Pitney Bowes 2005 Annual Report Download - page 4

2
Chairman’s Letter
I am pleased to report that Pitney Bowes had
another excellent year, with our strongest organic
growth in five years and operating margins that
improved across all of our core businesses.
Even more important than a single year’s strong
performance, though, is the mounting success of
our long-term growth strategies. Nearly a quarter
of our revenue now comes from businesses we
have acquired since 2001. In another measure of
our ability to deliver sustainable growth, nearly
50 percent of revenue is now generated by our
six diversified growth engines — international
operations, mail services, payment solutions,
small business solutions, software solutions
and supplies. Simply put, we are not the same
company we were just five years ago. We are
profiting from new opportunities, including some
that were not even on the horizon back then, and
acting with the agility needed to seize emerging
opportunities as they appear.
Many factors affect performance in a given quarter
or year. For example, the U.S. Postal Service®
mandate for the phased migration to digital
meters contributed to the strong performance of
our mailing systems business in the U.S. But it is
also clear that our growth strategies are helping
to accelerate growth.
Among other highlights:
>Software revenue grew to 5 percent of total
revenue, compared to 1 percent five years ago.
>Our Mail Services businesses, including the PSI
Group, IMEX and Imagitas, our newly acquired
marketing services company, all delivered
double-digit revenue growth.
>Pitney Bowes Management Services doubled its
cross-sell activity. Although the increase came
on a modest base, cross-sell will be one of our
priorities going forward.
>The Document Messaging Technologies group
grew the business it does with direct mail
houses, an important new market for us,
by more than 130 percent.
>Our geocoding business, part of Group 1
Software and one of our most promising new
ventures, more than doubled revenue from
software licenses.
>Our supplies business generated double-digit
revenue growth throughout the world.
The letter on page 31 from Bruce Nolop, our Chief
Financial Officer, provides additional perspective
on our financial results. I will focus here on our
strategic direction.
The Mailstream
For several years now, I have been talking with
investors about expanding our presence in the
mailstream. But the term “mailstream,” our
research reveals, also helps the marketplace —
customers and prospects alike — better
understand the diversity and complexity of our
industry today and the full breadth and depth of
our value proposition. For that reason, in 2005
Michael J. Critelli
Chairman and
Chief Executive Officer