Invacare 2013 Annual Report Download - page 48

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continues to remain judicious in its extension of credit to customers in these areas. The Company has worked closely with providers
over the last three years in preparation for NCB, offering programs to assist them in improving their operational efficiency, as well
as offering products that serve to expand market opportunities. The Company believes that products such as the HomeFill® oxygen
systems can enable providers an opportunity to reduce costs and transform their business model.
As described elsewhere in this Annual Report on Form 10-K, for the fiscal quarter and the fiscal year ended December 31,
2013, the Company had a net loss from continuing operations of $0.48 per share and $1.60 per share, respectively. These results
are indicative of the pressures on the Company's net sales and margins that were present throughout 2013. The Company expects
to continue to experience decreased net sales in the North America/HME segment until it has successfully completed the previously
described third-party expert certification audit and FDA inspection and has received written notification from the FDA that the
Company may resume full operations at its corporate and Taylor Street manufacturing facilities. For the North America/HME
segment, total Mobility and Seating sales were $257,886,000 for the year ended December 31, 2012 and $152,650,000 for the year
ended December 31, 2013. However, not all the product lines included in these amounts were manufactured at the Taylor Street
facility. The Company does not track net sales by production facility. Therefore, the Company has estimated net sales attributable
to the Taylor Street facility by segregating the net sales for the North America/HME segment by business unit and product line and
then estimating whether the product lines were sourced from the Taylor Street facility. Based on this methodology, the Company
estimates that total net sales related to products produced at the Taylor Street facility were approximately $147,100,000 for the year
ended December 31, 2012 and $55,500,000 for the year ended December 31, 2013. Even after the Company receives the FDA
notification that it may resume full operations at its Taylor Street facility, it is uncertain as to whether, or how quickly, the Company
will be able to rebuild net sales to more typical historical levels, irrespective of market conditions. Accordingly, the Company
expects that these challenges could negatively impact the Company's operating results in 2014.
See “Contingencies” in the Notes to the Condensed Consolidated Financial Statements and “Forward-Looking Statements”
included in this Annual Report on Form 10-K.
DISCONTINUED OPERATIONS
On December 21, 2012, as part of the Company's globalization strategy, and to allow it to focus on its core equipment product
lines, the Company entered into an agreement to sell ISG and determined on that date that the "held for sale" criteria of ASC
360-10-45-9 were met. Accordingly, the assets and liabilities of ISG (long-lived asset disposal group) are shown at their carrying
amounts, which were lower than the fair value as of December 31, 2012.
On January 18, 2013, the Company completed the sale of the ISG medical supplies business to AssuraMed, Inc. for a purchase
price of $150,800,000 in cash. ISG had been operated on a stand-alone basis and reported as a reportable segment of the Company.
The Company recorded a pre-tax gain of $59,402,000 in 2013 which represented the excess of the net sales price over the book
value of the assets and liabilities of ISG, excluding cash. The sale of this business is dilutive to the Company's results. The
Company utilized the proceeds from the sale to reduce debt outstanding under its revolving credit facility in the first quarter of
2013. The Company recorded expenses related to the sale of $5,350,000, of which $4,998,000 was paid as of December 31, 2013.
The assets and liabilities of ISG that were sold are shown as held for sale in the Company's Consolidated Balance Sheets
and are comprised of the following (in thousands):
December 31,
2012
Trade receivables, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 44,196
Inventories, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,165
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,355
Property and Equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,368
Goodwill. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,073
Assets held for sale - current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 103,157
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 17,692
Accrued expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,602
Accrued income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,064
Liabilities held for sale - current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 23,358