Pitney Bowes 2012 Annual Report Download - page 84

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PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular dollars in thousands, except per share amounts)
66
13. Restructuring Charges and Asset Impairments
Activity in our restructuring reserves for the years ended December 31, 2012, 2011 and 2010 was as follows:
Severance and
benefits costs
Pension and
Retiree
Medical
Asset
impairments
Other exit
costs Total
Balance at December 31, 2009 $ 73,792 $ — $ — $ 14,834 $ 88,626
Expenses, net 114,873 23,620 9,799 38,163 186,455
Gain on sale of facility — — (8,897) — (8,897)
Cash payments (87,026) — 8,897 (41,436) (119,565)
Non-cash charges — (23,620)(9,799) — (33,419)
Balance at December 31, 2010 101,639 — — 11,561 113,200
Expenses, net 101,043 8,178 13,528 12,471 135,220
Gain on sale of facility — — (601) — (601)
Cash payments (97,646) — 601 (9,957) (107,002)
Non-cash charges — (8,178)(13,528) — (21,706)
Balance at December 31, 2011 105,036 — — 14,075 119,111
Expenses, net 24,992 — — (1,627) 23,365
Cash payments (67,488) — — (7,230) (74,718)
Non-cash charges —————
Balance at December 31, 2012 $ 62,540 $ — $ — $ 5,218 $ 67,758
During 2012, we took actions to further streamline our business operations and reduce our cost structure. These actions consisted primarily
of workforce reductions and resulted in a pre-tax restructuring charge of $38 million. We anticipate that these actions will result in
annualized benefits of $45 million to $55 million. Restructuring charges are net of reversals of $15 million for changes in estimated
reserves for prior period programs. Total restructuring reserves at December 31, 2012 are expected to be paid over the next 12-24 months.
We expect to fund these payments from cash flows from operations.
Restructuring charges in 2011 and 2010 represent charges taken in connection with a series of strategic transformation initiatives announced
in 2009. These initiatives were designed to transform and enhance the way we operate as a global company, enhance our responsiveness
to changing market conditions and create improved processes and systems and were implemented over a three year period through 2011.
Restructuring charges and asset impairments on the Consolidated Statements of Income also includes asset impairment charges unrelated
to restructuring programs, which are not included in the table above and excludes restructuring charges related to discontinued operations,
which are included in the table above. Asset impairment charges unrelated to restructuring programs were $5 million in both 2011 and
2010.
14. Commitments and Contingencies
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 clients; or disputes with employees. Some of
these actions may be brought as a purported class action on behalf of a purported class of employees, clients or others.
In October 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 projections. Plaintiffs
filed an amended complaint in September 2010. After briefing on the motion to dismiss was completed, the plaintiffs filed a new amended
complaint on February 17, 2012. We have moved to dismiss this new amended complaint. We expect to prevail in this legal action;
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, results of operations or cash flows. Based upon our current understanding of the facts
and applicable laws, we do not believe there is a reasonable possibility that any loss has been incurred.