Invacare 2009 Annual Report Download - page 108

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INVACARE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Fair Values of Financial Instruments—Continued
market participant assumptions regarding taxes, impact of contributory assets in the valuation models, etc. The
fair values are then compared to the carrying value of the intangible. For amortized intangibles, the forecasted
undiscounted cash flows were compared to the carrying value, and if impairment results, the impairment is
measured based on the estimated fair value of the intangibles. As a result of the company’s 2009 intangible
impairment review, there were impairment charges related to intangible assets for Europe of $896,000 and
NA/HME of $800,000.
Business Segments
The company operates in five primary business segments: North America/Home Medical Equipment
(NA/HME), Invacare Supply Group (ISG), Institutional Products Group (IPG), Europe and Asia/Pacific.
The NA/HME segment sells each of three primary product lines, which includes: standard, rehab and
respiratory products. Invacare Supply Group sells distributed product and the Institutional Products Group sells
health care furnishings and accessory products. Europe and Asia/Pacific sell the same product lines with the
exception of distributed products. Each business segment sells to the home health care, retail and extended care
markets.
The company evaluates performance and allocates resources based on profit or loss from operations before
income taxes for each reportable segment. The accounting policies of each segment are the same as those
described in the summary of significant accounting policies for the company’s consolidated financial statements.
Intersegment sales and transfers are based on the costs to manufacture plus a reasonable profit element.
Therefore, intercompany profit or loss on intersegment sales and transfers is not considered in evaluating
segment performance except for Asia/Pacific due to its significant intercompany sales volume.
In 2009, management changed how it views segment earnings before taxes and accordingly reclassifications
have been made to the company’s segment disclosure of earnings (loss) before income tax amounts for 2007 and
2008 to be consistent with 2009 presentation. As a result, 2008 earnings before taxes decreased for NA/HME by
$6,918,000 and the loss before income taxes for All Other increased by $9,066,000 while earnings before income
tax increased for Europe and Asia/Pacific by $6,918,000 and $9,066,000, respectively. For 2007, earnings before
taxes decreased for NA/HME by $7,151,000 and the loss before income taxes for All Other increased by and
$8,282,000 while earnings before income tax increased for Europe and Asia/Pacific by $7,151,000 and
$8,282,000, respectively.
FS-40