Invacare 2008 Annual Report Download

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2008 Annual Report
And Form 10-K

Table of contents

  • Page 1
    2008 Annual Report And Form 10-K

  • Page 2

  • Page 3
    ... new Infrared Control Module for Invacare® power wheelchair users with Invacare® MK6i™ Expandable Electronics, Invacare continues to deliver products that give patients independence and safety. Invacare Continuing Care introduced the innovative Carroll® CS Series™ of long-term care beds. This...

  • Page 4
    ...of portable oxygen; and Develop a positive working relationship with the new administration, including the appointed lead of the Department of Health and Human Services, Kansas Governor Kathleen Sebelius, and the new counselor to the president and director of the White House Office for Health Reform...

  • Page 5
    ...'s National Security Advisor. We thank General Jones for his contributions. Effective February 12, 2009, Invacare welcomed Dale C. LaPorte to its Board. Mr. LaPorte retired from Invacare on December 31, 2008 as Senior Vice President - Business Development and General Counsel. His long history with...

  • Page 6
    ... measure widely used by financial analysts and others in our industry to meaningfully evaluate a company's operating performance. Doty, Pamela. "Cost-Effectiveness of Home and Community-Based Long-Term Care Services." USHHS/ ASPE Office of Disability, Aging and Long-Term Care Policy. June 2000...

  • Page 7
    ... calculated based upon the last sale price of the Common Shares as reported by The New York Stock Exchange on June 30, 2008, which was $20.44. For purposes of this information, the 2,871,162 Common Shares and 1,080,174 Class B Common Shares which were held by Executive Officers and Directors of the...

  • Page 8
    INVACARE CORPORATION 2008 ANNUAL REPORT ON FORM 10-K CONTENTS Item Page 1. 1A. 1B. 2. 3. 4. PART I: Business ...Risk Factors ...Unresolved Staff Comments ...Properties ...Legal Proceedings ...Submission of Matters to a Vote of Security Holders ...Executive Officers of the Registrant ...PART II: ...

  • Page 9
    ..., breadth of product line and net sales, currently is the leading company in each of the following major, non-acute, medical equipment categories: power and manual wheelchairs, home care bed systems and home oxygen systems. The company's executive offices are located at One Invacare Way, Elyria...

  • Page 10
    THE HOME MEDICAL EQUIPMENT INDUSTRY North America Market The home medical equipment market includes home health care products, physical rehabilitation products and other non-disposable products used for the recovery and long-term care of patients. The company believes that patients overwhelmingly ...

  • Page 11
    ...Home Medical Equipment (NA/HME), Invacare Supply Group (ISG) and Institutional Products Group (IPG). North America/HME This segment includes: Rehab, Standard and Respiratory product lines as discussed below. REHAB PRODUCTS Power Wheelchairs. Invacare manufactures a complete line of power wheelchairs...

  • Page 12
    .... Home care bed accessories include bedside rails, mattresses, overbed tables, trapeze bars and traction equipment. Also available are new bariatric beds and accompanying accessories to serve the special needs of bariatric patients. Low Air Loss Therapy Products. Invacare distributes a complete line...

  • Page 13
    ... power wheelchairs, lifts, ramps, beds, furniture and pressure care products; Dynamic Controls, a manufacturer of electronic operating components used in power wheelchairs, scooters and other products; Invacare New Zealand, a distributor of a wide range of home medical equipment; and Invacare Asia...

  • Page 14
    ... using Invacare products receive quality service and support that is consistent with the Invacare brand promise. The company markets products and services to the long-term care market through IPG. IPG products include beds and furnishings, patient handling, bathing, therapeutic support surfaces...

  • Page 15
    ...and distribution operations in Western Europe and export sales activities through local distributors elsewhere in the world. The company has a sales force and where appropriate, distribution centers in the United Kingdom, France, Germany, Belgium, Portugal, Spain, Italy, Denmark, Sweden, Switzerland...

  • Page 16
    ... 2008 net sales. The loss of business of one or more of these customers or buying groups may have a significant impact on the company, although no single customer accounted for more than 3% of the company's 2008 net sales. Providers who are part of a buying group generally make individual purchasing...

  • Page 17
    ...-body lift but at a price level more appropriate for a homecare market. Asia/Pacific Asia/Pacific continued range extensions and design improvements to products during 2008 and introduced various new products such as the Dynamic Controls DX-2 wheelchair controller and various new power and manual...

  • Page 18
    ... leap forward in the evolution of oxygen concentrators. Invacare® Birdie™ and Birdie™ Compact lifts offer maximum space for users and allows comfortable lifts and transfer to or from beds, chairs or even the floor. The lifters are designed to ensure that folding and unfolding can be carried out...

  • Page 19
    ... high risk active mattress for pressure area care. An "electronic spare part list" has been introduced to the Invacare Europe after sales service departments which has improved product spare part selection and customer service. MANUFACTURING AND SUPPLIERS The company's objective is to continue to...

  • Page 20
    ... move controller manufacturing from New Zealand to China was completed during the year. Europe The company has eleven manufacturing facilities spread throughout Europe with the capability to manufacture patient aid, wheelchair, powered mobility, bath safety, beds and patient transport products. The...

  • Page 21
    ... on low-cost country sourcing and/or manufacturing to help ensure that the company is one of the lowest cost manufacturers and distributors to the home care provider. BACKLOG The company generally manufactures most of its products to meet near-term demands by shipping from stock or by building to...

  • Page 22
    ... impact on our providers, on our suppliers and on the demand for our products of the recent global economic downturn and general volatility in the credit and stock markets; difficulties in implementing an Enterprise Resource Planning system; legal actions or regulatory proceedings and governmental...

  • Page 23
    ... Act's limit on 36 months of rental payments for home oxygen went into effect January 1, 2009. CMS has clarified that payments do restart after 60 months of a patient's usage of oxygen. However, Invacare's new respiratory products (for example, the low cost HomeFill® oxygen delivery system) can...

  • Page 24
    ... has resulted in greater pricing pressures, including pressure to offer customers more competitive pricing terms, and the exclusion of certain suppliers from important market segments as group purchasing organizations, independent delivery networks and large single accounts continue to consolidate...

  • Page 25
    ...operates is highly competitive and some of the company's competitors may be larger and may have greater financial resources than the company does. The home medical equipment market is highly competitive and the company's products face significant competition from other well-established manufacturers...

  • Page 26
    ... of operations. The company sells its products principally to medical equipment and home health care providers who resell or rent those products to consumers. Many of those providers (the company's customers) are reimbursed for the Invacare products sold to their customers and patients by third...

  • Page 27
    ... sales of Standard Products (this category includes products such as manual wheelchairs, canes, walkers and bath aids) during 2006 and 2007. The company's failure to comply with regulatory requirements or receive regulatory clearance or approval for the company's products or operations in the United...

  • Page 28
    ... component failures, manufacturing errors or design defects, including defects in labeling. Any recall/field correction would divert managerial and financial resources and could harm the company's reputation with its customers, product users and the health care professionals that use, prescribe and...

  • Page 29
    ... liability claims may harm the company's business, particularly if the number of claims increases significantly or the company's product liability insurance proves inadequate. The manufacture and sale of home health care devices and related products exposes the company to a significant risk of...

  • Page 30
    ... relating to the company's products could cause its customers or potential customers to defer or limit their purchase or use of the affected products until resolution of the litigation. The company's business strategy relies on certain assumptions concerning demographic trends that impact the market...

  • Page 31
    ...trends. The loss of the services of the company's key management and personnel could adversely affect its ability to operate the company's business. The company's future success will depend, in part, upon the continued service of key managerial, research and development staff and sales and technical...

  • Page 32
    ... operations, including operations in Australia, New Zealand, Mexico, Asia and Europe. There are risks inherent in operating and selling products internationally, including difficulties in enforcing agreements and collecting receivables through certain foreign legal systems; foreign customers...

  • Page 33
    ...currency used by the subsidiaries to transact business. Through the company's international operations, the company is exposed to foreign currency fluctuations, and changes in exchange rates can have a significant impact on net sales and elements of cost. The company conducts a significant number of...

  • Page 34
    ... and intended uses. Information concerning certain leased facilities of the company as of December 31, 2008 is set forth in Leases and Commitments in the Notes to the Consolidated Financial Statements of the company included in this report and in the table below: North American/HME Operations Square...

  • Page 35
    Invacare Supply Group Square Feet Ownership Or Expiration Date of Lease Renewal Options Use Atlanta, Georgia ...Atlanta, Georgia ...Grand Prairie, Texas ...Jamesburg, New Jersey ...Milford, Massachusetts ...Rancho Cucamonga, California ...South Bend, Indiana ...Institutional Products Group 45,...

  • Page 36
    ... Lease Renewal Options Use Albstadt, Germany ...Anderstorp, Sweden ...Bergen, Norway ...Bridgend, Wales ...Brondby, Denmark ...Dio, Sweden ...Dublin, Ireland ...Ede, The Netherlands ...Ede, The Netherlands ...Fondettes, France ...Girona, Spain ...Gland, Switzerland ...Gland, Switzerland ...Gland...

  • Page 37
    ... trade relations. Management does not believe that the outcome of any of these actions will have a material adverse effect upon the company's business or financial condition. The company received a subpoena in 2006 from the U.S. Department of Justice seeking documents relating to three long-standing...

  • Page 38
    ... Officer in April 2008. From October 2005 until his appointment at Invacare, Mr. Gudbranson served as Vice President of Strategic Planning and Acquisitions at Lincoln Electric Holdings, Inc. (NASDAQ: LECO), a $2.0 billion global manufacturer of welding, brazing and soldering products located...

  • Page 39
    ..., Related Stockholder Matters and Issuer Purchases of Equity Securities. Invacare's Common Shares, without par value, trade on the New York Stock Exchange (NYSE) under the symbol "IVC." Ownership of the company's Class B Common Shares (which are not listed on NYSE) cannot be transferred, except...

  • Page 40
    ...Inc. All rights reserved. * The S&P Healthcare Equipment & Supplies Index is a capitalization-weighted average index comprised of health care companies in the S&P 500 Index. The graph assumes $100 invested on December 31, 2003 in the common shares of Invacare Corporation, S&P 500 Index, Russell 2000...

  • Page 41
    ... the company's 2003 Performance Plan. Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs (1) Period Total Number of Shares Purchased Average Price Paid Per Share 10/1/2008-10/31/08 ...11...

  • Page 42
    ... Net Sales ...Net Earnings (loss) ...Net Earnings (loss) per Share-Basic ...Net Earnings (loss) per Share-Assuming Dilution ...Dividends per Common Share ...Dividends per Class B Common Share ...Balance Sheet Current Assets ...Total Assets ...Current Liabilities ...Working Capital ...Long-Term...

  • Page 43
    ... Act's limit on 36 months of rental payments for home oxygen went into effect January 1, 2009. CMS has clarified that payments do restart after 60 months of a patient's usage of oxygen. Invacare's new respiratory products (for example, the low cost HomeFill® oxygen delivery system), however...

  • Page 44
    ... increases in custom power and custom manual wheelchairs. Respiratory product line sales increased by 11.3% in 2008, primarily attributable to increased unit volumes of oxygen concentrators and HomeFill® oxygen delivery systems. Invacare Supply Group ISG net sales increased 3.4% in 2008 over the...

  • Page 45
    ... and pricing pressures in Germany. Gross profit in Asia/Pacific as a percentage of net sales improved by 8.3 percentage points in 2008 from the prior year. The increase was largely due to cost reduction activities including the move of controller manufacturing from New Zealand to China, which...

  • Page 46
    ... net sales, were 1.4% in both 2008 and 2007, respectively. 2007 Versus 2006 Charge Related to Restructuring Activities. The company achieved its cost reduction and profit improvement initiatives established at the beginning of 2007, which included: product line rationalization, expanded outsourcing...

  • Page 47
    ... custom and consumer power wheelchairs. Respiratory product line sales declined by 9.0% in 2007, primarily attributable to reduced unit volumes of oxygen concentrators resulting from the loss of one large national provider, continued inventory utilization programs by providers and pricing declines...

  • Page 48
    ... pricing reductions. ISG gross profit as a percentage of net sales declined 0.5 of a percentage point from the prior year. The decline was primarily attributable to continued unfavorable product mix toward lower margin product, such as diabetic and incontinence products, and an unfavorable customer...

  • Page 49
    ...legal and professional expenses related to the embezzlement noted above. SG&A expenses for ISG increased by 12.5% or $2,858,000 in 2007 compared to 2006. The increase was attributable to higher distribution costs associated with increased sales...favorable finance terms provided to customers. Income ...

  • Page 50
    ...the majority of the impact of price increases from suppliers by productivity improvements and other cost reduction activities. LIQUIDITY AND CAPITAL RESOURCES The company continues to maintain an adequate liquidity position through its unused bank lines of credit (see Long-Term Debt in the Notes to...

  • Page 51
    ...provides lease financing to the company's customers may refuse or be unable to fulfill its financing obligations or extend credit to the company's customers; one or more customers of the company may be unable to pay for purchases of the company's products on a timely basis; one or more key suppliers...

  • Page 52
    ... cash used for inventory in 2008 compared to 2007. Free cash flow is a non-GAAP financial measure that is comprised of net cash provided by operating activities, excluding net cash impact related to restructuring activities, less net purchases of property and equipment, net of proceeds from sales of...

  • Page 53
    ..., personal guarantee and/or a cross corporate guarantee depending on the credit history of the customer. Credit lines are established for new customers after an evaluation of their credit report and/or other relevant financial information. Existing credit lines are regularly reviewed and adjusted...

  • Page 54
    ... all of the company's receivables are due from health care, medical equipment dealers and long term care facilities located throughout the United States, Australia, Canada, New Zealand and Europe. A significant portion of products sold to dealers, both foreign and domestic, is ultimately funded...

  • Page 55
    ...in annual aggregate losses arising from individual claims anywhere in the world that exceed the captive insurance company policy limits or the limits of the company's per country foreign liability limits, as applicable. There can be no assurance that Invacare's current insurance levels will continue...

  • Page 56
    ... options granted since 2005 and the company continues to use a Black-Scholes valuation model. As of December 31, 2008, there was $12,599,000 of total unrecognized compensation cost from stock-based compensation arrangements granted under the plans, which is related to non-vested shares, and includes...

  • Page 57
    ...). SFAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. The company...

  • Page 58
    ... the Chief Executive Officer and Chief Financial Officer, concluded that the company's disclosure controls and procedures were effective as of December 31, 2008, in ensuring that information required to be disclosed by the company in the reports it files and submits under the Exchange Act is...

  • Page 59
    ...; a Code of Conduct; written policies and procedures; and a careful selection and training of employees. Actions are taken to correct deficiencies as they are identified. An effective internal control system, no matter how well designed, has inherent limitations-including the possibility of the...

  • Page 60
    ... Annual Meeting of Shareholders. We submitted the New York Stock Exchange ("NYSE") Section 12(a) Annual CEO Certification as to our compliance with the NYSE corporate governance listing standards to the NYSE in June 2008. In addition, we have filed the certifications of our Chief Executive Officer...

  • Page 61
    ... Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized as of February 27, 2009. INVACARE CORPORATION By: /s/ A. MALACHI MIXON, III A. Malachi Mixon, III Chairman of the Board of Directors and Chief Executive Officer...

  • Page 62
    ... Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated as of February 27, 2009. Signature Title /s/ A. MALACHI MIXON, III A. Malachi Mixon, III Chairman of the Board of Directors and Chief Executive Officer...

  • Page 63
    INVACARE CORPORATION Report on Form 10-K for the fiscal year ended December 31, 2008. Exhibit Index Official Exhibit No. Description Sequential Page No. 2.1 Sale and Purchase Agreement Regarding the Sale and Purchase of All Shares in WP Domus GmbH by and among WP Domus LLC, Mr. Peter Schultz and ...

  • Page 64
    ... and executive officers Invacare Corporation Deferred Compensation Plus Plan, as amended effective December 31, 2008 Invacare Corporation Death Benefit Only Plan, effective January 1, 2005, as amended Supplemental Executive Retirement Plan, as amended and restated effective February 1, 2000 Form of...

  • Page 65
    ...America Securities Asia Limited, as Australian Administrative Agent and Australian Collateral Agent Second Amendment to Credit Agreement, dated as of February 25, 2009, by and among Invacare Corporation, certain Subsidiaries of the Company party thereto, the Lenders party thereto, National City Bank...

  • Page 66
    ... the company report on Form 10-K for the fiscal year ended December 31,...report on Form 10-Q, dated June 30, 2007, which is incorporated herein by reference. Reference is made to the appropriate Exhibit of the company report on Form... the company report on Form 10-K for the fiscal year ended December 31...

  • Page 67
    ... OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Shareholders Invacare Corporation We have audited the accompanying consolidated balance sheets of Invacare Corporation and subsidiaries as of December 31, 2008 and 2007, and the related consolidated statements of operations...

  • Page 68
    ... Board (United States), the consolidated balance sheets of Invacare Corporation and subsidiaries as of December 31, 2008 and 2007 and the related consolidated statements of operations, cash flows and shareholders' equity for each of the three years in the period ended December 31, 2008 of Invacare...

  • Page 69
    ... STATEMENT OF OPERATIONS INVACARE CORPORATION AND SUBSIDIARIES Years Ended December 31, 2008 2007 2006 (In thousands, except per share data) Net sales ...Cost of products sold ...Gross Profit ...Selling, general and administrative expenses ...Charges related to restructuring activities ...Debt...

  • Page 70
    CONSOLIDATED BALANCE SHEETS INVACARE CORPORATION AND SUBSIDIARIES December 31, December 31, 2008 2007 (In thousands) Assets Current Assets Cash and cash equivalents ...Marketable securities ...Trade receivables, net ...Installment receivables, net ...Inventories, net ...Deferred income taxes ......

  • Page 71
    ... by Operating Activities ...Investing Activities Purchases of property and equipment ...Proceeds from sale of property and equipment ...Business acquisitions, net of cash acquired ...(Increase) decrease in other investments ...(Increase) decrease in other long-term assets ...Other ...Net Cash Used...

  • Page 72
    ... stock option expense ...Restricted stock awards ...Net earnings ...Foreign currency translation adjustments ...Unrealized loss on cash flow hedges ...Defined benefit plans: Amortization of prior service costs and unrecognized losses and credits ...Plan amendment giving rise to prior service credit...

  • Page 73
    ...FINANCIAL STATEMENTS Accounting Policies Nature of Operations: Invacare Corporation is the world's leading manufacturer and distributor in the $8.0 billion worldwide market for medical equipment used in the home based upon our distribution channels, breadth of product line and net sales. The company...

  • Page 74
    ..., personal guarantee and/or a cross corporate guarantee depending on the credit history of the customer. Credit lines are established for new customers after an evaluation of their credit report and/or other relevant financial information. Existing credit lines are regularly reviewed and adjusted...

  • Page 75
    ... Issues Task Force (EITF) No. 99-19 Reporting Revenue Gross as a Principal versus Net as an Agent. The company records distributed product sales gross as a principal since the company takes title to the products and has the risks of loss for collections, delivery and returns. Product sales that give...

  • Page 76
    ... forecasted purchases/sales denominated in foreign currencies. The company recognized a net loss of $26,000 in 2008, a net gain of $451,000 in 2007 and a net loss of $240,000 in 2006 on foreign currency cash flow hedges. The gains and losses are included in cost of products sold and selling, general...

  • Page 77
    ... outside the United States is the applicable local currency. The assets and liabilities of the company's foreign subsidiaries are translated into U.S. dollars at year-end exchange rates. Revenues and expenses are translated at weighted average exchange rates. Gains and losses resulting from...

  • Page 78
    ...company did not recognize an adjustment in the liability for unrecognized income tax benefits. The company continues to recognize interest and penalties related to uncertain tax positions in income tax expense. In September, 2006, the Financial Accounting Standards Board (FASB) issued FASB Statement...

  • Page 79
    ... all of the company's receivables are due from health care, medical equipment dealers and long term care facilities located throughout the United States, Australia, Canada, New Zealand and Europe. A significant portion of products sold to dealers, both foreign and domestic, is ultimately funded...

  • Page 80
    ... has a limited recourse obligation and provides amounts necessary for estimated losses in the allowance for doubtful accounts. See Concentration of Credit Risk in the Notes to the Consolidated Financial Statements for a description of the financing arrangement. Long-term installment receivables...

  • Page 81
    ... acquired Home Health Equipment Pty Ltd, an Australian based company, and leading supplier of medical equipment in South Australia, providing high quality equipment and service to institutions and individual clients selling the full range of rehabilitation, mobility and continuing care products. In...

  • Page 82
    ... AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Goodwill The carrying amount of goodwill by operating segment is as follows (in thousands): North America / HME Invacare Supply Group Institutional Products Group Asia/ Pacific Europe Consolidated Balance at January 1, 2007...

  • Page 83
    ... to power wheelchairs and created uncertainty in the market place, thus decreasing purchases. NA/HME sales of respiratory products were also negatively affected as small and independent provider sales declined as these dealers slowed their purchases of the company's HomeFill® oxygen delivery system...

  • Page 84
    ..., the company consolidated NeuroControl, a company whose product is focused on the treatment of post-stroke shoulder pain in the United States. Certain of the company's officers and directors (or their affiliates) had small minority equity ownership positions in NeuroControl. Based on the provisions...

  • Page 85
    ... pressure in the U.S. market for standard products in recent years and has partially reduced prices to our customers in the form of a volume rebate such that the rebates would typically apply only if customers increased their standard product purchases from the company. Changes in accrued warranty...

  • Page 86
    INVACARE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Long-Term Debt Debt as of December 31, 2008 and 2007 consist of the following (in thousands): 2008 2007 $250,000,000 term loan facility at 2.25% above local interbank offered rates (LIBOR), expires February...

  • Page 87
    INVACARE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Long-Term Debt-Continued guaranteed by substantially all of the company's domestic subsidiaries, pay interest at 4.125% per annum on each February 1 and August 1, and are convertible upon satisfaction of ...

  • Page 88
    ...in thousands): 2008 2007 Supplemental Executive Retirement Plan liability ...Product liability ...Deferred income taxes ...Other, principally deferred compensation ...Total long-term obligations ... $24,293 19,734 25,664 19,135 $88,826 $ 33,496 17,580 28,824 26,146 $106,046 Leases and Commitments...

  • Page 89
    ... of minimum lease payments ... $ 1,818 1,501 1,448 1,353 1,334 7,500 14,954 (4,381) $10,573 $21,067 14,100 8,696 4,504 3,125 4,964 $56,456 Retirement and Benefit Plans Substantially all full-time salaried and hourly domestic employees are included in the Invacare Retirement Savings Plan sponsored...

  • Page 90
    INVACARE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Retirement and Benefit Plans-Continued a result of the plan amendment, a prior service credit of $12,455,000 was recorded in Accumulated Other Comprehensive Income. The prior service credit will be amortized...

  • Page 91
    ... 31, 2008 reduced by net restricted stock award activity of 291,762. The following table summarizes information about stock options outstanding at December 31, 2008: Number Outstanding At 12/31/08 Options Outstanding Weighted Average Remaining Weighted Average Contractual Life Exercise Price Options...

  • Page 92
    ...because service or employment requirements have not been met. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions: 2008 2007 2006 Expected dividend yield ...Expected stock price volatility...

  • Page 93
    ... more of the company's outstanding voting power, and in certain other circumstances described in the Rights Agreement. Capital Stock Capital stock activity for 2008, 2007 and 2006 consisted of the following (in thousands of shares): Common Stock Shares Class B Shares Treasury Shares January 1, 2006...

  • Page 94
    ... reduction relating to unrealized gain on available for sale securities ...Defined Benefit Plans: Amortization of prior service costs and unrecognized losses ...Plan amendment giving rise to prior service credit ...Amounts arising during the year, primarily due to the addition of new participants...

  • Page 95
    ...and profit improvement actions, which included: reducing global headcount, outsourcing improvements utilizing the company's China manufacturing capability and third parties, shifting substantial resources from product development to manufacturing cost reduction activities and product rationalization...

  • Page 96
    ... STATEMENTS-(Continued) Charges Related to Restructuring Activities-Continued Severance Product Line Discontinuance Contract Terminations Other Total December 31, 2006 Balance NA/HME ...ISG ...Europe ...Asia/Pacific ...Total ...Accruals NA/HME ...ISG ...IPG ...Europe ...Asia/Pacific ...Total...

  • Page 97
    ... ...Asset write-downs related to goodwill and other intangibles, without tax benefit ...Federal and foreign valuation allowance ...Variable interest entity without tax ...Withholding taxes ...Compensation ...Dividends ...Life Insurance ...Foreign branch activity ...Other, net ... 35.0% 35.0% (35...

  • Page 98
    ... income tax assets (liabilities), net: Loss carryforwards ...Bad debt ...Warranty ...State and local taxes ...Other accrued expenses and reserves ...Inventory ...Compensation and benefits ...Product liability ...Valuation allowance ...Other, net ...Long-term deferred income tax assets (liabilities...

  • Page 99
    INVACARE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Income Taxes-Continued The company recorded a valuation allowance for its domestic net deferred tax assets due to the domestic loss recognized in 2006, 2007 and 2008 and based upon near term domestic ...

  • Page 100
    ... all of the company's receivables are due from health care, medical equipment providers and long term care facilities located throughout the United States, Australia, Canada, New Zealand and Europe. A significant portion of products sold to dealers, both foreign and domestic, is ultimately funded...

  • Page 101
    ... Value Measurements at Reporting Date Quoted Prices in Active Markets for Significant Identical Other Significant Other Assets / Observable Unobservable (Liabilities) Inputs Inputs Level I Level II Level III December 31, 2008 Marketable Securities ...Forward Exchange Contracts-net ...Interest Rate...

  • Page 102
    ... company recognized a net loss of $26,000 in 2008, a net gain of $451,000 in 2007 and a net loss of $240,000 in 2006. Gains or losses recognized as the result of the settlement of forward contracts are recognized in cost of products sold for hedges of inventory transactions or selling, general and...

  • Page 103
    ... prices or stated rates of return. Business Segments The company operates in five primary business segments: North America/Home Medical Equipment (NA/ HME), Invacare Supply Group, Institutional Products Group, Europe and Asia/Pacific. The NA/HME segment sells each of three primary product lines...

  • Page 104
    .... The information by segment is as follows (in thousands): 2008 2007 2006 Revenues from external customers North America/HME ...Invacare Supply Group ...Institutional Products Group ...Europe ...Asia/Pacific ...Consolidated ...Intersegment revenues North America/HME ...Invacare Supply Group...

  • Page 105
    ...) Business Segments-Continued 2008 2007 2006 Earnings (loss) before income taxes North America/HME ...Invacare Supply Group ...Institutional Products Group ...Europe ...Asia/Pacific ...All Other(1) ...Consolidated ...Assets North America/HME ...Invacare Supply Group ...Institutional Products Group...

  • Page 106
    ...Business Segments-Continued Net sales by product, are as follows (in thousands): 2008 2007 2006 North America/HME Rehab ...Standard ...Respiratory ...Other ...Invacare Supply Group Distributed ...Institutional Products Group Continuing Care ...Europe Standard ...Rehab ...Respiratory ...Asia/Pacific...

  • Page 107
    ... Information-Continued CONSOLIDATING CONDENSED STATEMENTS OF OPERATIONS The Company (Parent) Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries (in thousands) Eliminations Total Year ended December 31, 2008 Net sales ...Cost of products sold ...Gross Profit ...Selling, general...

  • Page 108
    ...-Continued CONSOLIDATING CONDENSED BALANCE SHEETS The Company (Parent) Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries (in thousands) Eliminations Total December 31, 2008 Assets Current Assets Cash and cash equivalents ...Marketable securities ...Trade receivables, net...

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    ...and Equipment, net ...Goodwill ...Total Assets ...Liabilities and Shareholders' Equity Current Liabilities Accounts payable ...Accrued expenses ...Accrued income taxes ...Short-term debt and current maturities of long-term obligations ...Total Current Liabilities ...Long-Term Debt ...Other Long-Term...

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    ... (in thousands) Eliminations Total Year ended December 31, 2008 Net Cash Provided (Used) by Operating Activities ...$ 33,365 Investing Activities Purchases of property and equipment ...(5,377) Proceeds from sale of property and equipment ...- Business acquisitions, net of cash acquired ...(6,268...

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    ...Net Cash Provided (Used) by Operating Activities ...$ (27,319) Investing Activities Purchases of property and equipment ...(4,090) Proceeds from sale of property and equipment ...- Business acquisitions, net of cash acquired ...(5,496) Decrease in other investments ...155 Decrease in other long-term...

  • Page 112
    ...) Eliminations Total Year ended December 31, 2006 Net Cash Provided (Used) by Operating Activities ...$ (15,229) $ 21,057 Investing Activities Purchases of property and equipment ...(6,974) (2,440) Proceeds from sale of property and equipment ...- 11 Business acquisitions, net of cash acquired...

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    INVACARE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Interim Financial Information (unaudited) QUARTER ENDED (In thousands, except per share data) March 31, June 30, September 30, December 31, 2008 Net sales ...Gross profit ...Earnings before income taxes ......

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    ... reserve ...Investments and related notes receivable ...Tax valuation allowances ...Accrued warranty cost ...Accrued product liability ...Note (A)-Uncollectible accounts written off, net of recoveries. Note (B)-Amounts written off or payments incurred. Note (C)-Loss and loss adjustment. $42,960 12...

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    ... report financial information; and Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. INVACARE CORPORATION /s/ A. MALACHI MIXON, III A. Malachi Mixon, III Chief Executive Officer...

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    ... and report financial information; and Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. INVACARE CORPORATION /s/ ROBERT K. GUDBRANSON Robert K. Gudbranson Chief Financial Officer...

  • Page 117
    ... of 2002 In connection with the Annual Report of Invacare Corporation (the "company") on Form 10-K for the period ending December 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, A. Malachi Mixon, III, Chief Executive Officer of the company, certify...

  • Page 118
    ... of 2002 In connection with the Annual Report of Invacare Corporation (the "company") on Form 10-K for the period ending December 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Robert K. Gudbranson, Chief Financial Officer of the company, certify...

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