Invacare 2007 Annual Report Download - page 31

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The company is subject to certain risks inherent in managing and operating businesses in many different
foreign jurisdictions.
The company has significant international operations, including operations in Australia, New Zealand, Asia
and Europe. There are risks inherent in operating and selling products internationally, including:
• difficulties in enforcing agreements and collecting receivables through certain foreign legal systems;
• foreign customers who may have longer payment cycles than customers in the United States;
• tax rates in certain foreign countries that may exceed those in the United States and foreign earnings
that may be subject to withholding requirements;
• the imposition of tariffs, exchange controls or other trade restrictions including transfer pricing
restrictions when products produced in one country are sold to an affiliated entity in another country;
• general economic and political conditions in countries where the company operates or where end users
of the company’s products reside;
• difficulties associated with managing a large organization spread throughout various countries;
• difficulties in enforcing intellectual property rights and weaker intellectual property rights protection in
some countries;
• required compliance with a variety of foreign laws and regulations;
• different regulatory environments and reimbursement systems; and
• differing consumer product preferences.
The company’s revenues and profits are subject to exchange rate fluctuations that could adversely affect its
results of operations or financial position.
Currency exchange rates are subject to fluctuation due to, among other things, changes in local, regional or
global economic conditions, the imposition of currency exchange restrictions and unexpected changes in
regulatory or taxation environments. The functional currency of the company’s subsidiaries outside the United
States is the predominant currency used by the subsidiaries to transact business. Through the company’s
international operations, the company is exposed to foreign currency fluctuations, and changes in exchange rates
can have a significant impact on net sales and elements of cost.
The company uses forward contracts to help reduce its exposure to exchange rate variation risk. Despite the
company’s efforts to mitigate these risks, however, the company’s revenues and profitability may be materially
adversely affected by exchange rate fluctuations. The company also is exposed to market risk through various
financial instruments, including fixed rate and floating rate debt instruments. The company uses interest swap
agreements to mitigate its exposure to interest rate fluctuations, but those efforts may not adequately protect the
company from significant interest rate risks.
Certain provisions of the company’s debt agreements, its charter documents, its shareholder rights plan and
Ohio law could delay or prevent the sale of the company.
Provisions of the company’s debt agreements, its charter documents, its shareholder rights plan and Ohio
law may make it more difficult for a third party to acquire, or attempt to acquire, control of the company even if a
change in control would result in the purchase of shares of the company at a premium to market price. In
addition, these provisions may limit the ability of shareholders of the company to approve transactions that they
may deem to be in their best interest.
Item 1B. Unresolved Staff Comments.
None
I-26