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INVACARE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
FS-39
The following table provides a summary of the Company’s assets and liabilities that are measured on a recurring basis (in
thousands).
Basis for Fair Value Measurements at Reporting Date
Quoted Prices
in Active
Markets
for Identical
Assets /
(Liabilities)
Significant
Other
Observable
Inputs
Significant
Other
Unobservable
Inputs
Total Level I Level II Level III
December 31, 2013:
Forward Exchange Contracts—net . . . . . . . $(411) — $ (411) —
Interest Rate Swap Agreements—net . . . . . (12) — (12) —
December 31, 2012:
Forward Exchange Contracts—net . . . . . . . $ 5 — $ 5 —
Interest Rate Swap Agreements—net . . . . . (316) — (316) —
Forward Contracts: 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 and accounted for as hedging instruments. The forward contracts are used to hedge
the following currencies: AUD, CAD, CHF, CNY, DKK, EUR, GBP, MXP, NOK, NZD, SEK and USD. The Company does not
use derivative financial instruments for speculative purposes. Fair values for the Company’s foreign exchange forward contracts
are based on quoted market prices for contracts with similar maturities.
The gains and losses that result from the majority of the forward contracts are deferred and recognized when the offsetting
gains and losses for the identified transactions are recognized. The Company recognized a net loss of $349,000 in 2013, a net gain
of $3,763,000 in 2012 and a net loss of $250,000 in 2011 related to ASC 815 designated derivatives. Gains or losses recognized
as the result of the settlement of forward contracts are recognized in cost of products sold for hedges of inventory transactions,
sales for hedges of forecasted sales or selling, general and administrative expenses for other hedged transactions. The Company’s
forward contracts are included in Other Current Assets or Accrued Expenses in the Consolidated Balance Sheets.
The carrying amounts and fair values of the Company’s financial instruments at December 31, 2013 and 2012 are as follows
(in thousands):
2013 2012
Carrying
Value Fair Value Carrying
Value Fair Value
Cash and cash equivalents. . . . . . . . . . . . . . . . . . $ 29,785 $ 29,785 $ 38,791 $ 38,791
Other investments . . . . . . . . . . . . . . . . . . . . . . . . 998 998 1,171 1,171
Installment receivables, net of reserves. . . . . . . . 2,819 2,819 2,594 2,594
Long-term debt (including current maturities of
long-term debt) . . . . . . . . . . . . . . . . . . . . . . . . . . (45,286)(46,124)(234,802)(234,072)
Forward contracts in Other Current Assets . . . . . 789 789 1,062 1,062
Forward contracts in Accrued Expenses . . . . . . . (1,200)(1,200)(1,057)(1,057)
Interest rate swap agreements in Accrued
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12)(12)(316)(316)
The Company, in estimating its fair value disclosures for financial instruments, used the following methods and assumptions:
Cash, cash equivalents: The carrying amount reported in the balance sheet for cash, cash equivalents equals its fair value.
Installment receivables: The carrying amount reported in the balance sheet for installment receivables approximates its fair
value. The interest rates associated with these receivables have not varied significantly since inception. Management believes that
after consideration of the credit risk, the net book value of the installment receivables approximates market value.