Invacare 2014 Annual Report Download - page 88

INVACARE CORPORATION AND SUBSIDIAIRIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
FS-18
miscellaneous intangibles such as non-compete agreements. The Company's indefinite lived intangible assets consist entirely of
trademarks.
The Company evaluates the carrying value of definite-lived assets whenever events or circumstances indicate possible
impairment. Definite-lived assets are determined to be impaired if the future un-discounted cash flows expected to be generated
by the asset are less than the carrying value. Actual impairment amounts for definite-lived assets are then calculated using a
discounted cash flow calculation. The Company reviews indefinite-lived assets for impairment annually in the fourth quarter of
each year and whenever events or circumstances indicate possible impairment. Any impairment amounts for indefinite-lived
assets are calculated as the difference between the future discounted cash flows expected to be generated by the asset less than
the carrying value for the asset.
During 2014, the Company recognized intangible write-down charges in the IPG segment of $13,041,000 comprised of a
customer list impairment of $12,826,000 and a non-compete agreement of $215,000 as the actual and remaining cash flows
associated with the intangibles were less than the cash flows originally used to value the intangibles, primarily driven by reduced
net sales. The after-tax and pre-tax impairment amounts were the same for each of the above impairments.
During 2013, the Company recognized intangible write-down charges of $1,523,000 comprised of: trademarks with indefinite
lives impairment of $568,000, a trademark with a definite life impairment of $123,000, customer list impairment of $442,000 and
developed technology impairment of $223,000 all recorded in the IPG segment and a customer list impairment of $167,000
recorded in the North America/HME segment. The after-tax and pre-tax impairment amounts were the same for each of the above
impairments except for the indefinite-lived trademark impairments in the IPG segment, which were $496,000 after-tax.
As a result of the Company's 2012 intangible impairment review, the Company recognized intangible write-down charges
of $773,000 related to a trademark with an indefinite life of $279,000 and a developed technology impairment of $398,000 each
in the IPG segment and a patent impairment of $96,000 in the North America/HME segment. The after-tax and pre-tax impairment
amounts were the same for each of the above impairments except for the trademark impairment in the IPG segment, which was
$204,000 after-tax.
The fair values of the customer lists were calculated using an excess earnings method, using a discounted cash flow model.
Estimated cash flow returns to the customer relationship were reduced by the cash flows required to satisfy the return requirements
of each of the assets employed with the residual cash flow then discounted to value the customer list. The fair values of the
trademarks and developed technology were calculated using a relief from royalty payment methodology which requires applying
an estimated market royalty rate to forecasted net sales and discounting the resulting cash flows to determine fair value. The patent
was impaired as the related product was discontinued.
Current Liabilities
Accrued expenses as of December 31, 2014 and 2013 consisted of accruals for the following (in thousands):
2014 2013
Salaries and wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 41,193 $ 39,861
Taxes other than income taxes, primarily Value Added Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,812 24,525
Warranty cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,738 27,393
Supplemental Executive Retirement Plan (SERP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,517 391
Freight. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,202 7,636
Professional. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,723 6,516
Product liability, current portion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,334 3,183
Rebates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,722 1,681
Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,266 2,549
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,068 1,041
Derivatives (foreign currency forward exchange contracts) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,526 1,212
Severance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,209 3,986
Other items, principally trade accruals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,165 13,126
$ 156,475 $ 133,100