2008 Annual Letter to Shareholders
I am proud to be able to report that our company is strong, stable and on course strategically. We performed well during a year when global economic conditions created challenges for everyone. Recognizing early warning signs of the coming economic slowdown, we took the necessary steps to increase our financial flexibility. This enabled us to stay focused on our mission of delivering customer and shareholder value.
Gartner, Inc., one of the world's premier information technology research firms, now includes our products and services in its assessment of leading solutions in three industry categories — data quality, data integration and managed print services.
We continue to find new ways to help businesses of all sizes maximize the power and efficiency of mail. Whether for a small business sending out a few pieces a month, a corporate mail center, a direct mail house or a high-volume mailer, we can help acquire customers, generate revenue, improve cash flow, contain costs and gain a competitive edge in this challenging economy.
Our technology milestones in 2008 included the launch of a new generation of scalable, intelligent, ultra-high-speed inserters capable of processing as many as 26,000 mail pieces in an hour. None of our competitors can match the combined integrity and speed we now offer. In many cases, one of these systems can do the work of several competing systems. These new inserters, powered by our Production Intelligence® software, enable users to create, send and track millions of multipage, data-rich transactional documents each month with unprecedented speed, reliability and savings. We earned the highest rating possible in Gartner's 2008 industry review of ADF 2.0TM automated document factory solutions.
We also expanded our presence in the important market of environmental responsibility with our ecowiseSM services, a systematic process to help businesses reduce both the cost and the carbon footprint of their print-to-mail operations. It begins with a baseline analysis that quantifies the current carbon impact of a customer's mailstream, then generates the most efficient strategies for reducing it — from consolidating mail pieces to decentralizing print operations in order to reduce transportation costs.
Innovation is not only about products and services. It is also about optimizing every touch point of every customer relationship. In 2008 we developed more sophisticated tools for understanding the evolving needs of each of our customer segments and how best to match our solution sets to them. We armed our sales force with the information we gained, so we can now approach a customer or prospect with what amounts to a high-definition image of its business situation and probable needs. We backed up this work by establishing a new customer operations group to ensure that we stay on top of changing customer needs and expectations and incorporate them into our day-to-day business processes.
Pitney Bowes is an innovation-driven company. In addition to a significant annual investment in research and development under a top-notch team of scientists and strategists, we take our forward-thinking approach to every organizational level and every employee. We engage employees through a variety of mechanisms such as the use of social networks for sharing ideas about new offerings, new markets and new ways to deliver customer value.
In the uncharted territory of today's turbulent markets, smart and secure are good watchwords for corporate strategy as well as technology. For us, they apply to everything from product mix to the R&D process, from financial controls to employee safety, and from service levels to corporate citizenship.
We remain committed to the highest standards of corporate governance and business practice. Today more than ever, building long-term shareholder value requires being not only innovative but also vigilant, disciplined and accountable. The commitment by the board of directors and the senior leadership team to good governance shows in our seamless and successful executive transitions. This year we faced a momentous change with the retirement of Executive Chairman Michael J. Critelli after a distinguished career at this great company. Through 29 years with Pitney Bowes, including a decade as chairman and chief executive officer, Mike symbolized everything that is best in our heritage, our culture and our relentless drive to 21st-century market leadership. We wish him every success as he turns his energy to other worthy causes.
We have a robust organization with the resourcefulness to succeed in difficult times while laying the groundwork for further success and growth. I am honored to lead Pitney Bowes at this exciting point in our history. Above all, I am deeply grateful for the insights, dedication and enthusiasm of our 35,000 employees world-wide. Their commitment to customers is the single greatest force helping to keep our company smart and secure year after year.
Muarry D. Martin
Chairman, President and Chief Executive Officer
We grew both revenue and income in 2008. We also generated robust cash flow. Our financial performance gave us the confidence to increase our dividend to shareholders for the 27th consecutive year. It allowed us to prudently reinvest in the business in areas such as customer operations and our global supply chain operations. We also intensified our focus on generating cash, reducing costs and boosting productivity.
We continue to make solid progress on our growth strategies. We are making the most of our experience and knowledge to create new solutions for our customers, strengthen our core mailing business and expand into new markets.
The breadth, depth and technological sophistication of our products and services have long set us apart from competitors and made our brand one of the strongest in the world. Our smart, secure solutions have made us a vital resource for organizations everywhere. Companies rely on us to help them connect with their customers, integrate business processes and break down barriers to commerce, whether global or local, all in the cause of greater efficiency and growth.
This report highlights several examples of our ability to turn our expertise in funds management, secure transactions, document management and outsourcing services into breakthrough business solutions for customers, not only in our core mailing business but in areas well beyond it. By strengthening our traditional competencies with complementary technologies such as location intelligence and predictive data analytics, we are helping our customers:
- Create great communications that get results
- Streamline mail and document operations
- Turn market insights into revenue generators
- Simplify the process of transacting business
Gartner, Inc., one of the world's premier information technology research firms, now includes our products and services in its assessment of leading solutions in three industry categories — data quality, data integration and managed print services.
We continue to find new ways to help businesses of all sizes maximize the power and efficiency of mail. Whether for a small business sending out a few pieces a month, a corporate mail center, a direct mail house or a high-volume mailer, we can help acquire customers, generate revenue, improve cash flow, contain costs and gain a competitive edge in this challenging economy.
Our technology milestones in 2008 included the launch of a new generation of scalable, intelligent, ultra-high-speed inserters capable of processing as many as 26,000 mail pieces in an hour. None of our competitors can match the combined integrity and speed we now offer. In many cases, one of these systems can do the work of several competing systems. These new inserters, powered by our Production Intelligence® software, enable users to create, send and track millions of multipage, data-rich transactional documents each month with unprecedented speed, reliability and savings. We earned the highest rating possible in Gartner's 2008 industry review of ADF 2.0TM automated document factory solutions.
We also expanded our presence in the important market of environmental responsibility with our ecowiseSM services, a systematic process to help businesses reduce both the cost and the carbon footprint of their print-to-mail operations. It begins with a baseline analysis that quantifies the current carbon impact of a customer's mailstream, then generates the most efficient strategies for reducing it — from consolidating mail pieces to decentralizing print operations in order to reduce transportation costs.
Innovation is not only about products and services. It is also about optimizing every touch point of every customer relationship. In 2008 we developed more sophisticated tools for understanding the evolving needs of each of our customer segments and how best to match our solution sets to them. We armed our sales force with the information we gained, so we can now approach a customer or prospect with what amounts to a high-definition image of its business situation and probable needs. We backed up this work by establishing a new customer operations group to ensure that we stay on top of changing customer needs and expectations and incorporate them into our day-to-day business processes.
Pitney Bowes is an innovation-driven company. In addition to a significant annual investment in research and development under a top-notch team of scientists and strategists, we take our forward-thinking approach to every organizational level and every employee. We engage employees through a variety of mechanisms such as the use of social networks for sharing ideas about new offerings, new markets and new ways to deliver customer value.
In the uncharted territory of today's turbulent markets, smart and secure are good watchwords for corporate strategy as well as technology. For us, they apply to everything from product mix to the R&D process, from financial controls to employee safety, and from service levels to corporate citizenship.
We remain committed to the highest standards of corporate governance and business practice. Today more than ever, building long-term shareholder value requires being not only innovative but also vigilant, disciplined and accountable. The commitment by the board of directors and the senior leadership team to good governance shows in our seamless and successful executive transitions. This year we faced a momentous change with the retirement of Executive Chairman Michael J. Critelli after a distinguished career at this great company. Through 29 years with Pitney Bowes, including a decade as chairman and chief executive officer, Mike symbolized everything that is best in our heritage, our culture and our relentless drive to 21st-century market leadership. We wish him every success as he turns his energy to other worthy causes.
We have a robust organization with the resourcefulness to succeed in difficult times while laying the groundwork for further success and growth. I am honored to lead Pitney Bowes at this exciting point in our history. Above all, I am deeply grateful for the insights, dedication and enthusiasm of our 35,000 employees world-wide. Their commitment to customers is the single greatest force helping to keep our company smart and secure year after year.
Muarry D. Martin
Chairman, President and Chief Executive Officer