Invacare 2013 Annual Report Download - page 93

INVACARE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
FS-19
As a result of the Company's 2012 intangible impairment review, the Company recognized intangible write-down charges
of $773,000 comprised of: trademark with an indefinite life impairment of $279,000 and developed technology impairment of
$398,000 in the IPG segment and a patent impairment of $96,000 in the North America/HME segment. The after-tax and pre-tax
impairment amounts were the same for each of the above impairments except for the trademark impairment in the IPG segment,
which was $204,000 after-tax.
As a result of the Company's 2011 intangible impairment review, the Company recognized intangible write-down charges
of $1,761,000 comprised of: customer list impairment of $625,000 in the IPG segment, customer list impairment of $508,000 in
the North America/HME segment, indefinite-lived trademark impairment of $427,000 in the European segment and an intellectual
property impairment of $201,000 in the Asia/Pacific segment. The after-tax and pre-tax impairment amounts were the same for
each of the above impairments except for the indefinite-lived trademark impairment in the European segment, which was $320,000
after-tax.
The fair value of the customer lists were calculated using an excess earnings method, using a discounted cash flow model.
Estimated cash flow returns to the customer relationship were reduced by the cash flows required to satisfy the return requirements
of each of the assets employed with the residual cash flow then discounted to value the customer relationship. The fair value of
the trademark and developed technology was calculated using a relief from royalty payment methodology which requires applying
an estimated market royalty rate to forecasted net sales and discounting the resulting cash flows to determine fair value. The
intellectual property intangible asset was impaired as the intellectual property was determined to be no longer viable and is no
longer being used.
Current Liabilities
Accrued expenses as of December 31, 2013 and 2012 consisted of accruals for the following (in thousands):
2013 2012
Salaries and wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 40,252 $ 41,813
Taxes other than income taxes, primarily Value Added Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,525 24,600
Warranty cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,393 21,451
Freight. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,636 7,853
Professional. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,516 7,595
Product liability, current portion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,183 3,323
Rebates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,681 3,635
Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,549 2,674
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,041 1,268
Derivative liability (foreign forward exchange contracts) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,212 1,373
Severance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,986 5,211
Other items, principally trade accruals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,126 14,393
$ 133,100 $ 135,189
Accrued rebates relate to several volume incentive programs the Company offers its customers. The Company accounts for
these rebates as a reduction of revenue when the products are sold in accordance with the guidance in ASC 605-50, Customer
Payments and Incentives.
Changes in accrued warranty costs were as follows (in thousands):
2013 2012
Balance as of January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 21,451 $ 19,842
Warranties provided during the period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,831 11,298
Settlements made during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13,452)(13,002)
Changes in liability for pre-existing warranties during the period, including expirations. . . . . . . 8,563 3,313
Balance as of December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 27,393 $ 21,451