Invacare 2011 Annual Report Download - page 33

The company’s revolving credit facility contains various covenants that limit the company’s ability to
engage in specified types of transactions. In addition, under the company’s revolving credit facility, it is required
to satisfy and maintain specified financial ratios and other financial condition tests. These covenants could
materially and adversely affect the company’s ability to finance its future operations or capital needs.
Furthermore, they may restrict the company’s ability to conduct and expand its business and pursue its business
strategies. The company’s ability to meet these financial ratios and financial condition tests can be affected by
events beyond its control, including changes in general economic and business conditions, or they can be affected
by government enforcement actions, such as, for example, adverse impacts from the consent decree of injunction
required by the FDA.
Armed hostilities, terrorism, natural disasters, political unrest or public health issues could harm the
company’s business.
Armed hostilities, terrorism, natural disasters, political unrest or public health issues, whether in the U.S. or
abroad, could cause damage or disruption to the company, its suppliers or customers, or could create political or
economic instability, any of which could harm the company’s business. These events could cause a decrease in
demand for the company’s products, could make it difficult or impossible for the company to deliver products or
for the company’s suppliers to deliver materials, and could create delays and inefficiencies in the company’s
manufacturing operations.
The company’s Chairman of the Board of Directors and certain members of management own shares
representing a substantial percentage of the company’s voting power and their interests may differ from
other shareholders.
The company has two classes of common stock. The Common Shares have one vote per share and the
Class B Common Shares have 10 votes per share. As of January 1, 2012, the company’s chairman,
Mr. A. Malachi Mixon, III, and certain members of management beneficially owned (including the right to
acquire) approximately 31% of the combined voting power of the company’s Common Shares and Class B
Common Shares and could influence the outcome of a corporate transaction or other matter submitted to the
shareholders for approval, including mergers, consolidations and the sale of all or substantially all of the
company’s assets. They also will have the power to influence or make more difficult a change in control. The
interests of Mr. Mixon and his relatives may differ from the interests of the other shareholders and they may take
actions with which some shareholders may disagree.
The company’s operating results and financial condition could be adversely affected if the company
becomes involved in litigation regarding its patents or other intellectual property rights.
Litigation involving patents and other intellectual property rights is common in the company’s industry, and
other companies within the company’s industry have used intellectual property litigation in an attempt to gain a
competitive advantage. The company in the past has been, and in the future may become, a party to lawsuits
involving patents or other intellectual property. If the company loses any of these proceedings, a court or a
similar foreign governing body could invalidate or render unenforceable the company’s owned or licensed
patents, require the company to pay significant damages, seek licenses and/or pay ongoing royalties to third
parties, require the company to redesign its products, or prevent the company from manufacturing, using or
selling its products, any of which would have an adverse effect on the company’s results of operations and
financial condition. The company in the past has brought, and may in the future also bring, actions against third
parties for infringement of the company’s intellectual property rights. The company may not succeed in these
actions. The defense and prosecution of intellectual property suits, proceedings before the U.S. Patent and
Trademark Office or its foreign equivalents and related legal and administrative proceedings are both costly and
time consuming. Protracted litigation to defend or prosecute the company’s intellectual property rights could
seriously detract from the time the company’s management would otherwise devote to running its business.
Intellectual property litigation relating to the company’s products could cause its customers or potential
customers to defer or limit their purchase or use of the affected products until resolution of the litigation.
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