeemed.
We will utilize the following procedures to calculate the adjusted treasury
rate described in the previous paragraph. We will appoint Deutsche Bank
Securities Inc. and J.P. Morgan Securities Inc. or their successors and one or
more other primary U.S. Government securities dealers in New York City as
reference dealers and we will select one of these reference dealers to act as
our quotation agent. If Deutsche Bank Securities Inc. and/or J.P. Morgan
Securities Inc. or their respective successors are no longer primary U.S.
Government securities dealers, we will substitute other primary U.S. Government
securities dealers in their place.
The quotation agent will select a United States Treasury security which has
a maturity comparable to the remaining maturity of our notes which would be used
in accordance with customary financial practice to price new issues of corporate
debt securities with a maturity comparable to the remaining maturity of our
notes. The reference dealers will provide us and the trustee with the bid and
asked prices for that comparable United States Treasury security as of 5:00 p.m.
on the third business day before the redemption date. We will calculate the
average of the bid and asked prices provided by each reference dealer, eliminate
the highest and the lowest reference dealer quotations and then calculate the
average of the remaining reference dealer quotations. However, if we obtain
fewer than three reference dealer quotations, we will calculate the average of
all the reference dealer quotations and not eliminate any quotations. We call
this average quotation the comparable treasury price. The adjusted treasury rate
will be the semi-annual equivalent yield to maturity of a security whose price,
expressed as a percentage of its principal amount, is equal to the comparable
treasury price.
We will mail notice of any redemption at least 30 days but not more than 60
days before the redemption date to each holder of the notes to be redeemed.
Unless we default in payment of the redemption price on the redemption date,
interest will cease to accrue on the notes or portions of notes called for
redemption on and after the redemption date.
The notes are not entitled to the benefits of any sinking fund--that is, we
will not set aside money on a regular basis in a separate custodial account to
repay the notes.
DEFEASANCE AND COVENANT DEFEASANCE
The provisions in the indenture allowing us to be discharged from our
obligations under the indenture as a whole or to avoid complying with its
restrictive covenants will apply to the notes. See "Description of Debt
Securities -- Defeasance and Covenant Defeasance" on page 6 of the accompanying
prospectus for a description of the terms of any defeasance of this kind.
GLOBAL NOTES
The notes will be represented by one or more global notes deposited with
The Depository Trust Company as the depositary for the notes and registered in
the name of DTC's nominee. See "Description of Debt Securities -- Global
Securities" in the accompanying prospectus for additional information about DTC
and procedures applicable to the global notes.
Global notes may not be transferred except as a whole among the depositary
and its nominees and successors. In any of the cases below, a global note is
exchangeable for the definitive notes in registered form, bearing interest at
the same rate, having the same date of issuance, maturity and other terms and of
differing denominations aggregating a like amount, only if
o the depositary notifies us that it is unwilling or unable to continue as
depositary for that global note or if at any time the depositary ceases
to be a clearing agency registered under the Securities Exchange Act of
S-4
1934 and we do not appoint a successor depositary registered as a
clearing agency under the Exchange Act within 90 days,
o we in our sole discretion determine that such global note will be
exchangeable for definitive notes in registered form, or
o any event will have occurred and be continuing which after notice or
lapse of time, or both, would become an event of default with respect to
the notes.
If issued, the definitive notes will be registered in the names of the
owners of the beneficial interests in the global notes as provided by the
depositary's participants. Except as described above, global notes are not
exchangeable, except for global notes of like denomination to be registered in
the name of the depositary or its nominee.
So long as the depositary for any global note, or its nominee, is the
registered owner of the global note, the depositary or its nominee, as the case
may be, will be considered the sole owner or holder of the global note for the
purposes of receiving payment on the notes, receiving notices and for all other
purposes under the indenture and the notes. Except as provided above, owners of
beneficial interests in any global note will not be entitled to receive physical
delivery of notes in definitive form and will not be considered the holders of
notes for any purpose under the indenture. Accordingly, each person owning a
beneficial interest in the global note must rely on the procedures of the
depositary and, if that person is not a participant, on the procedures of the
participant through which that person owns its interest, to exercise any rights
of a holder under the indenture. The laws of some jurisdictions require that
some types of purchasers of securities take physical delivery of the securities
in definitive form. The limits and laws described in this paragraph may impair
the ability to transfer beneficial interests in the global notes.
We understand that under existing industry practices, if we request any
action of holders or if an owner of a beneficial interest in any global note
desires to give or take any action which a holder is entitled to give or take
under the indenture, the depositary would authorize the participants holding the
relevant beneficial interests to give or take that action, and the participants
would authorize beneficial owners owning through these participants to give or
take that action or would otherwise act upon the instructions of beneficial
owners owning through them.
Investors may hold interests in a global note through organizations that
participate, directly or indirectly, in the DTC system. These organizations
include Euroclear and Clearstream, Luxembourg, which are securities clearance
systems in Europe. Both systems clear and settle securities transactions between
their participants through electronic, book-entry delivery of securities against
payment. Payments, deliveries, transfers, exchanges, notices and other matters
relating to the notes made through Euroclear or Clearstream, Luxembourg must
comply with the rules and procedures of those systems. Those systems could
change their rules and procedures at any time. We have no control over those
systems or their participants and we take no responsibility for their
activities. Transactions between participants in Euroclear or Clearstream,
Luxembourg, on one hand, and participants in DTC, on the other hand, are also
subject to DTC's rules and procedures.
Investors will be able to make and receive through Euroclear and
Clearstream, Luxembourg payments, deliveries, transfers, exchanges, notices and
other transactions involving the notes only on days when those systems are open
for business. Those systems may not be open for business on days when banks,
brokers and other institutions are open for business in the United States. In
addition, because of time-zone differences, U.S. investors who hold their
interests in the notes through these systems and wish to transfer their
interests, or to receive or make a payment or exercise any other right with
respect to their interests, on a particular day may find that the transaction
will not be effected until the next business day in Brussels or Luxembourg, as
applicable. Thus, investors who wish to exercise rights that expire on a
particular day may need to act before the expiration date. In addition,
investors who hold their interests through Euroclear or Clearstream, Luxembourg
may need to make special arrangements to finance any purchases or sales of their
interests between DTC and the European clearing systems, and those transactions
may settle later than would be the case for transactions within one clearing
system.
THE TRUSTEE, PAYING AGENT AND SECURITY REGISTRAR
SunTrust Bank is the trustee, paying agent and security registrar with
respect to the notes and maintains a banking relationship with us. Colin G.
Campbell, one of our directors, is also an Advisory Director of SunTrust Bank.
S-5
UNDERWRITING
Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc. are acting as
joint book-running managers of the offering and are acting as representatives of
the underwriters named below.
Subject to the terms and conditions in the underwriting agreement between
us and the underwriters, we have agreed to sell to each underwriter, and each
underwriter has severally agreed to purchase from us, the principal amount of
notes that appears opposite its name in the table below:
UNDERWRITER PRINCIPAL AMOUNT
----------- -----------------
Deutsche Bank Securities Inc. .............................. $ 160,000,000
J.P. Morgan Securities Inc. ................................ 160,000,000
Barclays Capital Inc. ...................................... 20,000,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated ......... 20,000,000
RBC Dominion Securities Corporation ........................ 20,000,000
SunTrust Capital Markets, Inc. ............................. 20,000,000
-------------
Total ...................................................... $ 400,000,000
=============
The underwriting agreement provides that the underwriters will purchase all
the notes if any of them are purchased.
The underwriters initially propose to offer the notes directly to the
public at the public offering price that appears on the cover page of this
prospectus supplement. The underwriters may offer the notes to selected dealers
at the public offering price minus a concession of up to 0.40% of the principal
amount. In addition, the underwriters may allow, and those selected dealers may
reallow, a concession of up to 0.25% of the principal amount to certain other
dealers. After the initial offering, the underwriters may change the public
offering price and any other selling terms. The underwriters may offer and sell
notes through certain of their affiliates.
The notes are a new issue of securities with no established trading market.
We do not intend to apply for the notes to be listed on any securities exchange
or to arrange for the notes to be quoted on any quotation system. One or more of
the underwriters have advised us that they intend to make a secondary market for
the notes. However, they are not obligated to do so and may discontinue making a
secondary market for the notes at any time without notice. We do not know how
liquid the trading market for the notes will be.
We have agreed to indemnify the underwriters against certain liabilities,
including certain liabilities under the Securities Act, or contribute to
payments which the underwriters may be required to make in respect of these
liabilities.
Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc. will make
the securities available for distribution on the Internet through a proprietary
web site and/or a third-party system operated by Market Axess Inc., an
Internet-based communications technology provider. Market Axess Inc. is
providing the system as a conduit for communications between Deutsche Bank
Securities Inc. and J.P. Morgan Securities Inc. and their customers and is not a
party to any transactions. Market Axess Inc., a registered broker-dealer, will
receive compensation from Deutsche Bank Securities Inc. and J.P. Morgan
Securities Inc. based on transactions they conduct through the system. Deutsche
Bank Securities Inc. and J.P. Morgan Securities Inc. will make the securities
available to their customers through the Internet distributions, whether made
through a proprietary or third-party system, on the same terms as distributions
made through other channels.
The underwriters may engage in over-allotment, stabilizing transactions,
syndicate covering transactions and penalty bids in accordance with Regulation M
under the Exchange Act.
o Over-allotment involves syndicate sales in excess of the offering size,
which creates a syndicate short position.
o Stabilizing transactions consist of certain bids or purchases of notes made
for the purpose of preventing or retarding a decline in the market price of
the notes while the offering is in progress.
o Syndicate covering transactions involve purchases of the notes in the open
market after the distribution has been completed in order to cover
syndicate short positions.
S-6
o Penalty bids permit the underwriters to reclaim a selling concession from a
syndicate member when the notes originally sold by the syndicate member are
purchased in a syndicate covering transaction or stabilizing purchase.
Any of these transactions may have the effect of preventing or retarding a
decline in the market price of the notes. They may also cause the price of the
notes to be higher than it would otherwise be in the absence of these
transactions. The underwriters may conduct these transactions in the
over-the-counter market or otherwise. If the underwriters commence any of these
transactions, they may discontinue them at any time.
We estimate that our out-of-pocket expenses for this offering will be
approximately $150,000.
One or more of the underwriters or their affiliates engage in transactions
with and perform services, including commercial and investment banking and
hedging services, for us and our affiliates in the ordinary course of business,
for which they receive customary compensation. SunTrust Capital Markets, Inc.,
one of the underwriters, is an affiliate of SunTrust Bank, the trustee under the
indenture under which the notes are to be issued. Upon the occurrence of an
event of default, or an event which, after notice or lapse of time or both,
would become an event of default, the trustee may be deemed to have a
conflicting interest with respect to the notes for the purposes of the Trust
Indenture Act of 1939 and, accordingly, may be required to resign as trustee
under the indenture. In that event, we would be required to appoint a successor
trustee. Colin G. Campbell, one of our directors, is also an Advisory Director
of SunTrust Bank.
EXPERTS
The financial statements incorporated in this prospectus supplement by
reference to Pitney Bowes' Annual Report on Form 10-K for the year ended
December 31, 2001 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports and other information with
the SEC. You may read and copy any document we file at the SEC's Public
Reference Room located at 450 Fifth Street, N.W., Washington, D.C. 20549. Please
call the SEC at 1-800-SEC-0330 for further information on the Public Reference
Room. You may also read our SEC filings, including the complete registration
statement and all of the exhibits to it, through the SEC's web site at
HTTP://WWW.SEC.GOV.
The SEC allows us to "incorporate by reference" much of the information we
file with them, which means that we can disclose important information to you by
referring you directly to those publicly available documents. The information
incorporated by reference is considered to be part of this prospectus. In
addition, information we file with the SEC in the future will automatically
update and supersede information contained in this prospectus supplement and the
accompanying prospectus.
In addition to the documents listed in the accompanying prospectus, we
incorporate by reference the documents listed below:
o Our Annual Report on Form 10-K for the year ended December 31, 2001 (which
incorporates by reference portions of our proxy statement dated March 26,
2002).
o Our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2002
and June 30, 2002.
o Our Current Reports on Form 8-K filed January 31, 2002, April 19, 2002,
June 28, 2002, July 19, 2002 and August 2, 2002.
S-7
$2,000,000,000
PITNEY BOWES INC.
DEBT SECURITIES
PREFERRED STOCK
PREFERENCE STOCK
DEPOSITARY SHARES
-----------------
We may offer and issue debt securities and shares of our preferred and
preference stock from time to time. The debt securities and shares of preferred
or preference stock may be convertible into or exchangeable for shares of our
common stock or other securities. We may offer and issue preferred stock and
preference stock either directly or represented by depositary shares. This
prospectus describes the general terms of these securities and the general
manner in which we will offer them. We will provide the specific terms of these
securities in supplements to this prospectus. The prospectus supplements will
also describe the specific manner in which we will offer these securities.
-----------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES, OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-----------------
We may offer these securities in amounts, at prices and on terms determined
at the time of offering. We may sell the securities directly to you, through
agents we select, or through underwriters and dealers we select. If we use
agents, underwriters or dealers to sell these securities, we will name them and
describe their compensation in a prospectus supplement.
-----------------
The date of this prospectus is November 21, 2001.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS, IN
THE ACCOMPANYING PROSPECTUS SUPPLEMENT AND IN MATERIAL WE FILE WITH THE SEC. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. WE
ARE OFFERING TO SELL, AND SEEKING OFFERS TO BUY, THE SECURITIES DESCRIBED IN
THIS PROSPECTUS ONLY WHERE OFFERS AND SALES ARE PERMITTED. SINCE INFORMATION
THAT WE FILE WITH THE SEC IN THE FUTURE WILL AUTOMATICALLY UPDATE AND SUPERSEDE
INFORMATION CONTAINED IN THIS PROSPECTUS OR ANY ACCOMPANYING PROSPECTUS
SUPPLEMENT, YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS
PROSPECTUS OR IN ANY PROSPECTUS SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN
THE DATE ON THE FRONT OF THE DOCUMENT.
-----------------------------
TABLE OF CONTENTS
PAGE
----
About This Prospectus .................................................... 2
Special Note Regarding Forward-Looking Statements ........................ 2
Pitney Bowes Inc. ........................................................ 3
Use of Proceeds .......................................................... 3
Ratio of Earnings to Fixed Charges and Ratio of Earnings
to Fixed Charges and Preferred and Preference Stock Dividends .......... 3
Description of Debt Securities ........................................... 4
Description of Preferred Stock and Preference Stock ...................... 13
Description of Common Stock .............................................. 16
Description of Depositary Shares ......................................... 22
Plan of Distribution ..................................................... 24
Validity of the Securities ............................................... 24
Experts .................................................................. 24
Where You Can Find More Information ...................................... 25
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission, referred to as the SEC in this prospectus,
utilizing a shelf registration process. Under this shelf registration process,
we may issue, from time to time, up to $2,000,000,000 of debt securities,
preferred stock, preference stock and depositary shares. Each time we issue any
securities under the registration statement, we will provide a prospectus
supplement that will contain specific information about the terms of that
offering. The prospectus supplement may also add, update or change information
contained in this prospectus. You should read both this prospectus and any
prospectus supplement together with the additional information described under
the heading "Where You Can Find More Information."
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
In this prospectus and in the documents we incorporate by reference, we may
state our views about our future performance. These views, which constitute
"forward-looking statements" under the Private Securities Litigation Reform Act
of 1995, involve risks and uncertainties that are difficult to predict and may
cause our actual results to differ materially from the results discussed in
those forward-looking statements. Some of the factors that may significantly
affect our performance are discussed in "Management's Discussion and Analysis of
Financial Condition and Results of Operations," which is contained in our most
recent Annual Report on Form 10-K that is on file with the SEC.
2
PITNEY BOWES INC.
Pitney Bowes was organized in 1920 and is a Delaware corporation.
Pitney Bowes operates in three segments:
o 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.
o ENTERPRISE SOLUTIONS--Enterprise Solutions consists of 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.
o 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.
On December 11, 2000, Pitney Bowes announced that its Board of Directors
approved a formal plan to spin off Pitney Bowes' Office Systems business to
stockholders as an independent, publicly-traded company. The transaction is
expected to be completed by the end of the fourth quarter of 2001.
The world headquarters of Pitney Bowes are located at One Elmcroft Road,
Stamford, Connecticut 06926-0700 (telephone: 203-356-5000).
USE OF PROCEEDS
We expect to use the net proceeds from sales of the securities described in
this prospectus to repay short-term debt, to repurchase our common stock, to
refinance our other indebtedness from time to time and for other general
corporate purposes, including possible acquisitions. We will describe our
intended use of the proceeds from a particular offering of securities in the
related prospectus supplement. Funds not required immediately for any of the
previously mentioned purposes may be temporarily invested in marketable
securities.
RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED AND PREFERENCE STOCK DIVIDENDS
The following table presents the ratio of our earnings to fixed charges
excluding minority interest for the periods indicated:
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
---------------------- -------------------------------------------------------
2001 2000 2000 1999 1998 1997 1996
--------- ---------- ---------- ---------- ---------- ---------- ----------
4.72 4.34 4.37 4.92 4.42 4.10 3.58
The following table presents the ratio of our earnings to fixed charges and
preferred and preference stock dividends excluding minority interest for the
periods indicated:
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
----------------------- -------------------------------------------------------
2001 2000 2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- ---------- ---------- ----------
4.71 4.34 4.37 4.92 4.42 4.10 3.57
For the purpose of computing the above ratios, earnings have been
calculated by adding to income from continuing operations before income taxes
the amount of fixed charges. Fixed charges consist of interest on debt
3
and a portion of net rental expense deemed to represent interest. These ratios
have been reclassified to reflect Pitney Bowes' Office Systems business, which
Pitney Bowes plans to spin off to its stockholders in 2001, Atlantic Mortgage &
Investment Corporation, which Pitney Bowes sold in 2000, and Colonial Pacific
Leasing Corporation, whose operations and assets Pitney Bowes sold in 1998, as
discontinued operations. Interest expense and the portion of rent which is
representative of the interest factor of these discontinued operations have been
excluded from fixed charges in the computation. If these amounts had been
included, the ratio of earnings to fixed charges excluding minority interest
would be 4.54 for first half 2001, 4.21 for first half 2000, 4.21 for 2000, 4.66
for 1999, 3.78 for 1998, 4.00 for 1997 and 3.54 for 1996. If these amounts had
been included, the ratio of earnings to fixed charges and preferred and
preference stock dividends excluding minority interest would be 4.53 for first
half 2001, 4.19 for first half 2000, 4.21 for 2000, 4.65 for 1999, 3.78 for
1998, 4.00 for 1997 and 3.54 for 1996.
DESCRIPTION OF DEBT SECURITIES
DEBT MAY BE SENIOR OR SUBORDINATED
We will issue the senior debt securities under one or more senior debt
indentures and the subordinated debt securities under one or more subordinated
debt indentures. We will appoint a trustee to act in a fiduciary capacity under
each of these indentures. In this prospectus we refer to these senior debt
indentures as our "senior debt indenture" and to these subordinated debt
indentures as our "subordinated debt indenture". We have filed the form of our
senior debt indenture and subordinated debt indenture as exhibits to the
registration statement of which this prospectus is a part.
The senior debt securities will be part of our senior debt and will rank
equally with all of our other unsecured and unsubordinated debt. The
subordinated debt securities will be junior in right of payment to all of our
"senior indebtedness", as defined in our subordinated debt indenture. If this
prospectus is being delivered in connection with a series of subordinated debt
securities, the accompanying prospectus supplement or the information we
incorporate in this prospectus by reference will indicate the approximate amount
of senior indebtedness outstanding as of the end of the most recent fiscal
quarter preceding the date of that prospectus supplement. Neither indenture
limits our ability to incur additional senior indebtedness.
We have summarized below the material provisions of the indentures and the
debt securities, or indicated which material provisions will be described in the
related prospectus supplement. These descriptions are only summaries, and each
investor should refer to the applicable indenture, which contains the terms and
definitions summarized below as well as additional information regarding the
debt securities.
Any reference to particular sections or defined terms of the applicable
indenture in any statement under this heading qualifies the entire statement and
incorporates by reference the applicable section or definition into that
statement. The indentures are substantially identical, except for the provisions
relating to limitations on liens and limitations on sales and leasebacks, which
are included in the senior debt indenture only, and to subordination, which are
included in the subordinated indenture only.
We may issue debt securities from time to time in one or more series. The
debt securities may be denominated and payable in U.S. dollars or foreign
currencies. We may also issue debt securities, from time to time, with the
principal amount or interest payable on any relevant payment date to be
determined by reference to one or more currency exchange rates, securities or
baskets of securities, commodity prices or indices. Holders of these types of
debt securities will receive payments of principal or interest that depend upon
the value of the applicable currency, security or basket of securities,
commodity or index on the relevant payment dates. As a result, you may receive a
payment of principal on any principal payment date, or a payment of interest on
any interest payment date, that is greater than or less than the amount of
principal or interest otherwise payable on those dates, depending upon the value
on those dates of the applicable currency, security or basket of securities,
commodity or index. Information as to the methods for determining the amount of
principal or interest payable on any date, the currencies, securities or baskets
of securities, commodities or indices to which the amount payable on that date
is linked and any material United States federal income tax considerations will
be provided in the applicable prospectus supplement.
Debt securities may bear interest at a fixed rate, which may be zero, or a
floating rate. Debt securities bearing no interest or interest at a rate that at
the time of issuance is below the prevailing market rate may be sold at a
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discount below their stated principal amount. We refer to debt securities of
this kind that are sold at a discount as "original issue discount securities".
We may, without the consent of the existing holders of any series of debt
securities, issue additional debt securities having the same terms so that the
existing debt securities and the new debt securities form a single series under
the applicable indenture.
TERMS SPECIFIED IN PROSPECTUS SUPPLEMENT
The prospectus supplement will contain, where applicable, the following
terms of, and other information relating to, any offered debt securities:
o title;
o whether the debt securities are senior or subordinated;
o aggregate principal amount and purchase price;
o currency in which the debt securities are denominated and/or in which
principal, and premium, if any, and/or interest, if any, is payable, if
not U.S. dollars;
o authorized denominations, if other than $1,000 and integral multiples of
$1,000;
o date of maturity;
o the interest rate or rates or the method by which a calculation agent
will determine the interest rate or rates, if any;
o the interest payment dates, if any;
o any repayment, redemption, prepayment or sinking fund provisions,
including any redemption notice provisions;
o the name of the trustee and any authenticating agent, paying agent,
transfer agent or registrar for the debt securities;
o whether we will issue the debt securities in definitive form or in the
form of one or more global securities;
o the terms on which holders of the debt securities may convert or
exchange these securities into our common stock, preferred stock or
preference stock or other securities of Pitney Bowes or other issuers;
o information as to the methods for determining the amount of principal or
interest payable on any date and/or the currencies, securities or
baskets of securities, commodities or indices to which the amount
payable on that date is linked;
o any special United States federal income tax consequences applicable to
the debt securities being issued; and
o any other specific terms of the debt securities, including any
additional events of default or covenants, and any terms required by or
advisable under applicable laws or regulations.
REGISTRATION AND TRANSFER OF DEBT SECURITIES
Holders may exchange their debt securities for debt securities of smaller
denominations or combine them into fewer debt securities of larger
denominations, as long as the total principal amount is not changed. You may not
exchange your debt securities for securities of a different series or having
different terms, unless your prospectus supplement says you may.
You may present debt securities for exchange and transfer in the manner, at
the places and subject to any restrictions described in the applicable
prospectus supplement. We will provide you those services free of charge,
although you may have to pay any tax or other governmental charge payable in
connection with any exchange or transfer, as provided in the applicable
indenture.
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If any of the debt securities are held in global form, the procedures for
transfer of interests in those securities will depend upon the procedures of the
depositary for those global securities. See "- Global Securities" for more
information about those provisions.
DEFEASANCE AND COVENANT DEFEASANCE
Unless the prospectus supplement states otherwise, we will be able to
discharge all of our obligations, other than administrative obligations such as
facilitating transfers and exchanges of certificates and replacement of lost or
mutilated certificates, relating to a series of debt securities under an
indenture by depositing cash and/or U.S. Government obligations with the trustee
in an amount sufficient to make all the remaining payments of principal, premium
and interest on those debt securities when those payments are due. We can do
this only if we have delivered to the trustee, among other things, an opinion of
counsel based on a United States Internal Revenue Service ruling or other change
in U.S. federal income tax law stating that holders will not recognize any gain
or loss for U.S. federal income tax purposes as a result of this deposit.
We can also avoid having to comply with the restrictive covenants in the
senior debt indenture, such as the limitation on liens and the limitation on
sale and leaseback transactions, by depositing cash and/or U.S. Government
obligations with the trustee in an amount sufficient to make all the remaining
payments of principal, premium and interest on the outstanding debt securities
when those payments are due. We can do this only if we have delivered to the
trustee, among other things, an opinion of counsel stating that holders of those
securities will not recognize any gain or loss for U.S. federal income tax
purposes as a result of this deposit.
SUBORDINATION PROVISIONS
There are contractual provisions in the subordinated debt indenture that
may prohibit us from making payments on our subordinated debt securities.
Subordinated debt securities are subordinate and junior in right of payment, to
the extent and in the manner stated in the subordinated debt indenture, to all
of our senior indebtedness, including the debt securities we have issued and
will issue under the senior debt indenture.
The subordinated debt indenture defines senior indebtedness generally as
obligations of, or guaranteed or assumed by, Pitney Bowes for borrowed money or
evidenced by bonds, notes or debentures or other similar instruments or incurred
in connection with the acquisition of property, and amendments, renewals,
extensions, modifications and refundings of any of that indebtedness. The
subordinated debt securities and any other obligations specifically designated
as being subordinate in right of payment to senior indebtedness are not senior
indebtedness as defined in the subordinated debt indenture.
The subordinated debt indenture provides that, unless all principal of and
any premium or interest on the senior indebtedness has been paid in full, or
provision has been made to make those payments in full, no payment of principal
of, or any premium or interest on, any subordinated debt securities may be made
in the event:
o of any insolvency or bankruptcy proceedings, or any receivership,
liquidation, reorganization, assignment for the benefit of creditors or
other similar proceedings involving us or a substantial part of our
property;
o a default has occurred in the payment of principal, any premium,
interest or other monetary amounts due and payable on any senior
indebtedness, and that default has not been cured or waived or has not
ceased to exist;
o there has occurred any other event of default with respect to senior
indebtedness that permits holders or any trustee of the senior
indebtedness to accelerate the maturity of the senior indebtedness, even
if that maturity is not in fact accelerated, and that event of default
has not been cured or waived or has not ceased to exist; or
o that the principal of and accrued interest on any subordinated debt
securities have been declared due and payable upon an event of default
as defined under the subordinated debt indenture and that declaration
has not been rescinded and annulled as provided under the subordinated
debt indenture.
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If the trustee under the subordinated debt indenture or any holders of the
subordinated debt securities receive any payment or distribution that is
prohibited under the subordination provisions, then the trustee or the holders
will have to repay that money to the holders of the senior indebtedness.
Even if the subordination provisions prevent us from making any payment
when due on the subordinated debt securities of any series, we will be in
default on our obligations under that series if we do not make the payment when
due. This means that the trustee under the subordinated debt indenture and the
holders of debt securities of that series can take action against us, but they
will not receive any money until the claims of the holders of senior
indebtedness have been fully satisfied.
The subordinated debt indenture allows the holders of senior indebtedness
to obtain a court order requiring us and any holder of subordinated debt
securities to comply with the subordination provisions.
COVENANTS RESTRICTING LIENS, MERGERS AND OTHER SIGNIFICANT CORPORATE ACTIONS
IN THE FOLLOWING DISCUSSION, WE USE A NUMBER OF CAPITALIZED TERMS WHICH
HAVE SPECIAL MEANINGS UNDER THE INDENTURES. WE PROVIDE DEFINITIONS OF THESE
TERMS UNDER "--DEFINITIONS" BELOW.
LIMITATION ON LIENS. The senior debt indenture provides that so long as any
of the senior debt securities remains outstanding, we will not, nor will we
permit any Restricted Subsidiary to, issue, assume, guarantee or become liable
for any Indebtedness if that Indebtedness is secured by a Mortgage upon any
Principal Domestic Manufacturing Plant or upon any shares of stock or
Indebtedness of any Restricted Subsidiary without in any such case effectively
providing that the senior debt securities will be secured equally and ratably
with (or prior to) that Indebtedness, except that the foregoing restrictions
will not apply to:
o Mortgages on property of any corporation existing at the time that
corporation is acquired by us or a Restricted Subsidiary (including by
way of merger or consolidation) or at the time of a sale, lease or other
disposition of substantially all of the properties of a corporation to
us or a Restricted Subsidiary, as long as that Mortgage is not extended
to cover any property previously owned by us or a Restricted Subsidiary;
o Mortgages on property of a corporation existing at the time the
corporation first becomes a Restricted Subsidiary;
o Mortgages on any property existing on the date securities are first
issued under that indenture or when we acquired that property;
o Mortgages securing any Indebtedness that a wholly-owned Restricted
Subsidiary owes to us or another wholly-owned Restricted Subsidiary;
o Mortgages that we enter into within specified time periods to finance
the acquisition, repair, improvement or construction of any property;
o mechanics' liens, tax liens, liens in favor of a governmental body to
secure progress payments or the acquisition of real or personal property
from the governmental body, and other specified liens which were not
incurred in connection with any borrowing of money, as long as we are
contesting those liens in good faith or those liens do not materially
impair the use of any Principal Domestic Manufacturing Plant;
o Mortgages arising from any judgment, decree or order of a court in a
pending proceeding;
o any extension, renewal or replacement of any of the Mortgages described
above, as long as the amount of Indebtedness secured does not exceed the
amount originally secured plus any fees incurred in connection with the
refinancing.
Notwithstanding the above, we may issue, assume or guarantee, and may
permit any Restricted Subsidiary to issue, assume or guarantee, secured
Indebtedness which would otherwise be subject to the foregoing restrictions,
provided that the total of the aggregate amount of that Indebtedness then
outstanding, excluding secured Indebtedness permitted under the foregoing
exceptions, does not exceed 15% of Consolidated Net Tangible Assets.
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THE SUBORDINATED DEBT INDENTURE DOES NOT INCLUDE ANY LIMITATION ON OUR
ABILITY TO INCUR THESE TYPES OF LIENS.
LIMITATION ON SALES AND LEASEBACKS. Under the senior debt indenture, we and
our Restricted Subsidiaries are not allowed to enter into any sale and leaseback
arrangement involving a Principal Domestic Manufacturing Plant which has a term
of more than three years, except for sale and leaseback arrangements between us
and a wholly-owned Restricted Subsidiary or between wholly-owned Restricted
Subsidiaries, unless:
o we enter into the sale and leaseback transaction within 180 days after
the Principal Domestic Manufacturing Plant is acquired, constructed or
placed into service by us;
o the rent that we pay under the related lease is reimbursed under a
contract between us or a Restricted Subsidiary and the United States
Government or one of its agencies or instrumentalities;
o the aggregate amount of all Attributable Debt with respect to sale and
leaseback transactions plus all Indebtedness secured by Mortgages on
Principal Domestic Manufacturing Plants (with the exception of secured
Indebtedness which is excluded as described under "- Limitations on
Liens" above) does not exceed 15% of Consolidated Net Tangible Assets;
or
o we apply an amount equal to, in the case of a sale or transfer for cash,
the lesser of the net proceeds of the sale or transfer of the Principal
Domestic Manufacturing Plant and the net book value, or, in the case of
a sale or transfer otherwise than for cash, the lesser of the fair
market value of the Principal Domestic Manufacturing Plant and the net
book value, within 180 days of the effective date of the sale and
leaseback arrangement to the retirement of our or a Restricted
Subsidiary's Indebtedness, which may include the senior debt securities.
However, we cannot satisfy this test by retiring Indebtedness that we
were otherwise obligated to repay within the 180-day period.
THE SUBORDINATED DEBT INDENTURE DOES NOT INCLUDE ANY LIMITATIONS ON SALES
AND LEASEBACKS.
CONSOLIDATION, MERGER OR SALE OF ASSETS. The senior debt indenture provides
that we will not consolidate or merge with or into any other corporation and
will not sell, lease or convey our properties and assets as an entirety, or
substantially as an entirety, to another corporation if, as a result of that
action, any of our assets would become subject to a mortgage, unless either:
o that mortgage could be created under the senior debt indenture without
equally and ratably securing the senior debt securities; or
o the senior debt securities will be secured equally and ratably with or
prior to the Indebtedness secured by that mortgage.
Each of the indentures provides that we may consolidate or merge or sell
all or substantially all of our assets if:
o we are the continuing corporation or if we are not the continuing
corporation, the continuing corporation is organized and existing under
the laws of the United States of America or any state of the United
States or the District of Columbia and assumes by supplemental indenture
the due and punctual payment of the principal of, and premium, if any,
and interest, if any, on, the debt securities and the due and punctual
performance and observance of all of the covenants and conditions of the
applicable indenture to be performed by us; and
o we are not, or the continuing corporation is not, in default in the
performance of any covenant or condition of the applicable indenture to
be performed by us immediately after the merger, consolidation or sale
of assets.
DEFINITIONS
"Attributable Debt" in respect of a sale and leaseback arrangement is
defined in the senior debt indenture to mean, at the time of determination, the
lesser of:
o the sale price of the Principal Domestic Manufacturing Plant to be
leased multiplied by a fraction the numerator of which is the remaining
portion of the base term of the lease and the denominator of which is
the base term of the lease; and
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o the total rental payments under the lease discounted to present value
using an interest factor determined in accordance with generally
accepted financial practice. However, if we cannot readily determine
that interest factor, we will use an annual rate of 11%, compounded
semiannually. We will also exclude from rental payments any amounts paid
on account of property taxes, maintenance, repairs, insurance, water
rates and other items which are not payments for property rights.
"Consolidated Net Tangible Assets" is defined in the senior debt indenture
to mean as of any particular time, the aggregate amount of assets after
deducting current liabilities, goodwill, patents, copyrights, trademarks, and
other intangibles, in each case as shown on our most recent consolidated
financial statements prepared in accordance with U.S. generally accepted
accounting principles.
"Consolidated Net Worth" is defined in the senior debt indenture to mean
the sum of (1) the par value of our capital stock, (2) our capital in excess of
par value and (3) retained earnings, in each case as shown on our most recent
consolidated financial statements prepared in accordance with U.S. generally
accepted accounting principles.
"Indebtedness" is defined in the senior debt indenture to mean any notes,
bonds, debentures or other similar indebtedness for money borrowed.
"Mortgage" is defined in the senior debt indenture to mean a mortgage,
security interest, pledge or lien.
"Principal Domestic Manufacturing Plant" is defined in the senior debt
indenture to mean any manufacturing or processing plant or warehouse (other than
any plant or warehouse which, in the opinion of our Board of Directors, is not
material to our total business), including land and fixtures, which is owned by
us or a subsidiary, located in the United States and has a gross book value
(without deduction of any depreciation reserves) on the determination date of
more than 1% of our Consolidated Net Worth.
"Restricted Subsidiary" is defined in the senior debt indenture to mean any
Subsidiary of ours which
o is organized under the laws of the United States or any state of the
United States or the District of Columbia;
o transacts all or a substantial part of its business in the United
States; and
o owns a Principal Domestic Manufacturing Plant.
However, "Restricted Subsidiary" does not include Pitney Bowes Credit
Corporation or any other Subsidiary which
o is primarily engaged in providing or obtaining financing for the sale or
lease of products that we or our Subsidiaries sell or lease or is
otherwise primarily engaged in the business of a finance company; or
o is primarily engaged in the business of owning, developing or leasing
real property other than a Principal Domestic Manufacturing Plant.
"Subsidiary" is defined in both indentures to mean any corporation of which
at least a majority of the outstanding voting stock is owned by us, or by us and
one or more Subsidiaries, or by one or more Subsidiaries.
EVENTS OF DEFAULT, WAIVER AND NOTICE
The indentures provide that the following events will be events of default
with respect to the debt securities of a series:
o we default in the payment of any interest on the debt securities of that
series for 30 days or more;
o we default in the payment of any principal or premium on the debt
securities of that series on the date that payment was due;
o we default in making any sinking fund payment on the debt securities of
that series on the date that payment was due;
o we breach any of the other covenants applicable to that series of debt
securities and that breach continues for 90 days or more after we
receive notice from the trustee or the holders of at least 25% of the
aggregate principal amount of debt securities of that series;
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o we commence bankruptcy or insolvency proceedings or consent to any
bankruptcy relief sought against us; or
o we become involved in involuntary bankruptcy or insolvency proceedings
and an order for relief is entered against us, if that order remains in
effect for more than 60 consecutive days.
The prospectus supplement may specify additional events of default that may
be applicable to debt securities of a series.
The trustee or the holders of 25% of the aggregate principal amount of debt
securities of a series may declare all of the debt securities of that series to
be due and payable immediately if an event of default with respect to a payment
occurs. The trustee or the holders of 25% of the aggregate principal amount of
debt securities of each affected series voting as one class may declare all of
the debt securities of each affected series due and payable immediately if an
event of default with respect to a breach of a covenant occurs. The trustee or
the holders of 25% of the aggregate principal amount of debt securities
outstanding under the applicable indenture voting as one class may declare all
of the debt securities outstanding under that indenture due and payable
immediately if a bankruptcy event of default occurs. The holders of a majority
of the aggregate principal amount of the debt securities of the applicable
series or number of series may annul a declaration or waive a past default with
respect to that series except for a continuing payment default and only if all
other events of default with respect to that series have been cured or waived.
If any of the affected debt securities are original issue discount securities,
by principal amount we mean the amount that the holders would be entitled to
receive by the terms of that debt security if the debt security were declared
immediately due and payable.
The holders of a majority in principal amount of the debt securities of any
or all series affected and then outstanding will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the applicable trustee under the indentures. Notwithstanding the foregoing, a
trustee will not have to follow any direction unless the holders of the debt
securities offer to reimburse the trustee for the costs, expenses and
liabilities which the trustee might incur in compliance with the request.
If we have placed funds on deposit with the trustee to avoid having to
comply with the restrictive covenants in the senior debt indenture and the debt
securities are declared due and payable because of an event of default, the
funds on deposit will be sufficient to pay amounts due on the debt securities at
the time of their stated maturity, but may not be sufficient to pay amounts due
on the debt securities at the time the debt securities are declared due and
payable. In that case, we would remain liable for any deficiency.
Each indenture requires that we file a certificate each year with the
applicable trustee stating that there are no defaults under the indenture. Each
indenture permits the applicable trustee to withhold notice to holders of debt
securities of any default other than a payment default if the trustee considers
it in the best interests of the holders.
MODIFICATION OF INDENTURES
We can enter into a supplemental indenture with the applicable trustee to
modify any provision of the applicable indenture or any series of debt
securities without obtaining the consent of the holders of any debt securities
if the modification does not adversely affect the holders in any material
respect. In addition, we can generally enter into a supplemental indenture with
the applicable trustee to modify any provision of the indenture or any series of
debt securities if we obtain the consent of the holders of a majority of the
aggregate principal amount of outstanding debt securities of each affected
series voting as one class. However, we need the consent of each affected holder
in order to:
o change the date on which any payment of principal or interest on any
debt security is due;
o reduce the amount of any principal, interest or premium due on any debt
security;
o change the currency or location of any payment;
o impair the right of any holder to bring suit for any payment after its
due date; or
o reduce the percentage in principal amount of debt securities required to
consent to any modification or waiver of any provision of the indenture
or the debt securities.
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FORM OF DEBT SECURITIES
Each debt security will be represented either by a certificate issued in
definitive form to a particular investor or by one or more global securities
representing the entire series of securities issued at one time. Certificated
securities in definitive form and global securities will be issued in registered
form. Definitive securities name you or your nominee as the owner of the
security and, in order to transfer or exchange these securities or to receive
payments other than interest or other interim payments, you or your nominee must
physically deliver the securities to the trustee, registrar, paying agent or
other agent, as applicable. Global securities name a depositary or its nominee
as the owner of the debt securities represented by the global securities. The
depositary maintains a computerized system that will reflect the beneficial
ownership of the securities through accounts maintained by broker/dealers,
banks, trust companies or other representatives, as we explain more fully below
under "--Global Securities."
GLOBAL SECURITIES
We may issue the debt securities of any series in the form of one or more
fully registered global securities that will be deposited with a depositary or
with a nominee for a depositary identified in the prospectus supplement relating
to that series and registered in the name of the depositary or its nominee.
Unless we specify a different depositary in a prospectus supplement, the
depositary for any global securities we issue will be The Depository Trust
Company, or DTC, New York, New York. In that case, one or more global securities
will be issued in a denomination or aggregate denominations equal to the portion
of the aggregate principal or face amount of outstanding registered securities
of the series to be represented by the global securities. Unless and until the
depositary exchanges a global security in whole or in part for securities in
definitive registered form, the global security may not be transferred except in
whole or in part by the depositary to a nominee of the depositary or by a
nominee of the depositary to the depositary or another nominee of the depositary
or by the depositary or any of its nominees to a successor of the depositary or
a nominee of that successor.
If not described below, any specific terms of the depositary arrangement
with respect to any portion of a series of securities to be represented by a
global security will be described in the prospectus supplement relating to that
series. We anticipate that the following provisions will apply to all depositary
arrangements.
Ownership of beneficial interests in a global security will be limited to
persons that have accounts with the depositary for that global security, which
we call "participants", or persons that may hold interests through participants.
Upon the issuance of a global security, the depositary for the global security
will credit, on its book-entry registration and transfer system, the
participants' accounts with the respective principal or face amounts of the
securities represented by the global security beneficially owned by those
participants. The accounts to be credited will be designated by any dealers,
underwriters or agents participating in the distribution of the securities.
Ownership of beneficial interests in the global security will be shown on, and
the transfer of those ownership interests will be effected only through, records
maintained by the depositary for the global security, with respect to interests
of participants, and on the records of participants, with respect to interests
of persons holding through participants.
The laws of some states may require that some purchasers of securities take
physical delivery of their securities in definitive form. Those laws may impair
the ability to own, transfer or pledge beneficial interests in global
securities.
So long as the depositary for a global security, or its nominee, is the
registered owner of the global security, the depositary or its nominee, as the
case may be, will be considered the sole owner or holder of the debt securities
represented by the global security for all purposes under the applicable
indenture. Except as described below, owners of beneficial interests in a global
security will not be entitled to have the securities represented by a global
security registered in their names, will not receive or be entitled to receive
physical delivery of their securities in definitive form and will not be
considered the owners or holders of the securities under the applicable
indenture. Accordingly, each person owning a beneficial interest in a global
security must rely on the procedures of the depositary for that global security
and, if that person is not a participant, on the procedures of the participant
through which that person owns its interest, to exercise any rights of a holder
under the applicable indenture. We understand that under existing industry
practices, if we request any action of holders or if an owner of a beneficial
interest in a global security desires to give or take any action which a holder
is entitled to give or take under the
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applicable indenture, the depositary for that global security would authorize
the participants holding the relevant beneficial interests to give or take that
action, and those participants would authorize beneficial owners owning through
those participants to give or take that action or would otherwise act upon the
instructions of beneficial owners holding through them.
Payments of principal, premium, if any, and interest, if any, on debt
securities represented by a global security registered in the name of a
depositary or its nominee will be made to the depositary or its nominee, as the
case may be, as the registered owner of the global security. We and the trustees
or any of our or their agents will not have any responsibility or liability for
any aspect of the records relating to or payments made on account of beneficial
ownership interests in the global security or for maintaining, supervising or
reviewing any records relating to those beneficial ownership interests.
We expect that the depositary for any debt securities represented by a
global security, upon receipt of any payment of principal, premium, interest or
other distribution of underlying securities or commodities to holders in respect
of the global security, will immediately credit participants' accounts in
amounts proportionate to their respective beneficial interests in the global
security as shown on the records of the depositary. We also expect that payments
by participants to owners of beneficial interests in the global security held
through those participants will be governed by standing customer instructions
and customary practices, as is now the case with the securities held for the
accounts of customers in bearer form or registered in "street name," and will be
the responsibility of those participants.
DTC has advised us that DTC is a limited purpose trust company organized
under the laws of the State of New York, a "banking organization" within the
meaning of the New York banking law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code and a "clearing agency" registered under Section 17A of the Securities
Exchange Act of 1934. DTC was created to hold securities of its participants and
to facilitate the clearance and settlement of securities transactions among its
participants through electronic book-entry changes in accounts of the
participants, thereby eliminating the need for physical movement of securities
certificates. DTC's participants include securities brokers and dealers, banks,
trust companies, clearing corporations and certain other organizations, some of
which (and/or representatives of which) are also owners of DTC. Access to DTC's
book-entry systems is also available to others, such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a participant, either directly or indirectly.
If the depositary for any debt securities represented by a global security
is at any time unwilling or unable to continue as depositary or ceases to be a
clearing agency registered under the Exchange Act, and we do not appoint a
successor depositary registered as a clearing agency under the Exchange Act
within 90 days, we will issue the debt securities in definitive form in exchange
for that global security. We will also issue debt securities of any series in
definitive form in exchange for the global securities representing the
securities of that series if any event occurs and is continuing which, after
notice or lapse of time, or both, would become an event of default with respect
to the securities of that series. In addition, we may at any time and in our
sole discretion determine not to have any of the debt securities of a series
represented by one or more global securities and, in that event, will issue debt
securities of that series in definitive form in exchange for all of the global
security or securities representing those debt securities. Any securities issued
in definitive form in exchange for a global security will be registered in such
name or names as the depositary will instruct the relevant trustee. We expect
that those instructions will be based upon directions received by the depositary
from participants with respect to ownership of beneficial interests in the
global security.
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DESCRIPTION OF PREFERRED STOCK AND PREFERENCE STOCK
The following description of the material terms of our preferred stock and
preference stock is based on the provisions of our restated certificate of
incorporation, as amended. For more information as to how you can obtain a
current copy of our restated certificate of incorporation, see "Where You Can
Find More Information."
Our restated certificate of incorporation, as amended, authorizes the
issuance of 600,000 shares of cumulative preferred stock, par value $50.00 per
share, 5,000,000 shares of preference stock, without par value, and 480,000,000
shares of common stock, par value $1.00 per share.
PREFERRED STOCK
We may issue preferred stock from time to time in one or more series,
without stockholder approval. Subject to limitations prescribed by law, our
board of directors is authorized to determine the voting powers, if any,
designations and powers, preferences and rights, and the qualifications,
limitations or restrictions, for each series of preferred stock that may be
issued and to fix the number of shares of each series.
At August 31, 2001, there were 488 shares of our 4% Convertible Cumulative
Preferred Stock outstanding. Each share of our outstanding 4% preferred stock is
entitled to cumulative dividends at the rate of $2 per year, can be redeemed at
our option, in whole or in part at any time, at a price of $50 per share, plus
dividends accrued to the redemption date, and is convertible into 24.24 shares
of our common stock, subject to anti-dilution adjustment.
DIVIDENDS. Holders of preferred shares of each series will be entitled to
receive, when and as declared by our board of directors out of funds legally
available for the payment of dividends, cumulative dividends at the rate
determined by our board of directors for that series, and no more. Dividends on
the preferred shares will accrue from the date fixed by our board of directors
for that series. Unless we have declared and paid in full all dividends payable
on all of our outstanding preferred shares for the current period and all prior
periods, we will not be allowed to make any dividend payments on any class of
stock that is subordinate to our preferred shares and we will not be allowed to
redeem or otherwise repurchase any shares of any class of stock which ranks
equally with or subordinate to our preferred shares.
Accrued and unpaid dividends on the preferred shares will not bear
interest.
REDEMPTION. The terms, if any, on which preferred shares of any series may
be redeemed will be described in a prospectus supplement.
If we decide to redeem fewer than all of the outstanding preferred shares
of any series, we will determine the method of selecting which shares to redeem.
CONVERSION OR EXCHANGE RIGHTS. The prospectus supplement relating to any
series of preferred stock that is convertible or exchangeable will state the
terms on which shares of that series are convertible into or exchangeable for
shares of common or preference stock or another series of preferred stock of
Pitney Bowes or securities of any third party.
LIQUIDATION. In the event of our voluntary or involuntary liquidation,
before any distribution of assets will be made to the holders of any class of
shares ranking subordinate to the preferred shares as to assets, the holders of
the preferred shares of each series will be entitled to receive out of our
assets available for distribution to our shareholders the sum of the par value
for that series and all accrued and unpaid dividends on those shares. In the
event of a voluntary liquidation, the holders of preferred shares also will
receive the premium, if any, assigned to that series. The holders of all series
of preferred shares are entitled to share ratably, in accordance with the
respective amounts payable on their shares, in any distribution upon liquidation
which is not sufficient to pay in full the aggregate amounts payable on all of
those shares. After payment in full of the liquidation price of the preferred
shares, the holders of those shares will not be entitled to any further
participation in any distribution of our assets. Neither the consolidation or
merger of Pitney Bowes with or into any other corporation or corporations, nor
the merger or consolidation of any other corporation into and with Pitney Bowes,
will be deemed to be a voluntary or involuntary liquidation if the transaction
is consented to by the holders of 66 2/3% of the outstanding preferred shares.
However, the sale, exchange or transfer of all or substantially all of the
assets of Pitney Bowes
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will be deemed a voluntary liquidation of Pitney Bowes for purposes of payment
of the liquidation price of the preferred shares.
VOTING. The preferred shares of a series will not be entitled to vote,
except as provided below or in the applicable prospectus supplement unless
required by applicable law. Unless otherwise indicated in the prospectus
supplement relating to a series of preferred shares, each share of a series will
be entitled to one vote on matters on which holders of that series are entitled
to vote. However, we may not alter certain rights and preferences of the
preferred shares without the affirmative vote of the holders of at least
two-thirds of the affected outstanding preferred shares, voting as a class. In
addition, whenever dividends on the preferred shares are in arrears in an
aggregate amount equal to six quarterly dividend periods or we fail to retire or
repurchase any shares of preferred stock that we are obligated to retire or
repurchase, then the holders of all series of outstanding preferred shares,
voting as a class, will be entitled to elect one-third of the total number of
directors, but not less than three directors. We may not increase the amount of
preferred shares or authorize or create any shares of any other class of stock
ranking equal to the preferred shares as to dividends or assets or otherwise
without the consent of the holders of at least a majority of all the outstanding
preferred shares, voting as a class.
PREFERENCE STOCK
We may issue preference stock from time to time in one or more series,
without stockholder approval. The preference shares rank as to dividends and
assets junior to the preferred shares but senior to the common stock and to any
other capital stock of Pitney Bowes that we may authorize in the future, other
than capital stock that ranks senior or equal to the preference shares and that
is authorized as described below under "--Voting". Each series of preference
shares will rank equally to each other series of preference shares as to
dividends and assets, unless the prospectus supplement relating to a particular
series of preference shares states that the shares of that series rank junior to
the other series of preference shares as to dividends or assets or both.
Subject to the limitations prescribed by law, our board of directors is
authorized to determine the voting powers, if any, designations and powers,
preferences and rights, and the qualifications, limitations or restrictions for
each series of preference stock that may be issued and to fix the number of
shares of each series.
At August 31, 2001, there were 59,774 shares of $2.12 Convertible
Preference Stock outstanding. Each share of our outstanding $2.12 preference
stock is entitled to cumulative dividends at the rate of $2.12 per year, can be
redeemed at our option, in whole or in part at any time, at a price of $28 per
share, plus dividends accrued to the redemption date, and is convertible into 16
shares of our common stock, subject to anti-dilution adjustment.
DIVIDENDS. Holders of preference shares of each series will be entitled to
receive, when and as declared by our board of directors out of funds legally
available for the payment of dividends, cumulative dividends at the rate
determined by our board of directors for that series, and no more. Dividends on
the preference shares will accrue from the date fixed by our board of directors
for that series. Because the preference shares rank junior to the preferred
shares, unless we have declared and paid in full all dividends payable on all of
our outstanding preferred shares for the current period and all prior periods,
we will not be allowed to make any dividend payments on the preference shares
and we will not be able to redeem or repurchase any preference shares. We will
also not be allowed to make any dividend payment on any series of preference
shares unless at the same time we pay dividends, in the same proportion to the
preferential dividend rates, for each other series of preference shares ranking
equally with that series. In addition, unless we have paid in full all dividends
payable on all of our outstanding preference shares for the current period and
all prior periods, we will not be allowed to make any dividend payments on any
class of stock that is subordinate to our preference shares and we will not be
allowed to redeem or otherwise repurchase any shares of any class of stock which
ranks equally with or subordinate to our preference shares.
REDEMPTION. The terms, if any, on which preference shares of any series may
be redeemed will be described in a prospectus supplement.
If we decide to redeem fewer than all of the outstanding preference shares
of any series, we will determine the method of selecting which shares to redeem.
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CONVERSION OR EXCHANGE RIGHTS. The prospectus supplement relating to any
series of preference stock that is convertible or exchangeable will state the
terms on which shares of that series are convertible into or exchangeable for
shares of common stock or another series of preference stock of Pitney Bowes or
securities of any third party.
LIQUIDATION. In the event of our voluntary or involuntary liquidation,
before any distribution of assets is made to the holders of any class of shares
ranking as to assets subordinate to the preference shares, the holders of the
preference shares of each series will be entitled to receive out of our assets
available for distribution to our shareholders the preferential amount, in cash,
that will be determined by our board of directors for that series when that
series is established and all accrued and unpaid dividends on those shares, but
the holders of the preference shares will not be entitled to receive the
liquidation price of their shares until the liquidation price of the preferred
shares outstanding at the time has been paid in full. The holders of all series
of preference shares are entitled to share ratably, in accordance with the
respective amounts payable on their shares, in any distribution upon liquidation
which is not sufficient to pay in full the aggregate amounts payable on those
shares, except to the extent that the prospectus supplement relating to a
particular series of preference shares states that the shares of that series
rank junior to the other series of preference shares as to dividends or assets.
After payment in full of the liquidation price of the preference shares, the
holders of those shares will not be entitled to any further participation in any
distribution of our assets.
VOTING. The preference shares of a series will not be entitled to vote,
except as provided below or in the applicable prospectus supplement and as
required by applicable law. Unless otherwise indicated in the prospectus
supplement relating to a series of preference shares, each share of a series
will be entitled to one vote on matters on which holders of that series are
entitled to vote. Notwithstanding the foregoing, we may not create, authorize or
increase the authorized amount of any class of stock having preference or
priority as to dividends or assets over the preference shares without the
affirmative vote of the holders of at least two-thirds of the preference shares,
irrespective of series. We may not increase the authorized amount of preference
stock or of any previously authorized class of stock ranking equally with the
preference stock as to dividends or assets, or authorize or create any class of
stock ranking equally with the preference stock as to dividends or assets,
without the consent of the holders of a majority of the outstanding preference
shares, irrespective of series. Whenever dividends on the preference shares are
in arrears in an aggregate amount equal to six quarterly dividend periods, then
the holders of preference shares, voting as a class, will be entitled to elect
two directors.
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DESCRIPTION OF COMMON STOCK
The following description of the material terms of our common stock is
based on the provisions of our restated certificate of incorporation, as
amended. For more information as to how you can obtain a current copy of our
restated certificate of incorporation, see "Where You Can Find More
Information".
We do not intend to offer common stock directly with this prospectus. We
may issue debt securities or preferred or preference stock under this prospectus
that are convertible into Pitney Bowes' common stock. If a series of securities
is convertible into common stock, the prospectus supplement will state the
initial conversion price per share at which the securities may be converted.
Subject to the rights of the holders of any of our preferred stock or
preference stock then outstanding, holders of common stock are entitled to one
vote per share on matters to be voted on by our stockholders and to receive
dividends, if any, when declared from time to time by our board of directors in
its discretion out of legally available funds. Upon our liquidation or
dissolution, holders of common stock are entitled to receive proportionately all
assets remaining after payment of all liabilities and liquidation preference on
any shares of preferred stock or preference stock outstanding at the time.
Holders of common stock have no preemptive or other subscription rights other
than the rights described below under "--Stockholder Rights Agreement", and
there are no conversion rights or redemption or sinking fund provisions with
respect to common stock. As of August 31, 2001, there were approximately
244,829,461 shares of our common stock outstanding, net of 78,508,451 shares of
treasury stock, and approximately 18,772,315 shares reserved for issuance upon
exercise of outstanding stock options and conversion of our 4% preferred shares
and $2.12 preference shares. All of our outstanding common stock is fully paid
and non-assessable, which means that the holders have paid their purchase price
in full and we may not ask them for additional funds, and all of the shares of
common stock that may be offered with this prospectus will be fully paid and
non-assessable when issued.
The transfer agent and registrar for our common stock is First Chicago
Trust Company of New York, a division of Equiserve LP.
Our common stock is listed on the New York Stock Exchange under the ticker
symbol "PBI".
STOCKHOLDER RIGHTS AGREEMENT
On December 11, 1995, we entered into a stockholder rights agreement. The
material provisions of that rights agreement are summarized below. However,
since the terms of our rights agreement are complex, this summary may not
contain all of the information that is important to you. For more information,
you should read the agreement, which is filed as an exhibit with the SEC. See
"Where You Can Find More Information" for information on how to obtain a copy.
Our rights agreement currently provides that each share of our outstanding
common stock has one right to purchase one-two-hundredth of a share of our
Series A Junior Participating Preference Stock. The purchase price per
one-two-hundredth of a share of preference stock under the stockholder rights
agreement is $97.50. The rights are not exercisable until they separate from the
common stock, as described below.
Initially, the rights under our rights agreement are attached to
outstanding certificates representing our common stock, but the rights will be
represented by separate certificates on the day 10 days after someone acquires
at least 20% of our common stock, or approximately 10 days after someone
commences a tender offer for at least 20% of our outstanding common stock.
After the rights separate from our common stock, certificates representing
the rights will be mailed to record holders of the common stock. Once
distributed, the rights certificates alone will represent the rights. All shares
of our common stock issued prior to the date the rights separate from the common
stock have been and will be issued with the rights attached. Until the rights
separate from the common stock, each right will be transferable only with the
related share of common stock. The rights will expire on February 20, 2006
unless we redeem or exchange them earlier.
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If an acquiring person obtains or has the right to obtain at least 20% of
our common stock and none of the events described in the next paragraph have
occurred, then each right will entitle the holder to purchase for $97.50 a
number of shares of our common stock having a then current market value of
$195.00.
If an acquiring person obtains or has the right to obtain at least 20% of
our common stock, then each right will entitle the holder to purchase for $97.50
a number of shares of common stock of the acquiring person having a then current
market value of $195.00 if any of the following occurs:
o we merge into another entity;
o an acquiring entity merges into us; or
o we sell 50% or more of our assets or earning power.
Under our rights agreement, any rights that are or were owned by an
acquiring person of more than 20% of our outstanding common stock will be null
and void.
Our rights agreement contains exchange provisions which provide that after
an acquiring person obtains 20% or more, but less than 50%, of our outstanding
common stock, our board of directors may, at its option, exchange all or part of
the then outstanding and exercisable rights for shares of our common stock, at
an exchange ratio of one share of common stock or one two-hundredth of a share
of Series A Junior Participating Preference Stock per right.
Our board of directors may, at its option, redeem all of the outstanding
rights at a redemption price of $0.005 per right, subject to adjustment, prior
to the earlier of (1) the time that an acquiring person obtains 20% or more of
our outstanding common stock, or (2) the final expiration date of the rights
agreement. The ability to exercise the rights will terminate upon the action of
our board of directors ordering the redemption of the rights, and the only right
of the holders of the rights will be to receive the redemption price.
Holders of rights will have no rights as stockholders, such as the right to
vote or receive dividends, simply by virtue of holding the rights. The rights
agreement includes anti-dilution provisions designed to prevent efforts to
diminish the effectiveness of the rights.
For so long as the rights are redeemable, we may amend the rights agreement
in any respect. At any time when the rights are no longer redeemable, we may
amend the rights in any respect that does not adversely affect the holders of
rights.
Our rights agreement contains provisions that have anti-takeover effects.
The rights may cause substantial dilution to a person or group that attempts to
acquire us without conditioning the offer on a substantial number of rights
being acquired, redeemed or declared invalid. Accordingly, the existence of the
rights may deter acquirors from making takeover proposals or tender offers.
However, the rights are not intended to prevent a takeover, but rather are
designed to enhance the ability of our board of directors to negotiate with an
acquiror on behalf of all of the stockholders.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
Our certificate of incorporation provides that a director of Pitney Bowes
will not be liable to Pitney Bowes or its stockholders for monetary damages for
breach of fiduciary duty as a director, except in certain cases where liability
is mandated by the Delaware General Corporation Law.
Our certificate of incorporation also provides for indemnification, to the
fullest extent permitted by the Delaware General Corporation Law, of any person
made or threatened to be made a party to any action, suit or proceeding by
reason of the fact that the person is or was a director or officer of Pitney
Bowes, or, at the request of Pitney Bowes, serves or served as a director,
officer, employee or agent of another corporation or of a partnership, joint
venture, trust or other enterprise, against all expense, liability and loss
(including attorneys' fees, judgments, fines, Employee Retirement Income
Security Act excise taxes or penalties and amounts paid or to be paid in
settlement) reasonably incurred or suffered by that person in connection with
the action, suit or proceeding. Our certificate of incorporation also provides
that, to the extent authorized from time to time by our board of directors,
Pitney Bowes may provide to employees and other agents of Pitney Bowes rights of
indemnification and to receive
17
payment or reimbursement of expenses, including attorneys' fees, that are
similar to the rights conferred by the certificate of incorporation on directors
and officers of Pitney Bowes or persons serving at the request of Pitney Bowes
as directors, officers, employees or agents of any other enterprise.
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
Section 203 of the Delaware General Corporation Law applies to Pitney
Bowes. In general, Section 203 prohibits a publicly held Delaware corporation
from engaging in a "business combination" with an "interested stockholder", as
defined in Section 203, for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless the
business combination is approved in a prescribed manner. A "business
combination" includes a merger, asset sale or a transaction resulting in a
financial benefit to the interested stockholder. An "interested stockholder", as
defined in Section 203, is a person who, together with affiliates and
associates, owns (or, in certain cases, within the preceding three years, did
own) 15% or more of the corporation's outstanding voting stock. Under Section
203, a business combination between Pitney Bowes and an interested stockholder
is prohibited unless it satisfies one of the following conditions:
o before the stockholder became an interested stockholder, the board of
directors of Pitney Bowes must have approved either the business
combination or the transaction that resulted in the stockholder becoming
an interested stockholder;
o upon consummation of the transaction that resulted in the stockholder
becoming an interested stockholder, the interested stockholder owned at
least 85% of the voting stock of Pitney Bowes outstanding at the time
the transaction commenced, excluding, for purposes of determining the
number of shares outstanding, shares owned by persons who are directors
and officers; or
o the business combination is approved by the board of directors of Pitney
Bowes and authorized at an annual or special meeting of the stockholders
by the affirmative vote of at least 66 2/3 % of the outstanding voting
stock which is not owned by the interested stockholder.
See also "--Certain Anti-Takeover Matters--Vote Required for Certain
Business Combinations" below for information abouT provisions in our certificate
of incorporation that impose requirements similar to those of Section 203.
CERTAIN ANTI-TAKEOVER MATTERS
Our certificate of incorporation and by-laws include a number of provisions
that may have the effect of encouraging persons considering unsolicited tender
offers or other unilateral takeover proposals to negotiate with our board of
directors rather than pursue non-negotiated takeover attempts. These provisions
include:
VOTE REQUIRED FOR CERTAIN BUSINESS COMBINATIONS. Our certificate of
incorporation generally requires the affirmative vote of the holders of at least
80% of the voting power of the then outstanding shares of capital stock of
Pitney Bowes entitled to vote generally in the election of directors, which we
call "voting stock", voting together as a single class, in addition to any other
affirmative vote required by law or the certificate of incorporation, to
approve:
o any merger or consolidation of Pitney Bowes or any of its subsidiaries
with an "interested stockholder", as defined in the certificate of
incorporation and described below, or any other corporation which is, or
after the merger or consolidation would be, an affiliate of an
interested stockholder;
o any sale, lease, exchange, mortgage, pledge, transfer or other
disposition to or with any interested stockholder or any affiliate of
any interested stockholder of any assets of Pitney Bowes or any of its
subsidiaries having an aggregate fair market value of $50,000,000 or
more;
o the issuance or transfer by Pitney Bowes or any of its subsidiaries of
any securities of Pitney Bowes or any of its subsidiaries to any
interested stockholder or any affiliate of any interested stockholder in
exchange for cash, securities or other property having an aggregate fair
market value of $50,000,000 or more;
o the adoption of any plan or proposal for the liquidation or dissolution
of Pitney Bowes proposed by or on behalf of an interested stockholder or
any affiliate of any interested stockholder; or
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o any reclassification of securities or recapitalization of Pitney Bowes,
or any merger or consolidation of Pitney Bowes with any of its
subsidiaries or any other transaction which has the effect of increasing
the proportionate share of the outstanding shares of any class of equity
or convertible securities of Pitney Bowes or any of its subsidiaries
which is directly or indirectly owned by any interested stockholder or
any affiliate of any interested stockholder.
An "interested stockholder" means any person, other than Pitney Bowes or
any of its subsidiaries, who or which:
o beneficially owns, directly or indirectly, more than 20% of the voting
power of the outstanding shares of voting stock;
o is an affiliate of Pitney Bowes and at any time within the two-year
period immediately before the date in question beneficially owned,
directly or indirectly, 20% or more of the voting power of the then
outstanding voting stock; or
o is the assignee of any shares of voting stock which were at any time
within the two-year period immediately before the date in question
beneficially owned by an interested stockholder, if the assignment of
those shares occurred in the course of a transaction or series of
transactions not involving a public offering within the meaning of the
Securities Act of 1933.
The special voting requirement described above will not apply to a
transaction of any of the kinds described above, and that transaction will
require only any affirmative vote that is required by law and any other
provisions of our certificate of incorporation, if either:
o a majority of our "disinterested directors" approve the transaction;
"disinterested director" means any director who is unaffiliated with the
interested stockholder and was a member of the board of directors before
the interested stockholder became an interested stockholder, and any
successor of a disinterested director who is unaffiliated with the
interested stockholder and is recommended to succeed the disinterested
director by a majority of disinterested directors then on the board; or
o all of the following conditions are met:
- the aggregate amount of the cash and the fair market value as of the
date of consummation of the transaction of consideration other than
cash to be received per share by holders of common stock in the
transaction is at least equal to the higher of the following: (a)
the highest per share price paid by the interested stockholder for
any shares of common stock acquired by it within the two-year period
immediately before the first public announcement of the proposal of
the transaction, which we call the "announcement date", or in the
transaction in which it became an interested stockholder, whichever
is higher, and (b) the fair market value per share of common stock
on the announcement date or the date on which the interested
stockholder became an interested stockholder, whichever is higher;
- the aggregate amount of the cash and the fair market value as of the
date of consummation of the transaction of consideration other than
cash to be received per share by holders of shares of any other
class of outstanding voting stock is at least equal to the highest
of the following: (a) the highest per share price paid by the
interested stockholder for any shares of that class of voting stock
acquired by it within the two-year period immediately before the
announcement date or in the transaction in which it became an
interested stockholder, whichever is higher; (b) the highest
preferential amount per share to which the holders of shares of that
class of voting stock are entitled upon any voluntary or involuntary
liquidation, dissolution or winding up of Pitney Bowes; and (c) the
fair market value per share of that class of voting stock on the
announcement date or the date on which the interested stockholder
became an interested stockholder, whichever is higher;
- the consideration to be received by holders of a particular class of
outstanding voting stock will be in cash or in the same form as the
interested stockholder has previously paid for shares of that class
of voting stock; if the interested stockholder has paid for shares
of any class of voting stock with
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varying forms of consideration, the consideration for that class
will be either cash or the form used to acquire the largest number
of shares of that class previously acquired by it;
- after the interested stockholder has become an interested
stockholder and before the consummation of the transaction: (a)
except as approved by a majority of the disinterested directors,
Pitney Bowes has not failed to declare and pay at the regular date
any full quarterly dividends on the outstanding preferred stock or
preference stock; (b) except as approved by a majority of the
disinterested directors, Pitney Bowes has not reduced the annual
rate of dividends on the common stock or failed to increase that
rate to reflect any reclassification of the outstanding shares of
common stock, including any reverse stock split; (c) the interested
stockholder has not become the beneficial owner of any additional
shares of voting stock except as part of the transaction which
results in the interested stockholder becoming an interested
stockholder;
- after the interested stockholder has become an interested
stockholder, the interested stockholder has not received the
benefit, except proportionately as a stockholder, of any loans,
advances, guarantees, pledges or other financial assistance or any
tax credits or other tax advantages provided by Pitney Bowes; and
- a proxy or information statement describing the proposed transaction
and complying with the requirements of the Exchange Act and the
rules and regulations under that Act has been mailed to public
stockholders of Pitney Bowes at least 30 days before the
consummation of the transaction, whether or not the proxy or
information statement is required to be mailed under that Act.
CLASSIFIED BOARD OF DIRECTORS. Our certificate of incorporation provides
for a board of directors divided into three classes, with one class to be
elected each year to serve for a three-year term. As a result, at least two
annual meetings of stockholders may be required for the stockholders to change a
majority of our board of directors. In addition, the stockholders of Pitney
Bowes can only remove directors, with or without cause, by the affirmative vote
of the holders of at least 80% of the outstanding shares of voting stock, voting
together as a single class. Except to the extent that the holders of preferred
stock and preference stock have the right to fill vacancies on the board of
directors in some circumstances, vacancies on our board of directors may be
filled only by our board of directors. The classification of directors and the
inability of stockholders to remove directors without the vote of at least 80%
of the outstanding shares of voting stock or to fill vacancies on the board of
directors make it more difficult to change the composition of our board of
directors, but promote a continuity of existing management.
ADVANCE NOTICE REQUIREMENTS. Our by-laws establish advance notice
procedures with regard to stockholder proposals relating to the nomination of
candidates for election as directors or other business to be brought before
meetings of stockholders of Pitney Bowes. These procedures provide that notice
of stockholder proposals of these kinds must be timely given in writing to the
Secretary of Pitney Bowes before the meeting at which the action is to be taken.
Generally, to be timely, notice of stockholder proposals other than nomination
of director candidates must be received at the principal executive offices of
Pitney Bowes not less than 90 days before an annual meeting at which the
proposals are to be presented, and notice of stockholder nominations of director
candidates to be presented at an annual or special meeting must be received not
later than (1) 90 days before the annual meeting or (2) the close of business on
the seventh day following the date on which notice of the special meeting is
first given to stockholders, as applicable. The notice must contain certain
information specified in the by-laws.
NO ABILITY OF STOCKHOLDERS TO CALL SPECIAL MEETINGS. Our certificate of
incorporation and by-laws deny stockholders the right to call a special meeting
of stockholders, except to the extent that holders of preferred stock or
preference stock have the right to call a special meeting in some circumstances.
Our certificate of incorporation and by-laws provide that, except to that
extent, only the board of directors may call special meetings of the
stockholders.
NO WRITTEN CONSENT OF STOCKHOLDERS. Our certificate of incorporation
requires all stockholder actions to be taken by a vote of the stockholders at an
annual or special meeting, and does not permit our stockholders to act by
written consent without a meeting.
AMENDMENT OF BY-LAWS AND CERTIFICATE OF INCORPORATION. Our certificate of
incorporation requires the approval of not less than 80% of the voting power of
all outstanding shares of voting stock, voting as a single class, to amend any
of the provisions of the certificate of incorporation and by-laws described in
this section. Those
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provisions make it more difficult to dilute the anti-takeover effects of our
by-laws and our certificate of incorporation.
BLANK CHECK PREFERRED AND PREFERENCE STOCK. Our certificate of
incorporation provides for 600,000 authorized shares of preferred stock and
5,000,000 authorized shares of preference stock. The existence of authorized but
unissued shares of preferred and preference stock may enable the board of
directors to render more difficult or to discourage an attempt to obtain control
of Pitney Bowes by means of a merger, tender offer, proxy contest or otherwise.
For example, if in the due exercise of its fiduciary obligations, the board of
directors were to determine that a takeover proposal is not in the best
interests of Pitney Bowes, the board of directors could cause shares of
preferred or preference stock to be issued without stockholder approval in one
or more private offerings or other transactions that might dilute the voting or
other rights of the proposed acquiror or insurgent stockholder or stockholder
group. In this regard, the certificate of incorporation grants our board of
directors broad power to establish the rights and preferences of authorized and
unissued shares of preferred and preference stock. The issuance of shares of
preferred or preference stock could decrease the amount of earnings and assets
available for distribution to holders of shares of common stock. The issuance
may also adversely affect the rights and powers, including voting rights, of
those holders and may have the effect of delaying, deterring or preventing a
change in control of Pitney Bowes.
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DESCRIPTION OF DEPOSITARY SHARES
We may, at our option, elect to offer fractional shares of preferred stock
or preference stock, rather than full shares of preferred stock or preference
stock. If we exercise this option, we will issue to the public receipts for
depositary shares, and each of these depositary shares will represent a fraction
(to be set forth in the applicable prospectus supplement) of a share of a
particular series of preferred stock or preference stock.
The shares of any series of preferred stock or preference stock underlying
the depositary shares will be deposited under a deposit agreement between us and
a bank or trust company selected by us. The depositary will have its principal
office in the United States and a combined capital and surplus of at least
$50,000,000. Subject to the terms of the deposit agreement, each owner of a
depositary share will be entitled, in proportion to the applicable fraction of a
share of preferred stock or preference stock underlying the depositary share, to
all the rights and preferences of the preferred stock or preference stock
underlying that depositary share. Those rights may include dividend, voting,
redemption, conversion and liquidation rights.
The depositary shares will be evidenced by depositary receipts issued under
a deposit agreement. Depositary receipts will be distributed to those persons
purchasing the fractional shares of preferred stock or preference stock
underlying the depositary shares, in accordance with the terms of the offering.
The following description of the material terms of the deposit agreement, the
depositary shares and the depositary receipts is only a summary and you should
refer to the forms of the deposit agreement and depositary receipts that will be
filed with the SEC in connection with the offering of the specific depositary
shares.
Pending the preparation of definitive engraved depositary receipts, the
depositary may, upon our written order, issue temporary depositary receipts
substantially identical to the definitive depositary receipts but not in
definitive form. These temporary depositary receipts entitle their holders to
all the rights of definitive depositary receipts. Temporary depositary receipts
will then be exchangeable for definitive depositary receipts at our expense.
DIVIDENDS AND OTHER DISTRIBUTIONS. The depositary will distribute all cash
dividends or other cash distributions received with respect to the underlying
stock to the record holders of depositary shares in proportion to the number of
depositary shares owned by those holders.
If there is a distribution other than in cash, the depositary will
distribute property received by it to the record holders of depositary shares
that are entitled to receive the distribution, unless the depositary determines
that it is not feasible to make the distribution. If this occurs, the depositary
may, with our approval, sell the property and distribute the net proceeds from
the sale to the applicable holders.
WITHDRAWAL OF UNDERLYING PREFERRED OR PREFERENCE STOCK. Unless we say
otherwise in a prospectus supplement, holders may surrender depositary receipts
at the principal office of the depositary and, upon payment of any unpaid amount
due to the depositary, be entitled to receive the number of whole shares of
underlying preferred or preference stock and all money and other property
represented by the related depositary shares. We will not issue any partial
shares of preferred or preference stock. If the holder delivers depositary
receipts evidencing a number of depositary shares that represent more than a
whole number of shares of preferred or preference stock, the depositary will
issue a new depositary receipt evidencing the excess number of depositary shares
to that holder.
REDEMPTION OF DEPOSITARY SHARES. If a series of preferred stock or
preference stock represented by depositary shares is subject to redemption, the
depositary shares will be redeemed from the proceeds received by the depositary
resulting from the redemption, in whole or in part, of that series of underlying
stock held by the depositary. The redemption price per depositary share will be
equal to the applicable fraction of the redemption price per share payable with
respect to that series of underlying stock. Whenever we redeem shares of
underlying stock that are held by the depositary, the depositary will redeem, as
of the same redemption date, the number of depositary shares representing the
shares of underlying stock so redeemed. If fewer than all the depositary shares
are to be redeemed, the depositary shares to be redeemed will be selected by lot
or proportionately, as may be determined by the depositary.
VOTING. Upon receipt of notice of any meeting at which the holders of the
underlying stock are entitled to vote, the depositary will mail the information
contained in the notice to the record holders of the depositary shares
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underlying the preferred stock or preference stock. Each record holder of the
depositary shares on the record date (which will be the same date as the record
date for the underlying stock) will be entitled to instruct the depositary as to
the exercise of the voting rights pertaining to the amount of the underlying
stock represented by that holder's depositary shares. The depositary will then
try, as far as practicable, to vote the number of shares of preferred stock or
preference stock underlying those depositary shares in accordance with those
instructions, and we will agree to take all actions which may be deemed
necessary by the depositary to enable the depositary to do so. The depositary
will not vote the underlying shares to the extent it does not receive specific
instructions from the holders of depositary shares underlying the preferred
stock or preference stock.
CONVERSION OF PREFERRED OR PREFERENCE STOCK. If the prospectus supplement
relating to the depositary shares says that the deposited preferred or
preference stock is convertible into or exchangeable for common stock or
preferred or preference stock of another series of Pitney Bowes or securities of
any third party, the following will apply. The depositary shares, as such, will
not be convertible into or exchangeable for any securities of Pitney Bowes or
any third party. Rather, any holder of the depositary shares may surrender the
related depositary receipts to the depositary with written instructions to
instruct us to cause conversion or exchange of the preferred or preference stock
represented by the depositary shares into or for whole shares of common stock or
shares of another series of preferred or preference stock of Pitney Bowes or
securities of the relevant third party, as applicable. Upon receipt of those
instructions and any amounts payable by the holder in connection with the
conversion or exchange, we will cause the conversion or exchange using the same
procedures as those provided for conversion or exchange of the deposited
preferred or preference stock. If only some of the depositary shares are to be
converted or exchanged, a new depositary receipt or receipts will be issued for
any depositary shares not to be converted or exchanged.
AMENDMENT AND TERMINATION OF THE DEPOSITARY AGREEMENT. The form of
depositary receipt evidencing the depositary shares and any provision of the
deposit agreement may at any time be amended by agreement between us and the
depositary. However, any amendment which materially and adversely alters the
rights of the holders of depositary shares will not be effective unless the
amendment has been approved by the holders of at least a majority of the
depositary shares then outstanding. The deposit agreement may be terminated by
us or by the depositary only if (a) all outstanding depositary shares have been
redeemed or converted or exchanged for any other securities into which the
underlying preferred or preference stock is convertible or exchangeable or (b)
there has been a final distribution of the underlying stock in connection with
our liquidation, dissolution or winding up and the underlying stock has been
distributed to the holders of depositary receipts.
CHARGES OF DEPOSITARY. We will pay all transfer and other taxes and
governmental charges arising solely from the existence of the depositary
arrangements. We will also pay charges of the depositary in connection with the
initial deposit of the underlying stock and any redemption of the underlying
stock. Holders of depositary receipts will pay other transfer and other taxes
and governmental charges and those other charges, including a fee for any
permitted withdrawal of shares of underlying stock upon surrender of depositary
receipts, as are expressly provided in the deposit agreement to be for their
accounts.
REPORTS. The depositary will forward to holders of depositary receipts all
reports and communications from us that we deliver to the depositary and that we
are required to furnish to the holders of the underlying stock.
LIMITATION ON LIABILITY. Neither we nor the depositary will be liable if
either of us is prevented or delayed by law or any circumstance beyond our
control in performing our respective obligations under the deposit agreement.
Our obligations and those of the depositary will be limited to performance in
good faith of our respective duties under the deposit agreement. Neither we nor
the depositary will be obligated to prosecute or defend any legal proceeding in
respect of any depositary shares or underlying stock unless satisfactory
indemnity is furnished. We and the depositary may rely upon written advice of
counsel or accountants, or upon information provided by persons presenting
underlying stock for deposit, holders of depositary receipts or other persons
believed to be competent and on documents believed to be genuine.
RESIGNATION AND REMOVAL OF DEPOSITARY. The depositary may resign at any
time by delivering notice to us of its election to resign. We may remove the
depositary at any time. Any resignation or removal will take effect upon the
appointment of a successor depositary and its acceptance of the appointment. The
successor depositary must be appointed within 60 days after delivery of the
notice of resignation or removal and must be a bank or trust company having its
principal office in the United States and having a combined capital and surplus
of at least $50,000,000.
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PLAN OF DISTRIBUTION
We may sell the securities being offered by this prospectus in four ways:
o directly to purchasers;
o through agents;
o through underwriters; and
o through dealers.
We may directly solicit offers to purchase our securities or we may
designate agents to solicit offers to purchase those securities. We will, in the
prospectus supplement relating to an offering, name any agent that could be
viewed as an underwriter under the Securities Act of 1933 and describe any
commissions we must pay. Any agent will be acting on a best efforts basis for
the period of its appointment or, if indicated in the applicable prospectus
supplement, on a firm commitment basis. Agents, dealers and underwriters may be
customers of, engage in transactions with, or perform services for us in the
ordinary course of business.
As one of the means of direct issuance of securities, we may utilize the
services of any available electronic auction system to conduct an electronic
`dutch auction' of the offered securities among potential purchasers who are
eligible to participate in the auction of those offered securities, if so
described in the prospectus supplement.
If any underwriters are utilized in the sale of the securities in respect
of which this prospectus is delivered, we will enter into an underwriting
agreement with them at the time of sale to them and we will set forth in the
prospectus supplement relating to that offering their names and the terms of our
agreement with them.
If a dealer is utilized in the sale of the securities in respect of which
the prospectus is delivered, we will sell those securities to the dealer, as
principal. The dealer may then resell those securities to the public at varying
prices to be determined by such dealer at the time of resale.
Remarketing firms, agents, underwriters and dealers may be entitled under
agreements which they may enter into with us to indemnification by us against
some types of civil liabilities or to contribution in respect of those
liabilities, including liabilities under the Securities Act of 1933. Remarketing
firms, agents, underwriters and dealers may be customers of or engage in
transactions with or perform services for us in the ordinary course of business.
If we so indicate in the prospectus supplement, we will authorize agents,
underwriters or dealers to solicit offers by the types of purchasers specified
in the prospectus supplement to purchase offered securities from us at the
public offering price set forth in the prospectus supplement under delayed
delivery contracts providing for payment and delivery on a specified date in the
future. These contracts will be subject to only those conditions described in
the prospectus supplement, and the prospectus supplement will set forth the
commission payable for solicitation of those offers.
Any underwriter, agent or dealer utilized in the initial offering of
securities will not confirm sales to accounts over which it exercises
discretionary authority without the prior specific written approval of its
customer.
VALIDITY OF THE SECURITIES
Unless otherwise specified in a prospectus supplement, the validity of the
securities in respect of which this prospectus is being delivered will be passed
on for us by Sara E. Moss, Esq., Senior Vice President and General Counsel of
Pitney Bowes, and by Davis Polk & Wardwell, 450 Lexington Avenue, New York,
New York 10017, and, for the underwriters or agents by Sullivan & Cromwell,
125 Broad Street, New York, New York 10004.
EXPERTS
The financial statements incorporated in this prospectus by reference to
the Annual Report on Form 10-K of Pitney Bowes Inc. for the year ended December
31, 2000, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
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WHERE YOU CAN FIND MORE INFORMATION
We have filed this prospectus as part of a registration statement on Form
S-3 with the SEC. The registration statement contains exhibits and other
information that are not contained in this prospectus. In particular, the
registration statement includes as exhibits copies of the forms of our senior
and subordinated indentures. Our descriptions in this prospectus of the
provisions of documents filed as exhibits to the registration statement or
otherwise filed with the SEC are only summaries of the documents' material
terms. If you want to review any of these documents, you should obtain the
documents by following the procedures described in the paragraph below.
We file annual, quarterly and special reports and other information with
the SEC. You may read and copy any document we file at the SEC's Public
Reference Room located at 450 Fifth Street, N.W., Washington, D.C. 20549. Please
call the SEC at 1-800-SEC-0330 for further information on the Public Reference
Room. You may also read our SEC filings, including the complete registration
statement and all of the exhibits to it, through the SEC's web site at
http://www.sec.gov.
The SEC allows us to "incorporate by reference" much of the information we
file with them, which means that we can disclose important information to you by
referring you directly to those publicly available documents. The information
incorporated by reference is considered to be part of this prospectus. In
addition, information we file with the SEC in the future will automatically
update and supersede information contained in this prospectus and the
accompanying prospectus supplement.
We incorporate by reference the documents listed below and any filings made
with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after
the date of the initial registration statement and before the effectiveness of
the registration statement and after the effectiveness of the registration
statement until we sell all of the securities we are offering with this
prospectus:
o Our Annual Report on Form 10-K for the year ended December 31, 2000
(which incorporates by reference portions of our proxy statement dated
March 23, 2001).
o Our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2001
and June 30, 2001.
o Our Current Reports on Form 8-K filed February 1, 2001, February 8,
2001, April 13, 2001, April 18, 2001, April 19, 2001 (two reports), May
17, 2001, June 5, 2001 (two reports), June 15, 2001, July 2, 2001, July
3, 2001, July 19, 2001 and October 23, 2001.
o Our Form 8-A filed February 16, 1996 and Form 8-A/A filed January 16,
1998.
You may obtain free copies of any of these documents by writing or
telephoning us at Pitney Bowes Inc., World Headquarters, One Elmcroft Road,
Stamford, Connecticut, 06926-0700, telephone (203) 356-5000.
[Graphic Omitted] PITNEY BOWES