Invacare 2014 Annual Report Download - page 81

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INVACARE CORPORATION AND SUBSIDIAIRIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
FS-11
liabilities of Champion. The sale of this business was dilutive to the Company's results. The Company utilized the proceeds from
the sale to reduce debt outstanding under its revolving credit facility in the third quarter of 2013. The gain recorded by the Company
reflects the Company's estimated final purchase adjustments.
The assets and liabilities of Champion were the following as of the date of the sale, August 6, 2013 (in thousands):
August 6,
2013
Trade receivables, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,030
Inventories, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,689
Other current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 309
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,277
Assets sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 21,397
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 936
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 352
Liabilities sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,288
The net sales of the discontinued operation of Champion were $15,857,000 and $22,767,000 for 2013 and 2012, respectively.
Earnings before income taxes for the discontinued operation of Champion were $3,156,000 and $4,274,000, respectively. Results
for Champion include an interest expense allocation from continuing operations to discontinued operations of $449,000 and
$792,000, respectively, as proceeds from the sale were required to be utilized to pay down debt. The interest allocation was based
on the net proceeds assumed to pay down debt applying the Company's average interest rates for the periods presented.
In addition, in accordance with ASC 350, when a portion of a reporting entity that constitutes a business is disposed of,
goodwill associated with that business should be included in the carrying amount of the net assets of the business sold in determining
the gain or loss on the disposal. As such, the Company allocated additional goodwill of $16,205,000 to Champion from the
continuing operations of the IPG segment based on the relative fair value of Champion as compared to the remaining IPG reporting
unit.
On August 29, 2014, the Company sold Altimate Medical, Inc. (Altimate), its manufacturer of stationary standing assistive
devices for use in patient rehabilitation, to REP Acquisition Corporation for $23,000,000 in cash, which is subject to final post-
closing adjustments. Altimate had been operated on a stand-alone basis and reported as part of the North America/HME segment
of the Company. The Company recorded a gain of $17,069,000 pre-tax in the third quarter of 2014, which represented the excess
of the net sales price over the book value of the assets and liabilities of Altimate. The sale of this business was dilutive to the
Company's results. The Company utilized the proceeds from the sale to reduce debt outstanding under its revolving credit facility
in the third quarter of 2014. The gain recorded by the Company reflects the Company's estimated final purchase adjustments.