Invacare 2011 Annual Report Download - page 57

“Other” includes an estimated payment of $50,000 in less than 1 year 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 cannot 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 believe that capital should be
kept available for use in growth opportunities through internal development and acquisitions. For 2011,
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 and all
majority-owned subsidiaries. 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 or services provided 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.
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