Invacare 2011 Annual Report Download - page 106

INVACARE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Net Earnings Per Common Share
The following table sets forth the computation of basic and diluted net earnings per common share.
2011 2010 2009
(In thousands except per share data)
Basic
Average common shares outstanding .......................... 31,958 32,393 31,969
Net earnings (loss) ......................................... $(4,113) $25,341 $41,179
Net earnings per common share .............................. $ (0.13) $ 0.78 $ 1.29
Diluted
Average common shares outstanding .......................... 31,958 32,393 31,969
Shares related to convertible debt ............................. — 163 —
Stock options and awards ................................... — 138 27
Average common shares assuming dilution ..................... 31,958 32,694 31,996
Net earnings (loss) ......................................... $(4,113) $25,341 $41,179
Net earnings (loss) per common share ......................... $ (0.13) $ 0.78 $ 1.29
At December 31, 2011, 2010, and 2009, 2,355,567, 2,396,061 and 4,230,630 shares associated with stock
options, respectively were excluded from the average common shares assuming dilution, as they were anti-
dilutive. At December 31, 2011, the majority of the anti-dilutive shares were granted at an exercise price of
$24.45, which was lower than the average fair market value price of $27.4 for 2011. For the 2011 Net Earnings
per Share calculation, all of the shares associated with stock options were anti-dilutive because of the company’s
loss. In 2010, the majority of the anti-dilutive shares were granted at an exercise price of $41.87, which was
higher than the average fair market value price of $25.82 for 2010. In 2009, the majority of the anti-dilutive
shares were granted at an exercise price of $41.87, which was higher than the average fair market value price of
$19.42 for 2009. Shares necessary to settle a conversion spread on the convertible notes were included in the
common shares assuming dilution as the average market price of the company stock for 2010 did exceed the
conversion price, which was not the case in 2011 and 2009.
Concentration of Credit Risk
The company manufactures and distributes durable medical equipment and supplies to the home health care,
retail and extended care markets. The company performs credit evaluations of its customers’ financial condition.
In December 2000, Invacare entered into an agreement with De Lage Landen, Inc. (“DLL”), a third party
financing company, to provide the majority of future lease financing to Invacare’s North America customers. The
DLL agreement provides for direct leasing between DLL and the Invacare customer. The company retains a
recourse obligation of $10,414,000 at December 31, 2011 to DLL for events of default under the contracts, which
total $70,354,000 at December 31, 2011. Guarantees, ASC 460, requires the company to record a guarantee
liability as it relates to the limited recourse obligation. As such, the company has recorded a liability of $381,000
for this guarantee obligation within accrued expenses. The company monitors the collections status of these
contracts and has provided amounts for estimated losses in its allowances for doubtful accounts in accordance
with Receivables, ASC 310-10-05-4.Credit losses are provided for in the financial statements.
Substantially all of the company’s receivables are due 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 such as Medicare and Medicaid. The company has also seen a significant
shift in reimbursement to customers from managed care entities. As a consequence, changes in these programs
FS-34