On the Surface

Our success depends, in part, on our ability to design, manufacture, distribute and achieve market acceptance of new products with higher
functionality and lower costs.
Many of our Customers operate businesses characterized by technological change, product innovation and evolving industry
standards. Price is a key consideration in their purchasing decisions. To successfully compete, we must continue to design, develop, and
improve innovative products. We also must achieve market acceptance of and effectively distribute those products, and reduce production
costs. Our business, performance, value, financial condition, and results of operations might be adversely affected if our competitors’
product development capabilities become more effective, if they introduce new or improved products that displace our products or gain
market acceptance before ours, or if they begin to produce and sell products at lower prices.
We are subject to extensive regulatory requirements and must receive and maintain regulatory clearance or approval for many products and
operations. Failure to receive or maintain, or delays in receiving, clearance or approvals may hurt our revenues, profitability, financial condition or
value.
Our operations are subject to extensive regulation in both the United States and in other countries where we do business.
Government regulation applies to nearly all aspects of testing, manufacturing, safety, labeling, storing, recordkeeping, reporting, promoting,
distributing, and importing or exporting of medical devices, products, and services. In general, unless an exemption applies, a sterilization,
decontamination or medical device or other product must receive regulatory approval or clearance before it can be marketed or sold.
Modifications to existing products or the marketing of new uses for existing products also may require regulatory approvals, approval
supplements or clearances. If we are unable to obtain any required approvals, approval supplements or clearances for any modification to a
previously cleared or approved device, we may be required to cease manufacturing or recall such modified device until such time as
appropriate clearance or approval is obtained.
Regulatory agencies may refuse to grant approval or clearance, or review and disagree with our decision that regulatory approval
is not required. Regulatory submissions may require the provision of additional clinical or pre-clinical data and may be time consuming and
costly. Regulatory agencies may also change policies, adopt additional regulations, or revise existing regulations, each of which could prevent
or delay approval or clearance of devices, or could impact our ability to market a previously cleared or approved device. Refer also to the
“Risk Factor” below titled, “We may be adversely affected by product liability claims or other legal or regulatory compliance matters,” and
to Part I, Item 3, “Legal Proceedings” for further information.
Our failure to comply with the regulatory requirements of the FDA or other applicable regulatory requirements in the United
States or elsewhere might subject us to administratively or judicially imposed sanctions. These sanctions include warning letters, fines, civil
penalties, criminal penalties, injunctions, debarment, product seizure or detention, product recalls and total or partial suspension of
production. In many foreign countries, sales of our products are subject to extensive regulations that are comparable to those of the FDA.
In Europe, our products are regulated primarily by country and community regulations of those countries within the European Economic
Area and must conform to the requirements of those authorities.
The failure to receive, or delays in the receipt of, relevant United States or international qualifications could have a material
adverse affect on our business, performance, value, financial condition and results of operations.
Consolidations among our health care and pharmaceutical Customers may result in a loss of Customers or more significant pricing pressures.
A number of our Customers have consolidated. These consolidations are due in part to health care cost reduction measures
initiated by competitive pressures as well as legislators, regulators and third-party payors. In an effort to attract Customers, some of our
competitors have also reduced production costs and lowered prices. This has resulted in greater pricing pressures on us and in some cases
loss of Customers. Additional consolidations could result in a loss of Customers or more significant pricing pressures.
If our cost reduction and restructuring efforts are ineffective, our revenues and profitability may be hurt.
We have undertaken various cost reduction and restructuring activities, including the restructuring activities announced in January
2006 and, in particular, the transfer of our Erie, Pennsylvania manufacturing operations to Mexico. More recently, on March 31, 2008 we
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