Invacare 2009 Annual Report Download - page 80

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INVACARE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Accounting Policies—Continued
On July 1, 2009, the FASB issued ASC 105, The Accounting Standards Codification (Codification) as the
single source of authoritative U.S. accounting and reporting standards, with the exception of guidance issued by
the SEC. Although the Codification is not intended to change U.S. GAAP, it does reorganize and supersede
current U.S. GAAP and therefore all references to U.S. GAAP in the company’s filings were changed to
Codification references, beginning with the company’s third quarter Form 10-Q.
Receivables
Accounts receivable are reduced by an allowance for amounts that may become uncollectible in the future.
Substantially all of the company’s receivables are due from health care, medical equipment dealers and long term
care facilities located throughout the United States, Australia, Canada, New Zealand and Europe. A significant
portion of products sold to dealers, both foreign and domestic, is ultimately funded through government
reimbursement programs such as Medicare and Medicaid in the U.S. As a consequence, changes in these
programs can have an adverse impact on dealer liquidity and profitability. The estimated allowance for
uncollectible amounts ($21,995,000 in 2009 and $18,048,000 in 2008) is based primarily on management’s
evaluation of the financial condition of specific customers. In addition, as a result of the third party financing
arrangement, management monitors the collection status of these contracts in accordance with the company’s
limited recourse obligations and provides amounts necessary for estimated losses in the allowance for doubtful
accounts.
Installment receivables as of December 31, 2009 and 2008 consist of the following (in thousands):
2009 2008
Current
Long-
Term Total Current
Long-
Term Total
Installment receivables ...................... $5,015 $ 8,268 $13,283 $ 5,549 $ 9,568 $15,117
Less:
Unearned interest ........................... (97) — (97) (129) — (129)
Allowance for doubtful accounts ............... (1,353) (4,727) (6,080) (1,153) (3,889) (5,042)
$ 3,565 $ 3,541 $ 7,106 $ 4,267 $ 5,679 $ 9,946
As a result of the company’s third party financing arrangement, management also monitors the collection
status of the contracts with De Lage Landen, Inc. for which the company has a limited recourse obligation and
provides amounts necessary for estimated losses in the allowance for doubtful accounts. See Concentration of
Credit Risk in the Notes to the Consolidated Financial Statements for a description of the financing arrangement.
Long-term installment receivables are included in “Other Assets” on the consolidated balance sheet.
Inventories
Inventories as of December 31, 2009 and 2008 consist of the following (in thousands):
2009 2008
Finished goods .................................................. $ 99,701 $ 99,486
Raw materials .................................................. 59,451 64,493
Work in process ................................................. 13,070 14,758
$172,222 $178,737
FS-12