Pitney Bowes 2009 Annual Report Download - page 38

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The net loss in 2008 includes accruals of tax and interest on uncertain tax positions. The 2007 net gain includes a benefit of $11
million and the accrual of $6 million of interest expense, both related to uncertain tax positions.
Noncontrolling interests (Preferred stock dividends of subsidiaries)
(Dollars in millions) 2008 2007 % change
$ 21 $ 19 8%
Noncontrolling interests includes dividends paid to preferred stockholders in subsidiary companies. In August 2008, we redeemed
100% of the outstanding Cumulative Preferred Stock issued previously by a subsidiary company for $10 million. This redemption
resulted in a net loss of $2 million accounting for the year over year increase.
Restructuring Charges and Asset Impairments
We recorded pre-tax restructuring charges and asset impairments of $49 million and $200 million for the years ended December 31,
2009 and 2008, respectively.
2009 Program
In 2009, we announced that we are undertaking a series of initiatives that are designed to transform and enhance the way we operate as
a global company. In order to enhance our responsiveness to changing market conditions, we are executing a strategic transformation
program designed to create improved processes and systems to further enable us to invest in future growth in areas such as our global
customer interactions and product development processes. This program is expected to continue into 2012 and will result in the
reduction of up to 10 percent of the positions in the company. We expect the total pre-tax cost of this program will be in the range of
$250 million to $350 million primarily related to severance and benefit costs incurred in connection with such workforce reductions.
Most of the total pre-tax costs will be cash-related charges. Currently, we are targeting annualized benefits, net of system and related
investments, in the range of at least $150 million to $200 million on a pre-tax basis. These costs and the related benefits will be
recognized as different actions are approved and implemented.
During 2009, we recorded pre-tax restructuring charges of $68 million, of which $56 million related to severance and benefit costs and
$12 million related to other exit costs associated with this new transformation project. As of December 31, 2009, 548 employee
terminations have occurred. The majority of the liability at December 31, 2009 is expected to be paid during the next twelve months
from cash generated from operations.
Pre-tax restructuring reserves at December 31, 2009 for the restructuring actions taken in connection with the 2009 program are
composed of the following:
2009 Program
Balance at
December 31,
2008 Expenses
Cash
payments
Non-cash
charges
Balance at
December 31,
2009
Severance and benefit costs $ - $ 56 $ (10) $ - $ 46
Other exit costs - 12 (5) - 7
Total $ - $ 68 $ (15) $ - $ 53
2007 Program
We announced a program in November 2007 to lower our cost structure, accelerate efforts to improve operational efficiencies, and
transition our product line. The program included charges primarily associated with older equipment that we had stopped selling upon
transition to the new generation of fully digital, networked, and remotely-downloadable equipment.
In 2009, we recorded a pre-tax adjustment to restructuring charges and asset impairments for $19 million due to lower than anticipated
charges associated with the program announced in November 2007.
In 2008, we recorded pre-tax restructuring charges and asset impairments of $200 million, the majority of which related to the
program announced in November 2007. These charges included severance and benefit costs of $118 million, asset impairment
charges related to older technology equipment of $29 million and other assets of $2 million. Other exit costs of $35 million related
primarily to lease termination fees, facility closing costs, contract cancellation costs and outplacement costs.