Invacare 2014 Annual Report Download - page 56

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I-52
CASH FLOWS
Cash flows provided by operating activities were $8,892,000 in 2014, compared to $10,054,000 in the previous year. The
decline in operating cash flows in 2014 was primarily attributable to a decline in net earnings excluding the gain on the sale of
businesses in 2014 and 2013, which more than offset the net positive cash flow impact of working capital items with declines in
receivables and increased payables partially offset by increased inventories.
Cash flows provided by investing activities were $33,582,000 in 2014, compared to cash flows provided by investing
activities of $175,345,000 in 2013. Cash flows provided by investing activities in 2014 were driven by the proceeds from the sale
of a business of $21,870,000. In addition, the Company sold life insurance assets of $21,338,000 in 2014 to fund payments as a
result of the retirement of certain executives officers of the Company. The majority of the future payments are expected to be paid
out by the end of the third quarter of 2015 which will negatively impact operating cash flows for the Company. Cash flows
provided by investing activities in 2013 were primarily related to the proceeds from sale of two businesses of $187,552,000.
Cash flows used by financing activities in 2014 were $32,158,000 compared to $194,488,000 in 2013. The decrease in cash
used was primarily attributable to repayment of debt.
During 2014, the Company generated free cash flow of $8,412,000 compared to free cash flow of $6,254,000 in 2013. The
increase is due primarily to a decrease in the purchase of property and equipment. Free cash flow is a non-GAAP financial measure
that is comprised of net cash provided by operating activities, excluding net cash impact related to restructuring activities, less
net purchases of property and equipment, net of proceeds from sales of property and equipment. Management believes that this
financial measure provides meaningful information for evaluating the overall financial performance of the Company and its ability
to repay debt or make future investments (including acquisitions, etc.).
The non-GAAP financial measure is reconciled to the GAAP measure as follows (in thousands):
Twelve Months Ended
December 31,
2014 2013
Net cash provided by operating activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,892 $ 10,054
Plus: Net cash impact related to restructuring activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,326 9,473
Less: Purchases of property and equipment—net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,806)(13,273)
Free Cash Flow. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,412 $ 6,254
CONTRACTUAL OBLIGATIONS
The Company’s contractual obligations as of December 31, 2014 are as follows (in thousands):
Payments due by period
Total Less than
1 year 1-3 years 3-5 years More than
5 years
4.125% Convertible Senior Subordinated
Debentures due 2027 . . . . . . . . . . . . . . . . . . . . . $ 20,027 $ 551 $ 1,101 $ 1,101 $ 17,274
Revolving Credit Agreement due 2018 . . . . . . . 4,263 86 173 4,004 —
Operating lease obligations . . . . . . . . . . . . . . . . 44,815 18,549 18,956 6,204 1,106
Capital lease obligations . . . . . . . . . . . . . . . . . . 6,053 1,315 2,619 1,163 956
Purchase obligations (primarily computer
systems contracts) . . . . . . . . . . . . . . . . . . . . . . . 28,711 9,328 13,139 6,244 —
Product liability . . . . . . . . . . . . . . . . . . . . . . . . . 23,194 4,334 9,103 4,238 5,519
Supplemental Executive Retirement Plan . . . . . 27,584 21,517 782 782 4,503
Other, principally deferred compensation . . . . . 8,250 3,583 310 293 4,064
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 162,897 $ 59,263 $ 46,183 $ 24,029 $ 33,422
The table does not include any payments related to liabilities recorded for uncertain tax positions as the Company cannot
make a reasonably reliable estimate as to the timing of any other payments. See Income Taxes in the Notes to the Consolidated
Financial Statements included in this report.