STAMFORD, Conn. - Pitney Bowes Inc. (NYSE: PBI) reported third quarter results that included diluted earnings per share of 63 cents. Excluding one-time items from both periods, diluted earnings per share increased nine percent from the third quarter of 1999. Revenue in the quarter grew three percent to $1.1 billion and net income excluding one-time items, rose three percent to $160.6 million. Included as one-time items in the third quarter of 2000 are an after-tax charge of approximately $11 million related to the consolidation of information technology staff and infrastructure, as well as a $12 million tax benefit related to recent state tax law changes. The third quarter of 1999 included a one-time, net after-tax settlement of $29.5 million received from the U.S. Postal Service. The company generated approximately $160 million in free cash flow (defined as cash flow from operations less capital expenditures) during the quarter. Pitney Bowes Chairman and Chief Executive Officer Michael J. Critelli commented on the third quarter results: "These results are in line with the revised guidance announced earlier this month, and reflect both the successes and challenges we experienced during the third quarter. Our Office Solutions segment reported its fifth consecutive quarter of higher year-over-year revenue growth. However, continuing pricing pressure in the highly competitive copier and facsimile markets has significantly reduced operating profit in the segment despite strong results in Pitney Bowes Management Services. In the Mailing and Integrated Logistics (MAIL) segment, core metering and mail finishing applications performed in line with expectations during the quarter. These results were offset by softer than anticipated results in the mail creation and logistics product lines as the weakening economic environment and slower customer decision-making for the higher-value, more-complex products adversely impacted revenue. This, combined with the sale of the credit card portfolio at the end of the second quarter 2000, resulted in lower than traditional revenue growth for the MAIL segment." The Mailing and Integrated Logistics Segment includes revenues and related expenses from the rental, sale and financing of mailing and shipping equipment, related supplies and services and software. Revenue for the segment grew two percent and operating profit grew 12 percent. Operating profit benefited from improving rental and financing margins in the core mail finishing business. International Mailing operations had strong local currency growth, particularly in European markets where the company continues to benefit from the changing needs and requirements of posts and businesses alike. However, the negative impact of foreign currency, principally related to the British Pound and the Euro, reduced MAIL segment revenue growth about one percent and consolidated revenue growth slightly less than one percent, compared to the third quarter of 1999. The Office Solutions Segment includes Pitney Bowes Office Systems and Pitney Bowes Management Services. Even though the segment revenue improved for the fifth consecutive quarter to six percent, operating profit in the quarter declined 23 percent. Office Systems' revenue grew six percent, while operating profit declined, due in part to significant competitive pricing pressure in the copier and facsimile markets. Margin impacts associated with the ongoing transition to a rental revenue model for large national accounts in the copier business and the relative value of the Yen also negatively impacted operating profit. While pricing pressure remained intense, our strategy for enhancing the business continued to yield benefits, as seen in the strong rental revenue growth for copier fleets in national accounts where established relationships between corporations and the facsimile account teams are being successfully leveraged. Marc C. Breslawsky, President and Chief Operating Officer commented: "The office products market in which Office Systems participates is obviously facing unprecedented competitive challenges. However, because of our existing customer relationships, excellent product line and financial flexibility, we believe we are uniquely positioned to take advantage of the opportunities that still exist in this market. We will do what it takes to position Office Systems to add shareholder value."