Lexmark 2009 Annual Report Download - page 112

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Leased products refers to hardware leased by Lexmark to certain customers as part of the Company’s
PSSD operations. The cost of the hardware is amortized over the life of the contracts, which have been
classified as operating leases based on the terms of the arrangements. The accumulated depreciation
related to the Company’s leased products was $27.8 million and $11.0 million at year-end 2009 and 2008,
respectively.
Accelerated depreciation and disposal of long-lived assets
The Company’s restructuring actions have resulted in shortened estimated useful lives of certain
machinery and equipment and buildings and subsequent disposal of machinery and equipment no
longer in use. Refer to Part II, Item 8, Note 4 of the Notes to Consolidated Financial Statements for a
discussion of these actions and the impact on earnings.
Long-lived assets held for sale
Related to the 2008 restructuring plan, one of the Company’s inkjet supplies manufacturing facilities in
Mexico was made available for sale in the first quarter of 2009. The asset is included in Property, plant and
equipment, net on the Consolidated Statement of Financial Position as of December 31, 2009 at the lower
of its carrying amount or fair value less costs to sell in accordance with guidance on accounting for the
impairment or disposal of long-lived assets. The carrying value of the building and land available for sale
was approximately $5 million at December 31, 2009. It is estimated that the fair value of the site is
approximately $6 million based on the conditional sale agreement signed by the Company and a potential
buyer in the fourth quarter of 2009. In the prior quarter, it was estimated that the fair value of the site was
approximately $7 million based on an average of the fair values calculated under the income approach and
market approach. The income approach was based on a hypothetical leasing arrangement which
considered a regional rental market price per square foot assumption as well as a five year customary
lease term. The market approach was based on adjusted prices for sales of realty considered comparable
to the site. The Company used the deposit method of accounting for the initial investment of $0.8 million
received from the buyer and anticipates derecognizing the asset in the second quarter of 2010 based on
the agreed upon payment schedule. There were no fair value adjustments recorded in 2009 related to the
site made available for sale.
Related to the 2007 restructuring plan, the Company’s Orleans, France facility was made available for sale
in the second quarter of 2009. The asset is included in Property, plant and equipment, net on the
Consolidated Statements of Financial Position as of December 31, 2009 at the lower of its carrying amount
or fair value less costs to sell in accordance with guidance on accounting for the impairment or disposal of
long-lived assets. At the completion of the accelerated depreciation, the facility’s carrying value was
approximately $7 million upon qualifying as held for sale. The fair value of the site is estimated to be in the
range of $7 million to $8 million based on non-binding price quotes from a market participant and
considering the highest and best use of the asset for sale. The Company believes it will likely sell the facility
in 2010.
10. ACCRUED LIABILITIES AND OTHER LIABILITIES
Accrued liabilities, in the current liabilities section of the balance sheet, consisted of the following at
December 31:
2009 2008
Deferred revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $119.7 $ 95.0
Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111.8 114.6
Copyright fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69.9 117.7
Marketing programs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69.8 70.4
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 310.5 297.2
Accrued liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $681.7 $694.9
106