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PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular dollars in thousands, except per share amounts)
83
16. Noncontrolling Interests (Preferred Stockholders’ Equity in Subsidiaries)
Pitney Bowes International Holdings, Inc. (PBIH), a subsidiary of the company, has 300,000 shares of outstanding perpetual voting
preferred stock valued at $300 million held by certain institutional investors (PBIH Preferred Stock). The holders of PBIH Preferred
Stock 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
the company. The PBIH Preferred Stock is entitled to cumulative dividends at a rate of 6.125% through April 30, 2016. Commencing
October 30, 2016, the PBIH Preferred Stock is redeemable, in whole or in part, at the option of PBIH. If the PBIH Preferred Stock is not
redeemed in whole prior to October 30, 2016, the dividend rate increases 50% and will increase 50% every six months thereafter. No
dividends were in arrears at December 31, 2015 or December 31, 2014.
17. 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 management's
opinion, the potential liability, if any, that may result from these actions, either individually or collectively, is not reasonably expected to
have a material effect on our financial position, results of operations or cash flows. However, as litigation is inherently unpredictable,
there can be no assurances in this regard.
In 2015, we finalized the settlement with the Department of Justice relating to an investigation it had conducted regarding compliance
with certain postal regulatory requirements in our Presort Services business without any admission of liability by the Company. As a
result of the settlement, we recorded a charge of $7 million, net of estimated recoveries in 2015. This charge is recorded in other (income)
expense, net in the Consolidated Statements of Income.
18. Leases
We lease office facilities, sales and service offices, equipment and other properties under operating lease agreements with varying terms.
Certain leases require us to pay property taxes, insurance and routine maintenance and include renewal options and escalation clauses.
Rent expense was $47 million, $55 million and $67 million in 2015, 2014 and 2013, respectively. Future minimum lease payments under
non-cancelable operating leases at December 31, 2015 were as follows:
Years ending December 31,
2016 $ 39,782
2017 31,178
2018 26,087
2019 21,874
2020 14,916
Thereafter 67,782
Total minimum lease payments $ 201,619