Invacare 2009 Annual Report Download - page 88

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INVACARE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Retirement and Benefit Plans
Substantially all full-time salaried and hourly domestic employees are included in the Invacare Retirement
Savings Plan sponsored by the company. The company makes matching cash contributions up to 66.7% of
employees’ contributions up to 3% of compensation, quarterly contributions based upon 4% of qualified wages
and may make discretionary contributions to the domestic plans based on an annual resolution of the Board of
Directors. Contribution expense for the Invacare Retirement Savings Plan in 2009, 2008 and 2007 was
$6,681,000, $6,140,000, and $5,455,000, respectively.
The company sponsors a Deferred Compensation Plus Plan covering certain employees, which provides for
elective deferrals and the company retirement deferrals so that the total retirement deferrals equal amounts that
would have contributed to the company’s principal retirement plans if it were not for limitations imposed by
income tax regulations.
The company also sponsors a non-qualified defined benefit Supplemental Executive Retirement Plan
(SERP) for certain key executives. The projected benefit obligation related to this unfunded plan was
$26,068,000 and $24,717,000 at December 31, 2009 and 2008, respectively, and the accumulated benefit
obligation was $25,941,000 and $24,323,000 at December 31, 2009 and 2008, respectively. The projected benefit
obligations were calculated using an assumed future salary increase of 4% at both December 31, 2009 and 2008.
The assumed discount rate for both 2009 and 2008 was 6% based upon the discount rate on high-quality fixed-
income investments without adjustment. The retirement age was 65 for both 2009 and 2008. Expense for the plan
in 2009, 2008 and 2007 was $2,128,000, $2,391,000, and $3,031,000, respectively of which $1,454,000,
$1,294,000, and $1,520,000 was related to interest cost with the remaining portion related to service costs, prior
service costs and other gains/losses. Benefit payments in 2009, 2008 and 2007 were $517,000, $424,000 and
$424,000, respectively.
Effective December 31, 2008, the SERP was amended, in part to comply with IRS Section 409A. As a result
of the amendment, the plan became a defined benefit cash balance plan for the non-retired participants and thus,
future payments by the company will be made based upon a cash balance formula with interest credited at a rate
determined annually by the Compensation Committee of the Board of Directors, currently 6%. The plan
continues to be unfunded with individual hypothetical accounts maintained for each participant. Future company
expense will be equal to the hypothetical contributions made for each participant plus the crediting of interest. As
a result of the plan amendment, a prior service credit of $12,455,000 was initially recorded in Accumulated Other
Comprehensive Earnings. The prior service credit is being amortized consistent with the amortization of the
unrealized losses previously recognized in Accumulated Other Comprehensive Earnings under ASC 715. The
company has determined that amortization of each of these components will offset annually and thus, the net
expense reported by the company will be equal to the company’s contributions.
In 2005, the company began sponsoring a Death Benefit Only Plan for certain key executives that provides a
benefit equal to three times the participant’s final earnings should the participant’s death occur while an
employee and a benefit equal to one times the participant’s final earnings upon the participant’s death after
normal retirement or post-employment. Expense for the plan in 2009, 2008 and 2007 was $190,000, $121,000,
and $281,000, respectively of which $131,000, $72,000, and $254,000 was related to service cost and accrual
adjustments with the remaining portion related to interest costs. There were no benefit payments in 2009, 2008 or
2007.
Accumulated other comprehensive income associated with the SERP and Death Benefit Only Plan (Defined
Benefit Plans) was $1,021,000 and $1,558,000 as of December 31, 2009 and 2008, respectively for a net change
of ($537,000) with $2,318,000 in net periodic benefit costs recognized during the year.
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