-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RdjAGXqy8Pn6Wbiiad/Ep8ckygPCapaKs+KV3XFlZbPI7+M4aQYr6u5VG5DXR05m 0bSl3yMZvNf9MQF/uoe7Yw== /in/edgar/work/20000811/0000742112-00-000014/0000742112-00-000014.txt : 20000921 0000742112-00-000014.hdr.sgml : 20000921 ACCESSION NUMBER: 0000742112-00-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INVACARE CORP CENTRAL INDEX KEY: 0000742112 STANDARD INDUSTRIAL CLASSIFICATION: [3842 ] IRS NUMBER: 952680965 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-15103 FILM NUMBER: 694123 BUSINESS ADDRESS: STREET 1: ONE INVACARE WAY STREET 2: P O BOX 4028 CITY: ELYRIA STATE: OH ZIP: 44036 BUSINESS PHONE: 4403296000 10-Q 1 0001.txt INVACARE CORPORATION FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended June 30, 2000 ---------------------------------------------------------- Commission File Number 0-12938 Invacare Corporation (Exact name of registrant as specified in its charter) Ohio 95-2680965 (State or other jurisdiction of (IRS Employer Identification No) incorporation or organization) One Invacare Way, P.O. Box 4028, Elyria, Ohio 44036 (Address of principal executive offices) (440) 329-6000 (Registrant's telephone number, including area code) - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if change since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 12 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No____ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date: As of August 10, 2000, the company had 28,707,893 Common Shares and 1,412,031 Class B Common Shares outstanding. 1 INVACARE CORPORATION INDEX Part I. FINANCIAL INFORMATION: Page No. Item 1. Financial Statements (Unaudited) Condensed Consolidated Balance Sheet - June 30, 2000 and December 31, 1999..........................3 Condensed Consolidated Statement of Earnings - Three and Six Months Ended June 30, 2000 and 1999............4 Condensed Consolidated Statement of Cash Flows - Six Months Ended June 30, 2000 and 1999......................5 Notes to Condensed Consolidated Financial Statements - June 30, 2000...................................6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................9 Item 3. Quantitative and Qualitative Disclosure of Market Risk...............13 Part II. OTHER INFORMATION: Item 4. Result of Votes of Security Holders..................................14 Item 6. Exhibits and Reports on Form 8-K.....................................14 SIGNATURES....................................................................14 2 Part I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited)
INVACARE CORPORATION AND SUBSIDIARIES Condensed Consolidated Balance Sheet - (unaudited) June 30, December 31, 2000 1999 (In thousands) -------------------------------- ASSETS - ------ CURRENT ASSETS .........Cash and cash equivalents $ 15,292 $18,258 .........Marketable securities 1,142 1,593 .........Trade receivables, net 187,063 181,550 .........Installment receivables, net 72,345 70,378 .........Inventories 110,980 108,535 .........Deferred income taxes 25,761 26,561 .........Other current assets 11,777 11,745 ------- -------- ......... TOTAL CURRENT ASSETS 424,360 418,620 OTHER ASSETS 80,208 71,316 PROPERTY AND EQUIPMENT, NET 138,503 137,132 GOODWILL, NET 311,821 328,217 ------- -------- ......... TOTAL ASSETS $954,892 $955,285 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES .........Accounts payable $76,379 $58,367 .........Accrued expenses 78,527 97,156 .........Accrued income taxes 15,395 15,547 .........Current maturities of long-term obligations 5,861 6,401 ------- -------- ......... TOTAL CURRENT LIABILITIES 176,162 177,471 LONG-TERM DEBT 425,023 440,795 OTHER LONG-TERM OBLIGATIONS 18,301 18,147 SHAREHOLDERS' EQUITY .........Preferred shares 0 0 .........Common shares 7,286 7,282 .........Class B common shares 358 358 .........Additional paid-in-capital 78,784 79,470 .........Retained earnings 274,870 251,955 .........Accumulated other comprehensive earnings (17,221) (8,976) .........Treasury shares (8,671) (11,217) ------- -------- ......... TOTAL SHAREHOLDERS' EQUITY 335,406 318,872 ------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $954,892 $955,285 ======== ========
See notes to condensed consolidated financial statements. 3 INVACARE CORPORATION AND SUBSIDIARIES Condensed Consolidated Statement of Earnings - (unaudited)
Three Months Ended Six Months Ended June 30, June 30, 2000 1999 2000 1999 (In thousands, except per share data) --------------------------------------------------------------------- Net sales $246,253 $202,195 $490,556 $398,287 Cost of products sold 166,584 140,110 338,007 279,465 ------- ------- ------- ------- Gross profit 79,669 62,085 152,549 118,822 Selling, general and administrative expense 52,120 39,802 103,545 79,549 ------- ------- ------- ------- Income from operations 27,549 22,283 49,004 39,273 Interest income 1,841 2,091 3,578 3,963 Interest expense (6,950) (4,836) (13,791) (9,776) ------- ------- ------- ------- Earnings before income taxes 22,440 19,538 38,791 33,460 Income taxes 8,751 7,624 15,128 13,054 ------- ------- ------- ------- NET EARNINGS $ 13,689 $ 11,914 $ 23,663 $ 20,406 ======== ======== ======== ======== DIVIDENDS DECLARED PER COMMON SHARE .0125 .0125 .0250 .0250 ======== ======== ======== ======== Net earnings per share - basic $ 0.46 $ 0.39 $ 0.79 $ 0.68 ======== ======== ======== ======== Weighted average shares outstanding - basic 30,085 30,179 30,042 30,068 ======== ======== ======== ======== Net earnings per share - assuming dilution $ 0.45 $ 0.39 $ 0.77 $ 0.67 ======== ======== ======== ======== Weighted average shares outstanding - assuming dilution 30,688 30,675 30,595 30,594 ======== ======== ======== ========
See notes to condensed consolidated financial statements. 4 INVACARE CORPORATION AND SUBSIDIARIES Condensed Consolidated Statement of Cash Flows - (unaudited)
Six Months Ended June 30, 2000 1999 (In thousands) -------- -------- OPERATING ACTIVITIES Net earnings $ 23,663 $ 20,406 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 15,416 12,113 Provision for losses on receivables 3,872 2,917 Provision for deferred income taxes 1,116 (1,150) Provision for other deferred liabilities (122) 969 Changes in operating assets and liabilities: Trade receivables (11,249) 4,187 Inventories (5,785) (6,983) Other current assets (331) 1,488 Accounts payable 18,659 304 Accrued expenses (13,604) 1,690 -------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES 31,635 35,941 INVESTING ACTIVITIES Purchases of property and equipment (14,204) (17,120) Proceeds from sale of property and equipment 108 538 Installment sales contracts written (33,818) (44,392) Payments received on installment sales contracts 33,042 36,372 Marketable securities purchased (166) (435) Marketable securities sold 608 660 Increase in other investments (3,383) (404) Increase in other long term assets (8,332) (7,254) Business acquisitions, net of cash acquired (696) 0 Other (659) 266 -------- -------- NET CASH REQUIRED BY INVESTING ACTIVITIES (27,500) (31,769) FINANCING ACTIVITIES Proceeds from revolving lines of credit and long-term borrowings 56,918 52,874 Principal payments on revolving lines of credit, long-term debt and capital lease obligations (63,601) (58,502) Proceeds from exercise of stock options 1,353 2,682 Purchase of treasury stock 0 (470) Payment of Dividends (747) (747) -------- -------- NET CASH (REQUIRED)/PROVIDED BY FINANCING ACTIVITIES (6,077) (4,163) Effect of exchange rate changes on cash (1,024) 662 -------- -------- Increase in cash and cash equivalents (2,966) 671 Cash and cash equivalents at beginning of period 18,258 9,460 -------- -------- Cash and cash equivalents at end of period $ 15,292 $ 10,131 ======== ========
See notes to condensed consolidated financial statements. 5 INVACARE CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) June 30, 2000 Nature of Operations - Invacare Corporation and its subsidiaries (the "company") is the world's leading manufacturer and distributor of non-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 include standard manual wheelchairs, motorized and lightweight prescription wheelchairs, motorized scooters, patient aids, home care and institutional beds, low air loss therapy products, home respiratory products, seating and positioning products, bathing equipment and distributed products. Principles of Consolidation - In the opinion of the company, the accompanying unaudited condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles which require management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results may differ from these estimates. The accompanying financial statements include all adjustments, which were of a normal recurring nature, necessary to present fairly the financial position of the company as of June 30, 2000 and December 31, 1999, and the results of its operations for the three and six months ended June 30, 2000 and 1999 and changes in its cash flows for the six months ended June 30, 2000 and 1999. The results of operations for the three and six months ended June 30, 2000, are not necessarily indicative of the results to be expected for the full year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements contained in the company's annual financial statements and notes. Business Segments - The company operates in three primary business segments based on geographical area: North America, Europe and Australasia. The three reportable segments represent operating groups which offer products to different geographic regions. The North America segment consists of five operating groups which sell the following products: wheelchairs, scooters, seating products, self care patient aids, home care beds, low air loss therapy products, patient transport products, distributed products, extended care and furniture products, respiratory and other products. The Europe segment consists of one operating group that sells primarily wheelchairs, scooters, beds, seating, self care patient aids, patient lifts and slings and respiratory products. The Australasia segment consists of two operating groups which sell custom power wheelchairs, electronic wheelchair components and patient aids. Each business segment sells to the home health care, retail and extended care markets. 6 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 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 are not considered in evaluating segment performance. Intersegment revenue for reportable segments was $15,635,000 and $31,848,000 for the three and six months ended June 30, 2000 respectively. The information by segment is as follows (in thousands):
Three Months Ended Six Months Ended June 30, June 30, 2000 1999 2000 1999 -------- -------- -------- -------- Revenues from external customers North America $177,870 $159,680 $354,100 $318,533 Europe 60,137 35,260 120,609 67,214 Australia/Asia 8,246 6,665 15,847 11,942 All Other * 0 590 0 598 -------- -------- -------- -------- Consolidated $246,253 $202,195 $490,556 $398,287 Earnings (loss) before income taxes North America $ 28,438 $ 25,531 $ 56,490 $ 49,374 Europe 1,993 745 2,387 (994) Australia/Asia 2,674 2,177 4,963 3,698 All Other * (10,665) (8,915) (25,049) (18,618) -------- -------- -------- -------- Consolidated $ 22,440 $ 19,538 $ 38,791 $ 33,460
* Consists of the domestic export unit, corporate selling, general and administrative costs, and the Invacare captive insurance unit, which do not meet the quantitative criteria for determining reportable segments. Comprehensive Earnings - Total comprehensive earnings were as follows (in thousands):
Three Months Ended Six Months Ended June 30, June 30, 2000 1999 2000 1999 -------- -------- -------- -------- Net earnings $13,689 $11,914 $23,663 $20,406 Foreign currency translation (6,685) (1,907) (8,575) (2,044) Unrealized gain or (loss) on available for sale securities (138) (26) 330 (578) -------- -------- ------- -------- Total comprehensive earnings $ 6,866 $ 9,981 $15,418 $17,784 ======= ======= ======= =======
7 Net Income Per Common Share - The following table sets forth the computation of basic and diluted net earnings per common share for the periods indicated.
Three Months Ended Six Months Ended June 30, June 30, (In thousands except per share data) 2000 1999 2000 1999 -------- -------- -------- -------- Basic Weighted average common shares outstanding 30,085 30,179 30,042 30,068 Net income $13,689 $11,914 $23,663 $20,406 Net income per common share $ .46 $ .39 $ .79 $ .68 Diluted Weighted average common shares outstanding 30,085 30,179 30,042 30,068 Stock options 603 496 553 526 -------- -------- -------- -------- Weighted average common shares assuming dilution 30,688 30,675 30,595 30,594 Net income $13,689 $11,914 $23,663 $20,406 Net income per common share $ .45 $ .39 $ .77 $ .67
Recently Issued Accounting Pronouncements - In June, 1998, the Financial Accounting Standards Board (FASB) issued SFAS No. 133, Accounting for Derivative Instruments and for Hedging Activities. This statement requires all derivatives to be recorded on the balance sheet at fair value and establishes "special accounting" for certain types of hedges. The company must adopt the statement no later than the first quarter of 2001. Management is currently studying the potential effects of the adoption of this statement but does not anticipate a significant impact on the company's financial position or results of operations. Statement of Cash Flows - The company made payments (in thousands) of : Six Months Ended June 30, 2000 1999 -------- -------- Interest $13,915 $10,014 Income taxes 13,592 8,317 Inventories - Inventories consist of the following components (in thousands): June 30, December 31, 2000 1999 -------- -------- Raw materials $ 31,681 $ 33,564 Work in process 17,159 16,825 Finished goods 62,140 58,146 -------- -------- $ 110,980 $ 108,535 ========= ========= 8 The final inventory determination under the LIFO method is made at the end of each fiscal year based on the inventory levels and cost at that point, therefore, interim LIFO determinations are based on management's estimates of expected year-end inventory levels and costs. Property and Equipment - Property and equipment consist of the following (in thousands): June 30, December 31, 2000 1999 -------- -------- Land, buildings and improvements $ 57,364 $ 58,974 Machinery and equipment 170,947 163,717 Furniture and fixtures 16,076 14,776 Leasehold improvements 10,185 9,985 -------- -------- 254,572 247,452 Less allowance for depreciation (116,069) (110,320) -------- -------- $138,503 $137,132 ======== ======== Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS NET SALES Net sales for the three months ended June 30, 2000 were $246,253,000 compared to $202,195,000 the same period a year ago. Excluding the net impact from acquisitions and currency translation, overall net sales increased 10%. North American and Australasia posted solid sales increases, which positively impacted net sales for the quarter. For the first half, net sales increased to $490,556,000 compared to $398,287,000 the same period a year ago, representing a 23% increase, with currency having a negative impact of 2%. Excluding the net impact from acquisitions and currency translation, overall first half-net sales increased 9% from the same period a year ago. The increase in the first half was driven by continued strong sales increases in North America and Australasia. North American Operations North American sales, consisting of Rehab (power wheelchairs, custom manual wheelchairs and seating), Standard (manual wheelchairs, personal care and retail), Beds and Continuing Care (beds, low air loss therapy and furniture and patient transport equipment), Respiratory (oxygen concentrators, liquid oxygen, aerosol therapy and associated respiratory) and Distributed (ostomy, incontinence, wound care and other medical supplies) products, increased 11% for the quarter and first half of the year compared to the same periods a year ago. The increase was due principally to unit volume increases in Rehab, Standard and Distributed. 9 European Operations European sales increased to $60,137,000 from $35,260,000 for the quarter primarily due to the acquisition of Scandinavian Mobility International AS (SMI). On a pro-forma basis taking into consideration SMI, European sales, excluding a negative impact of 12% from foreign currency, increased 2% from the same period a year ago. In the first half, on a pro-forma basis, net sales increased 4% excluding a negative impact of 12% from foreign currency translation. Australasia Operations The Australasia products group consists of Invacare Australia, which imports and distributes the Invacare range of products and manufactures and distributes the Rollerchair range of custom power wheelchairs, Dynamic Controls, a New Zealand manufacturer of operating components used in power wheelchairs and Invacare New Zealand, a distribution business. Net sales for the Australasia group increased $1,581,000 or 24% for the quarter, including a negative 31% impact from foreign currency translation. In the first half, net sales increased 33% including a 5% negative impact from foreign currency translation. GROSS PROFIT Gross profit as a percentage of net sales for the three and six-month periods ended June 30, 2000 was 32.4% and 31.1%, respectively, compared to 30.7% and 29.8% in the same periods last year. Margins for North America, Europe and Australasia operations each increased for the three and six-month periods as the company's focus on productivity improvements and cost controls in manufacturing operations, coupled with the realization of synergies from the SMI acquisition resulted in an increase in gross profit as a percentage of sales. SELLING, GENERAL AND ADMINISTRATIVE Selling, general and administrative expense as a percentage of net sales for the three and six months ending June 30, 2000 was 21.2% and 21.1%, respectively, compared to 19.7% and 20.0% in the same periods a year ago. The overall dollar increase was $12,318,000 (31%) for the quarter and $23,996,000 (30%) for the six months with acquisitions contributing $8,213,000 (20.6%) and $16,630,000 (20.9%) respectively. Excluding the impact of acquisitions and foreign currency, selling, general and administrative expense as a percent of sales remained relatively flat with the prior year. North American selling, general and administrative costs, as a percent of sales, for the three and six months ending June 30, 2000 increased by approximately one percentage point compared to the same periods a year ago. The increase was due in part to costs associated with the company's e-commerce and branding initiatives designed to increase the general publics awareness of home medical equipment products and specifically the Invacare brand name. European operations' selling, general and administrative costs, adjusted for acquisition and foreign currency impact, grew at a slower rate than sales for the quarter and first half compared to the same periods a year ago. As a percent of sales, cost were 24.1% and 24.7% compared to 25.0% and 26.6% respectively in the prior periods. Australasia operations' costs increased $681,000 and $1,056,000 for the quarter and first half respectively, compared to the same periods a year ago. As a percent of sales, cost were 25.5% and 26.6% compared to 21.3% and 26.4% respectively in the prior periods. 10 NON-RECURRING CHARGE During the fourth quarter of 1999, the company announced non-recurring and unusual charges of $14,800,000 ($9,028,000 or $.29 diluted per share after-tax) primarily related to the acquisition of Scandinavian Mobility International AS (SMI). Of these charges, $7,091,000 has been utilized through June 30, 2000 including $536,000 and $42,000 in the second quarter of 2000 for exit costs, and asset write-downs and other non-recurring items, respectively. The company anticipates all of the remaining charge to be utilized in 2000. INTEREST Interest income in the three months ended June 30, 2000 declined by approximately $250,000 and by $385,000 for the first half, when compared to the same periods a year ago, as decreased volume in customer loan refinancing was offset by an overall increase in the portfolio's effective rate. The company has significantly tightened its refinancing policy thereby reducing the number of refinances written in the quarter. The company believes its overall long-term profitability will be positively impacted by the change in policy. For the quarter and first half, interest expense increased compared to the same periods a year ago, due to higher average outstanding borrowings resulting primarily from the acquisition of Scandinavian Mobility International AS (SMI) in the third quarter of 1999, coupled with an overall increase in borrowing rates between years. INCOME TAXES The company had an effective tax rate of 39.0% for the three and six months periods ended June 30, 2000 and 1999 respectively. LIQUIDITY AND CAPITAL RESOURCES The company's reported overall level of long-term obligations decreased $15.8 million to $425.0 million for the six months ended June 30, 2000. The company continues to maintain an adequate liquidity position to fund its working capital and capital requirements through its cash flow from operations and its bank lines. As of June 30, 2000, the company had approximately $123.5 million available under its lines of credit. Pursuant to the most restrictive covenant of its debt arrangements the company could borrow up to an additional $198 million. The company's financing arrangements require it to maintain certain conditions with respect to net worth, working capital, funded debt to capitalization and interest coverage as defined. The company is in compliance with all of the conditions CAPITAL EXPENDITURES There were no material capital expenditure commitments outstanding as of June 30, 2000. The company expects to invest in capital projects at a rate that equals or exceeds depreciation and amortization in order to maintain and improve the company's competitive position. The company estimates that capital investments for 2000 will approximate $28 million. 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 fund required capital expenditures for the foreseeable future. 11 ACQUISITIONS Effective July 31, 1999, IVC Holdings Denmark A/S ("Holdings"), a wholly owned subsidiary of Invacare Corporation, acquired substantially all of the outstanding shares of common stock of Scandinavian Mobility International AS (SMI), a Danish corporation for approximately $142 million in cash. The acquisition was accounted for under the purchase method of accounting. The excess of the purchase price over the estimated fair value of the common stock acquired is being amortized over 40 years. SMI is a producer and distributor of rehabilitation products, mobility aids and related products in Europe. CASH FLOWS Cash flows provided by operating activities were $31.6 million for the first half of 2000 compared to $35.9 million in 1999. Operating cash flows decreased in 2000 as a result of a change in trade receivables offset to some extent by the net change in accounts payable and accrued expenses, as the timing of certain expenses varied between periods. Operating cash flows were also positively impacted by increased net earnings. Cash flows required for investing activities decreased by $4.3 million for the first half of 2000 when compared to 1999. The decrease is principally a result of a decrease in installment sales contracts written as the company continues to tighten its credit policies. The decrease is also attributable to reduced capital spending in the current year as capitalized consulting costs relating to systems initiatives completed in the prior year did not recur. Cash flows required by financing activities were $6.1 million compared to $4.2 million in 1999. Financing activities in 2000 were impacted by payments on revolving lines of credit and long term borrowings which exceeded proceeds from long term borrowings for the first six months of the year. The effect of foreign currency translation may result in amounts being shown for cash flows in the Condensed Consolidated Statement of Cash Flows that are different from the changes reflected in the respective balance sheet captions DIVIDEND POLICY On May 24, 2000, the Board of Directors for Invacare Corporation declared a quarterly cash dividend of $.0125 per Common Share to shareholders of record as of July 3, 2000, to be paid on July 14, 2000. At the current rate, the cash dividend will amount to $.05 per Common Share on an annual basis. 12 QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK The company is exposed to market risk through various financial instruments, including fixed rate and floating rate debt instruments. The Company uses interest rate swap agreements to mitigate its exposure to interest rate fluctuations. Based on June 30, 2000 debt levels, a 1% change in interest rates would impact interest expense by approximately $1,482,000 over the next twelve months. Additionally, the company operates internationally and as a result is exposed to foreign currency fluctuations. Specifically, the exposure includes intercompany loans, and third party sales or payments. In an attempt to reduce this exposure, foreign currency forward contracts are utilized. The company does not believe that any potential loss related to these financial instruments will have a material adverse effect on the company's financial condition or results of operations EURO CONVERSION On January 1, 1999, 11 of the 15 member countries of the European Union (the "participating countries") established a fixed rate between their existing sovereign currencies (the "legacy currencies") and the Euro. The legacy currencies are scheduled to remain legal tender in the participating countries between January 1, 1999 and July 1, 2002. Beginning January 1, 2002, the Euro currency will be introduced and the legacy currencies withdrawn from circulation six months later. The company believes with modifications to existing computer software and conversion to new software, the Euro conversion issue will not pose significant operational problems to its normal business activities. The company does not expect costs associated with the Euro conversion project to have a material effect on the company's results of operations or financial position. FORWARD-LOOKING STATEMENTS The statements contained in this form 10-Q constitute forward-looking statements based on current expectations which are covered under the "Safe Harbor" provision within the Private Securities Litigation Reform Act of 1995. Forward-looking statements include information concerning our possible or assumed future results of operations and statements in which we use words such as "expect," "will," "believe," "anticipate," "intend," "plan," "estimate," "project" or similar expressions. Actual results and events, including the results from the acquisition and integration of Scandinavian Mobility International AS (SMI) may differ significantly from those anticipated as a result of risks and uncertainties which include, but are not limited to, pricing pressures, increasing raw material costs, the consolidations of health care customers and competitors, the availability of strategic acquisition candidates, government reimbursement issues including those that affect the viability of customers, the effect in offering customers competitive financing terms, Invacare's ability to effectively integrate acquired companies, the difficulties in managing and operating businesses in many different foreign jurisdictions, the overall economic, market and industry growth conditions, foreign currency and interest rate risk, as well as the risks described from time to time in Invacare's reports as filed with the Securities and Exchange Commission. Item 3. Quantitative and Qualitative Disclosure of Market Risk The information called for by this item is provided under the same caption under Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations. 13 Item 4. Results of Votes of Security Holders On May 24, 2000, the company held its 2000 Annual Meeting of Shareholders to act on proposals to elect a class of Directors; and to approve and adopt an amendment to the Invacare Corporation 1994 Performance Plan to increase the number of Common Shares reserved for issuance thereunder from 3,500,000 to 5,500,000. James C. Boland, Whitney Evans, E.P. Nalley and William M. Weber were re-elected for a three year term of office expiring in 2003, with 35,526,850, 35,530,675, 35,510,429 and 35,530,327 affirmative votes, respectively, (83 percent of the total voting power). The candidates had 484,631, 480,806, 501,052 and 481,451 votes withheld, respectively, (1.1 percent of the total voting power). The proposal to approve and adopt an amendment to the Invacare Corporation 1994 Performance Plan to increase the number of Common Shares reserved for issuance thereunder from 3,500,000 to 5,500,000 received 27,161,969 affirmative votes (84.3 percent of the total voting power), 4,921,355 negative votes (15.3 percent of the total voting power) and 138,662 abstained votes (.4 percent of the total voting power). Item 6. Exhibits and Reports on Form 8-K A Exhibits: Official Exhibit No. (27) Financial Data Schedule B Reports on Form 8-K: None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. INVACARE CORPORATION By: Thomas R. Miklich Chief Financial Officer Date: August 11, 2000 14 EX-27 2 0002.txt INVACARE EXHIBIT 27
5 1,000 3-MOS DEC-31-1999 JUN-30-2000 15,292 1,142 200,059 (12,996) 110,980 424,360 254,572 (116,069) 954,892 176,162 0 0 0 7,644 327,762 954,892 490,556 490,556 338,007 338,007 103,545 0 10,213 38,791 15,128 23,663 0 0 0 23,663 .79 .77
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