Pitney Bowes Group 1 Software

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Press Release

License Fees Increase 38% to $9.9 Million; EPS $0.14 vs. $0.01 Prior Year

Lanham, MD — Group 1 Software (Nasdaq: GSOF) today reported record first quarter revenue of $23.4 million for its first fiscal quarter ended June 30, 2002, compared with the prior year's first quarter revenue of $20.8 million. Revenue from license fees increased 38% to $9.9 million from $7.2 million in the prior year's first quarter. Net income available to common stockholders was $1.0 million, up from $0.1 million in the prior year's first quarter. Diluted earnings were $0.14 per share compared with $0.01 per share the prior year. Outside analysts' expectations were $0.07 for the quarter.

Total revenue for the quarter from Enterprise Solutions software and services increased 11% to $16.1 million from $14.5 million the prior year. Total revenue for DOC1 Customer Communications Management software and services increased 15% to $7.3 million from $6.3 million the prior year. License revenue was up 35% in the Enterprise Solutions division to $7.1 million and 47% in the DOC1 division to $2.8 million.

Non-operating income declined to $0.1 million from $0.5 million the prior year's first quarter. The decline in non-operating income was due to lower interest income in the current year and higher interest expense related to the three asset acquisitions made during the prior year.

Group 1's cash position grew even stronger during the quarter. After paying $3.3 million in short-term debt related to one of the acquisitions, cash and short-term investments totaled $51.6 million (approximately $7.43 per diluted share) at June 30, 2002 compared with $47.6 million at March 31, 2002.

“We are pleased with Group 1's performance this quarter, especially in view of the weak overall market environment,” said Bob Bowen, CEO of Group 1 Software. “The significant increases in license fees were particularly encouraging. We saw strong demand for our Enterprise Solutions division's data quality solutions. The DOC1 division saw growing sales of DOC1 Archive, the newest component of our end-to-end customer communications management suite. DOC1 Archive offers real-time storage, compression and high-speed retrieval of business documents.”

Mark Funston, CFO, added: “We are obviously pleased to see a return to record results. Due to the continuing difficult market conditions, however, we are taking a conservative view toward the next several quarters. Accordingly, we will not be adjusting our financial guidance for the rest of the fiscal year until we are able to report further quarters of solid financial and market performance. Our guidance for the balance of the fiscal year remains ten percent revenue growth over the prior year and EPS growth in the 18% to 22% percent range.”

The Company will hold a conference call at 4:30 p.m. EST today to discuss these results. Interested parties are invited to listen to the call, which will be broadcast via the Internet at www.g1.com or by dialing 800-374-0565.

Group 1 Software (Nasdaq: GSOF) is a leading provider of customer relationship management (CRM)-enabling software solutions for data quality, marketing automation, customer communications management and direct marketing applications. Group 1's software systems and services enable over 2,000 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, 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 “taking a ….view” 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. GROUP 1 SOFTWARE, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data)

(unaudited)

For the Three Month Period Ended June 30, 2002 2001 Revenue: Software license and related revenue $ 9,877 $ 7,160 Maintenance and services 13,502 13,687 Total revenue 23,379 20,847 Cost of revenue: Software license expense 4,071 2,515 Maintenance and service expense 4,274 6,101 Total cost of revenue 8,345 8,616

Gross profit 15,034 12,231

Operating expenses: Research and development 2,742 2,401 Sales and marketing 7,510 7,397 General and administrative 3,330 2,776 Total operating expenses 13,582 12,574 Income from operations 1,452 (343)

Non-operating income 105 487

Income from operations before provision for income taxes 1,557 144 Provision for income taxes 584 58 Net income 973 86 Preferred stock dividend requirements (14) (14) Net income available to common stockholders $ 959 $ 72

Basic earnings per share $ 0.15 $ 0.01

Diluted earnings per share $ 0.14 $ 0.01

Basic weighted average shares outstanding 6,308 6,174

Diluted weighted average shares outstanding 6,943 6,884

GROUP 1 SOFTWARE, INC. CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

June 30, 2002 March 31, 2002 (unaudited) ASSETS Current assets: Cash and cash equivalents $ 28,521 $ 22,936 Short-term investments, available for sale 23,095 24,669 Trade and installment accounts receivable, less allowance of $1,967 and $2,058 13,113 17,551 Deferred income taxes 1,629 1,718 Prepaid expenses and other current assets 3,417 3,219 Total current assets 69,775 70,093

Installment accounts receivable, long-term 211 263 Property and equipment, net 5,331 5,797 Computer software, net 23,069 22,873 Goodwill 12,707 12,686 Other assets 173 167 Total assets $ 111,266 $ 111,879

LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable 1,534 1,198 Current portion of note payable 3,302 3,496 Accrued expenses 5,998 5,857 Accrued compensation 4,655 3,732 Current deferred revenues 27,596 28,833 Total current liabilities 43,085 43,116 Long-term portion of note payable 722 3,630 Deferred revenues, long-term 225 197 Deferred income taxes 4,528 4,534 Total liabilities 48,560 51,477

Commitments and contingencies

Stockholders'equity: 6% cumulative convertible preferred stock, $0.25 par value; 1,200 shares authorized; 48 shares issued and outstanding 916 916 Common stock, $0.50 par value; 50,000 shares authorized; 6,946 and 6,918 issued and outstanding 3,473 3,459 Additional paid in capital 33,329 33,079 Retained earnings 29,862 28,903 Accumulated other comprehensive income (261) (1,368) Less treasury stock at cost, 622 and 620 shares (4,613) (4,587) Total stockholders' equity 62,706 60,402 Total liabilities and stockholders' equity $ 111,266 $ 111,879 Additional Contact InformationDavid PeikinGroup 1 Software(301) 918-0818david_peikin@g1.comCharles MessmanMKR Group(212) 308-4557cmessman@mkr-group.com

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