Invacare 2015 Annual Report Download - page 57

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I-51
CAPITAL EXPENDITURES
There are no individually material capital expenditure commitments outstanding as of December 31, 2015. The company
estimates that capital investments for 2016 will be between $18,000,000 and $25,000,000 compared to actual capital expenditures
of $7,522,000 in 2015. The anticipated increase considers the company's investments to transform the company. The company
believes that its balances of cash and cash equivalents and existing borrowing facilities, will be sufficient to meet its operating
cash requirements and fund required capital expenditures for the foreseeable future. The Amended and Restated Credit Agreement,
as amended in February 2016, limits the company's annual capital expenditures to $35,000,000.
CASH FLOWS
Cash flows used by operating activities were $5,378,000 in 2015, compared to cash flows provided by operating activities
of $8,892,000 in the previous year. The 2015 operating cash flows were impacted by a decline in accrued expenses, accounts
payable and other long-term obligations, which was partially offset by the positive cash flow impact of a lower net loss and a
reduction in inventory and accounts receivable. The current year decline in accrued expenses was largely driven by benefit payments
of $24,651,000 related to the 2014 retirements of executive officers of the company.
Cash flows provided by investing activities were $44,376,000 in 2015, compared to $33,582,000 in 2014. Cash flows
provided by investing activities in 2015 included the receipt of $23,000,000 in proceeds from the company's real estate sale
leaseback transaction as well as the surrender of corporate-owned life insurance of $11,902,000 to fund payments in 2015 related
to the retirement of certain executive officers of the company in 2014. In addition, the company received net proceeds of $13,700,000
from the sale of its rental businesses in July 2015. By comparison, cash flows provided by investing activities in 2014 were driven
by the proceeds from the sale of a business of $21,870,000 and the sale of corporate-owned life insurance assets of $21,338,000.
Cash flows used by financing activities in 2015 were $14,346,000 compared to $32,158,000 in 2014. The decrease in cash
used was principally the result of lower net repayments of debt. Cash used for financing in 2015 also included payment of financing
costs related to the company's refinancing of debt in 2015.
During 2015, the company generated free cash flow of $13,940,000 compared to free cash flow of $8,412,000 in 2014. The
increase was most significantly affected by the positive impact of $23,000,000 in proceeds related to the company's real estate
sale leaseback transaction and the negative impact of benefit payments of $24,651,000 related to the 2014 retirements of executive
officers of the company. 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,
2015 2014
Net cash provided by operating activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(5,378) $ 8,892
Plus: Net cash impact related to restructuring activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,723 9,326
Sales of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,117 2,521
Less: Purchases of property and equipment—net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,522)(12,327)
Free Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 13,940 $ 8,412