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Imagistics International Reports Record Third Quarter Earnings

2 Nov, 2004

Imagistics International Reports Record Third Quarter Earnings

Imagistics International Inc. announced a 27 percent increase in diluted earnings per share to $0.38 for the third quarter of 2004 compared with $0.30 for the third quarter of 2003. Net income increased by 25 percent over the same period to $6.4 million from $5.1 million last year. Total revenue for the third quarter decreased 4 percent to $153.1 million. Revenue is generated from three business lines: copier/MFP (multifunctional product), facsimile and sales to Pitney Bowes of Canada ("PB Canada") under a reseller agreement. Copier/MFP revenue increased 9 percent to $108.4 million, facsimile revenue declined 17 percent to $43.0 million and sales to PB Canada decreased 81 percent to $1.7 million compared with the prior year's third quarter. Excluding sales to PB Canada, total revenue for the third quarter was $151.4 million, essentially flat versus revenue for the third quarter of the previous year.

Marc C. Breslawsky, Imagistics Chairman and Chief Executive Officer, said, "We are very proud of the progress we have made in the third quarter with record levels of net income and EPS. These results reflect our ability to execute and achieve our operational and strategic goals. We continue to successfully transition our business to copier/MFP products from facsimile products. Copier/MFP revenue now represents 72 percent of our total revenue versus 56 percent two years ago, reflecting our strong growth in copier/MFP while facsimile continues its expected decline. Copier/MFP is now clearly the dominant part of our business and represents the largest portion of our recurring revenue stream."

Mr. Breslawsky continued, "Again this quarter we continued our unbroken string of quarterly year-over-year increases in copier/MFP revenue since the spin-off, which now stands at eleven consecutive quarters. We are particularly pleased by our 9 percent increase in total copier/MFP revenue, led by a 13 percent increase in copier rental revenue. We do expect the rate of growth in copier/MFP rental revenue to moderate in the fourth quarter, as certain copier rental contracts with the federal government are expiring and we do not expect them to be renewed. In addition, we did see a higher rate of decline in our facsimile rental business during the quarter due to several large rental to sale conversions."

Mr. Breslawsky also commented, "This year J.D. Power and Associates again honored us with their prestigious "#1 Copier/Multifunction Product in Overall Customer Satisfaction Among Business Users"(1) award. We continue to be distinguished from our peers by independent research organizations and believe that this is not only a validation of our best of breed strategy, but also proof of the success of our commitment to provide our customers world-class products and unparalleled customer support."

Imagistics President and Chief Operating Officer, Joseph Skrzypczak added, "In the third quarter, we continued to expand our international presence through an acquisition in Ontario, Canada. This acquisition will provide additional direct distribution and service capabilities in the important Canadian market as well as enhance our ability to support our broad portfolio of global and U.S.-based national and major account customers. In addition to utilizing our free cash flow for geographic expansion, we were also able to reduce debt by $1.1 million and repurchase 255 thousand shares of our common stock for a total cost of $8.2 million. This represents 2 percent of the stock outstanding at June 30, 2004. Since the beginning of the stock buyback program in 2002, we have repurchased 3.8 million shares or 19 percent of the shares that were outstanding when Imagistics was spun off in December 2001."

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