Invacare 2012 Annual Report Download - page 24

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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 agreed to a consent decree of injunction (“consent decree”) with the U.S. Food and Drug
Administration (“FDA”), the effects of which are costly to the company and could result in adverse
consequences to the company’s business.
The consent decree, which was filed as an exhibit to the company’s Form 8-K filed on December 20, 2012,
became effective December 21, 2012. The injunction limits the company’s manufacture and distribution of
custom power and manual wheelchairs, wheelchair components and wheelchair sub-assemblies at or from its
Taylor Street manufacturing facility. The decree also temporarily limits design activities related to wheelchairs
and power beds that take place at the impacted Elyria, Ohio facilities. However, the company is entitled to
continue to produce from the Taylor Street manufacturing facility certain medically necessary products, as well
as ongoing replacement, service and repair of products already in use, under terms delineated in the consent
decree and is able to fulfill purchase orders and quotes that were in the company’s order fulfillment system prior
to the effective date of the decree. Under the terms of the consent decree, in order to resume full operations at the
impacted facilities, the company must successfully complete a third-party expert certification audit and receive
written notification from the FDA. The certification audit is comprised of three distinct reports, which the
company expects will allow it to serially resume certain activities while it continues to bring the remaining
aspects of its quality systems into compliance. The expert certification audit will be followed by an FDA
inspection of the company’s compliance with the quality system regulations. The three audit reports include:
• First, the third-party expert will inspect the qualification and validation procedures and
documentation for equipment processes at the Taylor Street facility. The third-party expert will
submit its report to the FDA, and when it is approved in writing by the FDA, the company will be
permitted to resume the manufacturing of components and parts in its Taylor Street facility for
devices produced by other Invacare facilities.
• Second, the third-party expert will review the company’s design control systems at the impacted
facilities. When the FDA reviews and approves the third-party expert’s report with respect to the
company’s design control systems, the company will be able to resume design activities for
wheelchairs and powered beds at the impacted Elyria facilities.
• The final inspection by the third-party expert will be a comprehensive review of the company’s
compliance with the FDA’s quality system regulation at the two impacted facilities. This audit
will be followed by an FDA inspection. After the company receives a written notification from
FDA, the company may resume full operations at the two impacted facilities.
As noted above, each of the three audits will result in a third-party expert report that will then be reviewed
by the FDA which will complete its own review procedures. Once satisfied with the company’s compliance, the
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