Pitney Bowes 2005 Annual Report Download - page 33

31
Financial Highlights From Our CFO
In most respects, we enjoyed
a very good year in 2005.
We achieved excellent
financial results, continued
our successful acquisition
program, returned substantial
cash to stockholders, and
strengthened our risk
management processes.
We grew our revenue by 10.8 percent to $5.5 billion.
Excluding the impact of strategic transactions
and currency translation, we grew our revenue by
5.6 percent, which is consistent with our annual
target of 4 to 6 percent.
We also achieved our earnings and cash flow
objectives, including broad-based profit
improvement across our businesses. In addition to
revenue growth, the improved operating margins
reflected the impact of our various productivity
programs, including shared services, Six Sigma,
outsourcing, and reengineering. We are serving our
customers more effectively and more efficiently.
We estimate that our restructuring program
contributed an incremental $50 million of benefits
in 2005, which brings the annualized total for the
2003–2005 program to $120 million.
We consummated 12 acquisitions during the year,
involving a net investment of $294 million. While
most of these acquisitions were relatively small
transactions, they also included Imagitas, which
gives us a platform into life-event direct marketing,
and Compulit, which gives us capabilities in
litigation support. Also, in early 2006 we acquired
Emtex, which broadens our offerings of software
products for large mailers.
Our acquisition program is helping to expand our
products and services across the mailstream,
giving us greater customer penetration and
enhanced long-term growth potential. It’s also having
a positive impact on our near-term results. We
estimate that our acquisitions since 2000 contributed
about 18 cents to our earnings per share in 2005.
We repurchased $259 million of shares during the
year at an average price of $43.53. This more than
offset the dilution due to option exercises and other
stock programs, producing a 1.6 percent decline
in shares outstanding from the prior year-end.
Over the past five years, we have reduced shares
outstanding by 8.9 percent.
We paid $284 million of dividends to our stock-
holders in 2005, and in early 2006, our Board of
Directors authorized an increase in our annualized
dividend rate to $1.28 per share. This makes the
24th straight year of dividend increases — a record
of consistency that we are committed to continuing.
We strengthened our processes to monitor and
mitigate our risk exposures throughout the
company. In addition to our continued efforts with
respect to Sarbanes-Oxley, we have instituted an
enterprise risk management program. Like many
companies, we are finding that this program is
helping us to focus not only on potential financial
exposures, but also on fundamental business
issues (e.g., brand value, contract liabilities, supply
chain, etc.).
Given our excellent results in 2005, we were deeply
disappointed with our stock price performance and
are committed to delivering better stockholder
returns in 2006. To that end, we expect to enjoy
another strong financial year. We have positive
momentum throughout most of our businesses and
we have programs to produce further improvements
in our margins.
We also expect to accomplish the exit from our
capital services business during the year. This will
help to simplify our investment story and remove a
drag on our revenue, earnings, and cash flow growth.
We look forward to continuing our mailstream growth
strategies and are confident that we have the financial
capabilities to deliver both consistency and growth to
our stockholders for the foreseeable future.
Bruce P. Nolop
Executive Vice President and
Chief Financial Officer