Invacare 2006 Annual Report Download - page 78

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Current Liabilities — Continued
Changes in accrued warranty costs were as follows (in thousands):
2006 2005
Balance as of January 1 ......................................... $15,583 $13,998
Warranties provided during the period .............................. 9,175 9,811
Settlements made during the period ................................ (10,252) (8,931)
Changes in liability for pre-existing warranties during the period, including
expirations ................................................. 659 705
Balance as of December 31 ...................................... $15,165 $15,583
Long-Term Debt
Debt as of December 31, 2006 and 2005 consist of the following (in thousands):
2006 2005
Revolving credit agreement ($500,000,000 multi-currency), at 0.675% to
1.40% above local interbank offered rates, expires January 14, 2010 ..... $157,465 $264,828
$80,000,000 senior notes at 6.71%, due in February 2008 ............... 80,000 80,553
$50,000,000 senior notes at 3.97%, due in October 2007 ............... 49,565 49,244
$30,000,000 senior notes at 4.74%, due in October 2009 ............... 30,000 30,339
$20,000,000 senior notes at 5.05%, due in October 2010 ............... 20,000 20,134
$150,000,000 senior notes at 6.15%, due in April 2016 . ............... 150,000 —
Short-term borrowings secured by accounts receivable . . ............... 71,750 79,351
Other notes and lease obligations ................................. 14,346 13,532
573,126 537,981
Less short-term borrowings secured by accounts receivable.............. (71,750) (79,351)
Less current maturities of long-term debt ........................... (52,493) (877)
$448,883 $457,753
The carrying values of the senior notes have been adjusted by the gains/losses on the swaps accounted for as
fair value hedges.
On November 6, 2006, the company determined that it was in violation of a financial covenant contained in
three Note Purchase Agreements between the company and various institutional lenders (the “Note Purchase
Agreements”). The Note Purchase Agreements relate to an aggregate principal amount of $330 million in long-term
debt of the company. The financial covenant limits the ratio of consolidated debt to consolidated operating cash
flow. The company believed the limits were exceeded as a result of borrowings by the company in early October,
2006 under its $500 million credit facility dated January 14, 2005 with various banks (the “Credit Facility”). The
violation of the covenant under the Note Purchase Agreements also may have constituted a default under both the
Credit Facility and the company’s separate $100 million trade receivables securitization facility (collectively, all of
these loan facilities are referred to as the “Loan Facilities”). The company obtained the necessary waivers of the
covenants that were violated. On February 12, 2007, the company announced the completion of its previously
announced refinancing transactions. The new financing program provides the company with total capacity of
approximately $710 million, the net proceeds of which have been used to refinance substantially all of the
FS-19
INVACARE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)