Pitney Bowes (PBI)

14. Restructuring Charges and Asset Impairments

Pre-tax restructuring reserves at March 31, 2009 are composed of the following:

We recorded pre-tax restructuring charges and asset impairments during 2008 and 2007. These charges primarily relate to a program we announced in November 2007 to lower our cost structure, accelerate efforts to improve operational efficiencies, and transition our product line.

As of March 31, 2009, 2,278 terminations have occurred under this program and approximately 300 additional positions have been eliminated since the inception of the program. The majority of the liability at March 31, 2009 is expected to be paid by the end of 2009 from cash generated from operations.

Restructuring charges and asset impairments

Pre-tax restructuring reserves at March 31, 2009 are composed of the following:

(Dollars in thousands)

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Restructuring Charges and Asset Impairments

Pre-tax restructuring reserves at September 30, 2008 are composed of the following:

We recorded pre-tax restructuring charges and asset impairments of $85.1 million in the nine months ended September 30, 2008. These charges primarily relate to a program we announced in November 2007 to lower our cost structure, accelerate efforts to improve operational efficiencies, and transition our product line. For the nine months ended September 30, 2008, the asset impairment charges included in restructuring activities related to older technology equipment of $9.9 million primarily in France and other assets of $0.3 million. Additional asset impairments, unrelated to restructuring, were also recorded. These other impairment charges are related to intangible assets of $10.0 million principally due to a loss of a customer in our Marketing Services business and the ongoing shift in market conditions for the litigation support vertical in our Management Services business.

As a result of this program, we originally targeted a net reduction of about 1,500 positions. About half of these reductions were to be outside the U.S. As of September 30, 2008, 1,272 terminations have occurred under this program and approximately 300 additional positions have been eliminated. We expect to incur approximately $15 million of restructuring charges in the fourth quarter 2008 associated with actions identified to date; however, we continue to evaluate additional actions in conjunction with this program. We expect to complete the majority of this program by the end of 2008. The majority of the liability at September 30, 2008 is expected to be paid by mid-2009 from cash generated from operations.

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14. Restructuring Charges and Asset Impairments

We recorded pre-tax restructuring charges and asset impairments of $264 million in 2007. These charges relate primarily to a program we announced in November 2007 to lower our cost structure, accelerate efforts to improve operational efficiencies, and transition our product line. The program includes charges primarily associated with older equipment that we have stopped selling upon transition to the new generation of fully digital, networked, and remotely-downloadable equipment. The asset impairment charges related to these initiatives include the write-off of inventory ($48.1 million), rental assets ($61.5 million), lease residual values ($46.1 million), and other assets ($8.8 million). The cash portion of the restructuring charges includes employee termination costs ($85.1 million) and other exit costs ($5.8 million) and relates primarily to our efforts to lower our cost structure and accelerate improvements in operational efficiencies. As a result of this program, we expect a net reduction of about 1,500 positions. About half of these reductions will be outside of the U.S. As of December 31, 2007, 401 employees had been terminated under this program. Other exit costs relate primarily to lease termination costs and other costs associated with exiting product lines and business activities. We expect to incur approximately $20 million of

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