Invacare 2015 Annual Report Download - page 92

INVACARE CORPORATION AND SUBSIDIAIRIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
FS-20
America/HME segment. Third, an incremental expense of $2,877,000 related to the company's joystick recall as a result of higher
than previously anticipated response rates from larger customers in the U.S. and Canada and a shift in the product mix toward
higher cost joysticks, which was recorded in the North America/HME segment ($1,612,000) and the Asia/Pacific segment
($1,265,000).
These warranty reserves are subject to adjustment in future periods as new developments change the company's estimate of
the total cost of these matters.
Long-Term Debt
Debt as of December 31, 2015 and 2014 consisted of the following (in thousands):
2015 2014
Senior secured revolving credit facility, due in October 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ 4,000
Convertible senior subordinated debentures at 4.125%, due in February 2027 . . . . . . . . . . . . . . . 12,147 11,351
Other notes and lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,973 4,980
47,120 20,331
Less current maturities of long-term debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,028)(959)
$ 45,092 $ 19,372
The company had outstanding letters of credit of $3,230,000 and $7,063,000 as of December 31, 2015 and 2014, respectively.
On September 30, 2015 the company entered into an Amended and Restated Revolving Credit and Security Agreement (the
“Amended and Restated Credit Agreement”), amending and restating the company’s existing Revolving Credit and Security
Agreement which was originally entered into on January 16, 2015 and amended on April 22, 2015 (the “Prior Credit Agreement”)
and which matures in January 2018. The Amended and Restated Credit Agreement was entered into by and among the company,
certain of the company’s direct and indirect U.S. and Canadian subsidiaries and certain of the company’s European subsidiaries
(together with the company, the “Borrowers”), certain other of the company’s direct and indirect U.S., Canadian and European
subsidiaries (the “Guarantors”), and PNC Bank, National Association (“PNC”), JPMorgan Chase Bank, N.A., J.P. Morgan Europe
Limited, KeyBank National Association, and Citizens Bank, National Association (the “Lenders”). PNC is the administrative
agent (the “Administrative Agent”) and J.P. Morgan Europe Limited is the European agent (the “European Agent”) under the
Amended and Restated Credit Agreement.
The Amended and Restated Credit Agreement contains customary representations, warranties and covenants. Exceptions to
the operating covenants in the Amended and Restated Credit Agreement provide the company with flexibility to, among other
things, enter into or undertake certain sale and leaseback transactions, dispositions of assets, additional credit facilities, sales of
receivables, additional indebtedness and intercompany indebtedness, all subject to limitations set forth in the Amended and Restated
Credit Agreement. The Amended and Restated Credit Agreement also contains a covenant requiring the company to maintain
minimum availability under the U.S. and Canadian Credit Facility of not less than the greater of (i) 11.25% of the maximum
amount that may be drawn under the U.S. and Canadian Credit Facility for five (5) consecutive business days, or (ii) $10,000,000
on any business day (which amount was reduced to $5,000,000 pursuant to an amendment in February 2016 -- see “Subsequent
Events”). The company also is subject to dominion triggers under the U.S. and Canadian Credit Facility (as defined below) requiring
the company to maintain borrowing capacity of not less than $11,250,000 on any business day or $12,500,000 for five consecutive
days in order to avoid triggering full control by an agent for the lenders of the company's cash receipts for application to the
company’s obligations under the agreement.
The Amended and Restated Credit Agreement contains customary default provisions, with certain grace periods and
exceptions, which provide that events of default that include, among other things, failure to pay amounts due, breach of covenants,
representations or warranties, bankruptcy, the occurrence of a material adverse effect, exclusion from any medical reimbursement
program, and an interruption of any material manufacturing facilities for more than 10 consecutive days. The initial borrowings
under the U.S. and Canadian Credit Facility were used to repay and terminate the company’s previous credit agreement, which
was scheduled to mature in October 2015.
The Prior Credit Agreement was amended on April 22, 2015 to provide for certain technical amendments, including: (1)
revising various provisions of the Prior Credit Agreement to allow the company to issue letters of credit denominated in foreign
currencies other than those originally contemplated under the Prior Credit Agreement; and (2) amending certain covenants in the