Invacare 2008 Annual Report Download - page 16

The company’s top 10 customers accounted for approximately 10% of 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 decisions and are invoiced directly by the company.
PRODUCT LIABILITY COSTS
The company’s captive insurance company, Invatection Insurance Company, currently has a policy year that
runs from September 1 to August 31 and insures annual policy losses of $10,000,000 per occurrence and
$13,000,000 in the aggregate of the company’s North American product liability exposure. The company also
has additional layers of external insurance coverage insuring up to $75,000,000 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 to be adequate or available at affordable rates.
Product liability reserves are recorded for individual claims based upon historical experience, industry
expertise and indications from the third-party actuary. Additional reserves, in excess of the specific individual
case reserves, are provided for incurred but not reported claims based upon third-party actuarial valuations at the
time such valuations are conducted. Historical claims experience and other assumptions are taken into
consideration by the third-party actuary to estimate the ultimate reserves. For example, the actuarial analysis
assumes that historical loss experience is an indicator of future experience, that the distribution of exposures by
geographic area and nature of operations for ongoing operations is expected to be very similar to historical
operations with no dramatic changes and that the government indices used to trend losses and exposures are
appropriate. Estimates made are adjusted on a regular basis and can be impacted by actual loss award settlements
on claims. While actuarial analysis is used to help determine adequate reserves, the company accepts
responsibility for the determination and recording of adequate reserves in accordance with accepted loss
reserving standards and practices.
PRODUCT DEVELOPMENT AND ENGINEERING
Invacare is committed to continuously improving its existing product lines in a focused manner. In 2008,
new product development continued to be a focus as part of Invacare’s strategy to gain market share and
maintain a competitive advantage along with beginning to globally standardize certain product platforms. To this
end, the company introduced several new products and product enhancements. The following are some of the
most significant 2008 product developments:
North America/HME
Invacare®G-trac™ Electronic Gyroscope module offers power wheelchair users with alternative
driver controls, an added level of control for safe, consistent driving performance. Improved tracking makes
it possible for the chair to drive straight on the intended path of the user. Side sloped terrain (even slightly);
obstacles that only one wheel encounter or come upon one side ahead of the other (such as door jambs);
steps and curbs approached at an angle; and soft or rough unleveled terrain, all make it difficult for power
chairs with alternative driver controls to stay on course without veering to one side or the other. The G-Trac
module makes it possible to safely and independently drive a power chair in these environments.
Invacare launched a new Infrared Control Module for Invacare®power wheelchair users with
Invacare®MK6i™ Expandable Electronics. This new control module will allow power wheelchair users to
utilize their driver control to operate up to six remote control devices such as televisions, stereos and DVD
players, lights and switches using standard X-10 technology, even operate a TASH®Infrared telephone.
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