Discontinued Operations

6 Months Ended

Jun. 30, 2015

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Operations Held For Sale

On May 14, 2015, the Company's board of directors approved for the Company and Invacare Continuing Care, Inc., a Missouri Corporation and wholly-owned subsidiary of the Company ("ICC") to enter into an agreement to sell all the issued and outstanding membership interests of Dynamic Medical Systems, LLC, a Nevada limited liability company, and Invacare Outcomes Management, LLC, a Delaware limited liability company, each a wholly-owned subsidiary of ICC (“collectively the Rental Subsidiaries”). The Company determined on that date that the "held for sale" criteria of ASC 360-10-45-9 were met and accordingly, the assets and liabilities of the Rental Subsidiaries (long-lived asset disposal group) are shown at their carrying amounts which approximate their fair values. The Rentals Subsidiaries had been operated on a stand-alone basis and reported as part of the Institutional Products Group (IPG) segment of the Company.

On July 2, 2015, ICC completed the sale (the "Transaction") of all the issued and outstanding membership interests in the Rental Subsidiaries, pursuant to a Membership Interest Purchase Agreement (the “Purchase Agreement”) among the Company, ICC and Joerns Healthcare Parent, LLC, a Delaware limited liability company. The price paid to ICC for the Rental Subsidiaries was approximately $15,500,000 in cash, which is subject to certain post-closing adjustments required by the Purchase Agreement. The Company estimates net proceeds from the Transaction are approximately $13,700,000, net of taxes and expenses. The Company expects to record a loss of approximately $46,000 pre-tax in the third quarter of 2015, which represents the excess of the book value of the assets and liabilities of the Rental Subsidiaries, as of the date of completion of the disposition, over the net sales price. The sale of the Rental Subsidiaries is not expected to be dilutive to the Company's results. The Company utilized the proceeds from the sale to reduce debt outstanding under its credit agreement. The Company determined that the sale of the Rental Subsidiaries did not meet the criteria for classification as a discontinued operation in accordance with ASU 2014-08.

The assets and liabilities of the Rental Subsidiaries that were sold are shown as held for sale in the Company's Consolidated Balance Sheets and are comprised of the following (in thousands):

	June 30, 2015		December 31, 2014
Trade receivables, net	$	5,879	$	6,207
Inventories, net	412		315
Other current assets	212		221
Property and Equipment, net	4,126		5,896
Goodwill	4,518		4,692
Intangibles	42		57
Assets sold	$	15,189	$	17,388
Accounts payable	$	410	$	225
Accrued expenses and other short-term obligations	1,033		788
Liabilities sold	$	1,443	$	1,013

Discontinued Operations

On August 29, 2014, the Company sold Altimate Medical, Inc. (Altimate), its manufacturer of stationary standing assistive devices for use in patient rehabilitation, to REP Acquisition Corporation for $23,000,000 in cash, which was subject to final post-closing adjustments. Altimate had been operated on a stand-alone basis and reported as part of the North America/HME segment of the Company. The Company recorded a gain of $17,069,000 pre-tax in the third quarter of 2014, which represented the excess of the net sales price over the book value of the assets and liabilities of Altimate. The sale of this business was dilutive to the Company's results. The Company utilized the proceeds from the sale to reduce debt outstanding under its revolving credit facility in the third quarter of 2014. The gain recorded by the Company reflects the Company's estimated final purchase adjustments.

The assets and liabilities of Altimate were the following as of the date of the sale, August 29, 2014, (in thousands):

	August 29, 2014
Trade receivables, net	$	2,019
Inventories, net	1,954
Other current assets	246
Property and Equipment, net	176
Other Intangibles	1,047
Assets sold	$	5,442
Accounts payable	$	425
Accrued expenses	316
Liabilities sold	$	741

The net sales and earnings before income taxes of the Altimate discontinued operations were $8,937,000 and $2,162,000for the six months endedJune 30, 2014, respectively. Results for Altimate include an interest expense allocation from continuing operations to discontinued operations of $150,000for the six months endedJune 30, 2014 as proceeds from the sale were required to be utilized to pay down debt. The interest allocation was based on the net proceeds assumed to pay down debt applying the Company's average interest rates for the periods presented. The Company recorded an incremental intra-period tax allocation expense to discontinued operations for the six months endedJune 30, 2014 representing the cumulative intra-period allocation expense to discontinued operations based on the Company's June 30, 2014 estimates of the projected domestic taxable loss related to continuing operations for 2014.

The Company recorded cumulative expenses related to the sale of discontinued operations, including Altimate, totaling $8,401,000, of which $8,006,000 have been paid as of June 30, 2015. The gain shown on the Consolidated Statement of Comprehensive Income for the six months endedJune 30, 2015 was the result of an adjustment to the originally recorded estimated expenses related to discontinued operations.

The Company has classified Altimate as a discontinued operation for all periods presented.