Invacare 2009 Annual Report Download - page 46

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ISG gross profit as a percentage of net sales increased 1.1 percentage points in comparison to the prior year.
The improvement was primarily as a result of volume increases, freight reduction programs and reduced
discounts associated with lower sales to larger providers.
IPG gross profit as a percentage of net sales increased 5.0 percentage points in 2009 from the prior year. The
increase in margin is primarily attributable to selective price increases introduced in the second half of 2008 and
cost reduction activities associated with commodity and freight costs.
Gross profit in Europe as a percentage of net sales declined 0.7 percentage points in 2009 from the prior
year. The decrease was primarily a result of unfavorable product mix toward lower margin product and
unfavorable foreign currency transactions partially offset by cost reduction activities associated with commodity
and freight costs.
Gross profit in Asia/Pacific as a percentage of net sales decreased by 7.6 percentage points in 2009 from the
prior year. The decrease was primarily as a result of volume declines and unfavorable foreign currency impact
principally due to the strengthening of the U.S. dollar.
Selling, General and Administrative. Consolidated selling, general and administrative expenses as a
percentage of net sales were 23.5% in 2009 and 22.7% in 2008. The overall dollar increase was $392,000 or
0.1%, with foreign currency translation decreasing expenses by $14,143,000 or four percentage points and
acquisitions increasing expenses by approximately $1,804,000 or one percentage point. Excluding acquisitions
and foreign currency translation impact, selling, general and administrative (SG&A) expenses increased
$12,731,000 or 3.2%. This increase is primarily attributable to higher bad debt expense and unfavorable foreign
currency transactions.
SG&A expenses for NA/HME increased 5.4% or $10,604,000 in 2009 compared to 2008. Acquisitions
increased these expenses by approximately $1,804,000 while foreign currency decreased SG&A expense by
$969,000. Excluding foreign currency translation, SG&A expense increased $9,769,000 or 4.9% primarily due to
higher bad debt expense.
SG&A expenses for ISG increased by 6.7% or $1,754,000 in 2009 compared to 2008. The increase is
primarily attributable to higher bad debt expense.
SG&A expenses for IPG increased by 6.3% or $922,000 in 2009 compared to 2008. Foreign currency
translation decreased SG&A expenses by approximately one percentage point or $185,000. Excluding the impact
of foreign currency translation, SG&A expenses increased by $1,107,000 due to unfavorable currency transaction
effects associated with the Canadian Dollar versus the U.S. Dollar.
European SG&A expenses decreased by 8.0% or $10,593,000 in 2009 compared to 2008. Foreign currency
translation decreased SG&A expenses by approximately $9,812,000. Excluding the foreign currency translation
impact, SG&A expenses decreased by $781,000.
Asia/Pacific SG&A expenses decreased 8.3% or $2,295,000 in 2009 compared to 2008. Foreign currency
translation decreased expenses by $3,177,000. Excluding the foreign currency translation impact, SG&A
expenses increased $882,000 or 3.2% primarily due to unfavorable currency transaction effects.
Debt Finance Charges, Interest and Fees Associated with Debt Refinancing. In 2009, the Company fully
paid down its $250,000,000 term loan facility which was not due to expire until February 2013. As a result,
deferred financing fees of $2,878,000 pre-tax, which were previously capitalized, were expensed in the NA/HME
operating segment.
Asset write-downs to intangibles and investments. The company has made other investments in limited
partnerships and non-marketable equity securities, which are accounted for using the cost method, adjusted for
I-40