Pitney Bowes 2008 Annual Report Download - page 24

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Regulatory Matters
We are subject to the U.S. Postal Service’s (USPS) regulations and those of foreign postal authorities, related to product specifications
and business practices involving our postage meters. From time to time, we will work with these governing bodies to help in the
enhancement and growth of mail and the mail channel. See “Legal and Regulatory Matters” in Management’s Discussion and
Analysis of Financial Condition and Results of Operations in Item 7 of this Form 10-K.
Employees and Employee Relations
At December 31, 2008, we employed 25,327 persons in the U.S. and 9,813 persons outside the U.S. Headcount decreased in 2008
compared to 2007 primarily due to our restructuring initiatives during 2008. We believe that our current relations with employees are
very good. The large majority of our employees are not represented by any labor union. Our management follows the policy of
keeping employees informed of decisions, and encourages and implements employee suggestions whenever practicable.
ITEM 1A. – RISK FACTORS
In addition to other information and risk disclosures contained in this Form 10-K, the risk factors discussed in this section should be
considered in evaluating our business. We work to manage and mitigate these risks proactively, including through our use of an
enterprise risk management program. In our management of these risks, we also evaluate the potential for additional opportunities to
mitigate these risks. Nevertheless, the following risks, some of which may be beyond our control, could materially impact our brand
and reputation or results of operations or could cause future results to differ materially from our current expectations:
Postal regulations and processes
The majority of our revenue is directly or indirectly subject to regulation and oversight by the USPS and foreign postal authorities.
We also depend on a healthy postal sector in the geographic markets where we do business, which could be influenced positively or
negatively by legislative or regulatory changes in the United States, another country or in the European Union. Our profitability and
revenue in a particular country could be affected by adverse changes in postal regulations, the business processes and practices of
individual posts, the decision of a post to enter into particular markets in direct competition with us, and the impact of any of these
changes on postal competitors that do not use our products or services. These changes could affect product specifications, service
offerings, customer behavior and the overall mailing industry.
Accelerated decline in use of physical mail
Changes in our customers’ communication behavior, including changes in communications technologies, could adversely impact our
revenue and profitability. Accelerated decline in physical mail could also result from government actions such as executive orders,
legislation or regulations that either mandate electronic substitution, prohibit certain types of mailings, increase the difficulty of using
information or materials in the mail, or impose higher taxes or fees on mailing or postal services. While we have introduced various
product and service offerings as alternatives to physical mail, we face competition from existing and emerging products and services
that offer alternative means of communication, such as email and electronic document transmission technologies. An accelerated
increase in the acceptance of electronic delivery technologies or other displacement of physical mail could adversely affect our
business.
Reduced confidence in the mail system
Unexpected events such as the transmission of biological or chemical agents, or acts of terrorism could have a negative effect on
customer confidence in a postal system and as a result adversely impact mail volume. An unexpected and significant interruption in
the use of the mail could have an adverse effect on our business.
Dependence on third-party suppliers
We depend on third-party suppliers for a variety of services, components, supplies and a portion of our product manufacturing. In
certain instances, we rely on single sourced or limited sourced suppliers around the world because the relationship is advantageous due
to quality or price or there are no alternative sources. If production or service was interrupted and we were not able to find alternate
suppliers, we could experience disruptions in manufacturing and operations including product shortages, an increase in freight costs,
and re-engineering costs. This could result in our inability to meet customer demand, damage our reputation and customer
relationships and adversely affect our business.