Invacare 2007 Annual Report Download - page 86

INVACARE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Long-Term Debt—Continued
The notes, debentures and common shares issuable upon conversion of the debentures have been registered
under the Securities Act.
On April 27, 2006, the company consummated a 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. The Senior Notes were repaid in full as part of the refinancing completed on
February 12, 2007.
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. The debt outstanding related to the $500 million
Credit Agreement was repaid in full as part of the refinancing completed on February 12, 2007.
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 provided that Invacare, could, upon consent of its lenders, increase the
amount of the facility by an additional $50,000,000. The 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. The debt outstanding related to the $450,000,000 multi-currency, long-term revolving credit agreement
was repaid in full as part of the refinancing completed on February 12, 2007.
Borrowings denominated in foreign currencies aggregated $19,488,000 at December 31, 2007 and
$115,964,000 at December 31, 2006. As of December 31, 2007 and 2006, the weighted average floating interest
rate on borrowings was 7.22% and 5.90%, respectively.
The company’s borrowing arrangements contain covenants with respect to, among other items, maximum
amount of debt, minimum loan commitments, interest coverage, net worth, dividend payments, working capital,
and funded debt to capitalization, as defined in the company’s bank agreements and agreement with its note
holders. The company is in compliance with all covenant requirements. Under the most restrictive covenant of
the company’s borrowing arrangements as of December 31, 2007, the company had the capacity to borrow up to
an additional $130,512,000.
In July 2007, the company entered into cash flow hedges that exchanged the LIBOR variable rate on
$125,000,000 of term loan debt for a fixed rate of 5.0525% and in November exchanged the LIBOR variable on
$30,000,000 of term loan debt for a fixed rate of 3.95%. In December 2006, $50,000,000 in fair value hedge
swaps that exchanged fixed rates for floating rates were de-designated as hedges as the associated debt was to be
paid off as part of the company’s refinancing, which was completed in February 2007. In August 2006,
$50,000,000 in fair value hedge swaps were also terminated. All losses associated with the terminations of fair
value hedge swaps were amortized over the remaining life of the previously hedged debt using the effective yield
method.
The aggregate minimum maturities of long-term debt for each of the next five years are as follows:
$24,510,000 in 2008, $3,351,000 in 2009, $3,030,000 in 2010, $3,074,000 in 2011, and $3,147,000 in 2012. The
2008 payment amount includes estimated additional mandatory payment of $13,572,000 as required by the
company’s credit facility based upon excess cash flow as defined in the agreement. Interest paid on borrowings
was $42,053,000, $28,723,000 and $29,017,000 in 2007, 2006 and 2005, respectively.
FS-22