Invacare 2012 Annual Report Download - page 38

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• difficulties in maintaining uniform standards, controls, procedures and policies throughout acquired
companies;
• adverse effects on existing business relationships with suppliers or customers;
• the risks associated with the assumption of contingent or undisclosed liabilities of acquisition
targets; and
• ability to generate future cash flows or the availability of financing.
In addition, an acquisition could materially impair the company’s operating results by causing the company
to incur debt or requiring the amortization of acquisition expenses and acquired assets.
The company’s reported results may be adversely affected by increases in reserves for uncollectible
accounts receivable.
The company has a large balance of accounts receivable and has established a reserve for the portion of such
accounts receivable that the company estimates will not be collected because of the company’s customers’ non-
payment. The specific reserve is based on historical trends and current relationships with the company’s
customers and providers. Changes in the company’s collection rates can result from a number of factors,
including turnover in personnel, changes in the payment policies or practices of payors, changes in industry rates
or pace of reimbursement or changes in the financial health of the company’s customers. As a result of past
changes in Medicare reimbursement regulations, specifically changes to the qualification processes and
reimbursement levels of consumer power wheelchairs and custom power wheelchairs, the business viability of
several of the company’s customers had become questionable and several have failed. Further, as National
Competitive Bidding is implemented in additional areas, the number of start-up or new providers who have
three-year contracted pricing will increase. The company’s reserve for uncollectible receivables has fluctuated in
the past and will continue to fluctuate in the future. Changes in rates of collection, even if they are small in
absolute terms, could require the company to increase its reserve for uncollectible receivables beyond its current
level. The company has reviewed the accounts receivables, including those receivables financed through DLL,
associated with many of its customers that are most exposed to these issues. If the business viability of certain of
the company’s customers deteriorates or the company’s credit policies are ineffective in reducing the company’s
exposures to credit risk, additional increases in reserves for uncollectible accounts may be necessary, which
could adversely affect the company’s financial results.
The loss of the services of the company’s key management and personnel could adversely affect its ability to
operate the company’s business.
The company’s future success will depend, in part, upon the continued service of key managerial, research
and development staff and sales and technical personnel. In addition, the company’s future success will depend
on its ability to continue to attract and retain other highly qualified personnel, including personnel experienced in
quality systems and regulatory affairs. If the company is not successful in retaining its current personnel or in
hiring or retaining qualified personnel in the future, the company’s business may be adversely affected. The
company’s future success depends, to a significant extent, on the abilities and efforts of its executive officers and
other members of its management team. If the company loses the services of any of its management team, the
company’s business may be adversely affected.
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.
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