Pitney Bowes 2009 Annual Report Download - page 41

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Seasoned Issuer with the SEC which allows us to issue debt securities, preferred stock, preference stock, common stock, purchase
contracts, depositary shares, warrants and units.
On September 15, 2009, we repaid the 8.55% notes with a $150 million face value at their maturity. The repayment of these notes
was funded through cash generated from operations and issuance of commercial paper. No additional long-term notes will mature
until 2012.
On June 29, 2009, we entered into an interest rate swap for an aggregate notional amount of $100 million to effectively convert our
interest payments on a portion of the $400 million, 4.625% fixed rate notes due in 2012, into variable interest rates. The variable rates
payable are based on one month LIBOR plus 249 basis points. In July 2009, we entered into three additional interest rate swaps for an
aggregate notional amount of $300 million to effectively convert our interest payments on the remainder of the $400 million, 4.625%
fixed rate notes due in 2012, into variable interest rates. The variable rates payable are based on one month LIBOR plus 248 basis
points for $100 million notional amount and one month LIBOR plus 250 basis points for $200 million notional amount.
On March 2, 2009, we issued $300 million of 10-year fixed-rate notes with a coupon rate of 6.25%. The interest is paid semi-annually
beginning September 15, 2009. The notes mature on March 15, 2019. We simultaneously unwound four forward starting swap
agreements (forward swaps) used to hedge the interest rate risk associated with the forecasted issuance of the fixed-rate debt. The
unwind of the derivatives resulted in a loss (and cash payment) of $20.3 million which was recorded to other comprehensive income,
net of tax, and will be amortized to net interest expense over the 10-year term of the notes. The proceeds from these notes were used
for general corporate purposes, including the repayment of commercial paper.
On March 4, 2008, we issued $250 million of 10-year fixed-rate notes with a coupon rate of 5.60%. The interest is paid semi-annually
beginning September 15, 2008. The notes mature on March 15, 2018. We simultaneously entered into two interest rate swaps for a
total notional amount of $250 million to convert the fixed rate debt to a floating rate obligation bearing interest at 6 month LIBOR
plus 111.5 basis points. The proceeds from these notes were used for general corporate purposes, including the repayment of
commercial paper and repurchase of our stock.
During 2009, we voluntarily contributed a total of $125 million in cash to our global defined benefit pension plans in excess of legally
required minimum contributions to increase the funding levels of the plans. Specifically, $100 million was contributed to the U.S.
qualified plan and $25 million to certain foreign qualified plans. The voluntary contributions were funded by cash flows from
operations and the issuance of commercial paper.
During 2009, the Board of Directors approved and adopted a resolution amending both U.S. pension plans, the Pitney Bowes Pension
Plan and the Pitney Bowes Pension Restoration Plan, to provide that benefit accruals as of December 31, 2014, will be determined and
frozen and no future benefit accruals under the plans will occur after that date.
In October 2009, Pitney Bowes International Holdings, Inc. (“PBIH”), a subsidiary of the Company, issued $300 million of perpetual
voting preferred stock to certain outside institutional investors. These preferred shares are entitled to 25% of the combined voting
power of all classes of capital stock of PBIH. All outstanding common stock of PBIH, representing the remaining 75% of the
combined voting power of all classes of capital stock, is owned directly or indirectly by Pitney Bowes Inc. The preferred stock is
entitled to cumulative dividends at a rate of 6.125% for a period of 7 years after which they become callable and, if remain
outstanding, will yield a dividend that increases by 150% every six months thereafter.
In October 2009, PBIH redeemed $344 million of its existing variable term voting preferred stock. The redemption was funded by a
combination of the issuance of the $300 million perpetual voting preferred stock and commercial paper.
In December 2009, PBIH redeemed the remaining $31 million of its existing variable term voting preferred stock. The redemption
was funded by cash flows from operations and the issuance of commercial paper.
We believe our financing needs in the short and long-term can be met from cash generated internally, the issuance of commercial
paper, debt issuance under our effective shelf registration statement and borrowing capacity under our existing credit agreements.
Information on debt maturities is presented in Note 8 to the Consolidated Financial Statements.