Invacare 2006 Annual Report Download - page 42

There have been no material changes in accrued balances related to the charge, either as a result of revisions in the
plan or changes in estimates, and the company utilized the accruals recorded as of December 31, 2005 during 2006.
The company continues to further refine its global manufacturing and distribution strategy. Execution of these
cost reduction actions has begun. Once complete in 2008, these actions are anticipated to generate approximately
$30 million of annual pre-tax savings and to result in pre-tax restructuring charges totaling $42 million. The
company expects a global reduction of at least 600 additional positions and to exit a number of its manufacturing
operations worldwide.
Net Sales. Consolidated net sales for 2005 increased 9% for the year, to $1,529,732,000 from
$1,403,327,000. Acquisitions accounted for nine percentage points of the net sales increase while foreign currency
translation had less than a one percentage point impact. The overall growth was primarily driven by growth in
Europe resulting from the Domus acquisition in 2004 as well as the impact of other acquisitions worldwide.
North America/Home Medical Equipment
NA/HME net sales for 2005 decreased 1.9% over the prior year to $706,555,000 from $720,553,000 with
acquisitions and foreign currency translation each increasing net sales by one percentage point. These sales consist
of Rehab (power wheelchairs, custom manual wheelchairs, personal mobility and seating and positioning),
Standard (manual wheelchairs, personal care, home care beds, low air loss therapy and patient transport), and
Respiratory (oxygen concentrators, aerosol therapy, sleep, homefill and associated respiratory) products. In 2005,
net sales growth was impacted by the disruption caused by the implementation of the ERP system in the fourth
quarter. The company estimates that this resulted in lost sales in NA/HME during the fourth quarter of 2005,
primarily due to start up difficulties in processing orders and the inability to ship products to customers within
required lead times. Respiratory products declined 1.2% due to reduced purchases from national accounts for the
Homefill
TM
II oxygen system and oxygen concentrators and the disruptions arising out of the ERP system
implementation; Standard products declined 2.5% as a result of reduced pricing and ERP issues. Rehab products
declined 2.1% primarily due to continued Medicare power wheelchair eligibility pressures and Medicaid related
reimbursement pressures.
Invacare Supply Group
ISG net sales increased 7.7% in 2005 over the prior year to $220,908,000 from $205,130,000. Acquisitions and
foreign currency translation had no impact on the sales increase. These sales consist of ostomy, incontinence,
diabetic, wound care and other medical supply product. The increase is consistent with ISG’s recent growth pattern.
Institutional Products Group
IPG net sales increased 11.5% in 2005 over the prior year to $85,415,000 from $76,590,000. Acquisitions
increased net sales by 11.9% while foreign currency translation had no impact on the sales increase. These sales
consist of bed, furniture, home medical equipment, and bathing equipment products sold into the long-term care
market.
European Operations
European net sales increased 28.3% in 2005 over the prior year to $432,142,000 from $336,792,000 with
acquisitions contributing to almost the entire increase as foreign currency did not have a material impact. Organic
growth in Europe was minimal and reflected increases throughout Europe offset by declines, primarily in Germany,
as a result of pricing pressures.
Asia/Pacific Operations
Asia/Pacific net sales increased 31.8% in 2005 from the prior year to $84,712,000 from $64,262,000.
Acquisitions contributed sixteen percentage points of the increase while foreign currency translation contributed
four percentage points. The overall growth was primarily driven by volume increases. The Asia/Pacific segment
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