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PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular dollars in thousands, except per share data)
74
Balance at
December 31,
2007 Expenses
Cash
payments
Non-cash
charges
Balance at
December 31,
2008
Severance and benefit costs $ 81,251 $ 118,239 $ (91,059) $ - $ 108,431
Asset impairments - 46,695 - (46,695) -
Other exit costs 5,795 35,320 (8,437) - 32,678
Total $ 87,046 $ 200,254 $ (99,496) $ (46,695) $ 141,109
15. Commitments and Contingencies
Legal Proceedings
In the ordinary course of business, we are routinely defendants in or party to a number of pending and threatened legal actions. These
may involve litigation by or against us relating to, among other things, contractual rights under vendor, insurance or other contracts;
intellectual property or patent rights; equipment, service, payment or other disputes with customers; or disputes with employees.
Some of these actions may be brought as a purported class action on behalf of a purported class of employees, customers or others.
Our wholly-owned subsidiary, Imagitas, Inc., is a defendant in ten purported class actions filed in six different states. These lawsuits
have been coordinated in the United States District Court for the Middle District of Florida, In re: Imagitas, Driver’s Privacy
Protection Act Litigation (Coordinated, May 28, 2007). Each of these lawsuits alleges that the Imagitas DriverSource program
violates the federal Drivers Privacy Protection Act (DPPA). Under the DriverSource program, Imagitas entered into contracts with
state governments to mail out automobile registration renewal materials along with third party advertisements, without revealing the
personal information of any state resident to any advertiser. The DriverSource program assisted the state in performing its
governmental function of delivering these mailings and funding the costs of them. The plaintiffs in these actions are seeking statutory
damages under the DPPA. On April 9, 2008, the District Court granted Imagitas’ motion for summary judgment in one of the
coordinated cases, Rine, et al. v. Imagitas, Inc. (United States District Court, Middle District of Florida, filed August 1, 2006). On
July 30, 2008, the District Court issued a final judgment in the Rine lawsuit and stayed all of the other cases filed against Imagitas
pending an appellate decision in Rine. On August 27, 2008, the Rine plaintiffs filed an appeal of the District Court’s decision in the
United States Court of Appeals, Eleventh Judicial Circuit (the “Circuit Court”). On December 21, 2009, the Circuit Court affirmed
the District Court decision. On January 8, 2010, the Rine plaintiffs filed a petition for rehearing en banc with the Circuit Court.
We expect to prevail in the lawsuits against Imagitas; however, as litigation is inherently unpredictable, there can be no assurance in
this regard. If the plaintiffs do prevail, the results may have a material effect on our financial position, future results of operations or
cash flows, including, for example, our ability to offer certain types of goods or services in the future.
On October 28, 2009, the Company and certain of our current and former officers, were named as defendants in NECA-IBEW Health
& Welfare Fund v. Pitney Bowes Inc. et al.,a class action lawsuit filed in the U.S. District Court for the District of Connecticut. The
complaint asserts claims under the Securities Exchange Act of 1934 on behalf of those who purchased the common stock of the
Company during the period between July 30, 2007 and October 29, 2007 alleging that the company, in essence, missed two financial
projections. We believe this case is without merit and intend to defend it vigorously.
Product Warranties
We provide product warranties in conjunction with certain product sales, generally for a period of 90 days from the date of
installation. Our product warranty liability reflects our best estimate of probable liability for product warranties based on historical
claims experience, which has not been significant, and other currently available evidence. Accordingly, our product warranty liability
at December 31, 2009 and December 31, 2008, respectively, was not material.