Lexmark 2013 Annual Report Download - page 107

receivables from LRC to the unrelated third party as a secured borrowing with the pledge of its receivables as collateral since LRC has
the ability to repurchase the receivables interests at a determinable price.
In October 2013, the trade receivables facility was amended by extending the term of the facility to October 9, 2014. In addition,
Perceptive Software, LLC became an originator under the facility, permitting advancements under the facility as receivables are
originated by Perceptive Software, LLC and transferred to LRC. The maximum capital availability under the facility remains at $125
million under the amended agreement. There were no secured borrowings outstanding under the trade receivables facility at
December 31, 2013 or December 31, 2012.
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 and Perceptive Software, LLC may
replenish these with new receivables. Lexmark and Perceptive Software, LLC bear a limited risk of bad debt losses on the trade
receivables transferred, since the Company and Perceptive Software, LLC over-collateralize the receivables transferred with additional
eligible receivables. Lexmark and Perceptive Software, LLC address this risk of loss in the 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 $0.5 million, $0.5 million, and $0.6 million in 2013, 2012, and 2011 respectively. The
expenses are primarily included in Interest (income) expense, net on the Consolidated Statements of Earnings in 2013, 2012, and
2011.
9. INVENTORIES
Inventories consist of the following at December 31:
2013 2012
Work in process $ 24.1 $ 23.7
Finished goods 244.1 253.6
Inventories $ 268.2 $ 277.3
10. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following at December 31:
Useful Lives
(Years) 2013 2012
Land and improvements 20 $ 34.4 $ 31.1
Buildings and improvements 10-35 554.0 571.2
Machinery and equipment 2-10 639.4 882.5
Information systems 3-4 135.4 143.3
Internal-use software 3-5 514.5 541.7
Leased products 2-7 133.9 113.9
Furniture and other 7 60.1 59.7
2,071.7 2,343.4
Accumulated depreciation (1,259.3) (1,498.1)
Property, plant and equipment, net $ 812.4 $ 845.3
In 2013 the Company retired certain fully depreciated assets and accordingly reduced both the related gross carrying balances and
accumulated depreciation balances. Also, in 2013 the Company derecognized certain assets upon the sale of its Inkjet-related
technology and assets to a third party. Refer to Note 4 of the Notes to Consolidated Financial Statements for information on the
divestiture.
Depreciation expense was $189.3 million, $229.6 million and $196.0 million in 2013, 2012 and 2011, 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
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