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Pitney Bowes Agrees to Sell Capital Services Business

Thursday, May 18, 2006

Press release from the issuing company

STAMFORD, Conn., May 17 -- Pitney Bowes Inc. today signed a definitive agreement with an affiliate of Cerberus Capital Management, L.P. for the sale of its Capital Services external financing business. The transaction is expected to close within 90 days subject to customary conditions. Separately, the company also reached tentative settlement with the Internal Revenue Service on all outstanding tax audit issues currently in dispute, most of which are related to the Capital Services external financing business. The company expects to reach a final settlement with the IRS within 45 days. The company expects to generate $1.16 billion of cash from the following actions: - The sale of the Capital Services external financing business for net proceeds of approximately $745 million after transaction expenses. - The recently completed sale of the Oce Imagistics lease portfolio for net proceeds of approximately $280 million after transaction expenses. - The draw down of $138 million of Corporate Owned Life Insurance (COLI) funds. In addition, the purchaser will assume about $500 million of the company's non-recourse debt and other liabilities in connection with the Capital Services transaction. The company expects to settle all outstanding tax obligations including those related to the above transactions for approximately $1.14 billion net of existing tax bonds. The company will account for the Capital Services business in discontinued operations beginning in the second quarter of 2006. As a result of the sale of Capital Services and the settlement of outstanding tax issues, the company estimates that it will incur an after-tax charge in discontinued operations of about $480 million, and a charge of about a $20 million in continuing operations. These actions will facilitate greater focus on the company's growth strategies, according to Michael J. Critelli, Chairman and CEO of Pitney Bowes. "We are pleased that we have been able to execute our disposition strategy for the Capital Services business and settle our outstanding tax issues. The resolution of both of these matters will make it easier for investors to analyze and understand our current financial position and future growth potential. These actions are a major step forward toward our goal of maximizing long-term growth and value for our shareholders." JPMorgan served as financial advisor to the company in connection with the sale of the Capital Services business. White & Case LLP served as external counsel.




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