Invacare 2015 Annual Report Download - page 95

INVACARE CORPORATION AND SUBSIDIAIRIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
FS-23
December 31, 2015, the principal amount of the company’s Convertible Notes exceeded the if-converted value of those notes by
$3,379,000.
The company includes the dilutive effect of shares necessary to settle the conversion spread in the Net Earnings per Share-
Assuming Dilution calculation unless such amounts are anti-dilutive as was the case in 2015, 2014 and 2013. The initial conversion
rate is 40.3323 shares per $1,000 principal amount of debentures, which represents an initial conversion price of approximately
$24.79 per share. Holders of the debentures can convert the debt to common stock if the company’s common stock price is at a
level in excess of $32.23, a 30% premium to the initial conversion price for at least 20 trading days during a period of thirty
consecutive trading days preceding the date on which the notice of conversion is given. At a conversion price of $32.23 (30%
premium over $24.79), the full conversion of the convertible debt equates to 539,000 shares. The debentures are redeemable at
the company’s option, subject to specified conditions, on or after February 6, 2012 through and including February 1, 2017. The
company may redeem some or all of the debentures for cash on or after February 1, 2017. Holders have the right to require the
company to repurchase all or some of their debentures upon the occurrence of certain circumstances on February 1, 2017 and
2022. The company evaluated the terms of the call, redemption and conversion features under the applicable accounting literature,
including Derivatives and Hedging, ASC 815, and determined that the features did not require separate accounting as derivatives.
The notes, debentures and common shares issuable upon conversion of the debentures have been registered under the Securities
Act.
The components of the company’s convertible debt as of December 31, 2015 and 2014 consist of the following (in thousands):
2015 2014
Carrying amount of equity component . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 25,381 $ 25,381
Principal amount of liability component . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 13,350 $ 13,350
Unamortized discount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,203)(1,999)
Net carrying amount of liability component. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,147 $ 11,351
The unamortized discount of $1,203,000 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 $796,000, $710,000 and $633,000 was recognized
in 2015, 2014 and 2013, respectively, in comparison to actual interest expense paid of $551,000, $551,000 and $551,000 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,
2015 nor was the convertible debt conversion price threshold of $32.23 met during 2015.
There were no borrowings denominated in foreign currencies as of December 31, 2015 or December 31, 2014. For 2015
and 2014, the weighted average interest rate on all borrowings, excluding capital leases, was 3.83% and 2.87%, respectively.
The aggregate minimum maturities of long-term debt for each of the next five years are as follows: $2,028,000 in 2016,
$2,169,000 in 2017, $1,784,000 in 2018, $1,632,000 in 2019, and $1,703,000 in 2020. Interest paid on all borrowings was
$2,753,000, $3,302,000 and $4,046,000 in 2015, 2014 and 2013, respectively.
Other Long-Term Obligations
Other long-term obligations as of December 31, 2015 and 2014 consist of the following (in thousands):
2015 2014
Supplemental Executive Retirement Plan liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,930 $ 6,067
Product liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,582 18,860
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,115 30,423
Deferred gain on sale leaseback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,978 —
Deferred compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,167 5,667
Uncertain tax obligation including interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,467 15,160
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,350 12,628
Total long-term obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 82,589 $ 88,805