Pitney Bowes Group 1 Software

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Net Income Increases 39%; EPS Increases to $0.34 From $0.29

Lanham, MD — Group 1 Software (Nasdaq: GSOF) today reported record results for its third fiscal quarter ending December 31, 2000. The Company reported revenue of $24.1 million, up 19% over the prior year's third quarter revenue of $20.2 million. Net income available to common stockholders increased 39% to $2.4 million or $0.34 per share from $1.7 million or $0.29 per share the prior year. (The increased price of Group 1 stock over the past year has resulted in a 18% increase in the calculation of diluted weighted average shares outstanding, which reduced the growth in earnings per share.)

Revenue for the quarter from Customer Relationship Communications software and services was up 19% to $8.5 million while Enterprise Solutions software revenue increased 20% to $15.6 million.

For the first nine months of the fiscal year, the Company reported an 18% increase in revenue to $66.3 million, from $56.3 million in the same period the prior year. Net income available to common stockholders for the first nine months increased 63% to $5.2 million or $0.75 per share, vs. $3.2 million or $0.55 per share the prior year.

Cash flow also continued strong. Cash and short-term investments totaled $39.2 million ($5.63 per share) at December 31, 2000 compared with $35.2 million at September 30, 2000 and $32.0 million at March 31, 2000.

``We are most pleased with the continuing growth of our Customer Relationship Communications and Enterprise Solutions products,'' said Bob Bowen, CEO of Group 1 Software. ``Group 1's comprehensive enterprise data quality solutions are proving to be essential components of successful Customer Relationship Management (CRM) implementations. The projected growth of CRM, coupled with Group 1's unique ability to offer off-line and real-time data quality solutions and to produce personalized customer communications, make this market area an especially attractive opportunity for Group 1.''

Conference Call

Group 1 will hold a conference call today at 4:15 p.m. EST to review quarterly results. To listen to the live Webcast -- Simply log onto http://www.g1.com and click on the conference call icon or to access the live Conference Call Dial: 1-800-509-6630; give Company Name: Group 1 Software; and Confirmation #: 3795480.

If you are unable to participate during the live webcast, the call will be archived on our Web Site. To access the webcast replay, click on the conference call replay icon at http://www.g1.com. A replay of the conference call will also be available from February 1, 2001 through February 15, 2001 by dialing 1-800-839-6713 and giving confirmation #3795480.

Group 1 Software is a leading provider of software for data quality, database marketing, electronic document composition applications, and mailing efficiency and direct marketing applications. Group 1 supports MVS, VSE, AS/400, UNIX (including Linux), Windows NT, Windows 2000 and other operating systems and various computers. Group 1 has offices throughout the United States and in Canada, the United Kingdom, and continental Europe; the Miami office serves the Latin American market. The Company is also represented in Asia and Australia.

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 ``expect,'' 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 and DOC1 are registered trademarks of Group 1 Software, Inc. DataQuality.net is a trademark of Group 1 Software, Inc. All other trademarks referred herein are the properties of their respective owners.

GROUP 1 SOFTWARE, INC.CONSOLIDATED STATEMENTS OF OPERATIONS (Adjusted to reflect the 3 for 2 stock split approved by the Board of Directors on February 4, 2000) (In thousands, except per share data) (Unaudited)

For the Three For the Nine Month Period Month Period Ended December 31, Ended December 31, 2000 1999 2000 1999 Revenues: Software license and related revenues $11,188 $9,292 $27,924 $25,410 Maintenance and services 12,948 10,951 38,408 30,860 Total revenue 24,136 20,243 66,332 56,270 Cost of revenue: Software license expense 2,536 3,370 8,435 9,830 Maintenance and service expense 4,631 3,346 13,431 10,794 Total cost of revenue 7,167 6,726 21,866 20,624 Gross profit 16,969 13,527 44,466 35,646 Operating expenses: Research and development 1,685 1,034 4,715 2,855 Sales and marketing 8,299 6,216 21,929 18,415 General and administrative 3,359 3,690 10,843 9,687 Total operating expenses 13,343 10,940 37,487 30,957 Income from operations 3,626 2,587 6,979 4,689 Non-operating income Interest income 688 322 1,838 743 Interest expense (90) (6) (107) (69) Other non-operating income (expense) (104) 28 206 21 Total non-operating income 494 344 1,937 695 Income from operations before provision for income taxes 4,120 2,931 8,916 5,384 Provision for income taxes 1,739 1,212 3,700 2,176 Net income 2,381 1,719 5,216 3,208 Preferred stock dividend requirements (14) (14) (42) (42) Net income available to common stockholders $2,367 $1,705 $5,174 $3,166 Basic earnings per share $0.39 $0.30 $0.86 $0.57 Diluted earnings per share $0.34 $0.28 $0.75 $0.55 Basic weighted average shares outstanding 6,091 5,658 6,029 5,610 Diluted weighted average shares outstanding 6,965 5,922 6,932 5,730

GROUP 1 SOFTWARE, INC.CONSOLIDATED BALANCE SHEETS (In thousands, except par value)

December 31, March 31, 2000 2000 (Unaudited) ASSETS Current assets: Cash and cash equivalents $31,600 $20,735 Short-term investments 7,637 11,259 Trade and installment accounts receivable, less allowance of $2,438 and $3,317 18,321 21,561 Deferred income taxes 2,406 3,297 Prepaid expenses and other current assets 3,666 3,407 Total current assets 63,630 60,259 Installment accounts receivable, long-term 1,095 1,945 Property and equipment, net 4,462 4,290 Computer software, net 20,099 21,823 Other assets 4,380 4,750 Total assets $93,666 $93,067

LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $2,149 $1,940 Current portion of capital lease obligation 88 109 Accrued expenses 6,433 6,627 Accrued compensation 7,062 7,617 Current deferred revenues 23,272 26,865 Total current liabilities 39,004 43,158

Capital lease obligation, net of current portion 29 88 Deferred revenues, long-term 635 1,169 Deferred income taxes 3,235 3,724 Total liabilities 42,903 48,139 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 $950,000) 916 916 Common stock $0.50 par value; 50,000 shares authorized; 6,632 and 6,468 shares issued and outstanding 3,316 3,234 Additional paid in capital 28,640 27,431 Retained earnings 20,858 15,684 Accumulated comprehensive income (632) (2) Less treasury stock, 497 shares, at cost (2,335) (2,335) Total stockholders' equity 50,763 44,928 Total liabilities and stockholders' equity $93,666 $93,067

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