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INVACARE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Charges Related to Restructuring Activities
On July 28, 2005, the company announced multi-year cost reductions 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, reducing freight exposure through freight
auctions and changing the freight policy, general expense reductions and exiting four facilities. The restructuring
was necessitated by the continued decline in reimbursement by the U.S. government as well as similar
reimbursement pressures abroad and continued pricing pressures faced by the company as a result of outsourcing
by competitors to lower cost locations.
To date, the company has made substantial progress on its restructuring activities, including exiting facilities
and eliminating positions through December 31, 2008, which resulted in restructuring charges of $4,766,000,
$11,408,000, $21,250,000 and $7,533,000 in 2008, 2007, 2006 and 2005, respectively, of which $1,817,000,
$1,817,000, $3,973,000 and $238,000, respectively is recorded in cost of products sold as it relates to inventory
markdowns. 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 expects to utilize the accruals recorded as of
December 31, 2008 during 2009. A progression by reporting segment of the accruals recorded as a result of the
restructuring is as follows (in thousands):
Severance
Product Line
Discontinuance
Contract
Terminations Other Total
January 1, 2006 Balance
NA/HME ................................. $ 2,130 $ — $ — $ — $ 2,130
ISG...................................... 112 — 165 — 277
Europe ................................... 799 — — — 799
Asia/Pacific ............................... 63 — — — 63
Total .................................... $ 3,104 $ — $ 165 $ — $ 3,269
Accruals
NA/HME ................................. 5,549 2,719 1,346 — 9,614
ISG...................................... 457 552 — — 1,009
IPG...................................... 38 — — — 38
Europe ................................... 5,208 455 — 2,995 8,658
Asia/Pacific ............................... 621 557 745 8 1,931
Total .................................... $11,873 $ 4,283 $ 2,091 $ 3,003 $ 21,250
Payments
NA/HME ................................. (6,320) (682) (789) — (7,791)
ISG...................................... (403) (552) (165) — (1,120)
IPG...................................... (38) — — — (38)
Europe ................................... (2,273) (455) — (2,995) (5,723)
Asia/Pacific ............................... (684) (557) (623) (8) (1,872)
Total .................................... $(9,718) $(2,246) $(1,577) $(3,003) $(16,544)
FS-29