Invacare 2014 Annual Report Download - page 92

INVACARE CORPORATION AND SUBSIDIAIRIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
FS-22
The unamortized discount of $1,999,000 is to be amortized through February 2017. The effective interest rate on the liability
component was 11.5% for 2007 through 2014. Non-cash interest expense of $710,000, $633,000 and $577,000 was recognized
in 2014, 2013 and 2012, respectively, in comparison to actual interest expense paid of $551,000, $551,000 and $560,000 based
on the stated coupon rate of 4.125%, for each of the same periods. The convertible debt was not convertible as of December 31,
2014 nor was the convertible debt conversion price threshold of $32.23 met during 2014.
Included in the senior secured revolving credit facility, there were no borrowings denominated in foreign currencies as of
December 31, 2014 or December 31, 2013. For 2014 and 2013, the weighted average interest rate on all borrowings was 2.87%
and 2.73%, respectively.
The aggregate minimum maturities of long-term debt for each of the next five years are as follows: $967,000 in 2015,
$5,076,000 in 2016, $1,143,000 in 2017, $637,000 in 2018, and $408,000 in 2019. Interest paid on all borrowings was $3,302,000,
$4,046,000 and $8,866,000 in 2014, 2013 and 2012, respectively.
Other Long-Term Obligations
Other long-term obligations as of December 31, 2014 and 2013 consist of the following (in thousands):
2014 2013
Supplemental Executive Retirement Plan liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,067 $ 27,049
Product liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,860 17,185
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,423 36,328
Deferred compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,667 11,679
Uncertain tax obligation including interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,160 15,524
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,628 10,511
Total long-term obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 88,805 $ 118,276
The decrease in the SERP liability in 2014 is the result of a reclassification of this liability from Current Liabilities to Other
Long-Term Obligations due to the retirement of four executives of the Company. Deferred compensation payments of $2,545,000
were made during 2014 related to those former executives. Furthermore, based on the retirement agreements for the same executives,
the Company estimates SERP payments of $21,126,000 as well as deferred compensation payments of $3,527,000 will be made
by the end of the third quarter of 2015, which will negatively impact the operating cash flows of the Company.
Leases and Commitments
The Company leases a portion of its facilities, transportation equipment, data processing equipment and certain other
equipment. These leases have terms from 1 to 20 years and provide for renewal options. Generally, the Company is required to
pay taxes and normal expenses of operating the facilities and equipment. As of December 31, 2014, the Company is committed
under non-cancelable operating leases, which have initial or remaining terms in excess of one year and expire on various dates
through 2024. Lease expenses were approximately $23,568,000 in 2014, $24,726,000 in 2013 and $24,205,000 in 2012.
The amount of buildings and equipment capitalized in connection with capital leases was $12,169,000 and $13,435,000 at
December 31, 2014 and 2013, respectively. At December 31, 2014 and 2013, accumulated amortization was $4,993,000 and
$6,942,000, respectively, which is included in depreciation expense.