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, 2001
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Commission File Number 0-12938
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Invacare Corporation
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(Exact name of registrant as specified in its charter)
Ohio 95-2680965
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(State or other jurisdiction of (IRS Employer Identification No)
incorporation or organization)
One Invacare Way, P.O. Box 4028, Elyria, Ohio 44036
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(Address of principal executive offices)
(440) 329-6000
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(Registrant's telephone number, including area code)
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(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 9, 2001, the company had 29,553,415 Common Shares and 1,112,187
Class B Common Shares outstanding.
<page>
INVACARE CORPORATION
INDEX
Part I. FINANCIAL INFORMATION: Page No.
- ------------------------------ --------
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheet -
June 30, 2001 and December 31, 2000..........................3
Condensed Consolidated Statement of Earnings -
Three and Six Months Ended June 30, 2001 and 2000............4
Condensed Consolidated Statement of Cash Flows -
Six Months Ended June 30, 2001 and 2000......................5
Notes to Condensed Consolidated Financial
Statements - June 30, 2001...................................6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations...............10
Item 3. Quantitative and Qualitative Disclosure of Market Risk...............14
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
Part I. FINANCIAL INFORMATION
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Item 1... Financial Statements (Unaudited)
INVACARE CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheet - (unaudited)
June 30, December 31,
2001 2000
------- -------
ASSETS (In thousands)
- ------
<s> <c> <c>
CURRENT ASSETS
.........Cash and cash equivalents $ 8,498 $12,357
.........Marketable securities 954 845
.........Trade receivables, net 218,225 211,372
.........Installment receivables, net 46,411 56,659
.........Inventories, net 111,404 105,295
.........Deferred income taxes 31,238 31,605
.........Other current assets 14,626 14,275
------- -------
......... TOTAL CURRENT ASSETS 431,356 432,408
OTHER ASSETS 78,825 74,305
PROPERTY AND EQUIPMENT, NET 132,597 134,913
GOODWILL, NET 300,118 310,229
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......... TOTAL ASSETS $942,896 $951,855
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES
.........Accounts payable $85,627 $81,316
.........Accrued expenses 89,502 92,453
.........Accrued income taxes 24,823 23,860
.........Current maturities of long-term obligations 6,989 5,807
------- -------
......... TOTAL CURRENT LIABILITIES 206,941 203,436
LONG-TERM DEBT 350,535 384,316
OTHER LONG-TERM OBLIGATIONS 13,950 14,330
SHAREHOLDERS' EQUITY
.........Preferred shares 0 0
.........Common shares 7,764 7,301
.........Class B common shares 278 343
.........Additional paid-in-capital 79,436 79,105
.........Retained earnings 337,239 310,367
.........Accumulated other comprehensive earnings (53,242) (43,430)
.........Treasury shares (5) (3,913)
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......... TOTAL SHAREHOLDERS' EQUITY 371,470 349,773
------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $942,896 $951,855
======== ========
</table>
See notes to condensed consolidated financial statements.
<page>
INVACARE CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statement of Earnings - (unaudited)
<table>
<caption>
Three Months Ended Six Months Ended
(In thousands except per share data) June 30, June 30,
2001 2000 2001 2000
-------- -------- -------- --------
<s> <c> <c> <c> <c>
Net sales $265,704 $247,542 $519,853 $493,135
Cost of products sold 184,849 167,873 362,108 340,586
-------- -------- -------- --------
Gross profit 80,855 79,669 157,745 152,549
Selling, general and administrative expense 49,085 49,891 100,343 99,057
Amortization of goodwill 1,959 2,229 4,517 4,488
Interest income 2,171 1,841 4,676 3,578
Interest expense 5,859 6,950 12,647 13,791
-------- -------- -------- --------
Earnings before income taxes 26,123 22,440 44,914 38,791
Income taxes 10,057 8,751 17,292 15,128
-------- -------- -------- --------
NET EARNINGS $ 16,066 $ 13,689 $ 27,622 $ 23,663
======== ======== ======== ========
DIVIDENDS DECLARED PER
COMMON SHARE .0125 .0125 .0250 .0250
======== ======== ======== ========
Net earnings per share - basic $ 0.52 $ 0.46 $ 0.90 $ 0.79
======== ======== ======== ========
Weighted average shares outstanding - basic 30,606 30,085 30,539 30,042
======== ======== ======== ========
Net earnings per share - assuming dilution $ 0.51 $ 0.45 $ 0.87 $ 0.77
======== ======== ======== ========
Weighted average shares outstanding -
assuming dilution 31,719 30,688 31,647 30,595
======== ======== ======== ========
</table>
See notes to condensed consolidated financial statements.
INVACARE CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statement of Cash Flows - (unaudited)
<table>
<caption>
Six Months Ended
June 30,
2001 2000
-------- --------
(In thousands)
<s> <c> <c>
OPERATING ACTIVITIES
Net earnings $ 27,622 $ 23,663
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 16,784 15,416
Provision for losses on receivables 2,562 3,872
Provision for deferred income taxes (45) 1,116
Provision for other deferred liabilities (24) (122)
Changes in operating assets and liabilities:
Trade receivables (9,998) (11,249)
Inventories (8,020) (5,785)
Other current assets (516) (331)
Accounts payable 6,206 18,659
Accrued expenses 1,007 (13,604)
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 35,578 31,635
INVESTING ACTIVITIES
Purchases of property and equipment (9,741) (14,204)
Proceeds from sale of property and equipment 560 108
Installment sales contracts 13,052 (776)
Marketable securities 128 442
Increase in other investments (2,135) (3,383)
Increase in other long term assets (7,353) (8,332)
Other (1,259) (1,355)
-------- --------
NET CASH REQUIRED BY INVESTING ACTIVITIES (6,748) (27,500)
FINANCING ACTIVITIES
Proceeds from revolving lines of credit and long-term borrowings 69,879 56,918
Principal payments on revolving lines of credit, long-term debt
and capital lease obligations (101,465) (63,601)
Proceeds from exercise of stock options 3,572 1,353
Payment of dividends (759) (747)
-------- --------
NET CASH REQUIRED BY FINANCING ACTIVITIES (28,773) (6,077)
Effect of exchange rate changes on cash (3,916) (1,024)
-------- --------
Increase in cash and cash equivalents (3,859) (2,966)
Cash and cash equivalents at beginning of period 12,357 18,258
-------- --------
Cash and cash equivalents at end of period $ 8,498 $ 15,292
======= ========
</table>
See notes to condensed consolidated financial statements.
INVACARE CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated
Financial Statements
(Unaudited)
June 30, 2001
Nature of Operations - Invacare Corporation and its subsidiaries (the "company")
is the leading home medical equipment manufacturer in the world based on its
distribution channels, the breadth of its product line and sales. The company
designs, manufactures and distributes an extensive line of medical equipment for
the home health care, retail and extended care markets. The company's products
include standard manual wheelchairs, motorized and lightweight prescription
wheelchairs, seating and positioning systems, motorized scooters, patient aids,
home care beds, low air loss therapy products, home respiratory products, bath
equipment and distributed products.
Principles of Consolidation - The consolidated financial statements include the
accounts of the company and its majority owned subsidiaries and include all
adjustments, which were of a normal recurring nature, necessary to present
fairly the financial position of the company as of June 30, 2001 and the results
of its operations for the three and six months ended June 30, 2001 and 2000 and
changes in its cash flows for the six months ended June 30, 2001 and 2000.
Certain foreign subsidiaries are consolidated using a one-month lagging. The
results of operations for the three and six months ended June 30, 2001 are not
necessarily indicative of the results to be expected for the full year.
Use of Estimates - The consolidated financial statements are prepared in
conformity with accounting principles generally accepted in the United States
which require management to make estimates and assumptions that affect the
amounts reported in the financial statements and accompanying notes. Actual
results may differ from these estimates.
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
three operating groups which sell custom power wheelchairs, electronic
wheelchair components, patient aids and lifts. Each business segment sells to
the home health care, retail and extended care markets.
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 $16,803,000 and $34,150,000 for the three and six months
ended June 30, 2001 respectively and $15,635,000 and $31,848,000 for the same
periods a year ago.
<page>
<table>
<caption>
The information by segment is as follows (in thousands):
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
-------- -------- -------- --------
<s> <c> <c> <c> <c>
Revenues from external customers
North America $196,382 $179,042 $384,345 $356,444
Europe 57,664 60,205 114,175 120,745
Australasia 11,658 8,295 21,333 15,946
-------- -------- -------- --------
Consolidated $265,704 $247,542 $519,853 $493,135
======== ======== ======== ========
Earnings (loss) before income taxes
North America $ 32,541 $ 28,438 $ 63,685 $ 56,490
Europe 1,448 1,993 1,799 2,387
Australasia 3,600 2,674 6,343 4,963
All Other * (11,466) (10,665) (26,913) (25,049)
-------- -------- -------- --------
Consolidated $26,123 $22,440 $44,914 $38,791
======== ======== ======== ========
</table>
* 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.
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.
<table>
<caption>
Three Months Ended Six Months Ended
June 30, June 30,
(In thousands except per share data)
2001 2000 2001 2000
-------- -------- -------- --------
<s> <c> <c> <c> <c>
Basic
Weighted average common shares outstanding 30,606 30,085 30,539 30,042
Net income $16,066 $13,689 $27,622 $23,663
Net income per common share $ .52 $ .46 $ .90 $ .79
Diluted
Weighted average common shares outstanding 30,606 30,085 30,539 30,042
Stock options 1,113 603 1,108 553
-------- -------- -------- --------
Weighted average common shares assuming dilution 31,719 30,688 31,647 30,595
Net income $16,066 $13,689 $27,622 $23,663
Net income per common share $ .51 $ .45 $ .87 $ .77
</table>
<page>
Accounting Policy for Derivative Instruments - Financial Accounting Standards
Board Statement No. 133, Accounting for Derivative Instruments and Hedging
Activities (Statement 133), requires companies to recognize all of its
derivative instruments as either assets or liabilities in the consolidated
balance sheet at fair value. The company adopted the statement on January 1,
2001.
Substantially all of the company's derivative instruments are designated and
qualify as cash flow hedges. Accordingly, the effective portion of the gain or
loss on the derivative instrument is reported as a component of other
comprehensive income and reclassified into earnings in the same period or
periods during which the hedged transaction affects earnings. The remaining gain
or loss on the derivative instrument in excess of the cumulative change in the
present value of future cash flows of the hedged item, if any, is recognized in
current earnings during the period of change.
To protect against decreases/increases in forecasted foreign currency cash flows
resulting from inventory purchases/sales over the next year, the company
utilizes cash flow hedges to hedge portions of its forecasted purchases/sales
denominated in foreign currencies.
The company has entered into interest rate swap agreements that effectively
convert a portion of its floating-rate debt to a fixed-rate basis, thus reducing
the impact of interest-rate changes on future interest expense. Approximately
20% ($70 million) of the company's outstanding debt was designated as the hedged
items to interest rate swap agreements at June 30, 2001. During the quarter
ended June 30, 2001 and for the year, the company recognized an immaterial loss
related to swap agreements, which is reflected in interest expense on the
statement of earnings.
During the quarter ended June 30, 2001 and for the year, the company recognized
a nominal gain related to forward contracts that do not qualify for special
hedging treatment which is included in costs of products sold on the statement
of earnings. The company recognized no gain or loss related to hedge
ineffectiveness or discontinued cash flow hedges.
<table>
<caption>
Comprehensive Earnings - Total comprehensive earnings were as follows (in
thousands):
Three Months Six Months
Ended Ended
June 30, June 30,
2001 2000 2001 2000
-------- -------- -------- --------
<s> <c> <c> <c> <c>
Net earnings $16,066 $13,689 $27,622 $23,663
Foreign currency translation (loss) (14,912) (6,685) (7,918) (8,575)
Unrealized gain (loss) on available for sale securities (366) (138) (91) 330
Cumulative effect upon adoption of FAS 133 0 0 802 0
Current period unrealized gain (loss) on cash flow
Hedges 530 0 (2,605) 0
-------- -------- -------- --------
Total comprehensive earnings $ 1,318 $ 6,866 $17,810 $15,418
======== ======== ======== ========
</table>
Recently Issued Accounting Pronouncements - In July, 2001, the Financial
Accounting Standards Board (FASB) issued SFAS No. 141, Business Combination and
SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 requires the
use of the purchase method for business combinations and prohibits the use of
the pooling-of-interest method for business combinations initiated after June
30, 2001 and also increases the disclosures required related to business
combinations. SFAS No. 142 addresses financial accounting and reporting for
acquired goodwill and other intangible assets. Under the new statement, goodwill
and some intangible assets will no longer be amortized, but will be assessed for
impairment. This statement is required to be implemented in the first quarter of
2002. Management is currently studying the potential effects of the adoption of
these statements.
<page>
Statement of Cash Flows - The company made payments (in thousands) of :
Six Months Ended
June 30,
2001 2000
------- -------
Interest $14,864 $13,915
Income taxes 14,311 13,592
Inventories - Inventories consist of the following components (in thousands):
June 30, December 31,
2001 2000
-------- --------
Raw materials $ 28,168 $ 29,417
Work in process 20,496 15,039
Finished goods 62,740 60,839
-------- --------
$ 111,404 $ 105,295
======== ========
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,
2001 2000
-------- --------
Land, buildings and improvements $ 54,181 $ 55,760
Machinery and equipment 178,304 176,885
Furniture and fixtures 14,287 13,443
Leasehold improvements 11,656 10,308
-------- --------
258,428 256,396
Less allowance for depreciation (125,831) (121,483)
-------- --------
$132,597 $134,913
======== ========
<page>
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, 2001 were $265,704,000 compared to
$247,542,000 the same period a year ago. Excluding the negative net impact of
currency translation, overall net sales increased 10%. North America and
Australasia posted solid sales increases, which positively impacted net sales
for the quarter. For the first half, net sales increased to $519,853,000
compared to $493,135,000 the same period a year ago. Excluding the negative net
impact of currency translation, overall first half-net sales increased 8% 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, beds, low
air loss therapy and patient transport equipment), Continuing Care (beds and
furniture), Respiratory (oxygen concentrators, liquid oxygen, aerosol therapy
and associated respiratory) and Distributed (ostomy, incontinence, wound care
and other medical supplies) products, increased 10% for the quarter and 8% for
the first half of the year compared to the same periods a year ago excluding the
net negative impact of currency translation. The gain for the quarter and year
to date was principally due to sales volume increases in Respiratory, Standard
Products and Continuing Care product lines.
European Operations
European sales decreased to $57,664,000 from $60,205,000 for the quarter and to
$114,175,000 from $120,745,000 year to date, primarily due to the adverse effect
of exchange rates. Adjusting for the negative impact of exchange rates, European
sales increased 2% in the quarter and for the first half. For the quarter and
year-to-date, strong growth in power wheelchairs and patient aid product lines
was offset by reduced sales of standard wheelchairs.
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. Excluding the negative impact from foreign
currency translation, net sales increased 61% for the quarter and 55% for the
first six months of the year. Sales were positively impacted by increased sales
volume resulting from strong demand for Dynamic Controls' products.
<page>
GROSS PROFIT
Gross profit as a percentage of net sales for the three and six-month periods
ended June 30, 2001 was 30.4% and 30.3%, respectively, compared to 32.2% and
30.9% in the same periods last year. A slight margin improvement in North
America was more than offset by a decrease in Europe and Australasia for the
three and six-month periods. The overall margin declines are primarily due to a
change in sales mix, the decline in the Euro and pricing pressure in the medical
supplies business. In North America, increased sales of low margin product had a
negative impact on margins which was offset by productivity improvements and
cost reductions.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expense (including goodwill amortization) as
a percentage of net sales for the three and six months ending June 30, 2001 was
19.2% and 20.2%, respectively, compared to 21.1% and 21.0% in the same periods a
year ago. Excluding the impact of acquisitions and foreign currency, selling,
general and administrative expense as a percent of sales declined by
approximately 1% for the quarter and year to date compared to the prior year.
North American selling, general and administrative costs, as a percent of sales,
for the three and six months ending June 30, 2001 remained flat compared to the
same periods a year ago. The dollar increase was $1,757,000 for the quarter and
$2,799,000 for the year respectively, compared to the prior year. European
operations' selling, general and administrative costs, adjusted for foreign
currency impact, declined as a percent of sales by approximately 2% compared to
the same periods a year ago. Australasia operations' costs for the quarter and
first half, as a percent of sales, declined versus the same periods a year ago.
NON-RECURRING CHARGE
In 2000, the company announced non-recurring and unusual charges of $8,700,000
primarily related to closing two distribution centers and a manufacturing plant,
severance costs due to staff reductions primarily at the corporate office and
costs associated with the settlement of litigation. Of these charges, $5,938,000
has been utilized through June 30, 2001 including $1,251,000 in the second
quarter of 2001 for the settlement of litigation and $664,000 for the payment of
severance costs. The company anticipates all of the remaining charge to be
utilized in 2001.
In 1999, the company announced non-recurring and unusual charges of $11,500,000
primarily related to the acquisition of Scandinavian Mobility International AS
("SMI"). Of these charges, $10,570,000 has been utilized through June 30, 2001
including $247,000 in the second quarter of 2001 for asset write-downs and other
non-recurring items and $68,000 for the payment of severance costs. The company
anticipates all of the remaining charge to be utilized in 2001.
INTEREST
Interest income in the three months ended June 30, 2001 increased by
approximately $330,000 and by $1,098,000 for the first half, when compared to
the same periods a year ago, due primarily to the third-party financing
arrangement with DLL, a subsidiary of Rabo Bank of the Netherlands, which
results in an acceleration of interest income on new business written. For the
quarter and first half, interest expense decreased from the same periods a year
ago as a result of decreased debt levels.
<page>
INCOME TAXES
The company had an effective tax rate of 38.5% for the three and six months
periods ended June 30, 2001 compared to an effective tax rate of 39.0% in the
same periods a year ago.
LIQUIDITY AND CAPITAL RESOURCES
The company's reported overall level of long-term obligations decreased $33.8
million to $350.5 million for the six months ended June 30, 2001. 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, 2001, the company had approximately $204.5 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 $339
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, 2001. 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 2001 will approximate $25 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.
CASH FLOWS
Cash flows provided by operating activities were $35.6 million for the first
half of 2001 compared to $31.6 million in 2000. Operating cash flows increased
in 2001 due to increased net earnings and the net increase in accounts payable
and accrued expenses, resulting from the company's cash management efforts.
These increases were partially offset by an increase in inventory, primarily in
North America.
Cash flows required for investing activities decreased by $20.8 million for the
first half of 2001 when compared to 2000. The decrease is principally a result
of payments received on installment receivables. The decrease is also
attributable to reduced capital spending in the current year as the company
tightly controlled expenditures to help meet operating objectives.
Cash flows required by financing activities were $28.8 million compared to $6.1
million in 2000. Financing activities in 2001 continue to be impacted by the
company's pay down of long term borrowings.
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.
<page>
DIVIDEND POLICY
On May 15, 2001, the Board of Directors for Invacare Corporation declared a
quarterly cash dividend of $.0125 per Common Share to shareholders of record as
of July 2, 2001, to be paid on July 13, 2001. At the current rate, the cash
dividend will amount to $.05 per Common Share on an annual basis.
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, 2001 debt levels, a 1% change in interest rates
would impact interest expense by approximately $1,740,000 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
within the meaning of the "Safe Harbor" provisions of the Private Securities
Litigation Reform Act of 1995. Terms such as "will," "should," "achieve,"
"increase," "plan," "can," "expect," "pursue," "benefit," "continue," "exceed,"
"improve," "believe," "build," "strengthen," "new," "lower," "drive," "seek,"
"hope," and "create," as well as similar comments, are forward-looking in
nature. Actual results and events may differ significantly from those
anticipated as a result of risks and uncertainties which include, but are not
limited to the following: pricing pressures, increasing raw material costs, the
consolidations of health care customers and competitors, government
reimbursement issues including those that affect the viability of customers, the
effect of offering customers competitive financing terms, Invacare's ability to
effectively identify, acquire and integrate strategic acquisition candidates,
the difficulties in managing and operating businesses in many different foreign
jurisdictions, the timely completion of facility consolidations, the
difficulties in acquiring and maintaining a proprietary intellectual property
ownership position, the overall economic, market and industry growth conditions,
foreign currency and interest rate risk, Invacare's ability to improve financing
terms and reduce working capital, as well as the risks described from time to
time in Invacare's reports as filed with the Securities and Exchange Commission.
<page>
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.
Item 4. Results of Votes of Security Holders
On May 24, 2001, the company held its 2001 Annual Meeting of Shareholders to act
on proposals to elect a class of Directors.
Gerald B. Blouch, John R. Kasich, Dan T. Moore, III and Joseph B. Richey, II
were re-elected for a three year term of office expiring in 2004, with
38,026,868, 38,020,661, 38,027,389 and 37,797,293 affirmative votes,
respectively, (93 percent of the total voting power). The candidates had
106,599, 112,806, 106,078 and 336,174 votes withheld, respectively, (6 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:/S/ Thomas R. Miklich
-----------------------
Thomas R. Miklich
Chief Financial Officer
Date: August 13, 2001