Pitney Bowes 2009 Annual Report Download - page 42

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24
Contractual Obligations and Off-Balance Sheet Arrangements
The following summarizes our known contractual obligations at December 31, 2009 and the effect that such obligations are expected
to have on our liquidity and cash flow in future periods:
Contractual Obligations Payments due by period
(Dollars in millions) Total Less than
1 year 1-3 years 3-5 years More than
5 years
Commercial paper borrowings $ 221 $ 221 $ - $ - $ -
Long-term debt and current portion of
long-term debt 4,175 - 550 825 2,800
Non-cancelable operating lease obligations 322 110 136 53 23
Interest payments on debt 1,762 185 371 327 879
Capital lease obligations 14 6 6 2 -
Purchase obligations (1) 325 244 68 13 -
Other non-current liabilities (2) 616 - 114 43 459
Total $ 7,435 $ 766 $ 1,245 $ 1,263 $ 4,161
(1) Purchase obligations include unrecorded agreements to purchase goods or services that are enforceable and legally binding upon
us and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable
price provisions; and the approximate timing of the transaction. Purchase obligations exclude agreements that are cancelable
without penalty.
(2) Other non-current liabilities relate primarily to our postretirement benefits. See Note 19 to the Consolidated Financial
Statements.
The amount and period of future payments related to our income tax uncertainties cannot be reliably estimated and, therefore, is not
included in the above table. See Note 9 to the Consolidated Financial Statements for further details.
Critical Accounting Estimates
We have identified the policies below as critical to our business operations and to the understanding of our results of operations. We
have discussed the impact and any associated risks on our results of operations related to these policies throughout the MD&A. For a
detailed discussion on the application of these and other accounting policies, see Note 1 to the Consolidated Financial Statements.
The preparation of our financial statements in conformity with GAAP requires our management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenue and expenses during the reporting period. These estimates include, but are not
limited to, customer cancellations, bad debts, inventory obsolescence, residual values of leased assets, useful lives of long-lived assets
and intangible assets, impairment of goodwill, warranty obligations, restructuring, pensions and other postretirement benefits,
contingencies and litigation, and allocation of purchase price to tangible and intangible assets acquired in business combinations. Our
actual results could differ from those estimates and assumptions. We believe the assumptions and estimates used are reasonable and
appropriate in accordance with GAAP.
Revenue recognition
Multiple element and internal financing arrangements
We derive our revenue from multiple sources including sales, rentals, financing and services. Certain of our transactions are
consummated at the same time and can therefore generate revenue from multiple sources. The most common form of these
transactions involves a non-cancelable equipment lease, a meter rental and an equipment maintenance agreement. As a result, we are
required to determine whether the deliverables in a multiple element arrangement should be treated as separate units of accounting for
revenue recognition purposes, and if so, how the price should be allocated among the delivered elements and when to recognize
revenue for each element.
In multiple element arrangements, we recognize revenue for each of the elements based on their respective fair values in accordance
with the accounting guidance for revenue arrangements with multiple deliverables. We recognize revenue for delivered elements only
when the fair values of undelivered elements are known and uncertainties regarding customer acceptance are resolved. Our allocation
of the fair values to the various elements does not change the total revenue recognized from a transaction, but impacts the timing of