Invacare 2014 Annual Report Download - page 30

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measures to protect its intellectual property, but effective intellectual property protection may not be available in all places that
the Company sells its products or services, particularly in certain foreign jurisdictions. In addition, the Company uses nondisclosure,
confidentiality agreements and invention assignment agreements with many of its employees, and nondisclosure and confidentiality
agreements with certain third parties, in an effort to help protect its proprietary technology and know-how. If these agreements
are breached or the Company's intellectual property is otherwise misappropriated, the Company may have to rely on litigation to
enforce its intellectual property rights. If any of these measures are unsuccessful in protecting the Company's intellectual property,
the Company's business may be affected adversely.
In addition, the Company may face claims of infringement that could interfere with its ability to use technology or other
intellectual property rights that are material to the Company's business operations. In the event that a claim of infringement against
the Company is successful, the Company may be required to pay royalties or license fees to continue to use technology or other
intellectual property rights that the Company was using, or the Company may be unable to obtain necessary licenses from third
parties at a reasonable cost or within a reasonable time. If the Company is unable to obtain licenses on reasonable terms, it may
be forced to cease selling or using the products that incorporate the challenged intellectual property, or to redesign or, in the case
of trademark claims, rename its products to avoid infringing the intellectual property rights of third parties, which may not be
possible, or if possible, may be time-consuming. Any litigation of this type, whether successful or unsuccessful, could result in
substantial costs to the Company and adversely affect the Company's business and financial condition.
The Company also holds patent and other intellectual property licenses from third parties for some of its products and on
technologies that are necessary in the design and manufacture of some of the Company's products. The loss of these licenses
could prevent the Company from, or could cause additional disruption or expense in, manufacturing, marketing and selling these
products, which could harm the Company's business.
The Company’s research and development and manufacturing processes are subject to federal, state, local and foreign
environmental requirements.
The Company’s research and development and manufacturing processes are subject to federal, state, local and foreign
environmental requirements, including requirements governing the discharge of pollutants into the air or water, the use, handling,
storage and disposal of hazardous substances and the responsibility to investigate and clean up contaminated sites. Under some
of these laws, the Company also could be held responsible for costs relating to any contamination at the Company’s past or present
facilities and at third-party waste disposal sites. These could include costs relating to contamination that did not result from any
violation of law and, in some circumstances, contamination that the Company did not cause. The Company may incur
significant expenses relating to the failure to comply with environmental laws. The enactment of stricter laws or regulations, the
stricter interpretation of existing laws and regulations or the requirement to undertake the investigation or remediation of currently
unknown environmental contamination at the Company’s own or third-party sites may require the Company to make additional
expenditures, which could be material.
Since the Company’s ability to obtain further financing may be limited, the Company may be unable to make strategic
acquisitions.
The Company’s business plans historically included identifying, analyzing, acquiring, and integrating other strategic
businesses. There are various reasons for the Company to acquire businesses or product lines, including providing new products
or new manufacturing and service capabilities, to add new customers, to increase penetration with existing customers, and to
expand into new geographic markets. The provisions of the New Credit Agreement prevent acquisitions unless the Company is
able to negotiate and obtain amendments with regard to those provisions. If the Company is unable to obtain the necessary financing,
it may miss opportunities to grow its business through strategic acquisitions.
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.
Additional tax expense or additional tax exposures could affect the Company's future profitability and cash flow.
The Company is subject to income taxes in both the United States and various non-U.S. jurisdictions. The domestic and
international tax liabilities are dependent upon the distribution of income among these different jurisdictions. The Company's tax
expense includes estimates of additional tax which may be incurred for tax exposures and reflects various estimates and assumptions.
In addition, the assumptions include assessments of future earnings of the Company that could impact the valuation of its deferred
tax assets. The Company’s future results of operations could be adversely affected by changes in the effective tax rate as a result
of a change in the mix of earnings in countries with differing statutory tax rates, changes in the overall profitability of the Company,
changes in tax legislation and rates, changes in generally accepted accounting principles, changes in the valuation of deferred tax