Regarding the status of Invacare's negotiations with the FDA and its related remediation program, Blouch stated, ''The Company is continuing to negotiate the terms of the FDA's proposed consent decree of injunction related to the Company's corporate and wheelchair manufacturing facilities in Elyria, Ohio. Simultaneously, the Company continues to make significant progress on its quality systems remediation. Throughout the remediation, the Company has engaged subject matter experts to assess the compliance of its new quality processes during the development and implementation stages to ensure they are in line with the FDA's Quality System Regulation. At this point, the Company is confident that it will initiate its third-party expert certification audit in December, and the Company expects it to be completed in the first quarter of 2013. The expert certification audit will be followed by an FDA re-inspection.
''I am incredibly proud of the Invacare associates who have dedicated an enormous amount of time and energy to ensure Invacare has a sustainable and compliant quality system. These new processes are making Invacare, which is already the industry leader, an even stronger Company. Invacare's future opportunities are compelling, as evidenced by positive demographic trends driving the markets that the Company serves, and its long-term globalization strategy to harmonize global product lines and reduce complexity thereby returning the Company to high single-digit operating margin.''
HIGHLIGHTS FOR THE THIRD QUARTER
- Earnings per share on a GAAP basis were $0.09 as compared to earnings per share of $0.40 last year.
- Adjusted earnings per share (a) decreased 64% for the quarter to $0.21 versus $0.59 last year. Third quarter 2012 adjusted earnings were negatively impacted by incremental regulatory and compliance costs related to quality systems improvements of approximately $0.13 per share ($4.0 million after-tax expense).
- Free cash flow (c) for the quarter was $15.6 million as compared to $25.0 million in the third quarter last year.
- Net sales for the quarter decreased 0.8% while organic net sales increased 2.2%, compared to the third quarter of last year.
- Adjusted EBITDA (d) was $23.5 million for the quarter versus $40.2 million for the same period last year.
- Debt outstanding for the quarter decreased by $8.1 million, resulting in a ratio of debt to adjusted EBITDA (d) of 2.2, compared to 2.0 at the third quarter of last year.
CONSOLIDATED RESULTSEarnings per share on a GAAP basis for the third quarter of 2012 were $0.09 ($2.9 million net earnings) as compared to earnings per share for the same period last year of $0.40 ($12.8 million net earnings). Net earnings for the current quarter were negatively impacted by incremental regulatory and compliance costs related to quality systems improvements of $0.19 per share ($6.2 million after-tax expense, applying U.S. GAAP effective annualized tax rate) and charges related to restructuring of $0.04 per share ($1.1 million after-tax expense). Net earnings for the third quarter of 2011 were unfavorably impacted by early debt extinguishment charges of $0.23 per share ($7.5 million after-tax expense).
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