Invacare 2013 Annual Report Download - page 33

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unknown environmental contamination at the Company’s own or third-party sites may require the Company to make additional
expenditures, which could be material.
Since the Company’s ability to obtain further financing may be limited, the Company may be unable to make strategic
acquisitions.
The Company’s plans typically include identifying, analyzing, acquiring, and integrating other strategic businesses. There
are various reasons for the Company to acquire businesses or product lines, including providing new products or new manufacturing
and service capabilities, to add new customers, to increase penetration with existing customers, and to expand into new geographic
markets. The Company’s ability to successfully grow through acquisitions depends upon its ability to identify, negotiate, complete
and integrate suitable acquisitions and to obtain any necessary financing. The costs of acquiring other businesses could increase
if competition for acquisition candidates increases. Further, the provisions of the Company’s existing credit facility impose
limitations regarding acquisitions, which could prevent significant acquisitions, without entering into amendments with regard to
those provisions. If the Company is unable to obtain the necessary financing, it may miss opportunities to grow its business through
strategic acquisitions.
Additionally, the success of the Company’s acquisition strategy is subject to other risks and costs, including the following:
• the Company’s ability to realize operating efficiencies, synergies, or other benefits expected from an acquisition,
and possible delays in realizing the benefits of the acquired Company or products;
• diversion of management’s time and attention from other business concerns;
• difficulties in retaining key employees of the acquired businesses who are necessary to manage these businesses;
• difficulties in maintaining uniform standards, controls, procedures and policies throughout acquired companies;
• adverse effects on existing business relationships with suppliers or customers;
• the risks associated with the assumption of contingent or undisclosed liabilities of acquisition targets; and
• ability to generate future cash flows or the availability of financing.
In addition, an acquisition could materially impair the Company’s operating results by causing the Company to incur debt
or requiring the amortization of acquisition expenses and acquired assets.
Additional tax expense or additional tax exposures could affect the Company's future profitability, cash flow and compliance
with debt covenants.
The Company is subject to income taxes in both the United States and various non-U.S. jurisdictions. The domestic and
international tax liabilities are dependent upon the distribution of income among these different jurisdictions. The Company's tax
expense includes estimates of additional tax which may be incurred for tax exposures and reflects various estimates and assumptions.
In addition, the assumptions include assessments of future earnings of the Company that could impact the valuation of its deferred
tax assets. The Company’s future results of operations could be adversely affected by changes in the effective tax rate as a result
of a change in the mix of earnings in countries with differing statutory tax rates, changes in the overall profitability of the Company,
changes in tax legislation and rates, changes in generally accepted accounting principles, changes in the valuation of deferred tax
assets and liabilities, the results of audits and examinations of previously filed tax returns and continuing assessments of its tax
exposures. Corporate tax reform and tax law changes continue to be analyzed in the United States and in many other jurisdictions.
The Company’s reported results may be adversely affected by increases in reserves for uncollectible accounts receivable.
The Company has a large balance of accounts receivable and has established a reserve for the portion of such accounts
receivable that the Company estimates will not be collected because of the Company’s customers’ non-payment. The specific
reserve is based on historical trends and current relationships with the Company’s customers and providers. Changes in the
Company’s collection rates can result from a number of factors, including turnover in personnel, changes in the payment policies
or practices of payors, changes in industry rates or pace of reimbursement or changes in the financial health of the Company’s
customers. As a result of past changes in Medicare reimbursement regulations, specifically changes to the qualification processes
and reimbursement levels of consumer power wheelchairs and custom power wheelchairs, the business viability of several of the
Company’s customers had become questionable and several have failed. Further, as National Competitive Bidding is implemented
in additional areas, the number of start-up or new providers who have three-year contracted pricing will increase. The Company’s
reserve for uncollectible receivables has fluctuated in the past and will continue to fluctuate in the future. Changes in rates of
collection, even if they are small in absolute terms, could require the Company to increase its reserve for uncollectible receivables
beyond its current level. The Company has reviewed the accounts receivables, including those receivables financed through DLL,
associated with many of its customers that are most exposed to these issues. If the business viability of certain of the Company’s