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PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular dollars in thousands, except per share data)
54
Depreciation expense was $318.1 million, $311.2 million and $292.2 million for the years ended December 31, 2007, 2006
and 2005, respectively. Depreciation expense included amounts from discontinued operations of $9.2 million and $3.2
million for the years ended December 31, 2006 and 2005, respectively. Rental equipment is primarily comprised of postage
meters. A pre-tax non-cash impairment charge of $61.5 million for net rental property and equipment was recorded in 2007
associated with our transitional initiatives, included in the restructuring charges and asset impairments line of the
Consolidated Statement of Income. See Note 14 to the Consolidated Financial Statements for further details.
6. Intangible Assets and Goodwill
The components of our purchased intangible assets are as follows:
December 31,
December 31,
2007 2006
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carr
y
in
g
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Customer relationships ............... $ 427,487 $ (119,652) $ 307,835 $ 314,768 $ (84,439) $ 230,329
Supplier relationships ................. 29,000 (7,492) 21,508 33,300 (5,954) 27,346
Mailing software & technology .. 176,558 (65,032) 111,526 134,476 (42,357) 92,119
Trademarks and trade names ...... 32,661 (17,202) 15,459 28,961 (14,716) 14,245
Non-compete agreements ........... 5,491 (4,631) 860 5,247 (4,094) 1,153
$ 671,197 $ (214,009) $ 457,188 $ 516,752 $ (151,560) $ 365,192
Amortization expense for intangible assets was $65.0 million, $53.9 million and $39.8 million for the years ended December
31, 2007, 2006 and 2005, respectively. In 2007, we recorded impairment charges of $8.5 million, included in the
restructuring charges and asset impairments line of the Consolidated Statement of Income. See Note 14 to the Consolidated
Financial Statements for further details.
The estimated future amortization expense related to intangible assets as of December 31, 2007 is as follows:
Year ended December 31, Amount
2008 ...................................................................... $ 70,000
2009 ...................................................................... 67,000
2010 ...................................................................... 60,000
2011 ...................................................................... 54,000
2012 ...................................................................... 44,000
Thereafter.............................................................. 162,000
$ 457,000
During 2007 and 2006, we recorded additions to intangible assets of $158.2 million and $64.3 million, respectively. The
components of these purchased intangible assets are as follows:
December 31,
December 31,
2007 2006
Amount
Weighted
Average life
Amount
Weighted
Average life
Customer relationships .............................. $ 111,315 10 years
$ 35,778 11 years
Mailing software and technology............... 38,323 7 years
21,900 5 years
Trademarks and trade names ..................... 8,500 2 years
6,390 4 years
Non-compete agreements .......................... 12 4 years
228 5 years
$ 158,150 9 years
$ 64,296 8 years