Invacare 2014 Annual Report Download - page 82

INVACARE CORPORATION AND SUBSIDIAIRIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
FS-12
The assets and liabilities of Altimate were the following as of the date of the sale, August 29, 2014, and as of December 31,
2013 (in thousands):
August 29,
2014 December 31, 2013
Trade receivables, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,019 $ 2,055
Inventories, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,954 1,703
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 246 10
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176 181
Other Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,047 1,530
Assets sold. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,442 $ 5,479
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 425 $ 544
Accrued expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 316 220
Liabilities sold. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 741 $ 764
The net sales of the Altimate discontinued operations were $11,778,000, $17,854,000 and $16,876,000 for 2014, 2013 and
2012, respectively, and earnings before income taxes were $2,796,000, $5,118,000 and $4,628,000, respectively for the same
periods. Results for Altimate include an interest expense allocation from continuing operations to discontinued operations of
$202,000, $323,000 and $378,000 for 2014, 2013 and 2012, 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.
The Company recorded total expenses related to the discontinued operations noted above of $8,801,000, of which $7,790,000
were paid as of December 31, 2014.
The Company recorded an incremental intra-period tax allocation expense to discontinued operations for 2014 and 2013
representing the cumulative intra-period allocation expense to discontinued operations based on the Company's domestic taxable
loss related to continuing operations for 2014 and 2013.
The Company has classified ISG, Champion and Altimate as a discontinued operations for all periods presented.
Receivables
Accounts receivable are reduced by an allowance for amounts that may become uncollectible in the future. 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, China and Europe. A significant portion of products sold to providers, both
foreign and domestic, is ultimately funded through government reimbursement programs such as Medicare and Medicaid in the
U.S. As a consequence, changes in these programs can have an adverse impact on dealer liquidity and profitability. The estimated
allowance for uncollectible amounts ($12,988,000 in 2014 and $17,715,000 in 2013) is based primarily on management’s evaluation
of the financial condition of specific customers. In addition, as a result of the third party financing arrangement with DLL, a third
party financing company which the Company has worked with since 2000, management monitors the collection status of these
contracts in accordance with the Company’s limited recourse obligations and provides amounts necessary for estimated losses in
the allowance for doubtful accounts and establishing reserves for specific customers as needed. The Company charges off
uncollectible trade accounts receivable after such receivables are moved to collection status and legal remedies are exhausted. See
Concentration of Credit Risk in the Notes to the Consolidated Financial Statements for a description of the financing arrangement.
Long-term installment receivables are included in “Other Assets” on the consolidated balance sheet.
The Company’s U.S. customers electing to finance their purchases can do so using DLL. In addition, the Company often
provides financing directly for its Canadian customers for which DLL is not an option, as DLL typically provides financing to
Canadian customers only on a limited basis. The installment receivables recorded on the books of the Company represent a single
portfolio segment of finance receivables to the independent provider channel and long-term care customers. The portfolio segment
is comprised of two classes of receivables distinguished by geography and credit quality. The U.S. installment receivables are the
first class and represent installment receivables re-purchased from DLL because the customers were in default. Default with DLL
is defined as a customer being delinquent by 3 payments. The Canadian installment receivables represent the second class of