Invacare 2009 Annual Report Download - page 106

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INVACARE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Fair Values of Financial Instruments—Continued
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 $338,000 in 2009, a net loss of $26,000 in 2008 and a net gain of $451,000 in 2007. 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, 2009 and
2008 are as follows (in thousands):
2009 2008
Carrying
Value Fair Value
Carrying
Value Fair Value
Cash and cash equivalents ............................. $ 37,501 $ 37,501 $ 47,516 $ 47,516
Marketable securities ................................. 3 3 72 72
Other investments ................................... 1,521 1,521 8,657 8,657
Installment receivables, net of reserves ................... 7,106 7,106 9,946 9,946
Long-term debt (including current maturities of long-term
debt) ............................................ (273,325) (349,070) (426,406) (321,729)
Interest rate swaps ................................... — — (2,737) (2,737)
Forward contracts in Other Current Assets ................ 1,907 1,907 1,413 1,413
Forward contracts in Accrued Expenses .................. (2,173) (2,173) (1,719) (1,719)
The long-term debt carrying value and fair value as of December 31, 2008 have been restated to reflect the
company’s adoption of FSP APB 14-1.
The company in estimating its fair value disclosures for financial instruments used the following methods
and assumptions:
Cash, cash equivalents and marketable securities: The carrying amount reported in the balance sheet for
cash, cash equivalents and marketable securities approximates 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.
Long-term debt: Fair values for the company’s senior notes and convertible debt are based on quoted market
prices as of year end, while the term loan and revolving credit facility fair values are based upon the company’s
estimate of the market for similar borrowing arrangements.
Other investments: The company has made other investments in limited partnerships and non-marketable
equity securities, which are accounted for using the cost method, adjusted for any estimated declines in value.
These investments were acquired in private placements and there are no quoted market prices or stated rates of
return and the company does not have the ability to easily sell these investments. The company completed an
evaluation of the residual value related to these investments in the fourth quarter of 2009 which considered the
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