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PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular dollars in thousands, except per share data)
75
Leveraged Leases
Our investment in leveraged lease assets consists of the following:
December 31,
2007
2006
Rental receivables............................................................. $ 1,889,083
$ 1,687,730
Unguaranteed residual values ........................................... 32,487
28,536
Principal and interest on non-recourse loans .................... (1,478,555) (1,326,361)
Unearned income .............................................................. (193,824) (174,534)
Investment in leveraged leases ......................................... 249,191
215,371
Less: Deferred taxes related to leveraged leases............... (117,500) (90,716)
Net investment in leveraged leases ................................... $ 131,691
$ 124,655
In the fourth quarter of 2006, we determined the need to adjust the accounting for our remaining leveraged lease transactions.
As a result, we recorded a $4.6 million reduction to our opening retained earnings. This reflects the cumulative effect of
these adjustments. We also adjusted the related lease assets and liabilities on our Consolidated Balance Sheet. See Note 1 to
the Consolidated Financial Statements for further discussion.
The following is a summary of the components of income from leveraged leases. The income amounts in prior years from
Capital Services have been reclassified as discontinued operations:
December 31,
2007
2006 2005
Pre-tax leveraged lease income......................................... $ 4,270
$ 8,019 $ 10,897
Income tax effect .............................................................. 1,186
(923) (3,814)
Income from leveraged leases........................................... $ 5,456
$ 7,096 $ 7,083
19. Business Segment Information
We conduct our business activities in seven business segments within the Mailstream Solutions and Mailstream Services
business groups. For a description of our reportable segments and the types of products and services from which each
reportable segment derives its revenue, see Item 1 - Business on page 3. That information is incorporated herein by
reference. The information set forth below should be read in conjunction with such information. The accounting policies of
the segments are the same as those described in the summary of significant accounting policies, with the exception of the
items outlined below.
EBIT is determined by deducting from revenue the related costs and expenses attributable to the segment. Segment EBIT
excludes general corporate expenses, restructuring charges, interest expense, other income (expense) and income taxes.
Identifiable assets are those used in our operations and exclude cash and cash equivalents, short-term investments and general
corporate assets. Long-lived assets exclude finance receivables and investment in leveraged leases.