Invacare 2015 Annual Report Download - page 28

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I-22
or secure government acceptance of their products and pricing. Any increase in competition may cause the company to lose market
share or compel the company to reduce prices to remain competitive, which could have a material adverse effect on the company’s
results of operations. The company's failure to recognize changing market demands or a failure to develop or execute a strategy
to meet such changes could also result in a material adverse effect on the company’s results of operations.
The consolidation of health care customers and the company’s competitors could result in a loss of customers or in additional
competitive pricing pressures.
Numerous initiatives and reforms instituted by legislators, regulators and third-party payors to reduce home medical
equipment costs have resulted in a consolidation trend in the home medical equipment industry as well as among the company’s
customers, including home health care providers. In the past, some of the company’s competitors, which may include distributors,
have been lowering the purchase prices of their products in an effort to attract customers. This in turn has resulted in greater pricing
pressures, including pressure to offer customers more competitive pricing terms, and the exclusion of certain suppliers from
important market segments as group purchasing organizations, independent delivery networks and large single accounts continue
to consolidate purchasing decisions for some of the company’s customers. Further consolidation could result in a loss of customers,
increased collectability risks, or increased competitive pricing pressures. In addition, as reimbursement pressures persist in the
U.S. market, the company is beginning to see some customers directly sourcing select lifestyle products to secure a low-cost
advantage.
The company maintains cash balances globally in various financial institutions.
While the company monitors its accounts with financial institutions both domestically and internationally, recovery of funds
cannot be assured in the event the financial institution would fail. In addition, the company may be limited by foreign governments
in the amount and timing of funds to be repatriated from foreign financial institutions. As a result, this could adversely impact the
company's ability to fund normal operations, capital expenditures, or service debt, which could adversely affect the company's
results.
The company is subject to certain risks inherent in managing and operating businesses in many different foreign jurisdictions.
The company has significant international operations, including operations in Australia, Canada, New Zealand, Mexico,
Asia (primarily China) and Europe. There are risks inherent in operating and selling products internationally, including:
• different regulatory environments and reimbursement systems;
• difficulties in enforcing agreements and collecting receivables through certain foreign legal systems;
• foreign customers who may have longer payment cycles than customers in the United States;
• fluctuations in foreign currency exchange rates;
• tax rates in certain foreign countries that may exceed those in the United States and foreign earnings that may be
subject to withholding requirements;
• the imposition of tariffs, exchange controls or other trade restrictions including transfer pricing restrictions when
products produced in one country are sold to an affiliated entity in another country;
• general economic and political conditions in countries where the company operates or where end users of the
company’s products reside;
• government control of capital transactions, including the borrowing of funds for operations or the expatriation of
cash;
• potential adverse tax consequences;
• security concerns and potential business interruption risks associated with political and/or social unrest in foreign
countries where the company’s facilities or assets are located;
• difficulties associated with managing a large organization spread throughout various countries;
• difficulties in enforcing intellectual property rights and weaker intellectual property rights protection in some
countries;
• required compliance with a variety of foreign laws and regulations; and
• differing consumer product preferences.
The factors described above also could disrupt the company’s product manufacturing and assembling operations or its key
suppliers located outside of the United States. For example, the company increasingly relies on its manufacturing and sourcing