Invacare 2009 Annual Report Download - page 45

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by one percentage point. These sales consist of Rehab (power wheelchairs, custom manual wheelchairs, personal
mobility and seating and positioning), Standard (manual wheelchairs, personal care, home care beds, low air loss
therapy and patient transport), and Respiratory (oxygen concentrators, HomeFill®oxygen delivery systems, sleep
apnea, aerosol therapy and other respiratory) products. The standard product line net sales improved by 5.5% in
2009, driven by increased volumes in beds, patient transport and therapeutic support surfaces products. Rehab
product line net sales decreased by 0.6% in 2009, despite volume increases in custom power products. The
respiratory product line net sales decreased by 8.1% in 2009, primarily driven by lower sales of HomeFill®
oxygen delivery systems to national providers.
Invacare Supply Group
ISG net sales increased 5.4% in 2009 over the prior year to $280,295,000 from $265,818,000. Acquisitions
and foreign currency translation had no impact on the sales increase. These sales principally consist of ostomy,
incontinence, diabetic, enterals, wound care and other medical supply products. The net sales increase was
primarily in diabetic, incontinence and wound care products.
Institutional Products Group
IPG net sales decreased 10.3% in 2009 over the prior year to $89,423,000 from $99,662,000. Foreign
currency translation decreased net sales by approximately one percentage point. These sales consist of bed,
furniture, home medical equipment, and bathing equipment products sold into the long-term care market. The net
sales decrease was largely driven by continued weakness in capital expenditures by nursing home customers, due
primarily to budgetary pressures in state Medicaid programs.
Europe
European net sales decreased 9.2% in 2009 compared to the prior year to $503,084,000 from $553,845,000
with foreign currency translation decreasing net sales by nine percentage points. The net sales decrease was the
result of sales declines primarily in France, where sales of beds and wheelchairs into nursing homes weakened as
a result of changes in reimbursement rules. This decline was partially offset by favorable net sales performance
in the U.K. region.
Asia/Pacific
Asia/Pacific net sales decreased 24.2% in 2009 from the prior year to $71,933,000 from $94,867,000.
Foreign currency translation decreased net sales by eight percentage points. The sales decline at the Company’s
subsidiary, which manufactures controllers, was largely due to external customers whose demand for inventory
remained weak in the current economic environment. The Company’s Australian distribution business had lower
sales due in large part to weak demand from long-term care facilities which continue to delay capital purchases.
Changes in exchange rates, particularly with the Euro and U.S. Dollar, have had, and may continue to have, a
significant impact on sales in this segment.
Gross Profit. Consolidated gross profit as a percentage of net sales was 29.1% in 2009 as compared to
27.8% in 2008. The margin improvement compared to the prior year for all segments except Asia/Pacific and
Europe was primarily the result of volume increases and cost reduction activities, including commodity cost and
freight reductions.
NA/HME gross profit as a percentage of net sales was 34.1% in 2009 versus 30.5% in 2008. The significant
improvement in margins was primarily a result of increased volumes, selective price increases implemented in
the second half of 2008 and cost reduction initiatives.
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