Lexmark 2010 Annual Report Download - page 104

Download and view the complete annual report

Please find page 104 of the 2010 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 147

  • 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
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147

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.
Expenses incurred under this program totaled $0.6 million, $0.4 million, and $0.3 million in 2010, 2009 and
2008 respectively. The expenses are primarily included in Interest (income) expense, net on the
Consolidated Statements of Earnings in 2010 and 2008. In 2009, the expenses are primarily included
in Other (income) expense, net on the Consolidated Statements of Earnings.
9. INVENTORIES
Inventories consisted of the following at December 31:
2010 2009
Work in process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 61.6 $ 67.9
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 304.5 289.4
Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $366.1 $357.3
10. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following at December 31:
Useful Lives
(Years) 2010 2009
Land and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 $ 33.7 $ 34.0
Buildings and improvements. . . . . . . . . . . . . . . . . . . . . . . . . . 10-35 548.0 537.2
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-10 860.8 897.7
Information systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-4 111.0 124.6
Internal-use software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-5 410.1 332.3
Leased products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-6 77.0 53.5
Furnitureandother ................................ 7 58.2 56.6
2,098.8 2,035.9
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,194.0) (1,121.0)
Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . . $ 904.8 $ 914.9
Depreciation expense was $181.0 million, $209.1 million, and $203.2 million in 2010, 2009 and 2008,
respectively.
Leased products refers to hardware leased by Lexmark to certain customers as part of the Company’s ISS
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 $43.2 million and $27.8 million at year-end 2010 and 2009, respectively.
The Company accounts for its internal-use software, an intangible asset by nature, in Property, plant and
equipment, net on the Consolidated Statements of Financial Position. The net carrying amounts of
internal-use software at December 31, 2010 and 2009 were $227.9 million and $183.9 million,
98