Pitney Bowes Group 1 Software

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Lanham, MD — Group 1 Software (Nasdaq: GSOF) today reported results for its second fiscal quarter ended September 30, 2001. The Company reported record second quarter revenue of $22.2 million vs. the prior year's second quarter revenue of $22.1 million. Net income available to common stockholders was $0.9 million compared with $1.7 million reported for the prior year's second quarter. Diluted earnings per share were $0.14 per share vs. $0.24 per share the prior year. The decline in net income and earnings per share is attributed to the approximately $0.7 million ($0.10 per share) net impact from operations and interest expense associated with the recent acquisitions of assets of HotData, Inc. and TriSense Software, Ltd.

Revenue for the quarter from Enterprise Solutions software and services was $14.0 million vs. $13.9 million for the same quarter of the prior year. Revenue from Customer Relationship Communications software and services was $8.2 million in both the current and prior year's second quarter. Revenue in both segments was impacted substantially by the events of September 11, 2001. Demand for Customer Relationship Communications software rebounded, however, after a disappointing first quarter. License fees in this segment increased by 6% over the same quarter last year. The Enterprise Solutions segment was hit harder by the events of September 11. License fees for that segment were down 19% over the same quarter last year. Growth in maintenance and service revenues contributed to a slight overall increase in revenue, however. Non-operating income declined by $0.5 million as a result of declining interest rates coupled with a currency loss for the second quarter of $0.2 million and interest expense on the note issued in relation to the TriSense acquisition.

For the first six months of the fiscal year, the Company reported a 2% increase in revenue to $42.9 million compared with $42.2 million the prior year. Net income available to common stockholders for the six months decreased to $1.0 million from $2.8 million the prior year.

Group 1's cash position grew even stronger in the quarter. Cash and short-term investments totaled approximately $41.8 million ($6.03 per diluted share) at September 30, 2001 compared with $40.3 million at June 30, 2001 and $44.1 million at March 31, 2001 (prior to cash outlays for the HotData and TriSense asset acquisitions).

“I'm pleased with our results in light of the challenging economic environment and the impact of the terrorist attacks,” said Group 1 CEO, Bob Bowen. “Despite losing much of the critical month of September for closing business, we were still able to set a revenue record for the quarter (even though by a small margin). During the quarter we introduced DOC1 Digital, our fully integrated system to generate dynamic customer communications for print and electronic delivery. Furthermore, we closed our first two deals for DOC1 Digital in September.”

“We continue to look for opportunities to expand our business through both internal development and acquisition of technology and talent,” Bowen added. “Monday's announcement of our intention to acquire key assets of Vision-R eTechnologies, which would add archiving and retrieval capabilities to our DOC1 Suite, is the latest result of this effort.”

“With the continuing delays in closing certain large transactions, we continue to keep tight control on costs without sacrificing product development initiatives,” added Group 1 CFO, Mark Funston. “Sales pipelines for both operating segments remain strong. The Company now expects revenue for fiscal year 2002 to be up 4% to 6% over fiscal year 2001 and net income available to common shareholders to be in the range of $0.88 to $0.95 per share for the fiscal year 2002.”

Group 1 Software (Nasdaq: GSOF) is a leading provider of customer relationship management (CRM)-enabling software solutions for data quality, marketing automation, customer relationship communications and direct marketing applications. Group 1's software systems and services enable 2,500 customers worldwide to market smarter by helping them find, reach and keep customers. Founded in 1982 and headquartered in Lanham, Maryland, Group 1's solutions are utilized by leaders in the financial services, banking, retail, telecommunications, utilities, e-commerce, and insurance industries. The company's customer base includes such recognized names as AT&T, Charles Schwab, Entergy, GEICO, L.L. Bean, MCI WorldCom, Wal-Mart and Wells Fargo. For more information about Group 1, visit the company's Web site at http://www.g1.com.

Certain statements made herein that are not historical are forward-looking within the meaning of the Private Securities Litigation reform Act of 1995. Words like “continue to look” and “expects” are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties. Readers are cautioned not to place undue reliance of these forward-looking statements, which address the conditions as they are found on the date of this press release. The Company undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances that arise after the date of this press release or to reflect the occurrence of unanticipated events. For additional information regarding these and other risks and uncertainties associated with the Company's business, reference is made to the Company's reports filed from time to time with the Securities and Exchange Commission. Group 1 Software, HotData, DOC1, and TriSense are registered trademarks of Group 1 Software, Inc.

Contacts Mark Funston, CFO, Group 1 Software at 301.918.0381 or mark_funston@g1.com David Peikin, Corporate Communications Manager, Group 1 Software at 301.918.0818 or pr@g1.com Charles Messman, MKR Group at 212.308.4557 or cmessman@mkr-group.com

GROUP 1 SOFTWARE, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited)

For the Three Month Period For the Six Month Period Ended September 30, Ended September 30, 2001 2000 2001 2000 Revenue: Software license and related revenue $ 8,232 $ 9,099 $ 15,392 $ 16,736 Maintenance and services 13,936 13,035 27,500 25,460

Total revenue 22,168 22,134 42,892 42,196

Cost of revenue: Software license expense 2,950 2,899 5,465 6,019 Maintenance and service expense 5,233 4,588 11,211 8,800 Total cost of revenue 8,183 7,487 16,676 14,819

Gross profit 13,985 14,707 26,216 27,377

Operating expenses: Research and development 2,691 1,519 5,092 3,030 Sales and marketing 7,386 7,058 14,783 13,510 General and administrative 2,686 3,842 5,462 7,484 Total operating expenses 12,763 12,419 25,337 24,024

Income from operations 1,222 2,228 879 3,353

Non-operating income Interest income 441 622 977 1,150 Interest expense (94) (11) (159) (17) Other non-operating income (expense) (162) 61 (146) 310 Total non-operating income 185 672 672 1,443 Income from operations before provision for income taxes 1,407 2,900 1,551 4,796

Provision for income taxes 452 1,196 510 1,961

Net income 955 1,704 1,041 2,835

Preferred stock dividend requirements (14) (14) (28) (28)

Net income available to common stockholders $941 $1,690 $1,013 $2,807

Basic earnings per share $ 0.15 $ 0.28 $ 0.16 $ 0.47

Diluted earnings per share $ 0.14 $ 0.24 $ 0.15 $ 0.40

Basic weighted average shares outstanding 6,242 6,016 6,209 5,998

Diluted weighted average shares outstanding 6,934 6,974 6,924 6,935

See notes to consolidated financial statements.

GROUP 1 SOFTWARE, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except par value) September 30, March 31, 2001 2001 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 34,423 $ 36,179 Short-term investments, available-for-sale 7,346 7,954 Trade and installment accounts receivable, less allowance of $2,296 and $2,197 15,516 23,658 Deferred income taxes 1,762 1,731 Prepaid expenses and other current assets 3,820 3,650

Total current assets 62,867 73,172

Installment accounts receivable, long-term 494 695 Property and equipment, net 6,554 5,592 Computer software, net 20,811 18,936 Goodwill 12,694 4,004 Other assets 100 226

Total assets $ 103,520 $ 102,625

LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,793 $ 1,977 Current portion of note payable and capital lease obligation 2,951 74 Accrued expenses 4,147 5,819 Accrued compensation 3,403 6,549 Current deferred revenues 26,700 29,032

Total current liabilities 38,994 43,451

Note payable and capital lease obligations, net of current portion 3,089 14 Deferred revenues, long-term 401 544 Deferred income taxes 4,152 4,165

Total liabilities 46,636 48,174

Commitments and contingencies

Stockholders' equity: 6% cumulative convertible preferred stock $0.25 par value; 1,200 shares authorized; 48 shares issued and outstanding (aggregate involuntary liquidation preference $950) 916 916 Common stock $0.50 par value; 50,000 shares authorized; 6,862 and 6,654 shares issued and outstanding 3,431 3,327 Additional paid in capital 32,541 29,296 Retained earnings 25,546 24,533 Accumulated other comprehensive income (987) (1,286) Less treasury stock, 618 and 497 shares, at cost (4,563) (2,335)

Total stockholders' equity 56,884 54,451

Total liabilities and stockholders' equity $ 103,520 $ 102,625

See notes to consolidated financial statements.

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