Invacare 2012 Annual Report Download - page 106

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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. The company also makes quarterly contributions to this
Plan equal to a percentage of qualified wages as determined by resolution of the Compensation and Management
Development Committee of the Board of Directors. In 2012 quarterly contributions were made at 1% of qualified
wages per a July 1, 2011 resolution of the Compensation and Management Development Committee of the Board
of Directors in which the contribution percentage was reduced from 4% to 1% of qualified wages. The company
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 2012, 2011 and 2010 was
$3,620,000, $5,599,000 and $7,153,000, 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. 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 and Management Development
Committee of the Board of Directors. In 2012 interest was credited at 0% in accordance with a July 1, 2011
resolution of the Compensation and Management Development Committee of the Board of Directors in which
the interest crediting rate was reduced from 6% per annum to 0% effective as of for active participants in the
SERP. The plan continues to be unfunded with individual hypothetical accounts maintained for each participant.
The SERP projected benefit obligation related to this unfunded plan was $27,851,000 and $27,879,000 at
December 31, 2012 and 2011, respectively, and the accumulated benefit obligation was $27,851,000 and
$27,879,000 at December 31, 2012 and 2011, respectively. The projected benefit obligations were calculated
using an assumed future salary increase of 4% at both December 31, 2012 and 2011. The assumed discount rate,
relevant for three participants unaffected by plan conversion was 4.05% and 4.4% for 2012 and 2011,
respectively, based upon the discount rate on high-quality fixed-income investments without adjustment. The
retirement age was 65 for both 2012 and 2011. Expense for the plan in 2012, 2011 and 2010 was $370,000,
$1,765,000, and $2,176,000, respectively of which $187,000, $904,000, and $1,535,000 was related to interest
cost with the remaining portion related to service costs, prior service costs and other gains/losses. Benefit
payments in 2012, 2011 and 2010 were $398,000, $410,000 and $1,592,000, respectively. In 2011, benefit
payments included a lump sum distribution to a plan participant.
In 2005, the company began sponsoring a Death Benefit Only Plan (DBO) for certain key executives that
provides a benefit equal to three times the participant’s final target 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 2012, 2011 and 2010 was $509,000,
$536,000, and $399,000, respectively, of which $412,000, $449,000, and $235,000 was related to service cost
and accrual adjustments with the remaining portion related to interest costs. There were no benefit payments in
2012, 2011 or 2010.
FS-26