Invacare 2006 Annual Report Download - page 74

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Acquisitions — Continued
Alber, Aquatec and Dolomite. The acquisition allows the company to expand its product line and reach new
markets. The final purchase price was $226,806,000, including acquisition costs of $4,116,000, which was paid in
cash.
In accordance with EITF Issue No. 95-3, Recognition of Liabilities in Connection with a Purchase Business
Combination, the company previously recorded accruals for severance and exit costs for facility closures and
contract terminations. A progression of the accruals recorded in the purchase price allocation is as follows (in
thousands):
Severance
Exit of
Product Lines
Sales Agency
Terminations
Balance at 1/1/05 ................................ $ 561 $ — $ —
Additional accruals . ............................ 4,445 897 612
Payments .................................... (1,957) — (612)
Balance at 12/31/05 . . ............................ 3,049 897 —
Adjustments .................................. (1,285) (897) —
Payments .................................... (566) — —
Balance at 12/31/06 . . ............................ $1,198 $ — $ —
The company anticipates all of the remaining reserves to be utilized in 2007. The adjustments represent
reversals to goodwill for accruals not to be utilized.
Goodwill
The carrying amount of goodwill by operating segment is as follows (in thousands):
North
America/HME
Invacare Supply
Group
Institutional
Products Group Europe Asia/Pacific Consolidated
Balance at January 1, 2005 . . . . . $ 313,327 $ — $ — $390,611 $14,026 $ 717,964
Acquisitions . . . . . . . . . . . . . . . . 14,293 — — 22,481 8,984 45,758
Foreign currency translation
adjustments. . . . . . . . . . . . . . . 4,318 — — (45,941) (1,226) (42,849)
Balance at December 31, 2005 . . . 331,938 — — 367,151 21,784 720,873
Acquisitions . . . . . . . . . . . . . . . . — — — — 8,081 8,081
Foreign currency translation
adjustments. . . . . . . . . . . . . . . 4,366 — — 51,983 1,964 58,313
Purchase accounting
adjustments. . . . . . . . . . . . . . . — — — (2,182) — (2,182)
Re-allocation . . . . . . . . . . . . . . . (41,648) 23,541 18,107 — — —
Impairment charge . . . . . . . . . . . (294,656) — — — — (294,656)
Balance at December 31, 2006 . . . $ — $23,541 $18,107 $416,952 $31,829 $ 490,429
As a result of the HHE and Morris acquisitions in 2006, additional goodwill of $8,081,000 was recorded, none
of which is expected to be deductible for tax purposes.
In the fourth quarter of 2006, the company expanded its number of reporting segments from three to five due to
organizational changes within the former North American geographic operating segment and changes in how the
FS-15
INVACARE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)