Invacare Corporation Announces Financial Results For The Quarter And Year Ended December 31, 2012

Adjusted net loss per share ^(a) from continuing operations was $0.06 for the fourth quarter of 2012 as compared to adjusted net earnings per share of $0.53 for the fourth quarter of 2011. The adjusted net loss ^(b) for the quarter was $1.9 million versus adjusted net earnings ^(b) of $17.0 million for the fourth quarter of last year. Adjusted net earnings ^(b) for the quarter were negatively impacted primarily by incremental regulatory and compliance costs related to quality system improvements of $3.2 million of after-tax expense ($5.5 million pre-tax expense), reduced gross margin, volume declines and a higher effective tax rate on adjusted pre-tax earnings.

Net sales for the quarter from continuing operations decreased 3.7% compared to the same quarter last year. Organic net sales for the quarter decreased 2.5% over the same period last year, as increases for the Europe and Institutional Products Group (IPG) segments were offset by 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 December 31, 2012 as compared to December 31, 2011, are provided in a table accompanying this release.

Gross margin as a percentage of net sales from continuing operations for the fourth quarter was lower by 2.3 percentage points compared to last year's fourth quarter. The margin decline was principally related to sales mix toward lower margin product lines and lower margin customers, volume declines, increased freight costs and research and development expenses.

SG&A expense from continuing operations increased 11.7% to $105.3 million in the fourth quarter compared to $94.3 million in the fourth quarter last year. Foreign currency translation decreased SG&A expense by 1.1 percentage points. Excluding the positive impact of foreign currency translation ($1.1 million pre-tax expense) and incremental regulatory and compliance costs related to quality system improvements ($5.5 million pre-tax expense), SG&A expense increased by 7.0% compared to the fourth quarter of last year primarily related to increased associate costs partially offset by reduced bad debt expenses.

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