Invacare 2006 Annual Report Download - page 79

Long-Term Debt — Continued
company’s existing indebtedness and pay related fees and expenses. See Subsequent Events in the Notes to the
Consolidated Financial Statements for an explanation of the details of the company’s new financing structure.
On April 27, 2006, the company consummated a new Senior Notes offering for $150 million at a fixed rate of
6.15% due April 27, 2016. The proceeds were used to reduce debt outstanding under the company’s $500 million
revolving credit facility.
On March 31, 2006, the company and the other parties to its $500 million Credit Agreement dated as of
January 12, 2005, entered into certain amendments to the Agreement which among other things: (i) amended the
definitions of Adjusted EBITDA and EBIT under the Credit Agreement to clarify the treatment of restructuring
costs under the Credit Agreement, and (ii) amended the definition of Consolidated Interest Expense under the Credit
Agreement to exclude any interest accrued under any Trade Receivables Securitization Transaction permitted
pursuant to Section 5.2(n) of the Credit Agreement.
On January 14, 2005, the company entered into a $450,000,000 multi-currency, long-term revolving credit
agreement which was increased on April 4, 2005 by $50,000,000 to an aggregate amount of $500,000,000 and
expires on January 14, 2010. The facility provides that Invacare, may, upon consent of its lenders, increase the
amount of the facility by an additional $50,000,000. The new agreement replaced the $325,000,000 multi-currency,
long-term revolving credit agreement entered into in 2001 and a $100,000,000 bridge agreement entered into in
2004.
Borrowings denominated in foreign currencies aggregated $115,964,000 at December 31, 2006 and
$131,464,000 at December 31, 2005. The borrowing rates under the revolving credit agreement are determined
based on the ratio of debt to EBITDA of the company as defined in the agreement and range from 0.35% to .675%
above the various interbank offered rates. As of December 31, 2006 and 2005, the weighted average floating interest
rate on borrowings was 5.90% and 4.53%, respectively.
The revolving credit agreement and senior notes all require the company to maintain certain conditions with
respect to net worth, funded debt to capitalization, and interest coverage as defined in the agreements. Under the
most restrictive covenant of the company’s borrowing arrangements, the company was at its maximum borrowing
capacity as of December 31, 2006 pursuant to the covenants of the company’s $500,000,000 multi-currency, long-
term revolving credit agreement.
In October 2003, the company exchanged the fixed rates of 3.97%, 4.74% and 5.05% on the $50,000,000,
$30,000,000 and $20,000,000 Senior Notes due in October 2007, October 2009 and October 2010 for variable rates
based on LIBOR plus 0.01%, LIBOR plus 0.14% and LIBOR plus 0.26%, respectively. The effect of these swaps
was to exchange fixed rates for floating rates. In November 2005, the $30,000,000 and $20,000,000 swaps,
exchanging fixed rates of 4.74% and 5.05% for variable rates, were terminated. In December 2006, the $50,000,000
swaps were de-designated as hedges as the associated debt was to be paid off as part of the company’s
recapitalization, which was completed in February 2007.
In December 2001, the company exchanged the fixed rate of 6.71% on $50,000,000 of the $80,000,000 in
Senior Notes due in February 2008. The three agreements for $25,000,000, $15,000,000 and $10,000,000
exchanged the fixed rate for variable rates equal to LIBOR plus 1.9%, 1.71% and 1.62%, respectively. In January
2002, the company exchanged the fixed rate of 6.71% on the remaining $30,000,000 of the $80,000,000 in Senior
Notes due in February 2008. The two agreements for $10,000,000 and $20,000,000 exchanged the fixed rate for
variable rates equal to LIBOR plus 1.05% and 1.08%, respectively and were terminated in August 2006. All losses
associated with the terminations of fair value hedge swaps have been amortized over the remaining life of the
previously hedged debt using the effective yield method.
FS-20
INVACARE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)