Invacare 2008 Annual Report Download - page 53

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* Includes an estimated additional payment of $15,328,000 as required by the company’s credit facility based
upon “excess cash flow” for 2008 and scheduled for payment in March 2009 (as defined in the
agreement). While additional payments may be required based on excess cash flow, the above table does not
include any additional such payments beyond the estimated payment for 2009 as such payments can not be
accurately estimated.
“Other” includes an estimated payment of $35,000 in less than 1 year and $959,000 in years 1-3 for
liabilities recorded for uncertain tax positions. The table does not include any other payments related to liabilities
recorded for uncertain tax positions as the company can not make a reasonably reliable estimate as to any other
payments. See Income Taxes in the Notes to the Consolidated Financial Statements included in this report.
DIVIDEND POLICY
It is the company’s policy to pay a nominal dividend in order for its stock to be more attractive to a broader
range of investors. The current annual dividend rate remains at $0.05 per Common Share and $0.045 per Class B
Common Share. It is not anticipated that this will change materially as the company continues to have available
significant growth opportunities through internal development and acquisitions. For 2008, annualized dividends
of $0.05 per Common Share and $0.045 per Class B Common Share were declared and paid.
CRITICAL ACCOUNTING POLICIES
The Consolidated Financial Statements included in the report include accounts of the company, all majority-
owned subsidiaries and a variable interest entity for which the company was the primary beneficiary in 2007. The
preparation of financial statements in conformity with accounting principles generally accepted in the United
States requires management to make estimates and assumptions in certain circumstances that affect amounts
reported in the accompanying Consolidated Financial Statements and related footnotes. In preparing the financial
statements, management has made its best estimates and judgments of certain amounts included in the financial
statements, giving due consideration to materiality. However, application of these accounting policies involves
the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could
differ from these estimates.
The following critical accounting policies, among others, affect the more significant judgments and
estimates used in preparation of our consolidated financial statements.
Revenue Recognition
Invacare’s revenues are recognized when products are shipped to unaffiliated customers. The SEC’s Staff
Accounting Bulletin (SAB) No. 101, “Revenue Recognition,” as updated by SAB No. 104, provides guidance on
the application of generally accepted accounting principles (GAAP) to selected revenue recognition issues. The
company has concluded that its revenue recognition policy is appropriate and in accordance with GAAP and
SAB No. 101. Shipping and handling costs are included in cost of goods sold.
Sales are made only to customers with whom the company believes collection is reasonably assured based
upon a credit analysis, which may include obtaining a credit application, a signed security agreement, 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 with consideration given to any
outstanding past due amounts.
I-47