Invacare 2011 Annual Report Download - page 51

North America/Home Medical Equipment
NA/HME net sales decreased 1.1% in 2010 versus the prior year to $738,441,000 from $747,018,000.
Foreign currency translation increased net sales by 0.8 of a percentage point. The organic net sales decline of
1.9% was driven by a decline in the Respiratory product line partially offset by increases in Standard and
Mobility and Seating product lines. Respiratory product line net sales decreased by 16.9% in 2010, primarily
driven by lower sales of both concentrators and HomeFill®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. Mobility and Seating product line net sales increased by 2.0% in 2010
primarily driven by increases in custom power products.
Invacare Supply Group
ISG net sales increased 6.1% in 2010 over the prior year to $297,517,000 from $280,295,000. The net sales
increase was primarily in the result of volume increases in diabetic, incontinence, ostomy and urological
products.
Institutional Products Group
IPG net sales increased 7.3% in 2010 over the prior year to $97,419,000 from $90,806,000 with an
acquisition increasing net sales by 7.1 percentage points while foreign currency translation increased net sales by
0.7 of a percentage point. The organic net sales decrease of 0.5 percentage points was largely driven by continued
weakness in capital expenditures by nursing home customers, due primarily to budgetary pressures in state
Medicaid programs.
Europe
European net sales increased 0.6% in 2010 compared to the prior year to $506,069,000 from $503,084,000
with foreign currency translation decreasing net sales by 1.9 percentage points. Organic net sales increased 2.5%
attributable to increases in France, U.K., Germany and Sweden and increases in Standard and Respiratory
product lines.
Asia/Pacific
Asia/Pacific net sales increased 14.9% in 2010 from the prior year to $82,635,000 from $71,933,000.
Foreign currency translation increased net sales by 12.9 percentage points. The organic net sales growth of 2.0%
was driven by the company’s New Zealand distribution business and increased demand for product from the
company’s subsidiary which produces microprocessor controllers.
Gross Profit. Consolidated gross profit as a percentage of net sales was 29.6% in 2010 as compared to
29.1% in 2009. The margin improvement was primarily the result of volume increases and cost reduction
activities, including warranty costs. Gross profit as a percentage of net sales for NA/HME, IPG and Asia/Pacific
segments were favorable as compared to the prior year with ISG and European segments unfavorable to the prior
year.
NA/HME gross profit as a percentage of net sales increased by 1.0 percentage points in 2010 versus 2009.
The improvement in margins was primarily a result of cost reduction 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 by volume increases and cost reduction programs including freight costs.
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