Invacare 2006 Annual Report Download - page 52

by approximately $2,292,000 and by approximately $5,588,000 if the company’s new Refinancing had been in
effect as of December 31, 2006. Additionally, the company operates internationally and, as a result, is exposed to
foreign currency fluctuations. Specifically, the exposure results from intercompany loans and third party sales or
payments. In an attempt to reduce this exposure, foreign currency forward contracts are utilized. The company does
not believe that any potential loss related to these financial instruments would have a material adverse effect on the
company’s financial condition or results of operations.
Item 8. Financial Statements and Supplementary Data.
Reference is made to the Report of Independent Registered Public Accounting Firm, Consolidated Balance
Sheet, Consolidated Statement of Operations, Consolidated Statement of Cash Flows, Consolidated Statement of
Shareholders’ Equity, Notes to Consolidated Financial Statements and Financial Statement Schedule, which appear
on pages FS-1 to FS-38 of this Annual Report on Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures
As of December 31, 2006, an evaluation was performed, under the supervision and with the participation of the
company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of
the design and operation of the company’s disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)). Based on that evaluation, the company’s management, including the Chief
Executive Officer and Chief Financial Officer, concluded that the company’s disclosure controls and procedures
were effective as of December 31, 2006, in ensuring that information required to be disclosed by the company in the
reports it files and submits under the Exchange Act is (1) recorded, processed, summarized and reported, within the
time periods specified in the Commission’s rules and forms and (2) accumulated and communicated to the
company’s management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate to
allow for timely decisions regarding required disclosure.
(b) Management’s Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining a system of adequate internal control over
financial reporting that provides reasonable assurance that assets are safeguarded and that transactions are
authorized, recorded and reported properly. The system includes self-monitoring mechanisms; regular testing
by the company’s internal auditors; a Code of Conduct; written policies and procedures; and a careful selection and
training of employees. Actions are taken to correct deficiencies as they are identified. An effective internal control
system, no matter how well designed, has inherent limitations — including the possibility of the circumvention or
overriding of controls — and therefore can provide only reasonable assurance that errors and fraud that can be
material to the financial statements are prevented or would be detected on a timely basis. Further, because of
changes in conditions, internal control system effectiveness may vary over time.
Management’s assessment of the effectiveness of the company’s internal control over financial reporting is
based on the Internal Control — Integrated Framework published by the Committee of Sponsoring Organizations
of the Treadway Commission.
In management’s opinion, internal control over financial reporting is effective as of December 31, 2006.
The company’s independent registered public accounting firm, Ernst & Young LLP, audited management’s
assessment of internal control over financial reporting and, based on that audit, issued an attestation report regarding
management’s assessment, which is included in this Annual Report on Form 10-K.
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