Invacare 2011 Annual Report Download - page 32

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Lower cost imports could negatively impact the company’s profitability.
Competition from lower cost imports sourced from Asia may negatively impact the company’s sales
volumes. In the past, competition from certain of these products has caused the company to lower its prices,
cutting into the company’s profit margins and reducing the company’s overall profitability.
The company’s success depends on the company’s ability to design, manufacture, distribute and achieve
market acceptance of new products with higher functionality and lower costs.
The company sells products to customers primarily in markets that are characterized by technological
change, product innovation and evolving industry standards, yet in which product price is increasingly a primary
consideration in customers’ purchasing decisions. The company is continually engaged in product development
and improvement programs. The company must continue to design and improve innovative products, effectively
distribute and achieve market acceptance of those products, and reduce the costs of producing the company’s
products, in order to compete successfully with the company’s competitors. If competitors’ product development
capabilities become more effective than the company’s product development capabilities, if competitors’ new or
improved products are accepted by the market before the company’s products or if competitors are able to
produce products at a lower cost and thus offer products for sale at a lower price, the company’s business,
financial condition and results of operation could be adversely affected.
Failure to properly manage the distribution of the company’s products may result in reduced revenue and
profitability.
The company uses a variety of distribution methods to sell its products and services. The company’s
distribution network includes various customers such as specialized home health care providers and extended
care facilities, hospital and HMO-based stores, home health agencies, mass merchandisers and the Internet. As
the company reaches more customers worldwide through an increasing number of new distribution channels,
inventory management becomes more challenging. If the company is unable to properly manage and balance
inventory levels and potential conflicts among these various distribution methods, its operating results could be
harmed.
The company’s business strategy relies on certain assumptions concerning demographic trends that impact
the market for its products. If these assumptions prove to be incorrect, demand for the company’s products
may be lower than expected.
The company’s ability to achieve its business objectives is subject to a variety of factors, including the
relative increase in the aging of the general population. The company believes that these trends will increase the
need for its products. The projected demand for the company’s products could materially differ from actual
demand if the company’s assumptions regarding these trends and acceptance of its products by health care
professionals and patients prove to be incorrect or do not materialize. If the company’s assumptions regarding
these factors prove to be incorrect, the company may not be able to successfully implement the company’s
business strategy, which could adversely affect the company’s results of operations. In addition, the perceived
benefits of these trends may be offset by competitive or business factors, such as the introduction of new
products by the company’s competitors or the emergence of other countervailing trends, including lower
reimbursement and pricing.
The company’s debt may limit the company’s flexibility in operating its business.
The company has substantial outstanding indebtedness. This indebtedness requires a significant portion of
cash flow from operations to be dedicated to the payment of principal and/or interest, thus reducing the
company’s ability to use its cash flow to fund its operations, capital expenditures and future business
opportunities. The company’s indebtedness also may limit the company’s ability to react to changes in the
economy or its industry.
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