Pitney Bowes 2009 Annual Report Download - page 24

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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.
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 experienced continued volatility and disruption. In some cases, the markets have exerted
downward pressure on stock prices and credit capacity for certain issuers. A portion of Pitney Bowes’ total borrowings has been
issued in the commercial paper markets. While 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. If market
conditions deteriorate, 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, financial 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 of this Form 10-K.