Pitney Bowes 2008 Annual Report Download - page 25

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Access to additional liquidity and current market volatility
We provide financing services to our customers for equipment, postage, and supplies. Our ability to provide these services is largely
dependent upon our continued access to the U.S. capital markets. An additional source of liquidity for the company consists of
deposits held in our wholly-owned industrial loan corporation, Pitney Bowes Bank (“Bank”). A significant credit ratings downgrade,
material capital market disruptions, significant withdrawals by depositors at the Bank, or adverse changes to our industrial loan charter
could impact our ability to maintain adequate liquidity, and impact our ability to provide competitive offerings to our customers.
The capital and credit markets have been experiencing extreme volatility and disruption for more than 12 months. In recent months,
the volatility and disruption have reached unprecedented levels. In some cases, the markets have exerted downward pressure on stock
prices and credit capacity for certain issuers. A sizeable portion of Pitney Bowes’ total borrowings has been issued in the commercial
paper markets and, although Pitney Bowes has continued to have unencumbered access to the commercial paper markets, there can be
no assurance that such markets will continue to be a reliable source of short-term financing for us. Under further deteriorating market
conditions, there may be no assurance that other funding sources would be available or sufficient.
Privacy laws and other related regulations
Several of our services and financing businesses use, process and store customer information that could include confidential, personal
or financial information. We also provide third party benefits administrators with access to our employees’ personal information.
Privacy laws and similar regulations in many jurisdictions where we do business, as well as contractual provisions, require that we and
our benefits administrators take significant steps to safeguard this information. Failure to comply with any of these laws, regulations
or contract provisions could adversely affect our reputation and business and subject us to significant liability.
Dependence on information systems
Our portfolio of product, service and financing solutions increases our dependence on information technologies. We maintain a secure
system to collect revenue for certain postal services, which is critical to enable both our systems and the postal systems to run reliably.
The continuous and uninterrupted performance of our systems is critical to our ability to support and service our customers and to
support postal services. Although we maintain back-up systems, these systems could be damaged by acts of nature, power loss,
telecommunications failures, computer viruses, vandalism and other unexpected events. If our systems were disrupted, we could be
prevented from fulfilling orders and servicing customers and postal services, which could have an adverse effect on our reputation and
business.
Intellectual property infringement
We rely on copyright, trade secret, patent and other intellectual property laws in the United States and similar laws in other countries
to establish and protect proprietary rights that are important to our business. If we fail to enforce our intellectual property rights, our
business may suffer. We, or our suppliers, may be subject to third-party claims of infringement on intellectual property rights. These
claims, if successful, may require us to redesign affected products, enter into costly settlement or license agreements, pay damage
awards, or face a temporary or permanent injunction prohibiting us from marketing or selling certain of our products.
Litigation and regulation
Our results may be affected by the outcome of legal proceedings and other contingencies that cannot be predicted with certainty. As a
large multi-national corporation that does business globally, subsequent developments in legal proceedings, including private civil
litigations or proceedings brought by governmental entities, or changes in laws or regulations or their interpretation or administration,
including developments in antitrust law or regulation, employment law or regulation, tax law and regulation, class actions, or
intellectual property litigations, could result in an adverse effect on our results of operations. For a description of current legal
proceedings and regulatory matters, see “Legal Proceedings” in Item 3 and “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.
Government contracts
Many of our contracts are with governmental entities. Government contracts are subject to extensive and complex government
procurement laws and regulations, along with regular audits of contract pricing and our business practices by government agencies. If
we are found to have violated some provisions of the government contracts, we could be required to provide a refund, pay significant
damages, or be subject to contract cancellation, civil or criminal penalties, fines, or debarment from doing business with the
government. Any of these events could not only affect us financially but also adversely affect our brand and reputation.