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PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular dollars in thousands, except per share data)
69
In 2010, we recorded pre-tax adjustments of $0.8 million due to lower than anticipated charges associated with this program.
Cumulative charges for this program since inception through December 31, 2010 were $445 million. As of December 31, 2010,
approximately 3,000 terminations have occurred under this program. The majority of the liability at December 31, 2010 is expected to
be paid from cash generated from operations.
Activity in the reserves for restructuring actions taken in connection with the 2007 Program for years ended December 31, 2010 and
2009 is as follows:
Severance
and benefits
costs
Asset
impairments
Other exit
costs Total
Balance at January 1, 2009 119,063 - 22,046 141,109
Expenses (14,721) (3,879) - (18,600)
Cash payments (76,445) - (14,019) (90,464)
Non-cash charges - 3,879 - 3,879
Balance at December 31, 2009 27,897 - 8,027 35,924
Expenses (684) - (70) (754)
Cash payments (13,743) - (3,183) (16,926)
Non-cash charges - - - -
Balance at December 31, 2010 $ 13,470 $ - $ 4,774 $ 18,244
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 several purported class actions initially filed in five 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 were seeking
statutory damages under the DPPA. On December 21, 2009, the Eleventh Circuit Court affirmed the District Court’s summary
judgment decision in Rine, et al. v. Imagitas, Inc. (United States District Court, Middle District of Florida, filed August 1, 2006),
which ruled in Imagitas’ favor and dismissed that litigation. That decision is now final, with no further appeals available. With respect
to the remaining state cases, Imagitas filed its motion to dismiss these cases on October 8, 2010. Plaintiff’s opposition brief was filed
on December 6, 2010, and Imagitas filed its reply brief on December 22, 2010. Although the plaintiffs are still contending that the
cases filed in Ohio and Missouri can proceed, they have admitted in their response that the reasoning in the Rine decision does require
that actions based on Minnesota and New York laws be dismissed. We are awaiting a decision by the District Court on the motion to
dismiss.
On October 28, 2009, the Company and certain of its 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