Invacare 2009 Annual Report Download - page 51

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LIQUIDITY AND CAPITAL RESOURCES
The company continues to maintain an adequate liquidity position through its unused bank lines of credit
(see Long-Term Debt in the Notes to Consolidated Financial Statements included in this report) and working
capital management.
The company’s debt decreased by $153,081,000 from $426,406,000 at December 31, 2008 to $273,325,000
at December 31, 2009, excluding the impact of adoption of FSB APB 14-1, as a result of improved cash flow
generation. The company’s balance sheet reflects the adoption of FSB APB 14-1 as codified in ASC 470-20.As a
result of adopting FSB APB 14-1, the company recorded a debt discount, which reduced debt and increased
equity by $48,272,000 as of December 31, 2009 and $52,414,000 as of December 31, 2008, respectively.
On February 12, 2007, the company completed the refinancing of its existing indebtedness and put in place
a long-term capital structure. The financing program provided the company with total capacity of approximately
$710 million, the net proceeds of which were utilized to refinance substantially all of the company’s previously-
existing indebtedness and pay related fees and expenses (the “Refinancing”). As part of the Refinancing, the
company entered into a $400 million senior secured credit facility consisting of a $250 million term loan facility
and a $150 million revolving credit facility. The company’s obligations under the senior secured credit facility
are secured by substantially all of the company’s assets and are guaranteed by its material domestic subsidiaries,
with certain obligations also guaranteed by its material foreign subsidiaries. Borrowings under the senior secured
credit facility currently generally bear interest at LIBOR plus a margin of 1.25%, including an initial facility fee
of 0.25% per annum on the facility.
Also in February 2007, the company completed the sale of $175 million principal amount of its
9.75% Senior Notes due 2015. The notes are unsecured senior obligations of the company guaranteed by
substantially all of the company’s domestic subsidiaries, and pay interest at 9.75% per annum on each
February 15 and August 15. The net proceeds to the company from the offering of the notes were approximately
$167 million.
As part of the February 2007 Refinancing, the company completed the sale of $135 million principal
amount of its 4.125% Convertible Senior Subordinated Debentures due 2027. The debentures are unsecured
senior subordinated obligations of the company guaranteed by substantially all of the company’s domestic
subsidiaries, pay interest at 4.125% per annum on each February 1 and August 1, and are convertible upon
satisfaction of certain conditions into cash, common shares of the company, or a combination of cash and
common shares of the company, subject to certain conditions. The initial conversion rate is 40.3323 shares per
$1,000 principal amount of debentures, which represents an initial conversion price of approximately $24.79 per
share. The debentures are redeemable at the company’s option, subject to specified conditions, on or after
February 6, 2012 through and including February 1, 2017, and at the company’s option after February 1, 2017.
On February 1, 2017 and 2022 and upon the occurrence of certain circumstances, holders have the right to
require the company to repurchase all or some of their debentures. The net proceeds to the company from the
offering of the debentures were approximately $132.3 million.
The company may from time to time seek to retire or purchase its outstanding 9.75% Senior Notes due 2015
and/or 4.125% Convertible Senior Subordinated Debentures due 2027, in open market purchases, privately
negotiated transactions or otherwise. Such purchases or exchanges, if any, will depend on prevailing market
conditions, the company’s liquidity requirements, contractual restrictions and other factors. The amounts
involved in any such transactions, individually or in the aggregate, may be material.
The company’s borrowing arrangements contain covenants, including with respect to 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 agreements with its note holders. There
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