Invacare 2009 Annual Report Download - page 54

“Other” includes an estimated payment of $35,000 in less than 1 year and $3,000,000 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 2009, 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 the company’s consolidated financial statements.
Revenue Recognition
Invacare’s revenues are recognized when products are shipped to unaffiliated customers. Revenue
Recognition, ASC 605, provides guidance on the application of generally accepted accounting principles to
selected revenue recognition issues. The company has concluded that its revenue recognition policy is
appropriate and in accordance with GAAP and ASC 605. 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.
The company offers discounts and rebates, which are accounted for as reductions to revenue in the period in
which the sale is recognized. Discounts offered include: cash discounts for prompt payment, base and trade
discounts based on contract level for specific classes of customers. Volume discounts and rebates are given based
on large purchases and the achievement of certain sales volumes. Product returns are accounted for as a reduction
to reported sales with estimates recorded for anticipated returns at the time of sale. The company does not ship
any goods on consignment.
Distributed products sold by the company are accounted for in accordance with the revenue recognition
guidance in ASC 605-45-05.The company records distributed product sales gross as a principal since the
company takes title to the products and has the risks of loss for collections, delivery and returns.
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