Invacare Corp. (IVC, Financial) filed Quarterly Report for the period ended 2009-05-07.
Invacare Corporation is the world's leading manufacturer and distributor ofnon-acute health care products based upon its distribution channels the breadth of its product line and sales. The company designs manufactures and distributes an extensive line of health care products for the non-acute care environment including the home health care retail and extended care markets. The company's products are sold through its world-wide distribution network byits sales force telemarketing employees and various organizations of independent manufacturer's representatives. Invacare Corp. has a market cap of $497.6 million; its shares were traded at around $16.04 with a P/E ratio of 11.6 and P/S ratio of 0.3. The dividend yield of Invacare Corp. stocks is 0.3%. Invacare Corp. had an annual average earning growth of 0.4% over the past 10 years.
NA/HME SG&A expense increased $2,487,000, or 5.2%, for the quarter compared to the same period a year ago. Foreign currency translation decreased SG&A by $864,000 while acquisitions increased SG&A by $662,000. Excluding foreign currency translation and acquisitions, SG&A expense increased by $2,689,000 or 5.7% primarily attributable to increased bad debt expense, stock option expense, employee benefit expenses and higher sales and marketing costs in anticipation of future sales growth.
The restructuring charges included $218,000 in NA/HME, $171,000 in IPG, $286,000 in Europe and $101,000 in Asia/Pacific. Of the total charges incurred to date, $635,000 remained unpaid as of March 31, 2009 with $252,000 unpaid related to NA/HME; $161,000 unpaid related to IPG; and $222,000 unpaid related to Europe. There have been no material changes in accrued balances related to the charge, either as a result of revisions in the plan or changes in estimates, and the company expects to utilize the accruals recorded through March 31, 2009 during 2009. With additional actions to be undertaken during the remainder of 2009, the company anticipates recognizing pre-tax restructuring charges of approximately $5,000,000 for the year.
The company s reported level of debt decreased by $13,457,000 from December 31, 2008 to $465,363,000 at March 31, 2009, excluding the impact of adoption of FSP APB 14-1, as a result of improved utilization of the company s cash. The company s balance sheet reflects the adoption of FSP APB 14-1. As a result of adopting FSP APB 14-1, the company recorded a debt discount, which reduced debt and increased equity by $51,422,000 and $52,414,000 as of March 31, 2009 and December 31, 2008, respectively.
The company had no individually material capital expenditure commitments outstanding as of March 31, 2009. The company estimates that capital investments for 2009 could approximate $20,000,000 to $22,000,000 as compared to $19,957,000 in 2008. The company believes that its balances of cash and cash equivalents, together with funds generated from operations and existing borrowing facilities will be sufficient to meet its operating cash requirements and to fund required capital expenditures for the foreseeable future.
On May 9, 2008, the FASB issued FASB Staff Position APB 14-1 (FSP APB 14-1) to provide clarification of the accounting for convertible debt that can be settled in cash upon conversion. The FASB believed this clarification was needed because the accounting being applied for convertible debt does not fully reflect the true economic impact on the issuer since the conversion option is not captured as a borrowing cost and its full dilutive effect is not included in earnings per share. FSP APB 14-1 requires separate accounting for the liability and equity components of the convertible debt in a manner that would reflect Invacare s nonconvertible debt borrowing rate. Accordingly, the company had to bifurcate a component of its convertible debt as a component of stockholders equity ($59,012,000 as of retrospective adoption date of February 12, 2007) and will accrete the resulting debt discount as interest expense. The company adopted FSP APB 14-1 effective January 1, 2009 and, as a result, reported interest expense increased and net earnings decreased by $992,000 ($0.03 per share) and $884,000 ($0.03 per share) for the quarters ended March 31, 2009 and 2008, respectively and by $3,695,000 ($0.12 per share) and $2,904,000 ($0.09 per share) for the years 2008 and 2007, respectively. FSP APB 14-1 required retrospective application upon adoption and accordingly, amounts for 2008 and 2007 will be restated in the 2009 financial statements.
Read the The complete Report
Invacare Corporation is the world's leading manufacturer and distributor ofnon-acute health care products based upon its distribution channels the breadth of its product line and sales. The company designs manufactures and distributes an extensive line of health care products for the non-acute care environment including the home health care retail and extended care markets. The company's products are sold through its world-wide distribution network byits sales force telemarketing employees and various organizations of independent manufacturer's representatives. Invacare Corp. has a market cap of $497.6 million; its shares were traded at around $16.04 with a P/E ratio of 11.6 and P/S ratio of 0.3. The dividend yield of Invacare Corp. stocks is 0.3%. Invacare Corp. had an annual average earning growth of 0.4% over the past 10 years.
Highlight of Business Operations:
Selling, general and administrative (“SG&A”) expense as a percentage of net sales for the three months ended March 31, 2009 was 23.7% compared to 23.5% for the same period a year ago. SG&A expense decreased by $3,562,000 or 3.6% for the quarter ended March 31, 2009 compared to the first quarter of last year. Acquisitions increased these expenses by $662,000 in the quarter while foreign currency translation decreased these expenses by $7,268,000 in the quarter compared to the same period a year ago. Excluding the impact of foreign currency translation and acquisitions, SG&A expense increased 3.1% for the quarter compared to the same period a year ago. The increase in SG&A expense is attributable to increased bad debt expense, in addition to higher sales and marketing costs in anticipation of future sales growth.NA/HME SG&A expense increased $2,487,000, or 5.2%, for the quarter compared to the same period a year ago. Foreign currency translation decreased SG&A by $864,000 while acquisitions increased SG&A by $662,000. Excluding foreign currency translation and acquisitions, SG&A expense increased by $2,689,000 or 5.7% primarily attributable to increased bad debt expense, stock option expense, employee benefit expenses and higher sales and marketing costs in anticipation of future sales growth.
The restructuring charges included $218,000 in NA/HME, $171,000 in IPG, $286,000 in Europe and $101,000 in Asia/Pacific. Of the total charges incurred to date, $635,000 remained unpaid as of March 31, 2009 with $252,000 unpaid related to NA/HME; $161,000 unpaid related to IPG; and $222,000 unpaid related to Europe. There have been no material changes in accrued balances related to the charge, either as a result of revisions in the plan or changes in estimates, and the company expects to utilize the accruals recorded through March 31, 2009 during 2009. With additional actions to be undertaken during the remainder of 2009, the company anticipates recognizing pre-tax restructuring charges of approximately $5,000,000 for the year.
The company s reported level of debt decreased by $13,457,000 from December 31, 2008 to $465,363,000 at March 31, 2009, excluding the impact of adoption of FSP APB 14-1, as a result of improved utilization of the company s cash. The company s balance sheet reflects the adoption of FSP APB 14-1. As a result of adopting FSP APB 14-1, the company recorded a debt discount, which reduced debt and increased equity by $51,422,000 and $52,414,000 as of March 31, 2009 and December 31, 2008, respectively.
The company had no individually material capital expenditure commitments outstanding as of March 31, 2009. The company estimates that capital investments for 2009 could approximate $20,000,000 to $22,000,000 as compared to $19,957,000 in 2008. The company believes that its balances of cash and cash equivalents, together with funds generated from operations and existing borrowing facilities will be sufficient to meet its operating cash requirements and to fund required capital expenditures for the foreseeable future.
On May 9, 2008, the FASB issued FASB Staff Position APB 14-1 (FSP APB 14-1) to provide clarification of the accounting for convertible debt that can be settled in cash upon conversion. The FASB believed this clarification was needed because the accounting being applied for convertible debt does not fully reflect the true economic impact on the issuer since the conversion option is not captured as a borrowing cost and its full dilutive effect is not included in earnings per share. FSP APB 14-1 requires separate accounting for the liability and equity components of the convertible debt in a manner that would reflect Invacare s nonconvertible debt borrowing rate. Accordingly, the company had to bifurcate a component of its convertible debt as a component of stockholders equity ($59,012,000 as of retrospective adoption date of February 12, 2007) and will accrete the resulting debt discount as interest expense. The company adopted FSP APB 14-1 effective January 1, 2009 and, as a result, reported interest expense increased and net earnings decreased by $992,000 ($0.03 per share) and $884,000 ($0.03 per share) for the quarters ended March 31, 2009 and 2008, respectively and by $3,695,000 ($0.12 per share) and $2,904,000 ($0.09 per share) for the years 2008 and 2007, respectively. FSP APB 14-1 required retrospective application upon adoption and accordingly, amounts for 2008 and 2007 will be restated in the 2009 financial statements.
Read the The complete Report
