Lexmark 2007 Annual Report Download - page 78

Download and view the complete annual report

Please find page 78 of the 2007 Lexmark annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 113

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113

During the first quarter of 2007, the Company amended the facility to allow LRC to repurchase receivables
previously transferred to the unrelated third party. Prior to the 2007 amendment, the Company accounted
for the transfer of receivables from LRC to the unrelated third party as sales of receivables. As a result of
the 2007 amendment, the Company accounts for the transfers of receivables from LRC to the unrelated
third party as a secured borrowing with a pledge of its receivables as collateral. The amendment became
effective in the second quarter of 2007. In October 2007, the facility was renewed until October 3, 2008.
This facility contains customary affirmative and negative covenants as well as specific provisions related to
the quality of the accounts receivables transferred. As collections reduce previously transferred
receivables, the Company may replenish these with new receivables. Lexmark bears a limited risk of
bad debt losses on the trade receivables transferred, since the Company over-collateralizes the
receivables transferred with additional eligible receivables. Lexmark addresses this risk of loss in its
allowance for doubtful accounts. Receivables transferred to the unrelated third-party may not include
amounts over 90 days past due or concentrations over certain limits with any one customer.
At December 31, 2007, there were no secured borrowings under the facility. At December 31, 2006, there
were no trade receivables outstanding under the facility.
Expenses incurred under this program totaling $0.6 million, $0.9 million and $1.0 million in 2007, 2006 and
2005, respectively, are included in Other (income) expense, net, on the Consolidated Statements of
Earnings.
7. INVENTORIES
Inventories consisted of the following at December 31:
2007 2006
Work in process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $127.2 $119.7
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 337.2 338.1
Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $464.4 $457.8
8. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following at December 31:
Useful Lives
(Years) 2007 2006
Land and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 $ 37.7 $ 35.7
Buildings and improvements. . . . . . . . . . . . . . . . . . . . . . . . . . 10-35 512.7 502.6
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-10 1,023.3 992.8
Information systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-4 136.7 121.4
Internal use software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-5 192.9 178.8
Furniture and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-7 91.7 71.4
1,995.0 1,902.7
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,126.0) (1,055.9)
Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . . $ 869.0 $ 846.8
Depreciation expense was $191.0 million, $199.5 million and $157.1 million in 2007, 2006 and 2005,
respectively.
72