Pitney Bowes 2007 Annual Report Download - page 91

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PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular dollars in thousands, except per share data)
73
We expect to prevail in both the Ricoh litigation and the lawsuits against Imagitas; however, as litigation is inherently
unpredictable, there can be no assurance in this regard. If the plaintiffs do prevail, the results may have a material effect on
our financial position, future results of operations or cash flows, including, for example, our ability to offer certain types of
goods or services in the future.
16. Guarantees
We apply FIN No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees
of Indebtedness of Others, to our agreements that contain guarantees or indemnifications. The provisions of FIN 45 require
that at the time a company issues a guarantee, it must recognize an initial liability for the fair value, or market value, of the
obligations it assumes under the guarantee and must disclose that information in its interim and annual financial statements.
The provisions related to recognizing a liability at inception of the guarantee for the fair value of the guarantor’ s obligations
does not apply to product warranties or to guarantees accounted for as derivatives.
As part of the sale of the Capital Services business in the second quarter of 2006, we indemnified the buyer for certain
guarantees by posting letters of credit at the date of sale. At December 31, 2007, the outstanding balance of these guarantees
was $8.5 million.
Our maximum risk of loss related to these letters of credit 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. These contracts are secured by the
underlying equipment value and supported by the creditworthiness of the customer.
We provide product warranties in conjunction with certain product sales, generally for a period of 90 days from the date of
installation. Our product warranty liability reflects our best estimate of probable liability or product warranties based on
historical claims experience, which has not been significant, and other currently available evidence. Accordingly, our
product warranty liability at December 31, 2007 and 2006, respectively, was not material.
17. Leases
In addition to factory and office facilities owned, we lease similar properties, as well as sales and service offices, equipment
and other properties, generally under long-term operating lease agreements extending from 3 to 25 years.
Future minimum lease payments under non-cancelable operating leases at December 31, 2007 are as follows:
Years ending December 31, Operating
leases
2008 .................................................................................. $ 88,740
2009 .................................................................................. 65,504
2010 .................................................................................. 47,457
2011 .................................................................................. 31,347
2012 .................................................................................. 20,664
Thereafter.......................................................................... 38,345
Total minimum lease payments ........................................ $ 292,057
Rental expense was $146.9 million, $138.8 million and $158.4 million in 2007, 2006 and 2005, respectively.