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INVACARE CORPORATION AND SUBSIDIAIRIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
FS-45
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 fair value 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 relationship. The
write-down charges were the result of decisions to exit certain businesses as well as lower than anticipated sales.
The fair values of the company's intangible assets were calculated using inputs that are not observable in the market and
included management’s own estimates regarding the assumptions that market participants would use and thus these inputs are
deemed Level III inputs in regards to the fair value hierarchy.
Business Segments
The company operates in four primary business segments: North America/Home Medical Equipment (North America/HME),
Institutional Products Group (IPG), Europe and Asia/Pacific.
The North America/HME segment sells each of the three primary product lines, which includes: lifestyle, mobility and
seating and respiratory therapy products. IPG sells, and rented prior to the disposition of the rentals businesses, long-term care
medical equipment, health care furnishings and accessory products. Europe and Asia/Pacific sell product lines similar to North
America/HME and IPG.
The company evaluates performance and allocates resources based on profit or loss from operations before income taxes
for each reportable segment. The accounting policies of each segment are the same as those described in the summary of significant
accounting policies for the company’s consolidated financial statements. Intersegment sales and transfers are based on the costs
to manufacture plus a reasonable profit element. Therefore, intercompany profit or loss on intersegment sales and transfers is not
considered in evaluating segment performance except for Asia/Pacific due to its significant intercompany sales volume relative
to the segment.
The information by segment is as follows (in thousands):
2015 2014 2013
Revenues from external customers
North America/HME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 474,196 $ 507,867 $ 589,240
Institutional Products Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87,137 102,796 112,290
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 536,463 610,555 583,143
Asia/Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,542 48,945 49,832
Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,142,338 $ 1,270,163 $ 1,334,505
Intersegment revenues
North America/HME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 111,321 $ 84,247 $ 77,553
Institutional Products Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 997 6,711 5,304
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,958 8,938 8,272
Asia/Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,661 26,173 24,941
Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 142,937 $ 126,069 $ 116,070
Depreciation and amortization
North America/HME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,775 $ 10,925 $ 12,149
Institutional Products Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,980 7,656 8,310
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,183 11,111 12,123
Asia/Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,463 2,406 3,073
All Other (1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 173 275
Discontinued Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 518 859
Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 19,430 $ 32,789 $ 36,789