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PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular dollars in thousands, except per share data)
52
The following table shows selected financial information included in discontinued operations for the years ended December 31:
Discontinued Operations 2008 2007 2006
Revenue $ - $ - $ 81,199
Pretax income $ - $ - $ 29,465
(Loss) income $ (27,700) $ 5,534 $ 30,982
Gain on sale of Imagistics, net of $7,075 tax expense - - 11,065
FSC tax law change - - (16,209)
Additional tax on IRS settlement - - (41,000)
Loss on sale of Capital Services, net of $284,605 tax benefit - - (445,150)
Total discontinued operations, net of tax $ (27,700) $ 5,534 $ (460,312)
The $27.7 million loss from discontinued operations in 2008 includes an accrual of tax and interest on uncertain tax positions. The
income in 2007 includes a gain of $11.3 million from uncertain tax positions, net of the accrual of interest expense of $5.8 million on
uncertain tax positions.
Interest expense included in discontinued operations was $19.2 million for the year ended December 31, 2006. Interest expense
recorded in discontinued operations consisted of interest on third-party debt that was assumed by Cerberus. We have not allocated
other consolidated interest expense to discontinued operations.
3. Acquisitions
On April 21, 2008, we acquired Zipsort, Inc. for $39 million in cash, net of cash acquired. Zipsort, Inc. acts as an intermediary
between customers and the U.S. Postal Service. Zipsort, Inc. offers mailing services that include presorting of first class, standard
class, flats, permit and international mail as well as metering services. We assigned the goodwill to the Mail Services segment.
On September 12, 2007, we acquired Asterion SAS for $29 million in cash, net of cash acquired. Asterion is a leading provider of
outsourced transactional print and document process services in France. We assigned the goodwill to the Management Services
segment.
On May 31, 2007, we acquired the remaining shares of Digital Cement, Inc. for a total purchase price of $52 million in cash, net of
cash acquired. Digital Cement, Inc. provides marketing management strategy and services to help companies acquire, retain, manage,
and grow their customer relationships. We assigned the goodwill to the Marketing Services segment.
On April 19, 2007, we acquired MapInfo Corporation for $436 million in cash, net of cash acquired. Included in the assets and
liabilities acquired were short-term investments of $46 million and debt assumed of $14 million. MapInfo is a global company and a
leading provider of location intelligence software and solutions. We assigned the goodwill to the Software segment. As part of the
purchase accounting for MapInfo, we aligned MapInfo’s accounting policies for software revenue recognition with ours.
Accordingly, certain software revenue that was previously recognized by MapInfo on a periodic basis has now been recognized over
the life of the contract.