Lexmark 2009 Annual Report Download - page 111

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who, in a liquidation of LRC, would be entitled to be satisfied out of LRC’s assets prior to any value in LRC
becoming available for equity claims of the Company. The Company accounts for transfers of receivables
from LRC to the unrelated third party as a secured borrowing with the pledge of its receivables as collateral
since LRC can repurchase receivables previously transferred to the unrelated third party. The maximum
capital available under the facility is $100 million. In October 2009, the agreement was amended to extend
the term of the facility to October 1, 2010.
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. The facility
also contains customary cash control triggering events which, if triggered, could adversely affect the
Company’s liquidity and/or its ability to obtain secured borrowings. A downgrade in the Company’s credit
rating would reduce the amount of secured borrowings available under the facility.
At the end of years 2009 and 2008, there were no secured borrowings under the facility. Expenses incurred
under this program totaled $0.4 million, $0.3 million and $0.6 million in 2009, 2008 and 2007 respectively.
The expenses are primarily included in Other (income) expense, net on the Consolidated Statements of
Earnings in 2009 and 2007. In 2008, the expenses are included in Interest (income) expense, net on the
Consolidated Statements of Earnings.
8. INVENTORIES
Inventories consisted of the following at December 31:
2009 2008
Work in process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 67.9 $102.4
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 289.4 335.9
Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $357.3 $438.3
9. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following at December 31:
Useful Lives
(Years) 2009 2008
Land and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 $ 34.0 $ 33.2
Buildings and improvements. . . . . . . . . . . . . . . . . . . . . . . . . . 10-35 537.2 528.6
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-10 897.7 965.8
Information systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-4 124.6 137.3
Internal use software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-5 332.3 261.5
Leased products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-5 53.5 30.2
Furniture and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 56.6 64.3
2,035.9 2,020.9
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,121.0) (1,157.7)
Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . . $ 914.9 $ 863.2
Depreciation expense was $209.1 million, $203.2 million, and $191.0 million in 2009, 2008 and 2007,
respectively.
The increase in Property, plant and equipment, net was due to a number of factors of which the primary
driver was current year expenditures related to internal use software.
105