Trade Receivables

12 Months Ended

Dec. 31, 2013

Trade Receivables [Abstract]

Trade Receivables

8.           TRADE RECEIVABLES

The Company's trade receivables are reported in the Consolidated Statements of Financial Position net of allowances for doubtful accounts and product returns. Trade receivables consisted of the following at December 31:

	2013		2012
Gross trade receivables	$	477.0	$	547.2
Allowances		(24.7	)	(23.6	)
Trade receivables, net	$	452.3	$	523.6

In the U.S., the Company and Perceptive Software, LLC transfer a majority of their receivables to a wholly-owned subsidiary, Lexmark Receivables Corporation (“LRC”), which then may transfer the receivables on a limited recourse basis to an unrelated third party. The financial results of LRC are included in the Company's consolidated financial results since it is a wholly-owned subsidiary. LRC is a separate legal entity with its own separate creditors 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 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.