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PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular dollars in thousands, except per share data)
72
additional restructuring charges in 2008 associated with these actions, however, we continue to evaluate additional actions in
conjunction with this program. We expect to complete the majority of this program by the end of 2008.
In addition, asset impairments also include the write-down of certain intangible assets for $8.5 million.
The pre-tax restructuring charges and asset impairments are composed of:
Restructuring
charges
Non-cash
charges
Cash
payments
Balance
December 31,
2007
Severance and benefit costs ............................... $ 85,137 $ - $ (3,886) $ 81,251
Asset impairments ............................................. 173,081 (173,081) - -
Other exit costs .................................................. 5,795 - - 5,795
Total .................................................................. $ 264,013 $(173,081) $ (3,886) $ 87,046
In January 2003, we undertook restructuring initiatives related to realigned infrastructure requirements and reduced
manufacturing needs for digital equipment. In connection with this plan, we recorded pre-tax restructuring charges of $36
million and $54 million for the years ended December 31, 2006 and 2005, respectively. The 2005 charge is net of a $30
million gain on the sale of our main plant manufacturing facility. The activities associated with this program were
substantially completed in 2006. During 2007, 2006, and 2005 we made restructuring payments of $29 million, $51 million
and $48 million (net of the $30 million gain), respectively. At December 31, 2007, we have a remaining liability associated
with this program of $5 million.
See Note 1 to the Consolidated Financial Statements for our accounting policy related to restructuring charges and asset
impairments.
15. Commitments, Contingencies and Regulatory Matters
Legal Proceedings
In the ordinary course of business, we are routinely defendants in or party to a number of pending and threatened legal
actions. These may involve litigation by or against us relating to, among other things, contractual rights under vendor,
insurance or other contracts; intellectual property or patent rights; equipment, service, payment or other disputes with
customers; or disputes with employees. Some of these actions may be brought as a purported class action on behalf of a
purported class of employees, customers or others.
We are a defendant in a patent action brought by Ricoh Company, Ltd. in which there are allegations of infringement against
certain of our important mailing products, including the DM SeriesTM. Ricoh Corporation et al. v. Pitney Bowes Inc. (United
States District Court, District of New Jersey, filed November 26, 2002). The plaintiff in this action is seeking both large
damage and injunctive relief. We prevailed at the trial held in this matter in the fall of 2006. The jury found the Ricoh
patents at issue to be invalid. Even though a finding of invalidity means that the plaintiff’ s claim must fail, the jury was also
required to rule on infringement and found that we infringed the Ricoh patents and did so willfully. As a result of the
invalidity finding, we prevailed and no damages were awarded. The matter is currently on appeal to the United States Court
of Appeals for the Federal Circuit.
Our wholly-owned subsidiary, Imagitas, Inc., is a defendant in ten purported class actions filed in six different states. These
litigations have been consolidated into a single federal multi-district litigation in the United States District for the Middle
District of Florida, In re: Imagitas, Driver’ s Privacy Protection Act (Consolidated, May 28, 2007). Each of these lawsuits
alleges that the Imagitas DriverSource program violates the federal Drivers Privacy Protection Act (DPPA). Under the
DriverSource program, Imagitas enters into contracts with state governments to mail out automobile registration renewal
materials along with third party advertisements, without revealing the personal information of any state resident to any
advertiser. The DriverSource program assists the state in performing its function of delivering these mailings and funding the
costs of them. The plaintiffs in these actions are seeking both statutory damages under the DPPA and an injunction against
the continuation of the program. The plaintiffs have also sued state officials in four of the affected states, Florida, Minnesota,
Missouri, and Ohio. Those suits have also been consolidated into the multi-district litigation. The state officials from Florida
who were sued in their individual capacity have reached a settlement with the plaintiffs. As a result of that settlement,
Imagitas has agreed to voluntarily suspend a portion of the program, pending a ruling in the litigation against it. During this
period, Imagitas will still be placing advertisements in the registration renewal forms in Florida.