Invacare 2014 Annual Report Download - page 93

INVACARE CORPORATION AND SUBSIDIAIRIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
FS-23
Future minimum operating and capital lease commitments, as of December 31, 2014, are as follows (in thousands):
Year Capital Leases Operating Leases
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,315 $ 18,549
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,312 11,718
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,307 7,238
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 685 4,006
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 478 2,198
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 956 1,106
Total future minimum lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,053 $ 44,815
Amounts representing interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,060)
Present value of minimum lease payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,993
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. In 2014,
quarterly contributions were made at 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
2014, 2013 and 2012 was $2,698,000, $3,126,000 and $3,620,000, 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 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 2014 interest was credited at 0% for active participants
in the SERP in accordance with a July 1, 2011 resolution of the Compensation and Management Development Committee of the
Board of Directors. 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 $27,584,000 and $27,440,000 at December 31,
2014 and 2013, respectively, and the accumulated benefit obligation was $27,584,000 and $27,440,000 at December 31, 2014 and
2013, respectively. The projected benefit obligations were calculated using an assumed future salary increase of 4% at both
December 31, 2014 and 2013. The assumed discount rate, relevant for three participants unaffected by the plan conversion was
3.95% and 4.95% for 2014 and 2013, respectively, based upon the discount rate on high-quality fixed-income investments without
adjustment. The retirement age was 67 for 2014 and 65 for 2013. Expense for the plan in 2014 was $539,000 compared to income
of $14,000 in 2013 and expense of $370,000 in 2012. The expense was comprised of interest expense of $377,000 in 2014, interest
income of $236,000 in 2013 and expense of $187,000 in 2012 with the remaining portion related to service costs, prior service
costs and other gains/losses. Benefit payments in 2014, 2013 and 2012 were $394,000, $398,000 and $398,000, respectively.
The Company also sponsors 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 2014 was $808,000 compared to income of $259,000 and expense of $509,000 in 2013 and 2012, respectively. The
expense was comprised of service and accrual adjustment expense of $692,000 in 2014, income of $364,000 in 2013 and expense
of $412,000 in 2012 with the remaining portion related to interest costs in each year, respectively. There were no benefit payments
in 2014, 2013 or 2012.
In conjunction with these non-qualified and unfunded U.S. defined benefit plans, the Company has invested in life insurance
policies related to certain employees to help satisfy these obligations of which $21,338,000 in life insurance policies were sold
during 2014 to fund payments related to the retirement of certain executive officers of the Company.