Pitney Bowes 2009 Annual Report Download - page 79

PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular dollars in thousands, except per share data)
61
state income tax adjustments associated with the discontinued Capital Services' leasing transactions for years prior to 2007 and are
recorded as a reduction of 2007 opening retained earnings in the Consolidated Statements of Stockholders’ Equity (Deficit).
During 2009, we reversed tax benefits of $12.9 million associated with the expiration of out-of-the-money vested stock options and
the vesting of restricted stock units previously granted to our employees. During 2010, we expect to reverse tax benefits of
approximately $15 million associated with the expiration of out-of-the-money vested stock options and the vesting of restricted stock
units previously granted to our employees. These write-offs of deferred tax assets will not require the payment of any taxes.
10. Noncontrolling Interests (Preferred Stockholders’ Equity in Subsidiaries)
At December 31, 2008, Pitney Bowes International Holdings, Inc. (“PBIH”), a subsidiary of the Company, had 3,750,000 shares
outstanding or $375 million of variable term voting preferred stock owned by certain outside institutional investors. These preferred
shares were entitled as a group 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, was owned directly or
indirectly by Pitney Bowes Inc. The preferred stock, $.01 par value, was entitled to cumulative dividends at rates set at auction. The
weighted average dividend rate was 4.8% for the variable term voting preferred stock during 2009 and 2008.
In October 2009, PBIH issued 300,000 shares, or $300 million, of perpetual voting preferred stock to certain outside institutional
investors. These preferred shares are entitled as a group 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 it becomes callable and, if it remains 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.
Preferred dividends are included in Preferred stock dividends of subsidiaries attributable to noncontrolling interests in the
Consolidated Statements of Income. No dividends were in arrears at December 31, 2009 or December 31, 2008.
A rollforward of noncontrolling interests is as follows:
Beginning balance at January 1, 2007 and 2008 $ 384,165
Movements:
Share redemptions (1) (10,000)
Ending balance at December 31, 2008 $ 374,165
Movements:
Share issuances 296,370
Share redemptions (374,165)
Ending balance at December 31, 2009 $ 296,370
(1) At December 31, 2007, a subsidiary of the Company had 100 shares or $10 million of 9.11% Cumulative Preferred Stock,
mandatorily redeemable in 20 years, owned by an institutional investor. In August 2008, we redeemed 100% of this Preferred
Stock resulting in a net loss of $1.8 million.