Invacare 2010 Annual Report Download

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2010 Annual Report
And Form 10-K

Table of contents

  • Page 1
    2010 Annual Report And Form 10-K

  • Page 2
    ... calculated based upon the last sale price of the Common Shares as reported by The New York Stock Exchange on June 30, 2010, which was $20.74. For purposes of this information, the 2,954,236 Common Shares and 1,080,174 Class B Common Shares which were held by Executive Officers and Directors of the...

  • Page 3
    INVACARE CORPORATION 2010 ANNUAL REPORT ON FORM 10-K CONTENTS Item Page 1. 1A. 1B. 2. 3. PART I: Business ...Risk Factors ...Unresolved Staff Comments ...Properties ...Legal Proceedings ...Executive Officers of the Registrant ...PART II: Market for the Registrant's Common Equity, Related ...

  • Page 4
    ... sells its products principally to over 25,000 home health care and medical equipment providers, distributors and government locations in the United States, Australia, Canada, Europe, New Zealand and Asia. Invacare's products are sold through its worldwide distribution network by its sales force...

  • Page 5
    ... outside of the traditional institutional setting. In addition, continuing medical advances prolong the lives of adults and children, thus increasing the demand for home medical care equipment. Health Care Cost Containment Trends. Health care expenditures in the United States for 2009 were estimated...

  • Page 6
    ... the company's distribution within them, develop. United States/Europe Market The company is directly affected by government regulation and reimbursement policies in virtually every country in which the company operates. In the United States, the growth of health care costs has increased at rates in...

  • Page 7
    ... care products such as commodes and other toilet assist aids. Home Care Beds. Invacare manufactures and distributes a wide variety of manual, semi-electric and fully-electric beds for home use under the Invacare® brand name. Home care bed accessories include bedside rails, mattresses, overbed...

  • Page 8
    ... home medical equipment and accessory products. Asia/Pacific The company's Asia/Pacific operations consist of Invacare Australia, which distributes the Invacare range of products which includes: manual and power wheelchairs, lifts, ramps, beds, furniture and pressure care products; Dynamic Controls...

  • Page 9
    ... AND DISTRIBUTION North America and Asia/Pacific Invacare products are marketed in the United States and Asia/Pacific primarily to providers who in turn sell or rent these products directly to consumers within the non-acute care setting. Invacare's primary customer is the home medical equipment (HME...

  • Page 10
    ... their business success. The company markets products and services to the institutional care market through IPG. IPG products include beds and furnishings, patient handling, bathing, durable medical equipment and clinical therapies, such as therapeutic support surfaces. IPG sales and marketing...

  • Page 11
    ...big buying groups tending to develop their business on a European scale has continued. As a result, Invacare is generalizing the application of pan-European pricing policies. In 2010, Invacare was the title sponsor for the fifteenth year in a row of the "Invacare World Team Cup," a wheelchair tennis...

  • Page 12
    ... in both home care and continuing care medical device equipment. 2010's marquee global product was the Invacare® FDX® Front-Wheel Drive Power Wheelchair. Launched in May in the United States and July in Europe, this wheelchair completes Invacare's power wheelchair offerings with a solution for...

  • Page 13
    ... United States, Invacare introduced the Invacare® Insignia® Wheelchair. This high-strength lightweight chair offers height adjustable arms that convert from desk to full length, allowing providers to stock one chair instead of two, as well as a robust wheel lock, simple adjustable head tube design...

  • Page 14
    ... and final assembly of a variety of standard manual wheelchairs and personal care products. The company operates four major factories located in Elyria, Ohio; Sanford, Florida; London, Ontario and Reynosa, Mexico. Asia/Pacific The Asia/Pacific region is focused on improving its customer delivery...

  • Page 15
    ... and foreign manufacturers of medical devices distributed commercially in the U.S. are subject to periodic inspections by the FDA. Furthermore, state, local and foreign governments have adopted regulations relating to the design, manufacture and marketing of health care products. As part of its...

  • Page 16
    ... month purchase option for standard power wheelchairs effective January 1, 2011. Instead, Medicare now makes rental payments for 13 months before the beneficiary assumes ownership of the standard power wheelchair. Finally, the new health care law imposed a "productivity adjustment" to the annual fee...

  • Page 17
    ...Company's products resulting from the current global economic conditions and general volatility in the credit and stock markets; loss of key health care providers; exchange rate and tax rate fluctuations; inability to design, manufacture, distribute and achieve market acceptance of new products with...

  • Page 18
    ... could continue to negatively impact the company's revenues and profitability. The company's products are sold primarily through a network of medical equipment and home health care providers, extended care facilities, hospital and HMO-based stores and other providers. In addition, the company sells...

  • Page 19
    ... health care systems that govern reimbursement for new home health care products. The ability of hospitals and other providers supported by such systems to purchase the company's products is dependent, in part, upon public budgetary constraints. Various countries have tightened reimbursement rates...

  • Page 20
    ... have greater financial resources than the company does. The home medical equipment market is highly competitive and the company's products face significant competition from other well-established manufacturers. Reduced government reimbursement levels and changes in reimbursement policies, such as...

  • Page 21
    ...thus offer products for sale at a lower price, the company's business, financial condition and results of operation could be adversely affected. The consolidation of health care customers and the company's competitors could result in a loss of customers or in additional competitive pricing pressures...

  • Page 22
    ... component failures, manufacturing errors or design defects, including defects in labeling. Any recall/field correction would divert managerial and financial resources and could harm the company's reputation with its customers, product users and the health care professionals that use, prescribe and...

  • Page 23
    ... products sold to their customers and patients by third-party payors, including Medicare and Medicaid. The U.S. federal government and the governments in the states and other countries in which the company operates regulate many aspects of the company's business. As a medical device manufacturer...

  • Page 24
    ... at the company's Sanford, Florida facility. The letter does not call into question the safety or efficacy of Invacare products, and production has not been impacted. The company is taking these issues very seriously and has added resources to ensure it is addressing all of the FDA's concerns in...

  • Page 25
    ... rates or pace of reimbursement or changes in the financial health of the company's customers. As a result of past changes in Medicare reimbursement regulations, specifically changes to the qualification processes and reimbursement levels of consumer power wheelchairs and custom power wheelchairs...

  • Page 26
    ... and profitability. The company uses a variety of distribution methods to sell its products and services. The company's distribution network includes various customers such as specialized home health care providers and extended care facilities, hospital and HMO-based stores, home health agencies...

  • Page 27
    ... vendors, employees, independent sales agents, distributors, consultants and others. However, these agreements may be breached. The FDA or another governmental agency may require the disclosure of this information in order for the company to have the right to market a product. Trade secrets, know...

  • Page 28
    ... and pricing. The loss of the services of the company's key management and personnel could adversely affect its ability to operate the company's business. The company's future success will depend, in part, upon the continued service of key managerial, research and development staff and sales and...

  • Page 29
    ... to acquire businesses or product lines, including providing new products or new manufacturing and service capabilities, to add new customers, to increase penetration with existing customers, and to expand into new geographic markets. The company's ability to successfully grow through acquisitions...

  • Page 30
    ... 31, 2010 is set forth in Leases and Commitments in the Notes to the Consolidated Financial Statements of the company included in this report and in the table below: Square Feet Ownership Or Expiration Date of Lease Renewal Options North American/HME Operations Use Akron, Ohio ...Alexandria...

  • Page 31
    ... Offices Manufacturing, Warehouse and Offices Warehouse and Offices Warehouse and Offices Warehouse and Offices Grand Prairie, Texas ...Jacksonville, Florida ...Jamesburg, New Jersey ...Milford, Massachusetts ...Rancho Cucamonga, California ...South Bend, Indiana ...Institutional Products Group...

  • Page 32
    Asia/Pacific Operations Square Feet Ownership Or Expiration Date of Lease Renewal Options Use Carrum Downs, VIC, Australia ...Christchurch, New Zealand ...Christchurch, New Zealand ...Kidderminster, United Kingdom . . Malaga, WA, Australia ...North Olmsted, Ohio ...Southport, QLD, Australia ......

  • Page 33
    ... Vice President-Electronics and Design Engineering and Director Senior Vice President-Corporate Marketing and Chief Product Officer Senior Vice President-Human Resources Senior Vice President-Global Commercial Operations * The description of executive officers is included pursuant to Instruction...

  • Page 34
    ... position in 2009. Prior to her promotion, Mrs. Stumpp served as Director of Compensation & Benefits from January 2001 to August 2009 and as Director of Human Resources Group from August 2006 until August 2009. She also has prior experience in healthcare, small business and the services industry...

  • Page 35
    ... Matters and Issuer Purchases of Equity Securities. Invacare's Common Shares, without par value, trade on the New York Stock Exchange (NYSE) under the symbol "IVC." Ownership of the company's Class B Common Shares (which are not listed on NYSE) cannot be transferred, except, in general, to family...

  • Page 36
    ...of health care companies in the S&P 500 Index. The graph assumes $100 invested on December 31, 2005 in the common shares of Invacare Corporation, S&P 500 Index, Russell 2000 Index and the S&P Healthcare Equipment & Supplies Index, including reinvestment of dividends, through December 31, 2010. I-35

  • Page 37
    ... months ended December 31, 2010. Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs (2) Period Total Number of Shares Purchased (1) Average Price Paid Per Share 10/1/2010-10/31/10 ...11...

  • Page 38
    ... and ratio data) Earnings Net Sales ...Net Earnings (loss) ...Net Earnings (loss) per Share-Basic ...Net Earnings (loss) per Share-Assuming Dilution ...Dividends per Common Share ...Dividends per Class B Common Share ...Balance Sheet Current Assets ...Total Assets ...Current Liabilities ...Working...

  • Page 39
    ...the growth rate in 2011. As the company shifts to a global operating model, it intends to leverage its regional product strengths into its other geographic markets. For example, the company will be introducing a new bath lift in the United States that was developed and has already enjoyed success in...

  • Page 40
    ...® oxygen delivery systems to national providers. Standard product line net sales improved by 2.6% in 2010, driven by increased volumes in standard wheelchairs, beds and therapeutic support surfaces. Rehab product line net sales increased by 2.0% in 2010 primarily driven by increases in custom power...

  • Page 41
    ... initiatives including freight and warranty expenses. ISG gross profit as a percentage of net sales decreased 0.6 percentage points in comparison to the prior year. The decrease was primarily as a result of unfavorable product mix to lower margin diabetic and ostomy products partially offset...

  • Page 42
    ... due to losses without benefit, and due to valuation allowances in the United States, Australia and New Zealand. In addition, the 2009 tax rate was lower than the 2010 rate primarily due to a loss carryback, resulting from a tax law change in the United States, which previously was fully offset by...

  • Page 43
    ...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. Respiratory product line net sales decreased by 8.1% in 2009, primarily driven by lower sales of HomeFill® oxygen delivery...

  • Page 44
    ... 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...

  • Page 45
    ... due to losses without benefit, and due to valuation allowances in the United States, Australia and New Zealand. In addition, the 2009 tax rate was lower than the 2008 tax rate primarily due to a loss carryback, resulting from a tax law change in the United States, which previously was fully offset...

  • Page 46
    ... of materials, salaries and benefits, utilities and outside services. The company attempts to minimize or offset the effects through increased sales volumes, capital expenditure programs designed to improve productivity, alternative sourcing of material and other cost control measures. In 2010, 2009...

  • Page 47
    ... previous year. The decline in operating cash flows in 2010 was primarily attributable to an increase in net working capital assets specifically trade receivables and inventories. Trade receivables increased due to strong fourth quarter 2010 sales. Cash flows used for investing activities were $30...

  • Page 48
    ... Subordinated Debentures due 2027 ...Revolving Credit Agreements due 2015 ...Operating lease obligations ...Capital lease obligations ...Purchase obligations (primarily computer systems contracts) ...Product liability ...SERP ...Other, principally deferred compensation ...Total ... $128,552 184,932...

  • Page 49
    ..., 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...

  • Page 50
    ...for specific customers as needed. The company continues to closely monitor the credit-worthiness of its customers and adhere to tight credit policies. During the second quarter of 2010, the Centers for Medicare and Medicaid Services announced the single payment amounts for Round 1 of the Competitive...

  • Page 51
    ... reporting units. Product Liability The company's captive insurance company, Invatection Insurance Co., currently has a policy year that runs from September 1 to August 31 and insures annual policy losses of $10,000,000 per occurrence and $13,000,000 in the aggregate of the company's North American...

  • Page 52
    ... of the fair value hierarchy. Entities are also required to disclose information in the Level 3 roll forward about purchases, sales, issuances and settlements on a gross basis. In addition to these new disclosure requirements, ASU 2010-06 also amends Topic 820 to further clarify existing guidance...

  • Page 53
    ... party purchases and sales. The company does not believe that any potential loss related to these financial instruments would have a material adverse effect on the company's financial condition or results of operations. On October 28, 2010, the company entered into the New Credit Agreement which...

  • Page 54
    ... company's internal auditors; a Code of Conduct; written policies and procedures; and a careful selection and training of employees. Actions are taken to correct deficiencies as they are identified. An effective internal control system, no matter how well designed, has inherent limitations-including...

  • Page 55
    ... required by Item 11 is incorporated by reference to the information set forth under the captions "Executive Compensation" and "Corporate Governance" in the company's definitive Proxy Statement for the 2011 Annual Meeting of Shareholders. Item 12. Security Ownership of Certain Beneficial Owners...

  • Page 56
    ... page number I-57 of this Report on Form 10-K. Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized as of February 25, 2011. INVACARE CORPORATION...

  • Page 57
    ...Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated as of February 25, 2011... B. Richey, II President-Invacare Technologies, Senior Vice President-Electronics and Design Engineering and Director Director /s/...

  • Page 58
    INVACARE CORPORATION Report on Form 10-K for the fiscal year ended December 31, 2010. Exhibit Index Official Exhibit No. Description Sequential Page No. 2.1 Sale and Purchase Agreement Regarding the Sale and Purchase of All Shares in WP Domus GmbH by and among WP Domus LLC, Mr. Peter Schultz and ...

  • Page 59
    ... Plan Form of Switzerland Stock Option Award under Invacare Corporation 2003 Performance Plan Form of Switzerland Executive Stock Option Award under Invacare Corporation 2003 Performance Plan Director Compensation Schedule Invacare Corporation Executive Incentive Bonus Plan, as amended March 9, 2010...

  • Page 60
    ...Executive Retirement Plan, effective August 19, 2009 $400,000,000 Revolving Credit Facility Credit Agreement by and among Invacare Corporation...Independent Registered Public Accounting Firm Certification of the Chief Executive Officer... Exhibit of the company report on Form 10-K for the fiscal...

  • Page 61
    ..., dated April 8, 2005, which is incorporated herein by reference. Reference is made to the appropriate Exhibit of the company report on Form 8-K, dated October 28, 2010, which is incorporated herein by reference. Reference is made to Appendix A to the company's definitive proxy statement on Schedule...

  • Page 62
    ...in all material respects the information set forth therein. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Invacare Corporation's internal control over financial reporting as of December 31, 2010, based on criteria established...

  • Page 63
    ..., effective internal control over financial reporting as of December 31, 2010, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Invacare Corporation and subsidiaries...

  • Page 64
    ...STATEMENT OF EARNINGS INVACARE CORPORATION AND SUBSIDIARIES Years Ended December 31, 2010 2009 2008 (In thousands, except per share data) Net sales ...Cost of products sold ...Gross Profit ...Selling, general and administrative expenses ...Charges related to restructuring activities ...Loss on debt...

  • Page 65
    ... BALANCE SHEETS INVACARE CORPORATION AND SUBSIDIARIES December 31, December 31, 2009 2010 (In thousands) Assets Current Assets Cash and cash equivalents ...Trade receivables, net ...Installment receivables, net ...Inventories, net ...Deferred income taxes ...Other current assets ...Total Current...

  • Page 66
    ... borrowings ...Payments on revolving lines of credit and long-term borrowings ...Proceeds from exercise of stock options ...Payment of financing costs ...Payment of dividends ...Purchase of treasury stock ...Net Cash Used by Financing Activities ...Effect of exchange rate changes on cash ...Increase...

  • Page 67
    ... of prior service costs and unrecognized losses and credits ...Marketable securities holding gain ...Total comprehensive income ...Dividends ...December 31, 2009 Balance ...Exercise of stock options ...Non-qualified stock option expense ...Restricted stock awards ...Conversion from Class B Stock to...

  • Page 68
    ... in the estimated $11.0 billion worldwide market for medical equipment and supplies used in the home based upon the company's distribution channels, breadth of product line and net sales. The company designs, manufactures and distributes an extensive line of health care products for the non-acute...

  • Page 69
    ..., 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...

  • Page 70
    INVACARE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Accounting Policies-Continued 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 ...

  • Page 71
    ... of the fair value hierarchy. Entities are also required to disclose information in the Level 3 roll forward about purchases, sales, issuances and settlements on a gross basis. In addition to these new disclosure requirements, ASU 2010-06 also amends Topic 820 to further clarify existing guidance...

  • Page 72
    ... from health care, medical equipment providers and long term care facilities located throughout the United States, Australia, Canada, New Zealand and Europe. A significant portion of products sold to providers, both foreign and domestic, is ultimately funded through government reimbursement programs...

  • Page 73
    INVACARE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Receivables-Continued collateral and time in business. Additional analysis is performed for customers desiring credit greater than $250,000 which includes a detailed review of the customer's financials as ...

  • Page 74
    INVACARE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Receivables-Continued Installment receivables by class as of December 31, 2010 consist of the following (in thousands): 2010 Related Allowance for Doubtful Accounts Total Installment Receivables Unpaid ...

  • Page 75
    ... 2010, Invacare Corporation acquired Centralized Medical Equipment LLC and the majority of the assets of Specialty Medical Equipment LLC, both Massachusetts limited liability companies, collectively referred to as Boston Rentals, which rent equipment to skilled nursing and long-term care providers...

  • Page 76
    ... amount of goodwill by operating segment is as follows (in thousands): North America/ HME Invacare Supply Group Institutional Products Group Europe Asia/ Pacific Consolidated Balance at January 1, 2009 ...Foreign currency translation adjustments ...Purchase accounting adjustments ...Balance at...

  • Page 77
    ... stock price volatility would increase the discount rate and thus increase the chance of impairment. For example, if the discount rate used were 100 basis points higher for the 2010 impairment analysis, there still would not be any indicator of potential impairment for any of the reporting units...

  • Page 78
    ... income taxes, primarily Value Added Taxes ...Warranty cost ...Freight ...Professional ...Product liability, current portion ...Rebates ...Insurance ...Interest ...Derivative liability (foreign forward exchange contracts) ...Severance ...Other items, principally trade accruals ... $ 46,658 19,981 18...

  • Page 79
    INVACARE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Long-Term Debt-Continued On October 28, 2010, the company entered into a new credit agreement (the "New Credit Agreement") which provides for a $400,000,000 senior secured revolving credit facility maturing ...

  • Page 80
    INVACARE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Long-Term Debt-Continued deferred financing fees, which were previously capitalized, were expensed in the All Other operating segment in 2009. As part of the refinancing done on October 28, 2010, the ...

  • Page 81
    ...in thousands): 2010 2009 Supplemental Executive Retirement Plan liability ...Product liability ...Deferred income taxes ...Deferred compensation ...Other ...Total long-term obligations ... $26,133 20,026 32,559 8,542 12,331 $99,591 $25,677 19,757 30,276 7,253 12,740 $95,703 Leases and Commitments...

  • Page 82
    INVACARE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Leases and Commitments-Continued December 31, 2010, the company is committed under non-cancelable operating leases, which have initial or remaining terms in excess of one year and expire on various dates ...

  • Page 83
    .../losses. Benefit payments in 2010, 2009 and 2008 were $1,592,000, $517,000 and $424,000, respectively. In 2010, benefit payments included a lump sum distribution to a plan participant. In 2005, the company began sponsoring a Death Benefit Only Plan for certain key executives that provides a benefit...

  • Page 84
    ...,000 and $1,338,000 was recognized in 2010, 2009 and 2008, respectively, related to restricted stock awards granted since 2004. The 2003 Plan and the 1994 Performance Plan have provisions that allow employees to exchange mature shares to pay the exercise price and surrender shares for the options or...

  • Page 85
    INVACARE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Shareholders' Equity Transactions-Continued The following table summarizes information about stock options outstanding at December 31, 2010: Number Outstanding At 12/31/10 Options Outstanding Weighted ...

  • Page 86
    INVACARE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Shareholders' Equity Transactions-Continued includes $5,190,000 related to restricted stock awards. The company expects the compensation expense to be recognized over a weighted-average period of ...

  • Page 87
    ... reduction relating to unrealized loss on available for sale securities ...Defined Benefit Plans: Amortization of prior service costs and unrecognized losses ...Deferred tax expense resulting from amortization of prior service costs and unrecognized losses, prior service credit and other amounts...

  • Page 88
    ...): Severance Product Line Discontinuance Contract Terminations Other Total December 31, 2009 Balance NA/HME ...IPG ...Europe ...Asia/Pacific ...Total ...Payments NA/HME ...IPG ...Europe ...Asia/Pacific ...Total ...December 31, 2010 Balance NA/HME ...ISG ...Europe ...Asia/Pacific ...Total ... 46...

  • Page 89
    ... the loss carryforward, was fully offset by a tax valuation allowance. A reconciliation to the effective income tax rate from the federal statutory rate is as follows: 2010 2009 2008 Statutory federal income tax rate ...State and local income taxes, net of federal income tax benefit ...Tax credits...

  • Page 90
    ... are as follows (in thousands): 2010 2009 Current deferred income tax assets (liabilities), net: Loss carryforwards ...Bad debt ...Warranty ...State and local taxes ...Other accrued expenses and reserves ...Inventory ...Compensation and benefits ...Product liability ...Valuation allowance ...Other...

  • Page 91
    ... STATEMENTS-(Continued) Income Taxes-Continued $380,000,000 of domestic state and local tax loss carryforwards, of which $201,000,000 expire between 2011 and 2014, $91,000,000 expire between 2015 and 2024 and $88,000,000 expire after 2024. The company has domestic federal tax credit carryforwards...

  • Page 92
    ... from health care, medical equipment providers 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...

  • Page 93
    ...-(Continued) Concentration of Credit Risk-Continued in the home health care industry have a substantial impact on the nature and type of equipment an end user can obtain as well as the timing of reimbursement and, thus, affect the product mix, pricing and payment patterns of the company's customers...

  • Page 94
    ... settlement occurs on a specific day each month. Forward contracts with a total notional amount in USD of $173,337,000 and $180,664,000 matured during the twelve months ended December 31, 2010 and 2009, respectively. Foreign exchange forward contracts qualifying and designated for hedge accounting...

  • Page 95
    INVACARE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Derivatives-Continued or losses are recorded as part of earnings in the current period. A gain of $28,000 and a loss of $68,000 were recorded by the company for the year ended December 31, 2010 and 2009, ...

  • Page 96
    ...... $3,800 $2,899 The gains or losses recognized as the result of the settlement of cash flow hedge foreign currency forward contracts are recognized in net sales for hedges of inventory sales or cost of product sold for hedges of inventory purchases. In 2010, net sales were increased by $1,605,000...

  • Page 97
    ...,000 in 2008 on ASC 815 designated derivatives. Gains or losses recognized as the result of the settlement of forward contracts are recognized in cost of products sold for hedges of inventory transactions, sales for hedges of forecasted sales or selling, general and administrative expenses for other...

  • Page 98
    ... stock price volatility would increase the discount rate and thus increase the chance of impairment. For example, if the discount rate used were 100 basis points higher for the 2010 impairment analysis, there still would not be any indicator of potential impairment for any of the reporting units...

  • Page 99
    ..., 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. Each business segment sells to the home health care, retail and extended...

  • Page 100
    ...-(Continued) Business Segments-Continued The information by segment is as follows (in thousands): 2010 2009 2008 Revenues from external customers North America/HME ...Invacare Supply Group ...Institutional Products Group ...Europe ...Asia/Pacific ...Consolidated ...Intersegment revenues North...

  • Page 101
    INVACARE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Business Segments-Continued 2010 2009 2008 Assets North America/HME ...Invacare Supply Group ...Institutional Products Group ...Europe ...Asia/Pacific ...All Other(1) ...Consolidated ...Long-lived assets ...

  • Page 102
    ... services, including repair services, equipment rentals and external contracting. No single customer accounted for more than 3.3% of the company's sales. Contingencies In the ordinary course of its business, the company is a defendant in a number of lawsuits, primarily product liability actions...

  • Page 103
    ...Guarantor Subsidiaries has fully and unconditionally guaranteed, on a joint and several basis, to pay principal, premium, and interest ...Invacare Corporation (Parent), its combined Guarantor Subsidiaries and combined Non-Guarantor Subsidiaries with their investments in subsidiaries accounted for using...

  • Page 104
    ... Combined Non-Guarantor Subsidiaries (in thousands) Eliminations Total Year ended December 31, 2010 Net sales ...$403,227 Cost of products sold ...283,859 Gross Profit ...119,368 Selling, general and administrative expenses ...132,177 Loss on debt extinguishment including debt finance charges and...

  • Page 105
    ...-(Continued) Supplemental Guarantor Information-Continued CONSOLIDATING CONDENSED BALANCE SHEETS The Company (Parent) Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries (in thousands) Eliminations Total December 31, 2010 Assets Current Assets Cash and cash equivalents ...$ Trade...

  • Page 106
    INVACARE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Supplemental Guarantor Information-Continued CONSOLIDATING CONDENSED BALANCE SHEETS The Company (Parent) Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries (in thousands) Eliminations ...

  • Page 107
    ... ...Payments on revolving lines of credit and long-term borrowings ...Proceeds from exercise of stock options ...Payment of financing costs ...Payment of dividends ...Purchase of treasury stock ...Net Cash Provided (Used) by Financing Activities ...Effect of exchange rate changes on cash ...Increase...

  • Page 108
    ... Proceeds from revolving lines of credit and long-term borrowings ...Payments on revolving lines of credit and long-term borrowings ...Proceeds from exercise of stock options ...Payment of dividends ...Net Cash Provided (Used) by Financing Activities ...Effect of exchange rate changes on cash...

  • Page 109
    ... Proceeds from revolving lines of credit and long-term borrowings ...Payments on revolving lines of credit and long-term borrowings ...Proceeds from exercise of stock options ...Payment of dividends ...Net Cash Provided (Used) by Financing Activities ...Effect of exchange rate changes on cash...

  • Page 110
    INVACARE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Interim Financial Information (unaudited) QUARTER ENDED (In thousands, except per share data) March 31, June 30, September 30, December 31, 2010 Net sales ...Gross profit ...Earnings before income taxes ......

  • Page 111
    ...COL D. Balance At End of Period Year Ended December 31, 2010 Deducted from asset accounts- Allowance for doubtful accounts ...Inventory obsolescence reserve ...Tax valuation allowances ...Accrued warranty cost ...Accrued product liability ...Year Ended December 31, 2009 Deducted from asset accounts...

  • Page 112
    ... information; and Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. INVACARE CORPORATION /s/ GERALD B. BLOUCH Gerald B. Blouch Chief Executive Officer (Principal Executive Officer...

  • Page 113
    ... ability to record, process, summarize and report financial information; and Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. INVACARE CORPORATION /s/ ROBERT K. GUDBRANSON Robert...

  • Page 114
    ... B. BLOUCH Gerald B. Blouch Chief Executive Officer Date: February 25, 2011 A signed original of this written statement required by Section 906 has been provided to Invacare Corporation and will be retained by Invacare Corporation and furnished to the Securities and Exchange Commission or its staff...

  • Page 115
    ... Robert K. Gudbranson Chief Financial Officer Date: February 25, 2011 A signed original of this written statement required by Section 906 has been provided to Invacare Corporation and will be retained by Invacare Corporation and furnished to the Securities and Exchange Commission or its staff upon...