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Invacare Corporation Announces Financial Results For The Third Quarter And First Nine Months Of 2012

Adjusted earnings per share (a) were $0.21 for the third quarter of 2012 as compared to $0.59 for the third quarter of 2011. Adjusted net earnings (b) for the quarter were $6.8 million versus $18.9 million for the third quarter of last year. Adjusted net earnings (b) for the quarter were negatively impacted primarily by incremental regulatory and compliance costs related to quality systems improvements, reduced gross margin and lower net sales, partially offset by decreased interest expense and a slightly lower effective tax rate on adjusted pre-tax earnings.

Net sales for the quarter decreased 0.8% to $453.0 million versus $456.5 million for the same period last year. Organic net sales for the quarter increased 2.2% over the same period last year driven by increases in Europe, Invacare Supply Group (ISG) and Institutional Products Group (IPG) segments, which were offset by declines for the North America/HME and Asia/Pacific segments. Net sales by segment and for the consolidated company, as reported and as adjusted to exclude the impact of foreign currency translation and acquisitions comparing the quarter-end and year-to-date periods ended September 30, 2012 to September 30, 2011, are provided in a table accompanying this release.

Gross margin as a percentage of net sales for the third quarter was lower by 1.8 percentage points compared to last year's third quarter. The margin decline was principally related to sales mix favoring lower margin product lines and lower margin customers, which was partially offset by the favorable impact of an acquisition finalized in the third quarter of 2011.

SG&A expense increased 6.9% to $111.3 million in the third quarter compared to $104.1 million in the third quarter last year. Foreign currency translation decreased SG&A expense by 4.3 percentage points, while the impact of an acquisition increased SG&A expense by 3.1 percentage points. Excluding the impact of foreign currency translation, an acquisition and incremental regulatory and compliance costs related to quality systems improvements ($6.2 million pre-tax expense), SG&A expense increased by 2.2% compared to the third quarter of last year primarily related to increased associate costs.

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