Invacare 2015 Annual Report Download - page 15

I-9
to military service veterans who use wheelchairs for their mobility needs due to spinal cord injury, neurological conditions or
amputation.
Europe
The company’s European operations primarily conduct manufacturing, marketing and distribution functions in Western
Europe and coordinate export sales activities through local distributors elsewhere in the world. The company has a sales force
and, where appropriate, distribution centers in the United Kingdom, France, Germany, Belgium, Portugal, Spain, Italy, Denmark,
Sweden, Switzerland, Austria, Norway and the Netherlands, and sells through distributors elsewhere in Europe, Russia, the Middle
East and Africa. In markets where the company has its own sales force, product sales are typically made through dealers of medical
equipment and, in certain markets, directly to government agencies. In 2015, as in previous years, pricing comparison across
borders along with customer consolidation are driving the development of pan European pricing policies and control. The company
has centralized some of its distribution to a European Distribution Center in France, which optimizes logistics costs and increases
service levels to customers.
Asia/Pacific
The company's Asia/Pacific segment is comprised of revenues from selling electronic controls systems to medical equipment
OEMs from its Dynamic Controls business and revenue from trade sales and rentals to customers in Australia, New Zealand,
China, Japan, Korea and South East Asia. Invacare Asia/Pacific businesses sell through six distribution channels:
• Mobility and seating products are sold via a dealer network with almost all sales directly government funded;
• Homecare products are sold via a dealer network that sells products to the consumer market;
• Long-term care products are sold via a dealer network and directly to aged care facilities;
• Invacare operates a rentals business in New Zealand supporting the three largest District Health Boards (DHB’s) in New
Zealand’s North Island, comprising approximately 60% of the New Zealand population;
• Asia export sales are sold via distributors and agents based in Japan, Korea, India and South East Asia; and
• Invacare China sells primarily homecare products to retail channel customers via third-party distribution network focused
in Shanghai, Beijing and Guangzhou.
Invacare Australia and New Zealand have invested heavily in marketing efforts to increase demand for Invacare products,
with customer relationship management, marketing automation, and sales and marketing database tools being introduced to increase
market penetration. These tools are expected to be introduced in China during 2016.
Sponsorship efforts are focused around “grassroots” programs aimed at introducing people with disabilities to sports as a
pathway to inclusion. In 2016, Invacare New Zealand is “a supporting partner of Paralympics New Zealand” and the “Preferred
Equipment Supplier of Paralympics New Zealand.” Invacare also sponsors the "Oz Day 10K" classic wheelchair race on Australia
Day. Invacare is a sponsor of the Attitude Trust and is a named sponsor for the Disabled Sports Person of the Year award that is
held as part of the Attitude Awards on World Disability Day in New Zealand.
Dynamic Controls, Ltd., the company's subsidiary which produces electronic components for use in power wheelchairs,
scooters, respiratory and other products, sells to other Invacare subsidiaries and to external customers in North America, Europe
and Asia/Pacific.
PRODUCT LIABILITY COSTS
The company is self-insured in North America for product liability exposures through its captive insurance company,
Invatection Insurance Company, which insures annual policy losses up to $10,000,000 per occurrence and $13,000,000 in the
aggregate. Invatection’s policy-year runs from September 1 to August 31. The company also has additional layers of external
insurance coverage insuring up to $75,000,000 in aggregate losses per policy-year arising from individual claims anywhere in the
world that exceed the captive insurance company policy limits or the limits of the company’s per country foreign liability limits,
as applicable. There can be no assurance that Invacare’s current insurance levels will continue to be adequate or available at
affordable rates.
Product liability reserves are recorded for individual claims based upon historical experience, industry expertise and
indications from the third-party actuary. Additional reserves, in excess of the specific individual case reserves, are provided for