Invacare 2011 Annual Report Download - page 92

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INVACARE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Long-Term Debt
Debt as of December 31, 2011 and 2010 consisted of the following (in thousands):
2011 2010
$400,000,000 senior secured revolving credit facility, due in October 2015 ............ $247,063 $184,932
Convertible senior subordinated debentures at 4.125%, due in February 2027 .......... 9,797 52,064
Other notes and lease obligations ............................................. 8,624 9,068
265,484 246,064
Less current maturities of long-term debt ....................................... (5,044) (7,974)
$260,440 $238,090
The company’s senior secured revolving credit agreement (the “Credit Agreement”), entered into on
October 28, 2010, provides for a $400 million senior secured revolving credit facility maturing in October 2015.
Pursuant to the terms of the Credit Agreement, the company may from time to time borrow, repay and re-borrow
up to an aggregate outstanding amount at any one time of $400 million, subject to customary conditions. The
Credit Agreement also provides for the issuance of swing line loans. Borrowings under the Credit Agreement
bear interest, at the company’s election, at (i) the London Inter-Bank Offer Rate (“LIBOR”) plus a margin; or
(ii) a Base Rate Option plus a margin. The applicable margin is currently 1.75% per annum for LIBOR loans and
0.75% for the Base Rate Option loans based on the company’s leverage ratio. In addition to interest, the company
is required to pay commitment fees on the unused portion of the Credit Agreement. The commitment fee rate is
currently 0.30% per annum. Like the interest rate spreads, the commitment fee is subject to adjustment based on
the company’s leverage ratio. The obligations of the borrowers under the Credit Agreement are secured by
substantially all of the company’s U.S. assets and are guaranteed by substantially all of the company’s material
domestic and foreign subsidiaries.
The Credit Agreement contains certain covenants that are customary for similar credit arrangements,
including covenants relating to, among other things, financial reporting and notification, compliance with laws,
preservation of existence, maintenance of books and records, use of proceeds, maintenance of properties and
insurance, and limitations on liens, dispositions, issuance of debt, investments, payment of dividends,
repurchases of capital stock, acquisitions, transactions with affiliates, and capital expenditures. There also are
financial covenants that require the company to maintain a maximum leverage ratio (consolidated funded
indebtedness to consolidated EBITDA, each as defined in the Credit Agreement) of no greater than 3.5 to 1, and
a minimum interest coverage ratio (consolidated EBITDA to consolidated interest charges, each as defined in the
Credit Agreement) of no less than 3.5 to 1. As of December 31, 2011, the company’s leverage ratio was 1.81 and
the company’s interest coverage ratio was 23.80 compared to a leverage ratio of 1.89 and an interest coverage
ratio of 8.40 as of December 31, 2010. As of December 31, 2011, the company was in compliance with all
covenant requirements and under the most restrictive covenant of the company’s borrowing arrangements, the
company had the capacity to borrow up to an additional $152,937,000.
The company may from time to time seek to retire or purchase its 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. In 2011, the company repurchased and extinguished $63,351,000 principal amount
of its Convertible Senior Subordinated Debentures compared to $57,799,000 in 2010. As of December 31, 2011,
the company had $13,850,000 remaining of Convertible Senior Subordinated Debentures.
FS-20