UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                          WASHINGTON D.C. 20549
                                 FORM 10-K


  X          ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
-----        EXCHANGE ACT OF 1934
             For The Year Ended December 31, 1996

                                       OR

             TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
-----        SECURITIES EXCHANGE ACT OF 1934
             For the transition period from         to
                                            -------    -------

Commission file number 0-13497


                    PITNEY BOWES CREDIT CORPORATION

    State of Incorporation          IRS Employer Identification No.
          Delaware                            06-0946476

                          201 Merritt Seven
                  Norwalk, Connecticut  06856-5151
                  Telephone Number: (203) 846-5600


       Securities registered pursuant to Section 12(b) of the Act:

                                None

      Securities registered pursuant to Section 12(g) of the Act:

                       Common Stock, No Par Value

The Registrant (1) has filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months and (2) has been subject to such filing requirements for the
past 90 days. Yes   X    No
                  -----     -----

The aggregate market value of voting stock held by non-affiliates of the
Registrant at March 28, 1997:  None.

As of March 28, 1997, 460 shares of common stock with no par value were
outstanding, all of which were owned by Pitney Bowes Inc., the parent of
the Registrant.

REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION J(1)(a)
AND (b) OF FORM 10-K AND IS THEREFORE FILING THIS FORM WITH THE REDUCED
DISCLOSURE FORMAT.

<PAGE>
                       PITNEY BOWES CREDIT CORPORATION
                                FORM 10-K
                               1996 INDEX
                       -------------------------------

                              Part I

Item                                                             Page
----                                                             ----

 1.  Business . . . . . . . . . . . . . . . . . . . . . . .         1

 2.  Properties . . . . . . . . . . . . . . . . . . . . . .         9

 3.  Legal proceedings  . . . . . . . . . . . . . . . . . .         9

 4.  Submission of matters to a vote of security holders  .        10

                             Part II

 5.  Market for the Registrant's common equity and related
      stockholder matters . . . . . . . . . . . . . . . . .        10

 6.  Selected financial data  . . . . . . . . . . . . . . .        11

 7.  Management's discussion and analysis of financial
      condition and results of operations . . . . . . . . .        12

 8.  Financial statements and supplementary data  . . . . .        22

 9.  Changes in and disagreements with accountants on
      accounting and financial disclosure . . . . . . . . .        51

                             Part III

10.  Directors and executive officers of the Registrant . .        51

11.  Executive compensation . . . . . . . . . . . . . . . .        51

12.  Security ownership of certain beneficial owners and
      management  . . . . . . . . . . . . . . . . . . . . .        51

13.  Certain relationships and related transactions . . . .        51

                              Part IV

14.  Exhibits, financial statement schedules and reports on
      Form 8-K  . . . . . . . . . . . . . . . . . . . . . .        51

     Index to Exhibits  . . . . . . . . . . . . . . . . . .        52

     SIGNATURES . . . . . . . . . . . . . . . . . . . . . .        54


<PAGE>
                             Part I
Item 1.  Business
         --------
                             GENERAL
                             -------

Pitney Bowes Credit Corporation (the Company or PBCC) operates
primarily in the United States and is a wholly-owned subsidiary of
Pitney Bowes Inc. (PBI or Pitney Bowes).  The Company is
principally engaged in the business of providing lease financing
for PBI products as well as other financial services in the
commercial and industrial, and mortgage servicing markets.

The Internal Financing Division of PBCC provides marketing support
to PBI and its discontinued subsidiaries Dictaphone Corporation
(Dictaphone) and Monarch Marking Systems, Inc. (Monarch), both of
which were sold in 1995.  Equipment leased or financed for these
Internal Division programs include mailing, paper handling and
shipping equipment, scales, copiers, facsimile units, voice
processing systems and retail price marking and identification
equipment.  The transaction size for this equipment generally
ranges from $500 to $500,000, although historically most
transactions have occurred in the $1,000 to $10,000 range, with
lease terms generally from 36 to 60 months.  As part of the
Company's focus on new business initiatives, the Company launched
in August, 1996, a revolving credit product called Purchase Power
(SM).  This product allows Pitney Bowes customers to finance
postage as well as mailing, copier and facsimile supplies.  The
Company earns income on balances from customers who elect to use
this credit facility.

PBCC's External Financing Division (renamed Pitney Bowes Capital
Services in 1997) operates in the commercial and industrial market
by offering financial services to its customers for products not
manufactured or sold by PBI or its subsidiaries. Products financed
through the External Financing Division large-ticket financing
programs include both commercial and non-commercial aircraft,
over-the-road trucks and trailers, railcars and locomotives, and
high-technology equipment such as data processing and
communications equipment.  Transaction sizes (other than aircraft
leases) range from $50,000 to several million dollars, with lease
terms generally from 36 to 180 months. Aircraft transaction sizes
range from $1 million to $27 million for non-commercial aircraft
and up to $43 million for commercial aircraft. Lease terms are
generally from three to 12 years for non-commercial aircraft and
from 12 to 25 years for commercial aircraft.  The Company has also
participated in ten commercial aircraft leveraged lease
transactions with a total investment of $285.1 million at December
31, 1996.  The Company's External Financing Division also
participates, on a select basis, in certain other types of
financial transactions including: sales of lease transactions,
senior secured loans in connection with acquisition, leveraged
buyout and recapitalization financings, and certain project
financings. Sales of lease transactions are part of the Company's
ongoing strategy to shift the foundation of the External Financing
business from asset-based to service-based revenues.

                             1
<PAGE>

PBCC's External Financing Division is also responsible for managing
Pitney Bowes Real Estate Financing Corporation (PREFCO), a
wholly-owned subsidiary of PBCC providing lease financing for
commercial real estate properties.  Both PBCC and Pitney Bowes have
provided capital for PREFCO's investments.

Effective May 31, 1996, the Company sold its Custom Vendor Finance
(CVF) operations which had provided funding source financing
programs for non-affiliated vendors selling equipment with a cost
generally in the range of $5,000 to $250,000.  This sale included
twelve U.S. vendor finance programs with a portfolio of secured
loans valued at $126 million.

Colonial Pacific Leasing Corporation (CPLC), a wholly-owned
subsidiary of PBCC, located in Tualatin, Oregon operates in the
small-ticket external market.  CPLC provides lease financing
services to small- and medium-sized businesses throughout the
United States, marketing exclusively through a nationwide network
of brokers and independent lessors.  Transaction sizes range from
$2,000 to $250,000, with lease terms generally from 24 to 60
months.

CPLC, CVF, Dictaphone and Monarch are reported as "External small-
ticket programs" in this Annual Report for 1996.  Prior to January
1, 1996 Dictaphone and Monarch had been reported as part of the
Company's Internal small-ticket financing programs.

Atlantic Mortgage & Investment Corporation (AMIC), a wholly-owned
subsidiary of PBCC, located in Jacksonville, Florida, specializes
in servicing residential first mortgages for a fee.  AMIC does not
originate, or generally hold or assume the credit risk on mortgages
it services.  In return for a servicing fee, AMIC provides billing
services and collects principal, interest and tax and insurance
escrow payments for mortgage investors such as Federal National
Mortgage Association, Federal Home Loan Mortgage Corporation,
Government National Mortgage Association and private investors.

Financial Structures Limited (FSL), a wholly-owned and independent
subsidiary of PBCC, was incorporated in Bermuda in June, 1995.  FSL
provides residual value insurance to unaffiliated third parties,
including manufacturers, financial institutions and leasing
companies involved in  financing transactions.  FSL plans on
mitigating its residual risk by diversifying its portfolio by both
asset type and maturity date.

Substantially all lease financing is done through full payout
leases or security agreements whereby PBCC recovers its costs plus
a return on investment over the initial, noncancelable term of the
contract.  The Company has also entered into a limited amount of
syndicated, leveraged and operating lease structures.

                             2

<PAGE>

The Company's gross finance assets (contracts receivable plus
estimated residual values) outstanding for the Internal and
External financing programs at December 31, 1992 through 1996 are
presented in Item 6, Selected Financial Data.  Total Company gross
finance assets at December 31, 1996 were $5.5 billion of which
approximately 31 percent were related to mailing, paper handling
and shipping products, 14 percent to commercial aircraft, 11
percent to railcars, six percent to copier and office equipment,
four percent to both data processing equipment and manufacturing
products and three percent to over-the-road trucks and trailers.
In 1996, total gross finance contracts acquired excluding assets
held for sale amounted to $1.9 billion compared to $2.2 billion in
1995. External large-ticket programs accounted for 17 percent of
gross finance contracts acquired in 1996 compared to 26 percent in
1995.


As of December 31, 1996, PBCC had approximately 648,000 active
accounts compared with 606,000 active accounts at December 31,
1995.

At December 31, 1996, PBCC's largest customer accounted for $158.3
million, or 3.3 percent of gross finance receivables, and the
Company's ten largest customers accounted for $795.3 million in
gross finance receivables, or 16.5 percent of the receivable
portfolio.

                         CREDIT EXPERIENCE
                         -----------------

The percent of receivables over 30 days delinquent was 2.9 percent
at December 31, 1996 compared to 2.3 percent at both December 31,
1995 and 1994, respectively.  Delinquencies increased as a result
of a higher mix of small-ticket leases which historically have had
higher delinquency rates, as well as an increase in delinquency in
the small-ticket internal and external portfolios versus the prior
year-end.

                          CREDIT POLICIES
                          ---------------

PBCC's management and Board of Directors establish credit approval
limits at regional, divisional, subsidiary and corporate levels
based on the credit quality of the customer and the type of
equipment financed.  The Company and PBI have established an
Automatic Approval Program (AAP) for certain products within the
Internal Financing Division.  The AAP dictates the criteria under
which PBCC will accept a customer without performing the Company's
usual credit investigation.  The AAP considers criteria such as
maximum equipment cost, a customer's time in business and current
payment experience with PBCC.

PBCC bases credit decisions primarily on a customer's financial
strength. However, with the Company's External Financing Division
programs, collateral values may also be considered.

                             3

<PAGE>
                          LOSS EXPERIENCE
                          ---------------

PBCC has charged against the allowance for credit losses $69.2
million, $52.5 million and $59.2 million in 1996, 1995 and 1994,
respectively.  The increase in write-offs in 1996 was primarily due
to higher write-offs related to assets originated by the Company's
German affiliate, which totaled $20.9 million in 1996 compared to
$14.2 million in 1995 and from higher write-offs at CPLC of $23.4
million in 1996 compared to $13.0 million in 1995, partially offset
by slightly lower write-offs in the Internal Financing Division.
Excluding the losses related to assets purchased from the Company's
German affiliate in prior years, losses as a percentage of average
net lease receivables were .94 percent for 1996 and .81 percent for
both 1995 and 1994, respectively.  For further information see Note
5 and Note 7 to the Company's consolidated financial statements.

               RELATIONSHIP WITH PITNEY BOWES INC.
               -----------------------------------

PBCC is PBI's domestic finance subsidiary and provides the largest
financing support of PBI's business equipment, business services
and commercial and industrial segments.  Approximately 13 percent
of PBI's consolidated revenue from continuing operations in 1996,
1995 and 1994 resulted from continuing operations' equipment sales
made to PBCC for lease to third parties.

Business relationships between PBCC and PBI are defined by several
agreements including an Operating Agreement, Finance Agreement and
Tax Sharing Agreement.

Operating Agreement: An Operating Agreement with PBI was initiated
on March 3, 1977 and was subsequently amended.  This agreement was
terminated in its entirety and superseded with the successor
agreement on November 6, 1996 as the First Amended and Restated
Operating Agreement (Operating Agreement).  The Operating Agreement
can be modified or cancelled on a prospective basis by either party
upon 90 days prior written notice.  PBI and PBCC have entered into
detailed written operating procedures (Operating Procedures) which
govern among other things:  the terms and prices of equipment
purchases by PBCC for lease to third parties; computation and
payment of fees for referrals and services provided by PBI sales
personnel; the AAP for PBI equipment; buyback allowances; and the
handling of contract terminations, cancellations, trade-ups and
trade-ins.

In connection with the sales of finance assets of the Internal
small-ticket financing programs, PBI agreed not to cancel or
modify, in any material respect, its obligations under the
Operating Agreement concerning the sold receivables, without the
prior written consent of PBCC and the transferee.

                             4

<PAGE>

Pursuant to the Operating Procedures, the purchase of equipment by
the Company is contingent upon a lessee entering into a full payout
lease with the Company and delivery to and acceptance of the
equipment by the lessee.  Service and maintenance of the equipment
leased is the responsibility of the lessee and is generally
arranged through a separate equipment maintenance agreement between
the lessee and PBI.

In connection with the buyback provision of the Operating
Procedures, PBCC has the option to request a buyback from PBI for
non-copier equipment subject to a lease which is terminated or
cancelled, provided the equipment is available for repossession.
Following such buyback, PBI is responsible for the repossession and
disposition of equipment.  The buyback provision sets forth a
stipulated amount that is payable by PBI to PBCC for certain
terminated leases; such amount is calculated on the basis of a
declining  percentage, based upon the passage of time, of the
original total invoice value to PBCC.  The difference between the
buyback amount received from PBI and the remaining value of the
lease usually results in a loss that is charged against PBCC's
allowance for credit losses.

The Pitney Bowes Copier Division does not remanufacture used copier
equipment; therefore copier equipment is excluded from the buyback
arrangement described above.  There is no AAP for copier equipment.
All copier equipment lease transactions are subject to the
Company's standard credit review investigation.

In 1994, Pitney Bowes announced that it had refined its strategic
focus to capitalize on its strengths and competitive position by
concentrating its energies and resources on products and services
which facilitate the preparation, organization, movement, delivery,
tracking, storage and retrieval of documents, packages, letters and
other materials, in hard copy and digital form for its customers.
As a result, it sold its Monarch and Dictaphone subsidiaries in
June 1995 and August 1995, respectively.  For the purpose of this
Annual Report, Monarch and Dictaphone are included as part of the
Internal Financing Division results prior to December 31, 1995 and
are classified as part of the External small-ticket financing
programs for 1996 and thereafter.  In connection with this change
in PBI's business focus, Dictaphone paid PBCC $11.2 million in
January 1995 to terminate its obligations under the buyback
agreement.  Under modified operating agreements, PBCC continues to
provide uninterrupted financing programs to both Monarch and
Dictaphone.

                             5
<PAGE>

Finance Agreement:  Pursuant to the Amended and Restated Finance
Agreement (the Finance Agreement) dated June 12, 1995, between PBI
and PBCC, PBI has agreed to retain, directly or indirectly,
ownership of the majority of the outstanding shares of capital
stock of the Company having voting power in the election of
directors, to make payments, if necessary, to enable the Company to
maintain a ratio of income available for fixed charges as defined
to such fixed charges of 1.25 to 1 as of the end of each fiscal
quarter, and to provide or cause to be provided funds sufficient to
make timely payment of any principal, interest or premium in
respect of any of the Company's indebtedness for borrowed money
that has the benefit of the Finance Agreement if the Company is
unable to make such payment.

Under the terms of the Finance Agreement and the Indenture dated as
of November 1, 1995, between the Company and Chemical Bank, as
Trustee (the 1995 Indenture), the Finance Agreement may not be
amended, in any material respect, or terminated while the Company
has any series of debt securities issued under the 1995 Indenture
or any series of other debt outstanding that is, by its express
terms, entitled to the provisions of the Finance Agreement unless
at least two nationally recognized statistical rating agencies that
have been rating such series of debt, confirm that their ratings
for such series of debt will not be downgraded as a result or the
holders of at least a majority of the outstanding principal amount
of such series of debt have consented in writing.

Under the Indenture dated as of May 1, 1985 (together with all
Supplemental Indentures as noted in Part IV Item 14(a) 3, the
Indenture), between PBCC and the trustee (Sun Trust Bank effective
December 16, 1996 replacing Bankers Trust Company), as Trustee (the
Trustee), PBCC agreed it would not waive compliance with, or amend
in any material respect, the Finance Agreement without the consent
of the holders of a majority in principal amount of the outstanding
securities of each series of debt securities issued under the
Indenture.  In addition, PBI has entered into a Letter Agreement
with the Trustee pursuant to which it agreed, among other things,
that it would not default under the Finance Agreement nor terminate
the Finance Agreement without the consent of the holders of a
majority in principal amount of the outstanding securities issued
under the Indenture.

Tax Sharing Agreement:  The Company's taxable results are included
in the consolidated Federal and certain state income tax returns of
Pitney Bowes.  Under the Tax Sharing Agreement, dated April 1,
1977, between the Company and Pitney Bowes (the Tax Sharing
Agreement), the Company makes payment to Pitney Bowes for its share
of consolidated income taxes, or receives cash equal to the benefit
of tax losses utilized in consolidated returns in exchange for
which it issues non-interest bearing subordinated notes with a
maturity one day after all senior debt is repaid.  The Tax Sharing
Agreement can be cancelled by either PBI or PBCC upon twelve months
written notice.

                             6
<PAGE>

Real Estate Transactions:  When the Company entered into real estate
lease financing, PBI agreed to make capital contributions up to a maximum
of $15.0 million to provide a portion of the financing for such
transactions, of which $13.8 million has been received to date.  There is
no formal agreement in place and PBI is under no obligation to continue
to make capital contributions.  There have been no capital contributions
made since 1993.

                           PITNEY BOWES INC.
                           -----------------

PBI, a Delaware corporation organized in 1920, is listed on the New York
Stock Exchange.  Headquartered in Stamford, Connecticut, PBI employs
approximately 28,600 people throughout the United States, Europe, Canada,
Australia and other countries.  PBI operates within three industry
segments:  business equipment, business services and commercial and
industrial financing.

The business equipment segment consists of four products, supplies and
service classes:  mailing, copying and facsimile systems, and related
financing.  These products are sold, rented or leased by PBI, while
supplies and services are sold.  In accordance with postal regulations,
postage meters may not be sold in the United States; they are rented to
users and therefore are not subject to lease by PBCC.  The financial
services operations provide global lease financing for PBI's products.

The business services segment consists of facilities management and
mortgage servicing.  Facilities management services are provided for a
variety of business support functions.  Mortgage servicing is
administered by AMIC.

The commercial and industrial financing segment provides large-ticket
financing programs, covering a broad range of products, and other
financial services to the commercial and industrial markets in the United
States.  It also provides small-ticket lease financing services to small
and medium-sized businesses throughout the United States.

As of December 31, 1996, PBI and its consolidated subsidiaries had total
assets of $8.2 billion and stockholders' equity of $2.2 billion.  For the
year ended December 31, 1996, PBI's consolidated revenue and income from
continuing operations were $3.9 billion and $469.4 million, respectively,
compared with $3.6 billion and $407.7 million for 1995.

                     COMPETITION AND REGULATION
                     --------------------------

The finance business is highly competitive with aggressive rate
competition.  Leasing companies, commercial finance companies, commercial
banks and other financial institutions compete in varying degrees in the
several markets in which PBCC does business and range from very large
diversified financial institutions to many small, specialized firms.  In
view of the market fragmentation and absence of any dominant competitors
which result from such competition, it is not possible to provide a
meaningful description of PBCC's competitive position in its markets.

                             7

<PAGE>

While financing rates are generally considered by customers to be the
principal factor in choosing a financing source, the Company believes
there are additional important factors related to a customer's decision,
including simplicity of documentation, flexibility and ease of doing
business over the duration of the contract. PBCC seeks to distinguish
itself from its competition by providing excellent service to its
customers.  PBCC considers its documentation and systems to be among the
best in the industry.  The Company has an established communication
network in its regional offices to eliminate costly delays and to
increase the quality of service offered to customers and vendors.

PBI has historically been a leading supplier of certain products and
services in its business segments, particularly postage meters and
mailing machines.  However, all segments have strong competition from a
number of companies.  In particular, PBI is facing competition in many
countries for new placements from several postage meter and mailing
machine suppliers, and its mailing systems products face some competition
from products and services offered as alternative means of message
communications.  Pitney Bowes believes that its long experience and
reputation for product quality, and its sales and support service
organizations, along with PBCC, are important factors in influencing
customer choices with respect to its products and services.

Several states have ceilings on interest rates which may be charged to
commercial customers on secured lending transactions.  PBCC may be
required to charge lower interest rates in certain jurisdictions than it
charges elsewhere, or to cease offering secured lending transactions in
such states.  PBCC does not extend consumer credit as defined in the
Federal Consumer Credit Protection Act.  Accordingly, PBCC's financing
transactions are not subject to that Act.

                         FUNDING POLICY
                         --------------

PBCC's borrowing strategy is to use a balanced mix of debt maturities,
variable- and fixed-rate debt and interest rate swap agreements (interest
rate swaps) to control its sensitivity to interest rate volatility.  The
Company utilizes interest rate swaps when it considers the economic
benefits to be favorable.  Interest rate swaps have been principally
utilized to fix interest rates on commercial paper and/or obtain a lower
cost on debt than would otherwise be available absent the swap.  The
Company may borrow through the sale of commercial paper, under its
confirmed bank lines of credit and by private and public offerings of
intermediate- or long-term debt securities.  The Company may also issue
debt securities having  maturities ranging from nine months to 30 years
through a medium-term note program.

                             8

<PAGE>

While the Company's funding strategy of balancing short-term and
longer-term borrowings and variable- and fixed-rate debt may reduce
sensitivity to interest rate changes over the long-term, effective
interest costs have been and will continue to be impacted by interest
rate changes.  The Company periodically adjusts prices on its new leasing
and financing transactions to reflect changes in interest rates; however,
the impact of these rate changes on revenue is usually less immediate
than the impact on borrowing costs.

                           EMPLOYEE RELATIONS
                           ------------------

At December 31, 1996, 972 people were employed by the Company and its
subsidiaries. Employee relations are considered to be highly
satisfactory. Management follows the policy of keeping employees informed
of its decisions, and encourages and implements suggestions whenever
practicable.

Item 2.  Properties
         ----------

All of the Company's office space is occupied under operating leases with
original terms ranging from one to eight years.  PBCC's executive and
administrative offices are located in Norwalk, Connecticut.  PBCC has
three regional offices located throughout the United States and seven
district sales offices located in or near major metropolitan areas.
Colonial Pacific Leasing Corporation's executive and administrative
offices are located in Tualatin, Oregon.  Atlantic Mortgage & Investment
Corporation's executive and administrative offices are located in
Jacksonville, Florida.

Item 3.  Legal proceedings
         -----------------

From time to time, the Company is a party to lawsuits that arise in the
ordinary course of its business.  These lawsuits may involve litigation
by or against the Company to enforce contractual rights under vendor,
insurance or other contracts; lawsuits by or against the Company relating
to equipment, service or payment disputes with customers; disputes with
employees; or other matters.  The Company is currently a defendant in a
number of lawsuits, none of which should have, in the opinion of
management and legal counsel, a material adverse effect on the Company's
financial position or results of operations.

                             9

<PAGE>

Item 4. Submission of matters to a vote of security holders
        ---------------------------------------------------

Omitted pursuant to General Instruction J.

                           Part II

Item 5. Market for the registrant's common equity and
        related stockholder matters
        ------------------------------------------------

All of the Company's common stock is owned by Pitney Bowes Inc.
Accordingly, there is no public trading market for the Company's common
stock.  The Board of Directors declared and the Company paid dividends to
PBI in amounts totaling $71.2 million in 1996, $62.0 million in 1995 and
$42.0 million in 1994.  The Company intends to continue to pay dividends
to PBI in 1997.

                             10

<PAGE>

Item 6.  Selected financial data
         -----------------------
<TABLE>
The following tables summarize selected financial data for the Company, and should be read in conjunction with the more
detailed financial statements and related notes thereto included under Item 8 of this report.
<CAPTION>
(Dollars in thousands)                                                              December 31
                                                    ----------------------------------------------------------------------
For the Year                                             1996           1995          1994           1993           1992
------------                                        ----------    ----------     ----------     ----------     ----------
<S>                                                <C>            <C>           <C>            <C>            <C>
Gross finance contracts acquired                   $ 1,908,105    $ 2,158,549   $ 1,627,974    $ 1,405,516    $ 1,425,450
                                                    ==========    ==========     ==========     ==========     ==========

Finance income                                     $   745,998    $  673,014    $   560,216    $   513,454    $   494,494
Equipment sales                                         26,666         2,687         45,747              -              -
Selling, general and administrative expenses           175,235       149,483        113,453         99,332         90,079
Depreciation and amortization                           40,447        32,031         26,497         16,545         13,936
Cost of equipment sales                                 22,821         2,214         43,039              -              -
Provision for credit losses                             66,529        58,549         56,133         70,245         58,181
Interest expense                                       201,543       202,090        151,239        137,372        146,594
Nonrecurring items, net                                      -             -         (3,311)             -              -
                                                    ----------    ----------     ----------     ----------     ----------
Income before income taxes                             266,089       231,334        218,913        189,960        185,704
Provision for income taxes                              86,855        72,678         71,820         66,475         64,942
                                                    ----------    ----------     ----------     ----------     ----------
Income before effect of accounting changes             179,234       158,656        147,093        123,485        120,762
Effect of accounting changes (1)                             -             -         (2,820)             -         (1,866)
                                                    ----------    ----------     ----------     ----------     ----------
Net income                                         $   179,234    $   158,656   $   144,273    $   123,485    $   118,896
                                                    ==========    ==========     ==========     ==========     ==========
Ratio of earnings to fixed charges (2)                   2.31X         2.14X          2.43X          2.37X          2.25X

At Year End
-----------
Gross finance assets
 Internal small-ticket programs                     $2,039,567    $1,872,593     $1,697,890     $1,497,678     $1,342,622
 External large-ticket programs                      2,433,450     2,574,338      2,485,419      2,415,370      2,399,918
 External small-ticket programs                      1,054,120     1,003,702        746,689        670,771        623,403
                                                     ---------     ---------      ---------      ---------      ---------
Total gross finance assets                           5,527,137     5,450,633      4,929,998      4,583,819      4,365,943
Unearned income                                     (1,285,778)   (1,333,280)    (1,234,928)    (1,173,297)    (1,204,261)
                                                     ---------     ---------      ---------      ---------      ---------
Finance assets                                      $4,241,359    $4,117,353     $3,695,070     $3,410,522     $3,161,682
                                                     =========     =========      =========      =========      =========
Investment in leveraged leases                      $  617,970    $  562,500     $  478,650     $  298,914     $  274,846
                                                     =========     =========      =========      =========      =========
Investment in operating leases, net                 $   86,634    $  114,587     $   95,684     $   63,899     $   45,432
                                                     =========     =========      =========      =========      =========
Allowance for credit losses                         $  (98,721)   $ (101,355)    $  (95,271)    $  (98,311)    $  (79,177)
                                                     =========     =========      =========      =========      =========
Total assets                                        $5,347,002    $5,057,874     $4,451,837     $3,931,462     $3,618,164
                                                     =========     =========      =========      =========      =========
Senior notes payable
 Within one year                                    $1,901,581    $2,122,880    $ 2,075,591    $ 1,735,607    $      1,475,630
 After one year                                      1,275,000     1,020,500        745,500        775,295        857,278
                                                    ----------    ----------     ----------     ----------     ----------
Total senior notes payable                          $3,176,581    $3,143,380   $ 2,821,091    $ 2,510,902    $ 2,332,908
                                                    ==========    ==========     ==========     ==========     ==========
Short-term notes payable to affiliates              $  139,400   $   149,709    $         -    $         -    $    31,025
                                                    ==========    ==========     ==========     ==========     ==========
Subordinated notes payable                         $   229,154    $  170,857  $   133,735    $   108,834    $    86,734
                                                    ==========    ==========     ==========     ==========     ==========
Stockholder's equity                               $   978,028    $  869,994   $   773,338    $   671,065    $   581,138
                                                    ==========    ==========     ==========     ==========     ==========
Debt to equity                                          3.62:1        3.98:1         3.82:1         3.90:1         4.22:1

<FN>
(1) Effective January 1, 1994, the Company adopted Statement of Financial Accounting Standards No. 112 entitled "Employers'
Accounting for Postemployment Benefits" (FAS 112).  Effective January 1, 1992, the Company adopted Statement of Financial
Accounting Standards No. 106 entitled "Employers' Accounting for Postretirement Benefits Other Than Pensions" (FAS 106).
For further discussion, see Note 18 to the Company's consolidated financial statements.

(2) In computing the ratio of earnings to fixed charges, earnings have been calculated by adding to earnings before income taxes
the amount of fixed charges.  Fixed charges consist of interest on debt and a portion of net rental expense deemed to represent
interest.
</FN>
</TABLE>

                             11

<PAGE>

Item 7.       Management's discussion and analysis of financial
              condition and results of operations
              -------------------------------------------------


Events Impacting Comparability
------------------------------

The Company adopted Statement of Financial Accounting Standards No.
112, "Employers' Accounting for Postemployment Benefits" (FAS 112),
as of January 1, 1994. FAS 112 requires that postemployment
benefits be recognized on the accrual basis of accounting. The
effect of adopting FAS 112 in the first quarter of 1994 was a one-
time non-cash, after-tax charge of $2.8 million (net of
approximately $1.9 million of income taxes). Additional information
with respect to accounting for postemployment benefits is disclosed
in Note 18 to the Company's consolidated financial statements.


Accounting Changes
------------------

The Company adopted Statement of Financial Accounting Standards No.
121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of" (FAS 121), on January 1, 1996.
The Company periodically reviews the fair value of long-lived
assets, the results of which have had no material affect on the
Company's reported results.

The Company also adopted Statement of Financial Accounting
Standards No. 122, "Accounting for Mortgage Servicing Rights" (FAS
122), on January 1, 1996.  FAS 122 requires that capitalized
mortgage servicing rights be assessed periodically for impairment
based on the fair value of those rights.  Based on the evaluations
performed throughout the year, no impairment was recognized in
PBCC's mortgage servicing rights portfolio.

In 1996, Statement of Financial Accounting Standards No. 125,
"Accounting for Transactions and Servicing of Financial Assets and
Extinguishments of Liabilities" (FAS 125) was issued.  This
statement may impact the method used to sell finance assets on a
prospective basis.  This statement must be adopted effective
January 1, 1997.

                             12

<PAGE>

Results of Operations
---------------------

The Company's finance income increased 10.8 percent to $746.0
million in 1996 compared with $673.0 million in 1995, which was up
20.1 percent from 1994.  Finance income for Internal small-ticket
financing programs increased 2.5 percent to $308.1 million in 1996
compared with $300.7 million in 1995, which was up 12.8 percent
from 1994.  The small increase in 1996 is primarily due to
exclusion of the Dictaphone and Monarch portfolios in the Internal
small-ticket segment for 1996, partly offset by higher investment
levels for the Mailing and Copier portfolios and higher income from
fee-based programs.  Finance income for External large-ticket
financing programs increased 1.9 percent to $199.7 million in 1996
compared with $195.9 million in 1995, which was up 17.4 percent
from 1994.  The increase in 1996 compared with 1995 is primarily
due to higher income from fee-based programs and the sale of $139
million of finance assets in March, 1996, substantially offset by
lower investment levels and lower lease rates on new business.
Finance income for External small-ticket financing programs
increased 32.9 percent to $185.2 million in 1996 compared with
$139.3 million in 1995, which was up 36.8 percent from 1994.  The
increase in 1996 as compared to 1995 is due to the inclusion of the
Dictaphone and Monarch portfolios in the External small-ticket
segment for 1996, higher investment levels, higher lease rates on
new business and higher income from fee-based programs.  Income
from fee-based programs include gains from the sale of $270 million
and $100 million of External small-ticket finance assets in 1996
and 1995, respectively.  The External small-ticket asset sale
figures reflect the May, 1996 Custom Vendor Finance (CVF) sale of
its operations and portfolio of secured loans (valued at $126
million with an associated pre-tax gain of $3.2 million).
Excluding the sale of finance assets and the inclusion of
Dictaphone and Monarch, finance income for External small-ticket
financing programs would have increased 21.5 percent in 1996 and
29.5 percent in 1995.  Revenue generated from mortgage servicing
increased 42.7 percent to $53.0 million in 1996 compared with $37.1
million in 1995, which was up 48.4 percent from 1994.  The
increases for the current and prior year are due to a growing
mortgage servicing portfolio and is consistent with the Company's
strategy to increase its fee-based programs.

During 1996, the Company sold operating lease assets which
generated $26.7 million in revenue compared to $2.7 million in
1995.  The cost of such equipment sales was $22.8 million in 1996
and $2.2 million in 1995.

                             13

<PAGE>

Selling, general and administrative (SG&A) expenses increased 17.2
percent to $175.2 million in 1996 compared with $149.5 million in
1995, which was up 31.8 percent from 1994.  SG&A expenses for
Internal small-ticket financing programs increased 7.7 percent to
$60.4 million in 1996 compared to $56.2 million in 1995, which was
3.9 percent above 1994.  The increase over the prior year is
principally due to higher startup and personnel costs related to
the launch of the Purchase Power (SM) program and to a lesser
degree higher sales assistance fees paid to PBI in 1996.  SG&A
expenses for External large-ticket financing programs increased
20.2 percent to $20.8 million in 1996 compared with $17.3 million
in 1995, up 24.9 percent from 1994.  The increases in 1996 and 1995
are due to higher personnel related costs and higher utilization of
Corporate systems and legal resources and support.  SG&A expenses
for External small-ticket financing programs increased 20.5 percent
to $74.4  million in 1996 compared with $61.7 million in 1995,
which was up 74.6 percent from 1994.  The increases in 1996 and
1995 are primarily due to portfolio growth, higher marketing fees
paid to brokers, impact of the sales of finance assets in both
years and the inclusion of the Dictaphone and Monarch portfolios in
the External small-ticket segment for 1996.  Excluding the sale of
finance assets and the inclusion of Dictaphone and Monarch, SG&A
for External small-ticket financing programs would have increased
26.6 percent in 1996 and 58.6 percent in 1995.  SG&A expenses
related to mortgage servicing increased 35.1 percent to $18.9
million in 1996 compared with $14.0 million in 1995, which was up
37.2 percent from 1994 primarily due to a growing mortgage
servicing portfolio. SG&A expenses related to the start-up of
residual value operations was $.7 million in 1996 and $.3 million
in 1995.

Depreciation on operating leases was $15.4 million in 1996 and
$13.5 million in 1995 reflecting a slightly higher operating lease
average investment balance and adjustments during 1996.
Amortization of mortgage servicing rights and acquisition fees was
$22.2 million in 1996 compared to $16.1 million in 1995.  This
increase is principally due to a larger mortgage servicing
portfolio in 1996.  The amortization of fees incurred in connection
with the 1993 majority-owned commercial aircraft partnership was
$2.5 million in 1996 and $2.4 million in 1995.  Amortization of
Financial Structures LTD. (FSL) acquisitions costs was $.4 million
in 1996.

                             14

<PAGE>

The provision for credit losses in 1996 increased 13.6 percent to
$66.5 million compared to $58.5 million for 1995, which increased
4.3 percent from 1994.  The provision for credit losses for the
Internal small-ticket financing programs decreased 9.5 percent to
$31.0 million in 1996 compared with a provision of $34.2 million in
1995, which had increased 5.4 percent from 1994.  The provision for
credit losses for the External small-ticket financing programs
increased 32.9 percent to $34.8 million in 1996 compared with $26.2
million in 1995, which increased 18.4 percent from 1994.  The
increase for External small-ticket financing programs in 1996 is
principally due to higher earning asset levels, the impact of
finance asset sales in 1996 and 1995 and the inclusion of the
Dictaphone and Monarch portfolios in the External small-ticket
segment for 1996.  Excluding the impact of asset sales and the
inclusion of Dictaphone and Monarch, the provision for credit
losses for the External small-ticket programs would have increased
22.7 percent in 1996 and 6.3 percent in 1995, respectively.  The
provision for credit losses for the External large-ticket financing
programs was a charge of $.7 million in 1996 compared with a credit
of $1.9 million in 1995, reflecting adjustments for management's
current evaluation of expected losses.

As disclosed in previous filings, in December 1992, as part of the
restructuring of its German affiliate, Adrema Leasing Corporation
(Adrema), the Company purchased certain finance receivables and
other assets from Adrema.  Based on the evaluation of these assets,
Pitney Bowes and the Company believe that sufficient reserves for
credit losses are in place to provide for currently expected
losses.  As part of the orderly liquidation of assets from leasing
non-Pitney Bowes products in Germany, Adrema continues to bill and
collect accounts and repossess and remarket collateral where
possible over the remainder of the lease terms.

The Company's allowance for credit losses as a percentage of net
lease receivables (net investments before allowance for credit
losses plus the uncollected principal balance of receivables sold,
exclusive of assets held for sale) was 1.88 percent at December 31,
1996, 2.03 percent at December 31, 1995 and 2.14 percent at
December 31, 1994.  PBCC charged $69.2 million, $52.5 million and
$59.2 million against the allowance for credit losses in 1996, 1995
and 1994, respectively.  These write-offs included $20.9 million,
$14.2 million and $25.2 million in 1996, 1995 and 1994,
respectively, which were related to assets purchased from Adrema.

Interest expense was $201.6 million in 1996 compared with $202.1
million in 1995, a decrease of .3 percent.  The decrease in 1996
reflects lower short-term interest rates, partially offset by
slightly higher average borrowings required to fund additional
investments in earning assets.  The effective interest rate on
short-term average borrowings was 4.89 percent in 1996 compared to
5.50 percent in 1995 and 4.19 percent in 1994.  The Company does
not match fund its financing investments and does not apply
different interest rates to its various financing programs.

                             15

<PAGE>

The effective tax rate for 1996 was 32.6 percent compared to 31.4
percent for 1995 and 32.8 percent in 1994.  The higher effective
tax rate is principally due to the declining impact of the residual
portfolio purchase completed in the fourth quarter of 1994 and a
lower level of tax exempt income.

Income before effect of accounting change increased 13.0 percent to
$179.2 million in 1996 compared with $158.7 million in 1995, which
was up 7.9 percent from 1994.  The increase in 1996 is primarily
attributable to higher External Financing Division asset sales,
higher Internal Financing Division investment levels, additional
fee-based income and lower short-term interest rates partly offset
by higher SG&A and depreciation and amortization expenses.

The Company's ratio of earnings to fixed charges was 2.31 times for
1996 compared with 2.14 times for 1995 and 2.43 times for 1994.

Liquidity and Capital Resources
-------------------------------

The Company's principal sources of funds are from operations and
borrowings.  It has been PBCC's practice to use a balanced mix of
debt maturities, variable- and fixed-rate debt and interest rate
swap agreements (interest rate swaps) to control its sensitivity to
interest rate volatility.  PBCC's debt mix was 58 percent short-
term and 42 percent long-term at December 31, 1996 and 66 percent
short-term and 34 percent long-term at December 31, 1995.  The
Company utilizes interest rate swaps when it considers the economic
benefits to be favorable.  Interest rate swaps have been
principally utilized to fix interest rates on commercial paper
and/or obtain a lower cost on debt than would otherwise be
available without the interest rate swap.  PBCC's swap-adjusted
fixed rate versus variable rate debt mix was 43 percent variable
rate and 57 percent fixed rate at December 31, 1996 and 57 percent
variable rate and 43 percent fixed rate at December 31, 1995.  The
Company may borrow through the sale of commercial paper, under its
confirmed bank lines of credit, and by private and public offerings
of intermediate- or long-term debt securities.

In July 1996, the Company issued $200 million of medium-term notes
due in July 1999 and $100 million of medium-term notes due in July
2001 with coupon rates of 6.54 percent and 6.78 percent,
respectively.

In September 1996, the Company issued $100 million of medium-term
notes due in October 1998 and $100 million of medium-term notes due
in October 2001 with coupon rates of 6.31 percent and 6.80 percent,
respectively.

                             16

<PAGE>

The Company has $250 million of unissued debt securities remaining
from a shelf registration statement filed with the Securities and
Exchange Commission in September 1995. The $250 million available
under this shelf registration statement should meet the Company's
financing needs for approximately the next year.  The Company also
had unused lines of credit and revolving credit facilities totaling
$1.50 billion at December 31, 1996, largely supporting its
commercial paper borrowings.

In January 1994, the Company sold approximately $88 million of
assets with recourse in a privately-placed transaction with a
third-party investor.  These assets, representing finance
receivables and other assets, were previously transferred in
December 1992 from the Company's German affiliate, Adrema Leasing
Corporation.  This transaction had no material effect on the
Company's results.  Additionally, during 1996, 1995 and 1994, the
Company sold approximately $270 million, $100 million and $55
million, respectively, of External small-ticket finance assets and
in 1996 the Company sold approximately $139 million of External
large-ticket finance assets with recourse in privately-placed
transactions with third-party investors.  The proceeds from the
sale of these assets were used to repay a portion of the Company's
commercial paper borrowings.  The uncollected principal balance of
receivables sold at December 31, 1996 and 1995 was $270 million and
$149 million, respectively.

The Company continues to develop strategies in support of ongoing
debt level management.  Emphasis on fee-based transactions and
consideration of the sale of financing transactions are expected to
continue to control the growth of External large-ticket investments
and debt levels.  These reductions are part of the Company's
ongoing strategy to shift the foundation of the External financing
business from asset-based to service-based revenues.

Additional financing will continue to be arranged as deemed
necessary.  Borrowing requirements will be primarily dependent upon
the level of equipment purchases from Pitney Bowes and its
subsidiaries, the level of External Division financing activity,
financing of any fee-based business initiatives and the refinancing
of maturing debt.

                             17

<PAGE>

The Company's utilization of derivative instruments is currently
limited to interest rate swap agreements (interest rate swaps) and
foreign currency exchange forward contracts (foreign currency
contracts).  The Company periodically enters into interest rate
swaps as a means of managing interest rate exposure.  The interest
rate differential to be paid or received is recognized over the
life of the agreements as an adjustment to interest expense.  The
Company is exposed to credit loss in the event of non-performance
by the counterparties to the interest rate swaps to the extent of
the differential between fixed- and variable-rates; such exposure
is considered minimal.  The Company has entered into foreign
currency contracts for the purpose of minimizing its risk of loss
from fluctuations in exchange rates in connection with certain
intercompany loans and certain transfers to the Company by foreign
affiliates of foreign currency denominated lease receivables.  The
Company is exposed to credit loss in the event of non-performance
by the counterparties to the foreign currency contracts to the
extent of the difference between the spot rate at the date of the
contract delivery and the contracted rate; such exposure is
considered minimal. See Note 13 to the Company's consolidated
financial statements for further information regarding derivative
instruments.

The Company's liquidity ratio (finance contracts receivable plus
residuals expected to be realized in cash over the next 12 months
to current maturities of debt over the same period) was .78 and .61
times at December 31, 1996 and 1995, respectively.

Under the Finance Agreement between Pitney Bowes and the Company,
Pitney Bowes is obligated on a quarterly basis to make payments, to
the extent necessary, so that the Company's income available for
fixed charges for the preceding one year period shall not be less
than 1.25 times its fixed charges.  Pitney Bowes has also agreed to
make any past due principal, interest or premium payments on behalf
of PBCC in respect to all approved debt and/or commercial paper, in
the event that PBCC is unable to make such payments.  To date, no
such payments from Pitney Bowes have been required.

The Company will continue to use cash to invest in finance assets
with emphasis on Internal and External small-ticket leasing
transactions and selective investment in External large-ticket
financing transactions.  The Company believes that cash generated
from operations and collections on existing lease contracts will
provide the majority of cash needed for such investment activities.
Additional cash, to the extent needed, is expected to be provided
from commercial paper and intermediate- or long-term debt
securities.  While the Company expects that market acceptance of
its short- and long-term debt will continue to be strong,
additional liquidity is available, if needed, under revolving
credit facilities and credit lines.

                             18

<PAGE>

Legal, Environmental and Regulatory Matters
-------------------------------------------

From time to time, the Company is a party to lawsuits that arise in
the ordinary course of its business.  These lawsuits may involve
litigation by or against the Company to enforce contractual rights
under vendor, insurance or other contracts; lawsuits by or against
the Company relating to equipment, service or payment disputes with
customers; disputes with employees; or other matters.  The Company
is currently a defendant in a number of lawsuits, none of which
should have, in the opinion of management and legal counsel, a
material adverse effect on the Company's financial position or
results of operations.

Pitney Bowes is subject to Federal, state and local laws and
regulations related to the environment, and is currently named as
a member of various groups of potentially responsible parties in
administrative or court proceedings.  Based on facts presently
known to it, PBI believes that the outcome of any current
proceeding will not have a material adverse effect on its financial
condition or results of operations.

In June 1995, the United States Postal Service (U.S.P.S.) issued
final regulations on the manufacture, distribution and use of
postage meters.  The regulations cover four general categories:
meter security, administrative controls, Computerized Meter
Resetting Systems (C.M.R.S.) and other issues.  In general, the
regulations put reporting and performance obligations on meter
manufacturers, outline potential administrative sanctions for
failure to meet these obligations and require changes in the fund
management system of C.M.R.S., (such as PBI's Postage by Phone(R)
System), to give the U.S.P.S. more direct control over meter
licensee deposits.  PBI is working with the U.S.P.S. to ensure that
these regulations provide mailing customers and the U.S.P.S. with
the intended benefits, and that Pitney Bowes also benefits.  Pitney
Bowes has begun implementation of these changes, including
modifying its Postage by Phone(R) System so that customers deposit
prepayments of postage into a U.S.P.S. account rather than a trust
account.  Resetting meters through Postage by Phone(R) still requires
the customer to request an authorization and a reset code from
Pitney Bowes, a service for which PBI charges a fee.  PBI continues
to believe that the financial impact of implementating these
regulations will not be material to its results of operations.

                             19

<PAGE>

In May 1996, the U.S.P.S. issued a proposed schedule for the
phase out of mechanical meters in the United States marketplace.
The schedule proposed that: (i) as of June 1, 1996, placements of
mechanical meters will be available only as replacements for
existing licensed mechanical meters; and (ii) as of March 1, 1997,
mechanical meters may not be used by persons or firms who process
mail for a fee; and (iii) as of December 31, 1997, mechanical
meters that interface with mail machines or processors will no
longer be approved; and (iv) as of March 1, 1999, all other
mechanical meters (stand-alone meters) will no longer be approved.

Pitney Bowes has voluntarily halted new placements of mechanical
meters in the United States as of June 1, 1996.  Pitney Bowes also
has been actively and voluntarily pursuing removal from the market
by March 1997, of mechanical meters used by persons or firms who
process mail for a fee as set forth in the U.S.P.S. proposed
schedule for that segment of meter users.  Further, PBI agreed,
in March 1997, to use its best efforts to remove from the market
mechanical systems meters (meters that interface with mail machines
or processors), by a revised target date of December 31, 1998, in
lieu of the December 31, 1997 date specified in the U.S.P.S proposed
schedule.

Pitney Bowes will continue to work with the U.S.P.S. to reach
agreement on all aspects of a mechanical meter migration schedule
that reflects the interests of PBI's customers while minimizing any
negative impact on itself.  PBI's constant focus on bringing new
technologies into the mailing market has already resulted in a
significant shift in the makeup of Pitney Bowes meter base.  In the
last 10 years, 1986 to 1996, the percentage of electronic meters in
the Pitney Bowes' U.S. installed base has risen from 6% to nearly 60%.
Until a mechanical meter migration plan is finalized, the financial
impact, if any, on PBI cannot be determined with certainty.  However,
based on the proposed schedule and agreements reached to date,
Pitney Bowes believes that the plan will not cause a material
adverse financial impact to the Company.

                             20

<PAGE>

The May 1996 U.S.P.S. proposal also contemplates the evolution of
metering technology to include a digital information-based indicia
standard which has not yet been developed.  In July 1996, the
U.S.P.S. proposed initial specifications for a digital information-
based indicia program.  The U.S.P.S. anticipates that digital
metering would eventually replace electronic metering in the United
States at some undetermined date in the future.  Pitney Bowes long-
term strategy also envisions the use of digital technology in new
product offerings, and PBI has taken the lead in deploying digital
meters in the marketplace with over 100,000 digital printing meters
already placed into service during 1995 and 1996.  Pitney Bowes
anticipates working with the U.S.P.S. in this effort to achieve a
timely and effective substitution plan.  However, until final
standards for a digital information-based indicia program are
completed, and transition to the new standard is clarified by the
U.S.P.S., the impact of this proposal, if any, on Pitney Bowes
cannot be determined.


-----------------------------------------------------------------


The Company wishes to caution readers that any forward-looking
statements (those which talk about the Company's or management's
current expectations as to the future), in this Form 10-K or made
by Company management involve risks and uncertainties which may
change based on various important factors.  Some of the factors
which could cause future financial performance to differ materially
from the expectations as expressed in any forward-looking statement
made by or on behalf of the Company include:  the level of business
and financial performance of Pitney Bowes, including the impact of
changes in postal regulations in the United States; the impact of
governmental financing regulations; the success of the Company in
developing strategies to manage debt levels, including the ability
of the Company to access the capital markets; the strength of
worldwide economies; the effects of and changes in trade, monetary
and fiscal policies and laws, and inflation and monetary
fluctuations, including changes in interest rates; the willingness
of customers to substitute financing sources; and the success of
the Company at managing customer credit risk and associated
collection and asset management efforts.

                             21

<PAGE>

Item 8.      Financial statements and supplementary data
             -------------------------------------------




Report of Independent Accountants




To the Stockholder and Board of Directors of
Pitney Bowes Credit Corporation

In our opinion, the consolidated financial statements listed in the
index appearing under Item 14(a)(1) and (2) on pages 51 and 52
present fairly, in all material respects, the financial position of
Pitney Bowes Credit Corporation and its subsidiaries (the
"Company") at December 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the
period ended December 31, 1996, in conformity with generally
accepted accounting principles.  These financial statements are the
responsibility of the Company's management; our responsibility is
to express an opinion on these financial statements based on our
audits.  We conducted our audits of these statements in accordance
with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable
basis for the opinion expressed above.

As discussed in Note 18 to the consolidated financial statements,
the Company adopted a new accounting standard for postemployment
benefits in 1994.


PRICE WATERHOUSE LLP



Stamford, Connecticut
January 17, 1997



                             22

<PAGE>

<TABLE>
Consolidated Statement of Income
(Dollars in thousands)
<CAPTION>
---------------------------------------------------------------------------------------
Years Ended December 31                        1996               1995             1994
<S>                                        <C>                <C>              <C>
Revenue
  Finance income                           $745,998           $673,014         $560,216
  Equipment sales                            26,666              2,687           45,747
                                            -------            -------          -------
    Total revenue                           772,664            675,701          605,963
                                            -------            -------          -------
Expenses
  Selling, general and administrative       175,235            149,483          113,453
  Depreciation and amortization              40,447             32,031           26,497
  Cost of equipment sales                    22,821              2,214           43,039
  Provision for credit losses                66,529             58,549           56,133
  Interest                                  201,543            202,090          151,239
  Nonrecurring items, net                         -                  -           (3,311)
                                            -------            -------          -------
    Total expenses                          506,575            444,367          387,050
                                            -------            -------          -------
Income before income taxes                  266,089            231,334          218,913
Provision for income taxes                   86,855             72,678           71,820
                                            -------            -------          -------
Income before effect of accounting
change                                      179,234            158,656          147,093
Effect of accounting change                       -                  -           (2,820)
                                            -------            -------          -------
Net income                                 $179,234           $158,656         $144,273
                                            =======            =======          =======
</TABLE>
<TABLE>
Consolidated Statement of Retained Earnings
(Dollars in thousands)

---------------------------------------------------------------------------------------
<CAPTION>
Years Ended December 31                        1996               1995             1994

<S>                                        <C>                <C>              <C>
Retained earnings at beginning
 of year                                   $782,269           $685,613         $583,340
Net income for the year                     179,234            158,656          144,273
Dividends paid to Pitney Bowes Inc.         (71,200)           (62,000)         (42,000)
                                            -------            -------          -------
Retained earnings at end of year           $890,303           $782,269         $685,613
                                            =======            =======          =======
</TABLE>

The accompanying notes are an integral part of the financial statements.


                             23

<PAGE>

Consolidated Balance Sheet
(Dollars in thousands)

-------------------------------------------------------------------------------

December 31                                           1996                 1995

Assets

Cash                                            $   20,937           $   10,129
                                                 ---------            ---------
Investments:
  Finance assets                                 4,241,359            4,117,353
  Investment in leveraged leases                   617,970              562,500
  Assets transferred from affiliate                 32,825               53,717
  Investment in operating leases, net of
    accumulated depreciation: 1996,
    $44,952; 1995, $51,657                          86,634              114,587
  Allowance for credit losses                      (98,721)            (101,355)
                                                 ---------            ---------
    Net investments                              4,880,067            4,746,802
                                                 ---------            ---------
Mortgage servicing rights, net of
  accumulated amortization: 1996,
  $63,666; 1995, $42,554                           138,146              108,851
Assets held for sale                               140,420               71,917
Other assets                                       167,432              120,175
                                                 ---------            ---------
Total assets                                    $5,347,002           $5,057,874
                                                 =========            =========
Liabilities

Senior notes payable within one year            $1,901,581           $2,122,880
Short-term notes payable to affiliates             139,400              149,709
Accounts payable to affiliates                     168,558              127,007
Accounts payable and accrued liabilities           176,657              155,603
Deferred taxes                                     478,624              441,324
Senior notes payable after one year              1,275,000            1,020,500
Subordinated notes payable                         229,154              170,857
                                                 ---------            ---------
  Total liabilities                              4,368,974            4,187,880
                                                 ---------            ---------
Stockholder's Equity

Common stock                                        46,000               46,000
Capital surplus                                     41,725               41,725
Retained earnings                                  890,303              782,269
                                                 ---------            ---------
  Total stockholder's equity                       978,028              869,994
                                                 ---------            ---------
Total liabilities and stockholder's equity      $5,347,002           $5,057,874
                                                 =========            =========

The accompanying notes are an integral part of the financial statements.

                             24

<PAGE>
<TABLE>
Consolidated Statement of Cash Flows
(Dollars in thousands)

-------------------------------------------------------------------------------------------------------
<CAPTION>
Years Ended December 31                            1996                   1995                     1994

Operating Activities
<S>                                          <C>                  <C>                   <C>
Net income                                   $  179,234             $  158,656              $   144,273
Effect of accounting change                           -                      -                    2,820
Adjustments to reconcile net income
  to net cash provided by operating
  activities:
    Provision for credit losses                  66,529                 58,549                   56,133
    Depreciation and amortization                40,447                 32,031                   26,497
    Cost of equipment sales                      22,821                  2,214                   43,039
    Increase in deferred taxes                   37,300                 99,290                   49,420
    Increase (decrease) in accounts
     payable to affiliates                       41,551                (26,353)                  (9,554)
    Increase (decrease) in accounts
     payable and accrued liabilities             21,054                (72,676)                  40,326
    Increase in assets transferred
     from affiliate                              (6,226)               (35,582)                 (61,255)
    Other, net                                  (36,904)               (14,747)                  (3,817)
                                               ---------             ---------               ----------
      Net cash provided by operating
      activities                                365,806                201,382                  287,882
                                              ---------              ---------               ----------
Investing Activities

Investment in net finance
  assets                                     (1,624,033)            (1,527,065)              (1,180,025)
Investment in leveraged leases                  (22,446)               (43,509)                (174,622)
Investment in operating leases                  (20,348)               (35,067)                 (85,435)
Investment in assets held for sale             (326,691)              (151,640)                 (37,703)
Cash receipts collected under
  lease contracts net of finance
  income recognized                           1,693,475              1,142,254                  944,274
Investment in mortgage servicing
  rights                                        (50,407)               (64,310)                 (27,825)
Investment in affiliate                               -                      -                   (2,160)
Loans and advances to affiliated
  companies, net                                 (2,001)                38,991                   (8,462)
Additions to equipment and
  leasehold improvements                        (12,536)                (9,277)                  (4,001)
                                              ---------             ----------               ----------
     Net cash used in investment
       activities                              (364,987)              (649,623)                (575,959)
                                              ---------             ----------               ----------
</TABLE>

The accompanying notes are an integral part of the financial statements.

                             25

<PAGE>
<TABLE>
Consolidated Statement of Cash Flows
(Dollars in thousands)

-------------------------------------------------------------------------------------------------------
<CAPTION>
Years Ended December 31                            1996                   1995                     1994

Financing Activities
<S>                                            <C>                     <C>                      <C>
(Decrease) increase in short-term debt         (466,799)                76,789                  311,405
Short-term loans from affiliates                (10,309)               149,709                        -
Proceeds from issuance of senior
  notes payable after one year                  500,000                275,000                  200,000
Proceeds from issuance of
  subordinated debt                              58,297                 37,862                   24,901
Settlement of long-term debt                          -                (29,500)                (201,216)
Payments to settle subordinated debt                  -                   (740)                       -
Dividends paid to Pitney Bowes Inc.             (71,200)               (62,000)                 (42,000)
                                              ---------             ----------              ----------
     Net cash provided by financing
       activities                                 9,989                447,120                  293,090
                                              ---------             ----------               ----------
Increase (decrease) in cash                      10,808                 (1,121)                   5,013
Cash at beginning of year                        10,129                 11,250                    6,237
                                              ---------             ----------               ----------
Cash at end of year                          $   20,937            $    10,129              $    11,250
                                              =========             ==========               ==========

Interest paid                                $  197,256            $   199,346              $   164,181
                                              =========             ==========               ==========

Income taxes refunded, net                   $  (44,397)           $  (36,360)              $    (9,900)
                                              =========             ==========               ==========
</TABLE>

The accompanying notes are an integral part of the financial statements.

                             26

<PAGE>

Notes to Consolidated Financial Statements
(Dollars in thousands)

Note 1. - Summary of Significant Accounting Policies

Consolidation:  The consolidated financial statements include the
accounts of Pitney Bowes Credit Corporation and all of its subsidiaries
(the Company or PBCC).  All significant intercompany transactions have
been eliminated.

Use of estimates:  The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.

Reclassifications:  Certain amounts have been reclassified to conform
with current year presentation.

Basis of accounting for financing transactions:  At the time a finance
transaction is consummated, the Company records on its balance sheet the
total receivable, unearned income and the estimated residual value of
leased equipment.  Unearned income represents the excess of the total
receivable plus the estimated residual value over the cost of equipment
or contract acquired.  Unearned income is recognized as finance income
under the interest method over the term of the transaction.  Initial
direct costs incurred in consummating transactions, including fees paid
to Pitney Bowes Inc. (Pitney Bowes or PBI), are accounted for as part of
the investment in a direct financing lease and amortized to income using
the interest method over the term of the lease.

The Company has, from time-to-time, sold selected finance assets.  The
Company follows Statement of Financial Accounting Standards No. 77,
"Reporting by Transferors for Transfers of Receivables with Recourse",
when accounting for its sale of finance assets.  The difference between
the sale price and the net receivable, exclusive of residuals, is
recognized as a gain or loss.

In 1996, Statement of Financial Accounting Standards No. 125, "Accounting
for Transactions and Servicing of Financial Assets and Extinguishments of
Liabilities" (FAS 125) was issued.  This statement may impact the method
used to sell finance assets on a prospective basis.  This statement must
be adopted effective January 1, 1997.

Allowance for credit losses:  The Company evaluates the collectibility of
its net investment in finance assets based upon its loss experience and
assessment of prospective risk, and does so through ongoing reviews of
its exposures to net asset impairment.  The Company adjusts the carrying
value of its net investment in finance assets to the estimated
collectible amount through adjustments to the allowance for credit
losses.  Losses are charged against the allowance for credit losses.  For
further information see Note 7 - Allowance for Credit Losses.

                             27

<PAGE>

Notes to Consolidated Financial Statements
(Dollars in thousands)

Income taxes:  The Company's taxable results are included in the
consolidated Federal and certain state income tax returns of Pitney
Bowes.  For tax purposes, income from leases is recognized under the
operating method and represents the difference between gross rentals
billed and operating expenses.  Under a tax-sharing agreement between the
Company and Pitney Bowes, the Company makes payment to Pitney Bowes for
its share of consolidated income taxes, or receives cash equal to the
benefit of tax losses utilized in consolidated returns in exchange for
which it issues non-interest bearing subordinated notes with a maturity
one day after all senior debt is repaid.  Deferred taxes reflected in the
Company's balance sheet represent the difference between Federal and
state income taxes reported for financial and tax reporting purposes,
less non-interest bearing subordinated notes issued, including those
capitalized.

Investment in operating leases:  Equipment under operating leases is
depreciated over the initial term of the lease to its estimated residual
value.  Rental revenue is recognized on a straight-line basis over the
related lease term.

Mortgage servicing rights:  Mortgage servicing rights (MSR) represent the
cost of purchasing the right to service mortgage loans originated by
others.  MSR's are recorded at the lower of amortized cost or present
value of the estimated future net servicing income, which does not exceed
fair market value and are amortized in proportion to, and over the period
of, estimated future net servicing income of the underlying mortgages.
On January 1, 1996, the Company adopted Statement of Financial Accounting
Standards No. 122, "Accounting for Mortgage Servicing Rights" (FAS 122).
FAS 122 requires that capitalized MSR's be assessed periodically for
impairment based on the fair value of those rights.

The Company estimates the fair value of MSR's based on estimated future
net servicing income, using a valuation model which considers such
factors as market discount rates and loan prepayments.  The Company's
policy for evaluating MSR's is based on the predominant risk
characteristics of the underlying loans, which include adjustable rate
versus fixed rate, segregated into strata by loan type and interest rate
bands.  The Company may adjust amortization prospectively in response to
changes in actual and anticipated prepayment, foreclosure, delinquency
and cost experience.

Assets held for sale:  Certain high quality External large-ticket
transactions are funded and held for a short period of time pending sale
to prospective buyers.  Assets held for sale are segregated from the
Company's net investment amounts and are recorded at net carrying value
(cost plus accrued interest less finance receipts).  Income is recognized
when the contract for the sale of the asset is executed, representing the
excess of sale proceeds over net asset carrying value.  The Company does
not maintain a separate loss reserve for assets held for sale due to
their relatively short holding period and valuation method.

                             28

<PAGE>

Notes to Consolidated Financial Statements
(Dollars in thousands)

Note 2. - New Business Subsidiary

In December 1995, the Company invested $25.0 million for 100 percent of
the common stock of Financial Structures Limited (FSL).  This wholly-
owned and independent subsidiary provides residual value insurance to
unaffiliated third parties.  Residual value insurance typically
guarantees a lessor that a physical asset with significant market
liquidity will not sell for less than the asset's pre-agreed price on its
scheduled lease termination date.  The Company's liability is limited to
the deficiency, if any, between actual price and the guaranteed price on
the asset's specified scheduled lease termination date. Gross policy
premiums are collected at lease inception and amortized on a straight-
line basis over the life of the policy.

Note 3. - Finance Assets

The composition of the Company's finance assets is as follows:

December 31                                1996                  1995
                                     ----------            ----------
Gross finance receivables           $ 4,826,361           $ 4,801,084
Unguaranteed residual valuation         700,776               649,549
Initial direct cost deferred             91,588                89,173
Unearned income                      (1,377,366)           (1,422,453)
                                     ----------            ----------
  Finance assets                    $ 4,241,359           $ 4,117,353
                                     ==========            ==========

Gross finance receivables represent earning assets held by the Company
which are generally due in monthly, quarterly or semi-annual installments
over original periods ranging from 36 to 180 months.  In addition, gross
finance receivables for the Company's External large-ticket programs
include commercial jet aircraft transactions with original lease terms up
to 25 years and other non-commercial jet aircraft transactions with lease
terms ranging from three to 12 years.  The balance due at December 31,
1996, including estimated residual value realizable at the end of the
lease term, is payable as follows:

                                     Gross Finance Assets
                --------------------------------------------------------------
                  Internal          External        External
                small-ticket      large-ticket     small-ticket
                  programs          programs         programs            Total
                ------------     ------------      ------------      ---------
1997            $  792,791       $  261,779        $  402,418       $1,456,988
1998               568,286          227,071           294,668        1,090,025
1999               401,991          243,673           200,572          846,236
2000               214,437          253,319           117,233          584,989
2001                58,608          216,318            38,871          313,797
Thereafter           3,454        1,231,290               358        1,235,102
                 ---------         ---------        ---------        ---------
Total           $2,039,567        $2,433,450       $1,054,120       $5,527,137
                 =========         =========        =========        =========

                             29

<PAGE>
Notes to Consolidated Financial Statements
(Dollars in thousands)

Net equipment financed for Pitney Bowes products were $571.6 million,
$545.6 million and $521.0 million in 1996, 1995, and 1994,
respectively.  Net equipment financed for Dictaphone and Monarch
products were $19.1 million, $27.9 million and $30.8 million in 1996,
1995 and 1994, respectively.

During 1996, the Company sold approximately $409 million of External
large and small-ticket finance assets with recourse in privately-
placed transactions with third-party investors.  In 1995 and 1994, the
Company sold approximately $100 million and $55 million, respectively,
of finance assets in similarly structured transactions.  The
uncollected principal balance of receivables sold at December 31, 1996
and 1995 was $270 million and $149 million, respectively.  In
addition, the Company has sold receivables while retaining residual
value exposure of $55 million.  The maximum risk of loss in these
transactions arises from the possible non-performance of lessees to
meet the terms of their contracts and from changes in the value of the
underlying equipment.  Conversely, these contracts are supported by
the underlying equipment value and creditworthiness of customers.  As
part of the review of its exposure to risk, the Company believes
adequate provisions have been made for sold receivables which may
become uncollectible.

As of December 31, 1996, $537.4 million (12.7 percent) of the
Company's finance assets and $792.0 million (14.3 percent) of the
Company's gross finance assets were related to aircraft leased to
commercial airlines.  The Company considers its credit risk for these
leases to be minimal since all commercial aircraft lessees are making
payments in accordance with lease agreements.  The Company believes
any potential exposure in commercial aircraft investment is mitigated
by the value of the collateral as the Company retains a security
interest in the leased aircraft.

Note 4. - Net Investment in Leveraged Leases

The Company's net investment in leveraged leases is composed of the
following elements:

December 31                                   1996                 1995
                                          --------             --------
Net rents receivable                     $ 532,205            $ 519,306
Unguaranteed residual valuation            640,978              584,456
Unearned income                           (555,213)            (541,262)
                                          --------             --------
Investment in leveraged leases             617,970              562,500
Deferred taxes arising from
 leveraged leases (1)                     (257,760)            (216,873)
                                          --------             --------
Net investment in leveraged leases       $ 360,210            $ 345,627
                                          ========             ========

(1) Includes amounts reclassified to subordinated debt.


                             30

<PAGE>

Notes to Consolidated Financial Statements
(Dollars in thousands)

Following is a summary of the components of income from leveraged
leases:

December 31                          1996            1995            1994
                                   ------          ------          ------
Pretax leveraged lease income     $ 7,145         $11,236         $ 6,606
Income tax benefit                  7,080           4,609           5,091
                                   ------          ------          ------
Income from leveraged leases      $14,225         $15,845         $11,697
                                   ======          ======          ======

Leveraged lease assets acquired by the Company are financed primarily
through nonrecourse loans from third-party debt participants.  These
loans are secured by the lessee's rental obligations and the leased
property.  Net rents receivable represent gross rents less the
principal and interest on the nonrecourse debt obligations.
Unguaranteed residual values are principally based on independent
appraisals of the values of leased assets remaining at the expiration
of the lease.

Leveraged lease investments totaling $299.6 million (48.5 percent) are
related to commercial real estate facilities, with original lease
terms ranging up to 25 years.  Also included are ten aircraft
transactions with major commercial airlines, with a total investment
of $285.1 million (46.1 percent) and with original lease terms ranging
from 22 to 25 years and one transaction involving locomotives with a
total investment of $33.2 million (5.4 percent) with an original lease
term of 38 years.

Note 5. - Transfer of Assets from Affiliate

As disclosed in previous filings, in December 1992, as part of the
restructuring of its German affiliate, Adrema Leasing Corporation
(Adrema), the Company purchased certain finance receivables and other
assets from Adrema.  Based on the evaluation of these assets, Pitney
Bowes and the Company believe that sufficient reserves for credit
losses are in place to provide for currently expected losses.  As part
of the orderly liquidation of assets from leasing non-Pitney Bowes
products in Germany, Adrema continues to bill and collect accounts and
repossess and remarket collateral where possible over the remainder of
the lease terms.

                             31

<PAGE>

Notes to Consolidated Financial Statements
(Dollars in thousands)

Note 6. - Investment in Operating Leases, Net

The Company is the lessor of various types of equipment under
operating leases including data processing, transportation and
production equipment.

Minimum future rental payments to be received in each of the next five
years under noncancelable operating leases are $11.9 million in 1997,
$11.3 million in 1998, $8.0 million in 1999, $6.7 million in 2000,
$5.7 million in 2001 and $16.8 million in later years.

Note 7. - Allowance for Credit Losses

The following is a summary of the allowance for credit losses,
substantially all of which relates to lease financing:

                                           1996             1995           1994
                                        -------          -------         ------
Balance at beginning of period         $101,355         $ 95,271        $98,311
                                        -------          -------         ------

Additions charged to operations          66,529           58,549         56,133
                                        -------          -------         ------
Amounts written-off:
  Internal small-ticket programs         22,879           24,330         20,177
  External large-ticket programs            101              356            668
  External small-ticket programs         46,183           27,779         38,328
                                        -------          -------         ------
       Total write-offs                  69,163           52,465         59,173
                                        -------          -------         ------
Balance at end of period               $ 98,721         $101,355        $95,271
                                        =======          =======         ======

The increase in the amount of additions charged to operations in 1996
and 1995 compared to 1994 is the result of higher investment levels in
all of PBCC's financing programs and the impact of finance asset sales
in 1996 and 1995, offset by favorable adjustments to the External
large-ticket financing program provision reflecting management's
current evaluation of expected losses.

Write-offs related to assets purchased from Adrema totaled $20.9
million in 1996, $14.2 million in 1995 and $25.2 million in 1994.
Excluding the impact of the write-offs related to assets purchased
from Adrema, External small-ticket write-offs increased $11.7 million.
This increase is due to a 21 percent increase in the lease portfolio
at Colonial Pacific Leasing Corporation (CPLC) combined with a 28
percent increase in bankruptcies.  Management has implemented various
measures to control this increase including modifying new credit
policies and improving collection and recovery procedures.

                             32

<PAGE>

Notes to Consolidated Financial Statements
(Dollars in thousands)

In establishing the provision for credit losses, the Company utilizes
an asset based percentage.  This percentage varies depending on the
nature of the asset, recent historical experience, vendor recourse,
management judgement, and for External large-ticket financing
transactions, the credit ratings assigned by Moody's and Standard &
Poor's.  In evaluating the adequacy of reserves, estimates of expected
losses, again by nature of the asset, are utilized.  While historical
experience is the principal factor in determining loss percentages,
adjustments will also be made for current economic conditions,
deviations from historical aging patterns, seasonal write-off patterns
and levels of non-earning assets.  If the resulting evaluation of
expected losses differs from the actual aggregate reserve, adjustments
are made to the reserve.

For transactions in the Internal small-ticket programs, the Company
discontinues income recognition for finance receivables past due over
120 days.  The Company has utilized this period because historically
internal collection efforts have continued for this time period.  In
External large-ticket programs, income recognition is discontinued as
soon as it is apparent that the obligor will not be making payments in
accordance with lease terms, such as in the event of bankruptcy.  In
External small-ticket programs, income recognition is discontinued
when accounts are past due over 90 days.

Finance receivables are written-off to the allowance for credit losses
after collection efforts are exhausted and the account is deemed
uncollectible.  For Internal and External small-ticket financing
transactions, this usually occurs near the point in time when the
transaction is placed in a non-earning status.  For External
large-ticket financing transactions, write-offs are normally made
after efforts are made to repossess the underlying collateral, the
repossessed collateral is sold, and efforts to recover remaining
balances are exhausted.  On External large-ticket financing
transactions, periodic adjustments also may be made and/or a cost
recovery approach for cash proceeds utilized to reduce the face value
to an estimated present value of the future expected recovery.  All
write-offs and adjustments are recorded on a transaction by
transaction basis.

Resumption of income recognition on Internal and External small-ticket
program non-earning accounts occurs when payments are reduced to 60
days or less past due.  On External large-ticket financing
transactions, resumption of income recognition occurs after the
Company has had sufficient experience on resumption of payments and is
satisfied that such payments will continue in accordance with the
original or restructured contract terms.

                             33

<PAGE>

Notes to Consolidated Financial Statements
(Dollars in thousands)

The carrying values of non-performing, restructured and troubled finance
assets are outlined below.  There are no leveraged leases classified under
these categories.

<TABLE>
<CAPTION>
December 31                                      1996               1995               1994
                                               ------             ------             ------
Non-performing (non-accrual) transactions
-----------------------------------------
<S>                                           <C>                <C>                <C>
  Internal small-ticket programs              $12,614            $12,248            $10,148
  External large-ticket programs                1,248              1,448              1,998
  External small-ticket programs               25,161              8,874              9,240
                                               ------             ------             ------
  Total                                       $39,023            $22,570            $21,386
                                               ======             ======             ======
Restructured transactions
-------------------------
  External large-ticket programs              $     -            $     -            $ 2,642
                                               ------             ------             ------
  Total                                       $     -            $     -            $ 2,642
                                               ======             ======             ======
Troubled (potential problem) transactions
-----------------------------------------
  External large-ticket programs              $13,810            $ 5,892            $ 6,991
                                               ------             ------             ------
  Total                                       $13,810            $ 5,892            $ 6,991
                                               ======             ======             ======
</TABLE>

The increase in non-performing transactions in 1996 in the External small-
ticket programs reflects higher volumes together with an increase in
bankruptcy levels among lease customers.  Management has taken various
measures to counter non-performing growth such as revalidating credit
scorecards, modifying audit procedures and improving transaction
verification processes.  The increase in troubled/potential problem
transactions for the External large-ticket programs is due to a real
estate transaction which is currently in the process of being
restructured.  The Company believes it has sufficient reserves to provide
for any losses which may result from the final resolution of the above
transactions.

Historically, the Company has not allocated a specific amount of credit
loss reserve to non-performing and troubled transactions.  This is due to
the historically low level of write-offs in the External large-ticket
financing programs and the limited number of transactions with material
credit loss exposure in other areas.  As stated previously, the Company
evaluates its aggregate reserve position in comparison to estimates of
aggregate expected losses.  However, for non-performing External
large-ticket financing transactions, the Company has adjusted the face
value of these receivables through the following adjustments:

                             34

<PAGE>

Notes to Consolidated Financial Statements
(Dollars in thousands)


December 31                                      1996         1995         1994
                                              -------      -------      -------

Face value of receivables                    $  2,500     $  4,511     $  4,512
Cash collections applied to principal          (1,252)      (2,436)      (2,087)
Write-offs to allowance for credit losses           -         (627)        (427)
                                              -------      -------      -------
Carrying value                               $  1,248     $  1,448     $  1,998
                                              =======      =======      =======

Note 8. - Mortgage Servicing Rights


The Company purchased rights to service loans with aggregate unpaid
principal balances of approximately $5.3 billion in 1996, $4.1 billion in
1995 and $3.1 billion in 1994.  The costs associated with acquiring these
rights were capitalized and recorded as mortgage servicing rights (MSR).

The following summarizes the Company's capitalized MSR activity:


December 31                                      1996         1995        1994
                                              -------      -------     -------

Balance at beginning of period               $108,851     $ 59,506     $ 41,833
MSR acquisitions                               50,407       64,310       27,825
MSR amortization                              (21,112)     (14,965)     (10,152)
                                              -------      -------      -------
Balance at end of period                     $138,146     $108,851     $ 59,506
                                              =======      =======      =======


At December 31, 1996, the fair value of MSR's was approximately $158.8
million.  There were no valuation allowances for MSR's at December 31, 1996
or 1995.


Note 9. - Assets Held for Sale


The Company funded transactions totaling $326.7 million in 1996, $151.6
million in 1995 and $37.7 million in 1994, relating to assets held for sale.
Transactions totalling $257.8 million in 1996 and $117.4 million in 1995,
were sold for a net gain before taxes of $8.5 million in 1996 and $10.3
million in 1995, respectively, which is recorded as part of finance income.
Fourteen transactions relating to assets held for sale remain in inventory
with a net carrying value of $140.4 million at December 31, 1996 compared
with eleven transactions with a net carrying value of $71.9 million at the
end of 1995.

                             35

<PAGE>

Notes to Consolidated Financial Statements
(Dollars in thousands)

Note 10. - Other Assets

December 31                                       1996                  1995
                                               -------               -------
Loans held for investment                     $ 29,590              $ 11,626
Billed meter rental receivables                 23,399                17,747
Equipment and leasehold improvements,
 net of accumulated depreciation
 and amortization:  1996, $18,123;
 1995, $13,870                                  22,873                14,831
Mortgage escrow advances                        19,413                11,789
Foreclosure claims receivable, net               9,902                 6,160
Interest discount on commercial paper            9,603                 6,934
Loans and advances to affiliated companies       8,711                 6,199
Deferred partnership fees                        7,250                 9,209
Deferred debt placement fees                     4,791                 4,324
Goodwill, net of accumulated amortization:
 1996, $1,744; 1995, $1,356                      2,906                 3,294
Investment securities                            1,026                     -
Prepaid expenses and other assets               27,968                28,062
                                               -------               -------
Total other assets                            $167,432              $120,175
                                               =======               =======

Loans held for investment consist primarily of purchased mortgage loans,
secured by first real estate mortgages, and are held to maturity.
Mortgage loans held for investment are stated at the lower of cost or
market value at the date acquired.  The amount of discount, if any,
recorded to reduce the carrying value of loans to market value is
amortized to income over the anticipated life of the investment.  The
Company periodically evaluates the credit risks associated with these
loans.  Any provision for possible losses is included in the reserve for
possible losses associated with foreclosure claims receivables.

Billed meter rental receivables represent uncollected meter rental
receivables billed to customers who have opted to have their meter rental
charged on their lease invoice.  PBCC remits these charges to PBI based
on billings.  There is no reserve established at PBCC, since any unpaid
meter rentals are netted against future payments due PBI.  The increase
in billed meter rental receivables resulted from a larger customer base
and higher meter rates, partly offset by a slightly lower delinquency at
December 31, 1996.

Equipment and leasehold improvements are stated at cost.  Equipment is
depreciated on a straight-line basis over the anticipated useful life
generally ranging from five to ten years.  Leasehold improvements are
amortized on a straight-line basis over the remaining lease terms.

Mortgage escrow advances include advances made in connection with loan
servicing activities.  These advances consist primarily of property taxes
and insurance premiums made before they are collected from mortgagors.

                             36

<PAGE>

Notes to Consolidated Financial Statements
(Dollars in thousands)

Foreclosure claims receivable include loans and related advances in the
process of foreclosure. Such loans are insured or guaranteed by either
the Federal Housing Administration, the Veterans Administration or
private mortgage insurance and will be repaid when the foreclosure
process is completed. The Company has established reserves for possible
losses in excess of insured or guaranteed amounts of approximately $3.1
million and $2.5 million at December 31, 1996 and 1995, respectively,
which have been netted against the foreclosure claims receivable
balances.

In the fourth quarter of 1993, the Company completed a transaction
whereby it contributed certain commercial aircraft, subject to direct
finance leases, to a majority-owned partnership. Partnership fees
incurred in connection with this transaction are amortized over the term
of the transaction.

Deferred debt placement fees incurred in connection with placing senior
and subordinated notes are amortized on a straight-line basis over the
related terms of the notes.

Note 11. - Accounts Payable and Accrued Liabilities

December 31                                         1996          1995
                                                 -------       -------
Advances and deposits from customers            $ 45,131      $ 33,650
Accounts payable                                  36,653        41,919
Accrued interest payable                          30,488        28,474
Sales and use, property and sundry taxes          12,879        10,499
Portfolio purchase price payable                   8,319         9,426
Minority interest in partnership                   7,512         7,024
Accrued salary and benefits payable                7,120         6,800
Other liabilities                                 28,555        17,811
                                                 -------       -------
Total accounts payable and accrued liabilities  $176,657      $155,603
                                                 =======       =======

The increase in advances and deposits from customers is primarily due to
an increase in lease rents payable to investors (where PBCC does the
billing and collecting on their behalf) resulting from an increase in
syndication activity and the sale of the CVF portfolio.

Note 12. - Notes Payable

Short-term notes payable totaled $1.9 billion at December 31, 1996 and
$2.1 billion at December 31, 1995.  These notes were issued as commercial
paper, loans against bank lines of credit, or to trust departments of
banks and others at rates below the prevailing prime rate.

                             37

<PAGE>

Notes to Consolidated Financial Statements
(Dollars in thousands)

The composition of the Company's notes payable is as follows:

December 31                                                1996           1995
                                                      ---------      ---------
Senior Notes Payable

Commercial paper at a weighted average interest
 rate of 5.54% (5.69% in 1995)                      $1,359,200      $1,864,000
Notes payable against bank lines of credit and
 others at a weighted average interest rate
 of 2.11% (2.35% in 1995)                              296,881         258,880
Current installment of long-term debt due within
 one year at interest rates of 5.63% to 7.48%          245,500               -
                                                     ---------       ---------

Total senior notes payable within one year           1,901,581       2,122,880

Senior notes payable after one year at interest
 rates of 5.63% to 9.25% through 2009                1,275,000       1,020,500
                                                     ---------       ---------
Total senior notes payable                           3,176,581       3,143,380
                                                     ---------       ---------
Short-Term Notes Payable to Affiliates

Notes payable to Pitney Bowes Inc. at a
 weighted average rate of 5.40%
 (5.72% in 1995)                                       139,400         132,000

Notes payable to Pitney Bowes International
 at a weighted average interest rate of
 5.85% in 1995                                               -          17,709
                                                      --------       ---------
Total short-term notes payable to affiliates           139,400         149,709

Subordinated Notes Payable

Non-interest bearing notes due Pitney Bowes            229,154         170,857
                                                     ---------       ---------
Total notes payable                                 $3,545,135      $3,463,946
                                                     =========       =========

At December 31, 1996, the Company had unused lines of credit and
revolving credit facilities totaling $1.50 billion largely supporting
commercial paper borrowings.  The Company recorded fees of $1.3 million,
$1.4 million and $2.2 million in 1996, 1995 and 1994 to maintain its
lines of credit.  The reduction in 1995 facility fees is a direct result
of the Company's renegotiation of its revolving credit facilities with
its smaller banking group initiated in the fourth quarter of 1995.

Total notes payable at December 31, 1996 mature as follows: $2,041.0
million in 1997, $225.0 million in 1998, $200.0 million in 1999, $50.0
million in 2000, $200.0 million in 2001 and $829.1 million beyond 2001.

                             38

<PAGE>

Notes to Consolidated Financial Statements
(Dollars in thousands)

Lending Arrangements:  Under terms of its senior and subordinated loan
agreements, the Company is required to maintain earnings before taxes
and interest charges at prescribed levels.  With respect to such loan
agreements, Pitney Bowes will endeavor to have the Company maintain
compliance with such terms and, under certain loan agreements, is
obligated, if necessary, to pay to the Company amounts sufficient to
maintain a prescribed ratio of income available for fixed charges or
make approved debt/commercial paper principal, interest or premium
payments in the event that PBCC is unable to.  To date, no such payments
have been required to maintain income available for fixed charge
coverage or to maintain the Company's contractual liquidity obligations.

In July 1996, the Company issued $200 million of medium-term notes due
in July 1999 and $100 million of medium-term notes due in July 2001 with
coupon rates of 6.54 percent and 6.78 percent, respectively.

In September 1996, the Company issued $100 million of medium-term notes
due in October 1998 and $100 million of medium-term notes due in October
2001 with coupon rates of 6.31 percent and 6.80 percent, respectively.

The Company has $250 million of unissued debt securities remaining from
a shelf registration statement filed with the Securities and Exchange
Commission in September 1995.  The $250 million available under this
shelf registration statement should meet the Company's financing needs
for approximately the next year.

In 1996 and 1995, the Company issued $58.3 million and $37.9 million,
respectively, of non-interest bearing subordinated notes to Pitney Bowes
in exchange for funds equal to tax losses generated by the Company and
utilized by Pitney Bowes in the 1995 and 1994 consolidated tax returns.
Any non-interest bearing subordinated notes payable to Pitney Bowes
mature after all senior notes now outstanding and executed hereafter are
paid.

                             39

<PAGE>

Notes to Consolidated Financial Statements
(Dollars in thousands)

Note 13. - Derivative Instruments

The Company's utilization of derivative instruments is currently limited
to interest rate swap agreements (interest rate swaps) and foreign
currency exchange forward contracts (foreign currency contracts).  The
Company periodically enters into interest rate swaps as a means of
managing interest rate exposure.  The interest rate differential to be
paid or received is recognized over the life of the agreements as an
adjustment to interest expense.  The Company is exposed to credit loss in
the event of non-performance by the counterparties to the interest rate
swaps to the extent of the differential between fixed- and variable-
rates; such exposure is considered minimal.  The Company has entered into
foreign currency contracts for the purpose of minimizing its risk of loss
from fluctuations in exchange rates in connection with certain
intercompany loans and certain transfers to the Company by foreign
affiliates of foreign currency denominated lease receivables.  The
Company is exposed to credit loss in the event of non-performance by the
counterparties to the foreign currency contracts to the extent of the
difference between the spot rate at the date of the contract delivery and
the contracted rate; such exposure is considered minimal.

The aggregate amount of interest rate swaps categorized by type, and the
related weighted average interest rate paid and received assuming current
market conditions is reflected below:

                                                        Weighted Average
Major Type                                Total          Interest Rates
of Interest     Hedged                   Notional      ------------------
Rate Swap       Liability                 Amount       Fixed   Variable(A)
-----------     ---------                --------      -----   ----------
Pay fixed       Commercial paper         $300,000      8.85%        5.66%

Pay variable    Senior notes payable
                after one year             26,048      7.94%        6.10%
                                          -------      ----         ----
Total                                    $326,048      8.77%        5.69%
                                          =======      ====         ====

(A)    The variable rate is indexed from the 30 day Fed AA composite
       commercial paper rate.  The Fed AA composite rate at December 31,
       1996 was used to calculate the weighted average interest rate.

                             40

<PAGE>

Notes to Consolidated Financial Statements
(Dollars in thousands)

The aggregate notional amount of interest rate swaps categorized by
annual maturity is reflected below:

                                                  Annual Maturity
                                ------------------------------------------
                                Pay Fixed     Pay Variable           Total
                                ---------     ------------        --------
1997                             $100,000          $ 2,400        $102,400
1998                                    -           23,648          23,648
1999                                    -                -               -
2000                                    -                -               -
2001                                    -                -               -
Thereafter                        200,000                -         200,000
                                  -------           ------         -------
  Total                          $300,000          $26,048        $326,048
                                  =======           ======         =======

The following is a reconciliation of interest rate swap activity by major
type of swap:

                                Pay Fixed     Pay Variable           Total
                                ---------     ------------       ---------
Balance December 31, 1994        $440,700          $14,000        $454,700
New contracts                     100,000           24,100         124,100
Expired contracts                (235,000)         (14,000)       (249,000)
                                 --------         --------        --------
Balance December 31, 1995         305,700           24,100         329,800
New contracts                           -           26,048          26,048
Expired contracts                  (5,700)         (24,100)        (29,800)
                                 --------         --------        --------
Balance December 31, 1996        $300,000          $26,048        $326,048
                                 ========          =======         =======

Interest rate swaps are used in the majority of circumstances to convert
variable rate commercial paper interest payments to fixed rate interest
payments.  The impact of interest rate swaps on interest expense and the
weighted average borrowing rate is as follows:

                                     1996             1995            1994
                                  -------          -------         -------
Impact of interest rate swaps
 on interest expense             $  7,346          $ 9,376        $ 13,930
Weighted average borrowing rate
 excluding interest rate swaps      5.81%            6.14%           5.44%
Weighted average borrowing rate
 including interest rate swaps      6.03%            6.45%           6.01%

The Company has entered into foreign currency contracts for the purpose
of minimizing its risk of loss from fluctuations in exchange rates in
connection with certain intercompany loans and certain sales of
receivables with recourse of foreign currency denominated lease
receivables.

                             41

<PAGE>

Notes to Consolidated Financial Statements
(Dollars in thousands)

The following summarizes the contractual amount of the Company's foreign
currency contract as of December 31, 1996:

     Hedged                  Currency           Maturity        Contract
   Transaction                 Sold               Date           Amount
-----------------------     -----------       -------------     --------
Transfer of receivables
 with recourse              U.S. Dollar       January, 1997       $146

Since the Company normally enters into derivative transactions only with
members of its banking group, the credit risk of these transactions is
monitored as part of the normal credit review of the banking group.  The
Company monitors the market risk of derivative instruments through
periodic review of the fair market values.

There were no deferred gains or losses relating to terminated interest
rate swaps or foreign currency contracts at December 31, 1996 and 1995.
The fair value of interest rate swaps and foreign currency contracts is
disclosed in Note 15 - Fair Value of Financial Instruments.

Note 14. - Stockholder's Equity

The following is a reconciliation of stockholder's equity:
<TABLE>
<CAPTION>
                                                                                      Total
                                 Common         Capital         Retained          Stockholder's
                                 Stock          Surplus         Earnings              Equity
                                -------         -------         --------          -------------
<S>                             <C>             <C>             <C>                  <C>
Balance December 31, 1993       $46,000         $41,725         $583,340             $671,065
Net income - 1994                     -               -          144,273              144,273
Dividends paid to PBI                 -               -          (42,000)             (42,000)
                                 ------          ------          -------              -------
Balance December 31, 1994        46,000          41,725          685,613              773,338
Net income - 1995                     -               -          158,656              158,656
Dividends paid to PBI                 -               -          (62,000)             (62,000)
                                 ------          ------          -------              -------
Balance December 31, 1995        46,000          41,725          782,269              869,994
Net Income - 1996                     -               -          179,234              179,234
Dividends paid to PBI                 -               -          (71,200)             (71,200)
                                 ------          ------          -------              -------
Balance December 31, 1996       $46,000         $41,725         $890,303             $978,028
                                 ======          ======          =======              =======
</TABLE>

At December 31, 1996, 10,000 shares of common stock, no-par with a stated
value of $100,000 per share were authorized and 460 shares were issued
and outstanding and amounted to $46.0 million at December 31, 1996 and
1995.  All of the Company's stock is owned by Pitney Bowes.

When the Company entered into real estate lease financing, PBI agreed to
make capital contributions up to a maximum of $15.0 million to provide a
portion of the financing for such transactions, of which $13.8 million
has been received to date.  There is no formal agreement in place and PBI
is under no obligation to continue with capital contributions.  No
capital contributions have been made since 1993.

                             42

<PAGE>

Notes to Consolidated Financial Statements
(Dollars in thousands)

Note 15. - Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair
value of each class of financial instruments:

Cash, assets held for sale, accounts payable and senior notes payable
within one year.  The carrying amounts approximate fair value because of
the short maturity of these instruments.

Investment securities.  The fair value of investment securities is
estimated based on quoted market prices, dealer quotes and other
estimates.

Loans receivable.  The fair value of loans receivable is estimated based
on quoted market prices, dealer quotes or by discounting the future cash
flows using current interest rates at which similar loans would be made
to borrowers with similar credit ratings and similar remaining
maturities.

Senior notes payable after one year.  The fair value of long-term debt is
estimated based on quoted dealer prices for the same or similar issues.

Interest rate swaps and foreign currency contracts.  The fair values of
interest rate swaps and foreign currency contracts are obtained from
dealer quotes.  These values represent the estimated amount the Company
would receive or pay to terminate the agreements taking into
consideration current interest rates, the creditworthiness of the
counterparties and current foreign currency exchange rates.

Transfers of receivables with recourse.  The fair value of the recourse
liability represents the estimate of expected future losses.  The Company
periodically evaluates the adequacy of reserves and estimates of expected
losses, if the resulting evaluation of expected losses differs from the
actual reserve, adjustments are made to the reserve.

Financial guarantee contracts.  The Company has provided standby
guarantees for its foreign affiliates under a $250 million European
commercial paper program and in connection with receivable transfers with
recourse.  The Company also has recourse obligations in connection with
certain mortgages it services.  Aggregate exposure under the guarantees
at December 31, 1996 and 1995 was $115 million and $88 million,
respectively.  The fair value of the European Commercial Paper program is
based on the cost to the Company for obtaining a letter of credit to
support performance under the guarantee.  The fair value of the
guarantees under the receivable transfers with recourse and the recourse
obligations on certain mortgages serviced represents the estimate of
expected future losses.  In certain instances, reserves established in
connection with these receivable transfers have been established on the
affiliated companies' financial statements approximately equal to the
fair value disclosures presented on the following page.

                             43

<PAGE>

Notes to Consolidated Financial Statements
(Dollars in thousands)

Residual and conditional commitment guarantee contracts.  The fair value of
residual and conditional commitment guarantee contracts is based on the
projected fair market value of the collateral as compared to the guaranteed
amount plus a commitment fee generally required by the counterparty to
assume the guarantee.

Commitments to extend credit.  The fair value of commitments to extend
credit is estimated by comparing current market conditions taking into
account the remaining terms of existing agreements and the creditworthiness
of the counterparties.

The estimated fair value of the Company's financial instruments is as
follows:

December 31                        1996                      1995
                         ----------------------    ----------------------
                         Carrying          Fair    Carrying          Fair
                            Value(1)      Value       Value(1)      Value
                         --------       -------    ---------      -------
Investment securities  $    1,031    $    1,031   $        -   $        -
Loans receivable (2)      381,789       365,560      288,361      288,485
Senior notes payable
  after one year       (1,298,074)   (1,346,255)  (1,039,441)  (1,130,182)
Interest rate swaps        (1,327)      (25,435)      (1,050)     (41,538)
Foreign currency
  contracts                     -            15            -         (420)
Transfers of
  receivables with
  recourse                (10,489)      (10,489)     (12,929)     (12,929)
Financial guarantee
  contracts                  (601)         (601)      (4,420)      (4,420)
Residual and conditional
  commitment guarantee
  contracts                (3,759)       (4,694)      (3,341)      (4,454)
Commitments to extend
  credit                        -             -            -         (165)

(1)  Carrying value includes accrued interest and deferred fee income,
     where applicable.

(2)  Carrying value for loans receivable and other debt financing is net
     of applicable allowance for credit losses.

                             44

<PAGE>

Notes to Consolidated Financial Statements
(Dollars in thousands)

Note 16. - Taxes on Income

Income before income taxes and the provision for income taxes were as
follows:

Years ended December 31              1996              1995               1994
                                 --------           -------            -------

Income before income taxes       $266,089          $231,334           $218,913
                                  =======           =======            =======

Provisions for income taxes:
  Federal:
    Current                      $(22,772)         $(70,605)          $(29,325)
    Deferred                       92,908           130,521             86,169
                                  -------           -------            -------
       Total Federal               70,136            59,916             56,844
                                  -------           -------            -------
  State and Local:
    Current                        (8,120)           (9,302)            (4,215)
    Deferred                       24,839            22,064             19,191
                                  -------           -------            -------
       Total state and local       16,719            12,762             14,976
                                  -------           -------            -------
Total                            $ 86,855          $ 72,678           $ 71,820
                                  =======           =======            =======

Deferred tax liabilities and (assets):

December 31                          1996              1995               1994
                                 --------          --------           --------
Deferred tax liabilities:
  Lease revenue and related
   depreciation                  $553,206          $491,467           $400,468

Deferred tax assets:
  Alternative minimum tax (AMT)
   credit carryforwards           (74,582)          (50,143)           (58,434)
                                  -------           -------            -------
Total                            $478,624          $441,324           $342,034
                                  =======           =======            =======

In 1993, the Company completed a transaction whereby it contributed
certain commercial aircraft, subject to direct finance leases, to a
majority-owned partnership.  The partnership transaction had the effect
of reducing the Company's obligation for previously accrued deferred
taxes and generated tax benefits over the past three years.

                             45

<PAGE>

Notes to Consolidated Financial Statements
(Dollars in thousands)

In the fourth quarter of 1994, the Company completed the purchase of a
lease portfolio whereby it receives all rights to the value of the
underlying equipment at lease termination.  The transaction will have the
effect of reducing the current period tax liabilities and associated
effective tax rates over the portfolio life.

A reconciliation of the U.S. Federal statutory rate to the Company's
effective income tax rate follows:

Percent of Pretax Income              1996         1995         1994
                                     -----        -----        -----
U.S. Federal statutory rate          35.0%        35.0%        35.0%
State and local income taxes          4.0          3.9          4.4
Partnership tax benefits             (0.9)        (1.1)        (1.6)
Tax-exempt foreign trade income      (2.2)        (2.7)        (3.0)
Tax-exempt finance income            (0.5)         (.8)         (.3)
Residual portfolio acquisition       (0.6)        (1.1)         (.4)
Other                                (2.2)        (1.8)        (1.3)
                                     -----        -----        -----
Effective income tax rate            32.6%        31.4%        32.8%
                                     =====        =====        =====

Note 17. - Retirement Plan

The Company participates in the Pitney Bowes retirement plan which covers
the majority of PBCC employees.  The assets of this plan fully fund
vested benefits.  Pitney Bowes' plan assumptions for 1996 and 1995
remained constant at 7.25 percent for the discount rate, 4.25 percent for
the expected rate of increase in future compensation levels and 9.50
percent for the expected long-term rate of return on plan assets.  The
Company's pension expense was $1.6 million in 1996, $1.3 million in 1995
and $1.6 million in 1994.

                             46

<PAGE>

Notes to Consolidated Financial Statements
(Dollars in thousands)

Note 18. - Nonpension Postretirement and Postemployment Benefits

The Company participates in the Pitney Bowes nonpension postretirement
benefit plan, which provides certain health care and life insurance
benefits to eligible retirees and their dependents.

The Company adopted Statement of Financial Accounting Standards No. 112,
"Employers' Accounting for Postemployment Benefits" (FAS 112) as of
January 1, 1994.  FAS 112 requires that postemployment benefits be
recognized on the accrual basis of accounting.  The effect of adopting
FAS 112 was a one-time non-cash, after-tax charge of $2.8 million (net
of approximately $1.9 million of income taxes).

Note 19. - Nonrecurring Items, Net

In the third quarter of 1994, a net nonrecurring credit of $3.3 million
resulted from a $3.5 million credit to income for changes made to
certain postemployment benefits and Pitney Bowes' decision to undertake
certain strategic actions which resulted in the Company's establishment
of a $.2 million reserve.

Since the first quarter of 1994, the Company's parent Pitney Bowes, as
part of its employee work-life initiatives, has actively sought employee
input regarding benefits and it was concluded that employees prefer
benefits more closely related to their changing work-life needs.  As a
result, in the third quarter of 1994, Pitney Bowes significantly reduced
or eliminated certain postemployment benefits, specifically service-
related company-subsidized life insurance, salary continuance and
medical benefits, resulting in an after-tax credit to income of $2.1
million (net of approximately $1.4 million of income taxes).

Note 20. - Commitments, Contingencies and Regulatory Matters

The Company is the lessee under noncancelable operating leases for
office space and automobiles.  Future minimum lease payments under these
leases are as follows:  $4.9 million in 1997, $4.5 million in 1998, $3.5
million in 1999,   $2.7 million in 2000, $2.7 million in 2001 and $2.1
million thereafter.  Rental expense under operating leases was $4.6
million, $4.7 million and $4.4 million in 1996, 1995 and 1994,
respectively.

                             47

<PAGE>

Notes to Consolidated Financial Statements
(Dollars in thousands)

At December 31, 1996, the Company had no unfunded commitments to extend
credit to customers.  The Company evaluates each customer's
creditworthiness on a case-by-case basis.  Upon extension of credit, the
amount and type of collateral obtained, if deemed necessary by the
Company, is based on management's credit assessment of the customer.
Fees received under the agreements are recognized over the commitment
period.  The maximum risk of loss arises from the possible non-
performance of the customer to meet the terms of the credit agreement.
As part of the Company's review of its exposure to risk, adequate
provisions are made for finance assets which may be uncollectible.

From time to time, the Company is a party to lawsuits that arise in the
ordinary course of its business.  These lawsuits may involve litigation
by or against the Company to enforce contractual rights under vendor,
insurance or other contracts; lawsuits by or against the Company relating
to equipment, service or payment disputes with customers; disputes with
employees; or other matters.  The Company is currently a defendant in a
number of lawsuits, none of which should have, in the opinion of
management and legal counsel, a material adverse effect on the Company's
financial position or results of operations.

Pitney Bowes is subject to Federal, state and local laws and regulations
related to the environment, and is currently named as a member of various
groups of potentially responsible parties in administrative or court
proceedings.  Based on facts presently known to it, PBI believes that the
outcome of any current proceeding will not have a material adverse effect
on its financial condition or results of operations.

In June 1995, the United States Postal Service (U.S.P.S.) issued final
regulations on the manufacture, distribution and use of postage meters.
The regulations cover four general categories:  meter security,
administrative controls, Computerized Meter Resetting Systems (C.M.R.S.)
and other issues.  In general, the regulations put reporting and
performance obligations on meter manufacturers, outline potential
administrative sanctions for failure to meet these obligations and
require changes in the fund management system of C.M.R.S., (such as PBI's
Postage by Phone(R) System), to give the U.S.P.S. more direct control over
meter licensee deposits.  PBI is working with the U.S.P.S. to ensure that
these regulations provide mailing customers and the U.S.P.S. with the
intended benefits, and that Pitney Bowes also benefits.  Pitney Bowes has
begun implementation of these changes, including modifying its Postage by
Phone(R) System so that customers deposit prepayments of postage into a
U.S.P.S. account rather than a trust account.  Resetting meters through
Postage by Phone(R) still requires the customer to request an authorization
and a reset code from Pitney Bowes, a service for which PBI charges a
fee.  PBI continues to believe that the financial impact of
implementating these regulations will not be material to its results of
operations.

                             48

<PAGE>

Notes to Consolidated Financial Statements
(Dollars in thousands)

In May 1996, the U.S.P.S. issued a proposed schedule for the phase out
of mechanical meters in the United States marketplace.  The schedule
proposed that: (i) as of June 1, 1996, placements of mechanical meters
will be available only as replacements for existing licensed mechanical
meters; and (ii) as of March 1, 1997, mechanical meters may not be used
by persons or firms who process mail for a fee; and (iii) as of December
31, 1997, mechanical meters that interface with mail machines or
processors will no longer be approved; and (iv) as of March 1, 1999, all
other mechanical meters (stand-alone meters) will no longer be approved.

Pitney Bowes has voluntarily halted new placements of mechanical meters
in the United States as of June 1, 1996.  Pitney Bowes also has
been actively and voluntarily pursuing removal from the market by
March 1997, of mechanical meters used by persons or firms who
process mail for a fee as set forth in the U.S.P.S. proposed
schedule for that segment of meter users.  Further, PBI agreed, in
March 1997, to use its best efforts to remove from the market
mechanical systems meters (meters that interface with mail machines
or processors), by a revised target date of December 31, 1998, in lieu
of the December 31, 1997 date specified in the U.S.P.S. proposed
schedule.

Pitney Bowes will continue to work with the U.S.P.S. to reach agreement
on all aspects of a mechanical meter migration schedule that reflects the
interests of PBI's customers while minimizing any negative impact on
itself.  PBI's constant focus on bringing new technologies into the
mailing market has already resulted in a significant shift in the makeup
of Pitney Bowes meter base.  In the last 10 years, 1986 to 1996, the
percentage of electronic meters in the Pitney Bowes' U.S. installed
base has risen from 6% to nearly 60%.  Until a mechanical meter migration
plan is finalized, the financial impact, if any, on PBI cannot be
determined with certainty. However, based on the proposed schedule and
agreements reached to date, Pitney Bowes believes that the plan will
not cause a material adverse financial impact to the Company.

The May 1996 U.S.P.S. proposal also contemplates the evolution of
metering technology to include a digital information-based indicia
standard which has not yet been developed.  In July 1996, the
U.S.P.S. proposed initial specifications for a digital information-based
indicia program.  The U.S.P.S. anticipates that digital metering would
eventually replace electronic metering in the United States at some
undetermined date in the future.  Pitney Bowes long-term strategy also
envisions the use of digital technology in new product offerings, and PBI
has taken the lead in deploying digital meters in the marketplace with
over 100,000 digital printing meters already placed into service during
1995 and 1996.  Pitney Bowes anticipates working with the U.S.P.S. in
this effort to achieve a timely and effective substitution plan.
However, until final standards for a digital information-based indicia
program are completed, and transition to the new standard is clarified by
the U.S.P.S., the impact of this proposal, if any, on Pitney Bowes cannot
be determined.

                             49

<PAGE>

Notes to Consolidated Financial Statements
(Dollars in thousands)

Note 21. - Quarterly Financial Information (Unaudited)

Summarized quarterly financial data for 1996 and 1995 follows:
<TABLE>
<CAPTION>
                                                          Three Months Ended
                                     ----------------------------------------------------------
1996                                 March 31          June 30        Sept. 30          Dec. 31
----                                 --------         --------        --------         --------
<S>                                  <C>              <C>             <C>              <C>
Total revenue                        $177,276         $179,991        $191,475         $223,922
                                      -------          -------         -------          -------
Expenses:
Selling, general and
 administrative                        39,282           38,982          47,814           49,157
Depreciation and
 amortization                           8,927           10,186          10,563           10,771
Cost of equipment sales                     -              283               -           22,538
Provision for credit losses            16,695           13,875          17,547           18,412
Interest                               50,315           48,954          50,394           51,880
Provision for income taxes             20,489           22,636          21,081           22,649
                                      -------          -------         -------          -------
Total expenses                        135,708          134,916         147,399          175,407
                                      -------          -------         -------          -------
Net Income                           $ 41,568         $ 45,075        $ 44,076         $ 48,515
                                      =======          =======         =======          =======
</TABLE>
<TABLE>
<CAPTION>
                                                          Three Months Ended
                                     ----------------------------------------------------------
1995                                 March 31          June 30        Sept. 30         Dec. 31
----                                 --------         --------        --------         --------
<S>                                  <C>              <C>             <C>              <C>
Total revenue                        $152,170         $159,735        $168,768         $195,028
                                      -------          -------         -------          -------
Expenses:
Selling, general and
 administrative                        32,018           33,313          34,831           49,321
Depreciation and
 amortization                           6,870            6,956           9,238            8,967
Cost of equipment sales                     -                -           2,163               51
Provision for credit losses            12,268           13,050          13,315           19,916
Interest                               48,549           50,918          51,236           51,387
Provision for income taxes             16,496           17,684          17,984           20,514
                                      -------          -------         -------          -------
Total expenses                        116,201          121,921         128,767          150,156
                                      -------          -------         -------          -------
Net Income                           $ 35,969         $ 37,814        $ 40,001         $ 44,872
                                      =======          =======         =======          =======
</TABLE>
                             50

<PAGE>

Item 9.  Changes in and disagreements with accountants on accounting and
         ---------------------------------------------------------------
         financial disclosure
         --------------------

None.
                             Part III

Item 10. Directors and executive officers of the Registrant
         --------------------------------------------------

Omitted pursuant to General Instruction J.

Item 11. Executive compensation
         ----------------------

Omitted pursuant to General Instruction J.

Item 12. Security ownership of certain beneficial owners and management
         --------------------------------------------------------------

Omitted pursuant to General Instruction J.

Item 13. Certain relationships and related transactions
         ----------------------------------------------

Omitted pursuant to General Instruction J.

                             Part IV

Item 14. Exhibits, financial statement schedules and reports on Form 8-K
         ---------------------------------------------------------------

(a)      Index of documents filed as part of this report:

  1.     Consolidated Financial Statements                            Page(s)
         ---------------------------------                            -------

         Included in Part II of this report:

         Report of Independent Accountants                                 22

         Consolidated Statements of Income and of
         Retained Earnings for each of the three years
         in the period ended December 31, 1996                             23

         Consolidated Balance Sheet at December 31, 1996
         and 1995                                                          24

         Consolidated Statement of Cash Flows for each of
         the three years in the period ended
         December 31, 1996                                              25-26

         Notes to Consolidated Financial Statements                     27-50


                             51

<PAGE>

 2.    Financial Statement Schedules
       -----------------------------
       Valuation and qualifying accounts and reserves
       (Schedule II)                                                       55

       The additional financial data should be read in conjunction with the
       financial statements included in Item 8 to this Form 10-K.  Schedules not
       included with this additional financial data have been omitted because
       they are not applicable or the required information is shown in the
       financial statements or notes thereto.
<TABLE>
3.    Index to Exhibits (numbered in accordance with Item 601 of Regulation S-K)
       -------------------------------------------------------------------------
<CAPTION>
    Reg. S-K                                                                        State or Incorporation
    Exhibits                 Description                                                  by Reference
    --------                 -----------------------------                          -------------------------
<S>                          <C>                                                    <C>
         (3)                 1.  Certificate of
                                 Incorporation, as amended                          Incorporated by reference
                                                                                    to Exhibit (3.1) to Form
                                                                                    10-K as filed with the
                                                                                    Commission on March 21,
                                                                                    1996 (File No. 01-13497).

                             2.  By-Laws, as amended                                Incorporated by reference
                                                                                    to Exhibit (3.2) to Form
                                                                                    10 on Registration Statement
                                                                                    No. 0-13497 as filed with
                                                                                    the Commission on May 1,
                                                                                    1985.

         (4)                 (a) Form of Indenture dated                            Incorporated by reference
                                 as of May 1, 1985 between                          to Exhibit (4a) to
                                 the Company and Bankers                            Registration Statement on
                                 Trust Company, as Trustee.                         Form S-3 (No. 2-97411) as
                                                                                    filed with the Commission
                                                                                    on May 1, 1985.

                             (b) Form of First Supplemental                         Incorporated by reference
                                 Indenture dated as of                              to Exhibit (4b) to
                                 December 1, 1986 between                           Registration Statement on
                                 the Company and Bankers                            Form S-3 (No. 33-10766)
                                 Trust Company, as Trustee.                         as filed with the
                                                                                    Commission on December 12,
                                                                                    1986.

                             (c) Form of Second Supplemental                        Incorporated by reference
                                 Indenture dated as of                              to Exhibit (4c) to
                                 February 15, 1989 between                          Registration Statement on
                                 the Company and Bankers                            Form S-3 (No. 33-27244)
                                 Trust Company, as Trustee.                         as filed with the
                                                                                    Commission on February 24,
                                                                                    1989.

                             (d) Form of Third Supplemental                         Incorporated by reference
                                 Indenture dated as of May 1,                       to Exhibit (1) on Form 8-K
                                 1989 between the Company and                       as filed with the
                                 Bankers Trust Company, as                          Commission on May 16,
                                 Trustee.                                           1989 (File No. 0-13497).

</TABLE>

                             52

<PAGE>
<TABLE>

<CAPTION>
<S>                          <C>                                                    <C>
                             (e) Letter Agreement between                           Incorporated by reference
                                Pitney Bowes Inc. and                               to Exhibit (4b) to
                                Bankers Trust Company,                              Registration Statement on
                                as Trustee.                                         Form S-3 (No. 2-97411) as
                                                                                    filed with the Commission
                                                                                    on May 1, 1985.

                            (f) Indenture dated as of                               Incorporated by reference
                                November 1, 1995                                    to Exhibit (4a) to
                                between the Company                                 Amendment No. 1 to
                                and Chemical Bank,                                  Registration Statement on
                                as Trustee.                                         Form S-3 (No. 33-62485) as
                                                                                    filed with the Commission
                                                                                    on November 2, 1995.

                 (10)       Material contracts
                            1. First Amended and Restated                           Incorporated by reference
                               Operating Agreement dated                            to Exhibit (i) on Form
                               November 6, 1996,                                    10-Q as filed with the
                               between Pitney Bowes                                 Commission on
                               Credit Corporation and                               November 13, 1996. (File
                               Pitney Bowes Inc.                                    No. 0-13497).

                            2. Tax Sharing Agreement, dated                         Incorporated by reference
                               April 1, 1977 between Pitney                         to Exhibit (10.3) to Form
                               Bowes Credit Corporation and                         10 as filed with the
                               Pitney Bowes Inc.                                    Commission on May 1, 1985.

                            3. Amended and Restated Finance                         Incorporated by reference
                               Agreement, dated June 12,                            to Exhibit (i) on Form 8-K
                               1995 between Pitney Bowes                            as filed with the
                               Credit Corporation and                               Commission on June 12, 1995
                               Pitney Bowes Inc.                                    (File No. 0-13497).

                 (12)       Computation of ratio of earnings
                            to fixed charges                                        Exhibit (i)

                 (21)       Subsidiaries of the registrant                          Exhibit (ii)

                 (23)       Consent of independent
                            accountants                                             Exhibit (iii)

                 (27)       Financial Data Schedule                                 Exhibit (iv)

<FN>
             (b) No reports on Form 8-K were filed for the three months ended
                 December 31, 1996.
</FN>
</TABLE>
                             53

<PAGE>

                                 SIGNATURES
                                 ----------


Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized.

                          Pitney Bowes Credit Corporation

                          By:   /s/ Matthew S. Kissner
                                -------------------------------------
                                Matthew S. Kissner
                                President and Chief Executive Officer

                          Date: March 28, 1997
                                -------------------------------------


Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S>                                                 <C>                      <C>
By /s/  Matthew S. Kissner                          Date 3/28/97             Matthew S. Kissner
   --------------------------                            -------             Director, President and
                                                                             Chief Executive Officer

By /s/  G. Kirk Hudson                              Date 3/28/97             G. Kirk Hudson
   ---------------------------                           -------             Vice President-Finance
                                                                             (Principal Financial and
                                                                              Accounting Officer)

By /s/  Marc C. Breslawsky                          Date 3/28/97             Marc C. Breslawsky-Director
   ---------------------------                           -------

By /s/  Michael J. Critelli                         Date 3/28/97             Michael J. Critelli-Director
   ---------------------------                           -------

By /s/  John N. D. Moody                            Date 3/28/97             John N. D. Moody-Director
   ---------------------------                           -------

By /s/  Sara E. Moss                                Date 3/28/97             Sara E. Moss-Director
   ---------------------------                           -------

By /s/  Murray L. Reichenstein                      Date 3/28/97             Murray L. Reichenstein-
   ---------------------------                           -------             Director

By                                                  Date                     Harry W. Neinstedt-Director
   ---------------------------                           -------

By /s/  Douglas A. Riggs                            Date 3/28/97             Douglas A. Riggs-Director
   ---------------------------                           -------
</TABLE>

                             54

<PAGE>
<TABLE>
                                       SCHEDULE II - VALUATION AND QUALIFYING
                                                ACCOUNTS AND RESERVES

                                    FOR THE YEARS ENDED DECEMBER 31, 1994 TO 1996



(Dollars in thousands)



<CAPTION>
                                                      Additions           Deductions -
                                   Balance at         charged to          uncollectible
                                   beginning          costs and           accounts               Balance at
                                   of year            expenses            written off            end of year
                                   ----------         ----------          -------------          -----------
<S>                                 <C>                <C>                 <C>                   <C>
Allowance for credit
 losses (shown on
 balance sheet as
 deduction from net
 investments)

      1996                          $101,355           $66,529             $69,163               $ 98,721

      1995                          $ 95,271           $58,549             $52,465               $101,355

      1994                          $ 98,311           $56,133             $59,173               $ 95,271

</TABLE>



                             55