Invacare 2012 Annual Report Download - page 89

INVACARE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
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 sell
any goods on consignment.
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 gross as a principal since the
company takes title to the products and has the risks of loss for collections, delivery and returns.
Product sales that give rise to installment receivables are recorded at the time of sale when the risks and
rewards of ownership are transferred. As such, interest income is recognized based on the terms of the
installment agreements. Installment accounts are monitored and if a customer defaults on payments, interest
income is no longer recognized. All installment accounts are accounted for using the same methodology,
regardless of duration of the installment agreements. The company has 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 customers.
Research and Development: Research and development costs are expensed as incurred and included in cost
of products sold. The company’s annual expenditures for product development and engineering were
approximately $31,663,000, $27,556,000 and $25,954,000 for 2012, 2011 and 2010, respectively.
Advertising: Advertising costs are expensed as incurred and included in selling, general and administrative
expenses. Advertising expenses amounted to $20,017,000, $19,523,000 and $20,119,000 for 2012, 2011 and
2010, respectively, the majority of which is incurred for advertising in the United States.
Stock-Based Compensation Plans: The company accounts for share based compensation under the
provisions of the Compensation—Stock Compensation, ASC 718.The amounts of stock-based compensation
expense recognized were as follows (in thousands):
2012 2011 2010
Stock-based compensation expense recognized as part of selling,
general and administrative expense ......................... $ 6,545 $ 6,640 $ 6,135
The amounts above reflect compensation expense related to restricted stock awards and nonqualified stock
options awarded under the 2003 Performance Plan. Stock-based compensation is not allocated to the business
segments, but is reported as part of All Other as shown in the company’s Business Segment Note to the
Consolidated Financial Statements.
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