Invacare 2011 Annual Report Download - page 23

increased security concerns and potential business interruption risks associated with political and/or social
unrest in foreign countries where the Company’s facilities or assets are located; provisions of Ohio law or in the
Company’s debt agreements, shareholder rights plan or charter documents that may prevent or delay a change
in control, as well as the risks described from time to time in Invacare’s reports as filed with the Securities and
Exchange Commission. Except to the extent required by law, we do not undertake and specifically decline any
obligation to review or update any forward-looking statements or to publicly announce the results of any
revisions to any of such statements to reflect future events or developments or otherwise.
Item 1A. Risk Factors.
The company’s business, operations and financial condition are subject to various risks and uncertainties.
One should carefully consider the risks and uncertainties described below, together with all of the other
information in this annual report on Form 10-K and in the company’s other filings with the SEC, before making
any investment decision with respect to the company’s securities. The risks and uncertainties described below
may not be the only ones the company faces. Additional risks and uncertainties not presently known by the
company or that the company currently deems immaterial may also affect the company’s business. If any of these
known or unknown risks or uncertainties actually occur, develop or worsen, the company’s business, financial
condition, results of operations and future growth prospects could change substantially.
The company has received a proposed consent decree of injunction from the U.S. Food and Drug
Administration (“FDA”), the effects of which could be costly to the company and could result in adverse
consequences to the company’s business.
The company received inspectional observations (known as FDA Form-483s) in connection with
inspections in 2010 and 2011 of its corporate facility and its wheelchair manufacturing facility in Elyria, Ohio. In
December 2011, the FDA requested that the company agree to a consent decree of injunction at the company’s
corporate facility and its wheelchair manufacturing facility in Elyria, Ohio, the proposed terms of which would
require the suspension of certain operations at those facilities until they are certified by the company and then
determined by the FDA to be in compliance with FDA quality system regulations. The company is in the process
of negotiating with the FDA on the terms of the consent decree. While the final terms of the consent decree have
not been determined, they will result in the suspension of a portion, which could be substantial, of the company’s
operations at its wheelchair manufacturing facility in Elyria, Ohio. The duration of any such suspension would be
dependent upon the company’s ability to certify its compliance with FDA regulations and then the FDA’s
determination of such compliance. A suspension of operations likely would have adverse effects on the
company’s business, including loss of revenues, harm to the company’s reputation and customer dissatisfaction.
The company also is devoting additional substantial financial, management and engineering resources to making
the systemic improvements necessary to comply with the terms of the consent decree and maintain compliance in
the future. The company’s diversion of resources could impact other areas of the company’s business, such as,
for example, delays in new product development and cost reduction and globalization activities. All of these
factors could result in material adverse consequences to the company’s business, performance, prospects, value,
financial condition, and results of operations.
The company is cooperating with the FDA in attempting to negotiate the final terms of the consent decree.
However, there can be no assurance that negotiations will conclude with mutually agreeable terms of the consent
decree which could lead the FDA to pursue judicial, legal or other enforcement action against the company. Such
enforcement could include requiring restrictions on the manufacturing, sale or distribution of the company’s
products, product recalls, or the payment of fines or penalties, which enforcement could result in material
adverse consequences to the company’s business, performance, prospects, value, financial condition, and results
of operations.
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