Invacare Corporation Announces Financial Results for the Quarter and Year Ended December 31, 2012

  Invacare Corporation Announces Financial Results for the Quarter and Year
  Ended December 31, 2012

Business Wire

ELYRIA, Ohio -- February 8, 2013

Invacare Corporation (NYSE: IVC) today announced its financial results for the
quarter and year ended December31, 2012.

During the fourth quarter of 2012, the Company announced the sale of its
Invacare Supply Group (ISG) medical supplies business, which was completed on
January 18, 2013. Accordingly, the results for the quarter and year ended
December 31, 2012, include the results of ISG as a discontinued operation.
Since ISG was not sold until 2013, the CEO Summary addresses the results of
the continuing operations and Invacare Supply Group as a combined operation
for the year ended December 31, 2012. However, the primary text of the
release, including the consolidated results, focuses on continuing operations.
For more information on the Company's continuing, discontinued and combined
operations, see the detailed condensed consolidated financial statements at
the end of the release.

CEO SUMMARY

Commenting on the Company's focus in 2012, Gerald B. Blouch, President and
Chief Executive Officer, stated, ``2012 was one of the most challenging years
in the Company's history. The year was dominated by our consent decree
negotiations with the United States Food & Drug Administration (FDA).
Negotiations were completed and the consent decree became effective in
December, necessitating a temporary cessation of production at our Taylor
Street wheelchair manufacturing facility to allow time to implement compliance
controls. In addition, over the past two years, most significantly in 2012, we
made a concerted effort to update and implement a comprehensive portfolio of
processes compliant with the FDA's Quality System Regulation. These processes
will be standardized across all of our FDA registered facilities. To
accelerate our progress on the remediation, we engaged third-party medical
device experts and extensively engaged the entire management team. As a
result, we suspended most new product development over the past year, because
the majority of our design engineering team was redeployed to focus on
remediation. The lack of new products coupled with uncertainty among our
customers over Invacare's ability to offer continuous product supply from the
Taylor Street facility resulted in a loss of market share and gross margin
pressure in the North America/Home Medical Equipment (HME) segment last year.”

Blouch continued, ``While our quality systems remediation is subject to
approval by the FDA, we have made significant progress. In order to resume
full operations at the Taylor Street and corporate facilities, the terms of
the consent decree require three expert certification audits followed by a
comprehensive FDA inspection and receipt of the FDA's confirmation of
compliance. The first two of three expert certification audits started in
December and are still in progress. We expect to complete these two
certification audits within the first quarter and complete the third expert
certification audit in the second quarter of 2013. Completing the remediation
and receiving the FDA's approval on the second certification audit related to
design controls will allow us to resume design activities and refocus our
engineering resources on new product development. Introducing new product
solutions to the market will get us back on track to regaining market share
and resuming our globalization program to harmonize core product offerings and
deliver on our long-term goal of $100 million in cost improvements and
re-establish high single-digit operating margins.”

Commenting on Invacare's combined 2012 results, Blouch said, ``Largely as a
result of the aforementioned challenges, as well as the ongoing pressures
primarily in the North America/HME and Asia/Pacific segments, the Company had:

  *Adjusted earnings per share^(a) for the year, including discontinued
    operations, of $0.87 in 2012 compared to $2.05 in 2011;
  *An increase of 0.9% in organic net sales on a combined basis compared to
    last year with strong performances from Europe and the Institutional
    Products Group segments, as well as the discontinued operations of ISG;
    and
  *Free cash flow^(c) of $49.1 million ^ in 2012. Applying the net proceeds
    of $146.6 million from the January 2013 sale of ISG to the December 31,
    2012 debt levels on a pro forma basis, the Company's debt reduction over
    the past five years would have been approximately $500 million, since the
    peak of our total debt outstanding in the first quarter of 2007 of
    approximately $602 million.

Blouch continued, ``In December 2012, we made two positive announcements about
our future. First, our analysis of the final regulations of the Affordable
Care Act's 2.3% excise tax on medical devices indicated that the impact of the
tax on Invacare is expected to be less than $1.5 million annually, as most of
our products are exempt based on the retail exemption. We intend to pass this
increase on to the market. Second, we announced the divestiture of Invacare
Supply Group, our domestic medical supplies business. The sale, which closed
on January 18, 2013, generated net proceeds of $146.6 million that were used
to reduce debt outstanding under the Company's revolving credit facility. This
additional capital capacity will better position us to explore selective niche
acquisitions to accelerate new product development after we have completed our
quality systems remediation.”

Looking forward, Blouch said, ``As difficult a year as this has been, our
quality systems investments will make us an even stronger company and will
facilitate complexity reduction, which will drive the $100 million in
structural benefits that we intend to achieve over the long-term from our
globalization program. While the United States HME industry faces several
challenges, including the second round of National Competitive Bidding where
the bid rates were recently announced, the underlying fundamentals continue to
be compelling. The aging of the population, growing prevalence of chronic
illness and healthcare reform all bode well for the future of our business. We
expect that, after we emerge from the remediation process, we will continue to
strengthen our product portfolio to serve the needs of the market with
innovative and cost-effective solutions, and will restore our profitability to
historic levels.”

                                               
FINANCIAL HIGHLIGHTS FOR THE FOURTH QUARTER
                                                  
                   Three Months Ended             Three Months Ended
                   December 31,                   December 31,
                   2012                           2011
Net Earnings       In Thousands  Per Share       In Thousands  Per Share
(Loss)
Continuing         $  (10,776 )  $   (0.34  )    $  (39,678 )  $   (1.25  )
Operations
Discontinued       3,483        0.11           4,650        0.15       
Operations
Combined           $  (7,293  )  $   (0.23  )    $  (35,028 )  $   (1.10  )
Operations
                                                                 
Significant
Items Affecting
Net Earnings
(Loss) - after
tax
Incremental
Regulatory and     $  5,477       $   0.17
Compliance Costs
                                                            
Adjusted Net
Earnings           In Thousands  Per Share^(a)   In Thousands  Per Share^(a)
(Loss)^(b)
Continuing         $  (1,924  )   $   (0.06  )    $  16,958      $   0.53
Operations
Discontinued       5,439        0.17           4,927        0.15       
Operations
Combined           $  3,515     $   0.11       $  21,885    $   0.69   
Operations
                                                                 
Significant
Items Affecting
Adjusted Net
Earnings
(Loss)^(b) -
after tax
Incremental
Regulatory and     $  3,177       $   0.10
Compliance Costs
                                                                 
Adjusted
EBITDA^(d) * for   $  16,538                      $  44,313
Combined
Operations
                                                                 
Free Cash          $  31,200                      $  28,628
Flow^(c) **
                                                                 

* Includes contribution to Adjusted EBITDA^(d) from the discontinued
operations of ISG of $4,647,000 and $4,356,000 for the quarters ended
December31, 2012 and December31, 2011, respectively.

** Includes impact on Free Cash Flow^(c) from the discontinued operations of
ISG of negative $1,496,000 and positive $569,000 for the quarters ended
December31, 2012 and December31, 2011, respectively.

                                               
FINANCIAL HIGHLIGHTS FOR THE YEAR
                                                  
                   Twelve Months Ended            Twelve Months Ended
                   December 31,                   December 31,
                   2012                           2011
Net Earnings       In Thousands  Per Share       In Thousands  Per Share
(Loss)
Continuing         $  (8,269  )  $   (0.26  )    $  (18,518 )  $   (0.58  )
Operations
Discontinued       10,096       0.32           14,405       0.45       
Operations
Combined           $  1,827     $   0.06       $  (4,113  )  $   (0.13  )
Operations
                                                                 
Significant
Items Affecting
Net Earnings
(Loss) - after
tax
Incremental
Regulatory and     $  22,757      $   0.72
Compliance Costs
                                                            
Adjusted Net
Earnings           In Thousands  Per Share^(a)   In Thousands  Per Share^(a)
(Loss)^(b)
Continuing         $  11,915      $   0.37        $  51,236      $   1.59
Operations
Discontinued       15,834       0.50           14,741       0.46       
Operations
Combined           $  27,749    $   0.87       $  65,977    $   2.05   
Operations
                                                                 
Significant
Items Affecting
Adjusted Net
Earnings
(Loss)^(b) -
after tax
Incremental
Regulatory and     $  14,757      $   0.46
Compliance Costs
                                                                 
Adjusted
EBITDA^(d) * for   $  91,369                      $  148,106
Combined
Operations
                                                                 
Free Cash          $  49,094                      $  80,603
Flow^(c) **
                                                                 

* Includes contribution to Adjusted EBITDA^(d) from the discontinued
operations of ISG of $13,057,000 and $12,470,000 for the fiscal years ended
December31, 2012 and December31, 2011, respectively.

** Includes impact on Free Cash Flow^(c) from the discontinued operations of
ISG of negative $705,000 and negative $126,000 for the fiscal years ended
December31, 2012 and December31, 2011, respectively.

CONSOLIDATED RESULTS FROM CONTINUING OPERATIONS

Net loss per share on a GAAP basis for the fourth quarter of 2012 from
continuing operations, was $0.34 ($10.8 million net loss) as compared to net
loss per share for the same period last year of $1.25 ($39.7 million net
loss). The net loss for the current quarter from continuing operations was
negatively impacted by incremental regulatory and compliance costs related to
quality systems improvements of $0.17 per share ($5.5 million after-tax
expense, applying U.S. GAAP effective annualized tax rate), charges related to
restructuring of $0.24 per share ($7.6 million after-tax expense) and asset
write-downs related to intangible assets of $0.02 per share ($0.7 million
after-tax expense) and positively impacted by $0.06 per share ($2.0 million
tax benefit) resulting from an intraperiod tax allocation associated with
discontinued operations. Net loss for the fourth quarter of 2011 was
unfavorably impacted by asset write-downs related to goodwill and intangible
assets of $1.53 per share ($48.7 million after-tax expense) and restructuring
charges of $0.28 per share ($8.9 million after-tax expense).

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 December31, 2012 as compared to December31, 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.

The Company incurred restructuring charges related to continuing operations in
the fourth quarter of 2012 of $7.6 million after-tax, principally related to
severance costs in the North America/HME and Asia/Pacific segments, as well as
asset write-downs related to facility closures in the Europe and Asia/Pacific
segments, compared to restructuring charges related to continuing operations
of $8.9 million after-tax in 2011, principally related to severance and other
facility closure costs. These restructuring charges are excluded from adjusted
earnings per share^(a).

Net loss per share on a GAAP basis for the fiscal year 2012 was $0.26 ($8.3
million net loss) as compared to the net loss per share for 2011 of $0.58
($18.5 million net loss). The net loss for the year ended December31, 2012
was negatively impacted by incremental regulatory and compliance costs related
to quality system improvements of $0.72 per share ($22.8 million after-tax
expense), a discrete 2012 tax expense related to prior years of $0.30 per
share ($9.3 million tax expense) which is a non-cash charge in the current
year for a matter that is under audit and being contested by the Company,
charges related to restructuring from continuing operations of $0.36 per share
($11.3 million after-tax expense), $0.01 per share ($0.3 million after-tax
expense) for early debt extinguishment charges and positively impacted by
$0.18 ($5.8 million tax benefit) resulting from an intraperiod tax allocation
associated with discontinued operations. The net loss for 2011 included asset
write-downs related to goodwill and intangible assets of $1.52 per share
($48.7 million after-tax expense), an expense of $0.76 per share ($24.2
million after-tax expense) for early debt extinguishment charges, and
restructuring charges from continuing operations of $0.32 per share ($10.3
million after-tax expense). The net loss for 2011 was positively impacted by
$0.15 per share ($4.9 million tax benefit) as a result of a tax settlement in
Germany.

Adjusted earnings per share^(a) from continuing operations were $0.37 for the
year ended December31, 2012 as compared to $1.59 for 2011. Adjusted net
earnings^(b) from continuing operations for 2012 were $11.9 million versus
$51.2 million in 2011. The decline in adjusted net earnings^(b) was primarily
driven by increased SG&A expenses attributable to incremental regulatory and
compliance costs related to quality system improvements of $14.8 million
after-tax expense ($22.8 million pre-tax expense), reduced gross margin and a
slightly higher effective tax rate on adjusted pre-tax earnings.

Net sales from continuing operations for the year ended December31, 2012
decreased 3.1% to $1.46 billion versus $1.50 billion for the same period last
year while organic net sales decreased 1.7% as a result of increases for the
Europe and IPG segments being partially offset by declines for the North
America/HME and Asia/Pacific segments.

NORTH AMERICA/HOME MEDICAL EQUIPMENT (HME)

For the quarter ended December31, 2012, North America/HME net sales decreased
8.8% to $165.8 million compared to $181.8 million in the same period last
year. Organic net sales decreased 9.0% compared to last year driven by
declines in the three major product categories of lifestyle, mobility and
seating and respiratory therapy. Many of the drivers of the sales decline in
the third quarter carried into the fourth quarter, including external
pressures on the Company's customers relating to the second round of National
Competitive Bidding, as well as prepayment reviews and post-payment audits
from Medicare and Medicaid. On December 21, 2012, the United States District
Court approved the terms of the Company's consent decree of injunction with
the FDA related to its corporate and Taylor Street wheelchair manufacturing
facilities in Elyria, Ohio. In order to bring the Company into immediate
compliance with the terms of the decree, the Company suspended production at
its Taylor Street facility for two days in December in order to take an
inventory of all products that were in production the day the consent decree
became effective. The Company then slowly began releasing product from the
facility in order to ensure its new consent decree compliance protocols were
effective. The sales decline for the quarter also was impacted by lack of new
products and general uncertainty relating to the consent decree for a
significant portion of the quarter. Loss before income taxes for the fourth
quarter of 2012 was $1.8 million, excluding restructuring charges of $2.0
million and intangible impairment charges of $0.1 million, as compared to
earnings before income taxes of $15.0 million in the fourth quarter of 2011,
excluding goodwill and intangible impairment charges of $8.5 million and
restructuring charges of $4.4 million. The loss before income taxes for the
quarter was primarily a result of the incremental costs mentioned previously
related to quality system improvements, volume declines, unfavorable sales mix
toward lower margin customers and unfavorable product mix away from higher
margin products. These factors were partially offset by reduced bad debt
expense.

For the year ended December31, 2012, North America/HME net sales decreased
7.2% to $693.3 million compared to $746.8 million in the same period last
year. Organic net sales decreased 7.1% compared to last year primarily driven
by declines in all three product categories. Earnings before income taxes for
the year ended December31, 2012 were $7.9 million, excluding restructuring
charges of $4.2 million and intangible impairment charges of $0.1 million, as
compared to earnings before income taxes of $48.7 million last year, excluding
goodwill and intangible impairment charges of $8.5 million and restructuring
charges of $4.8 million. The reduction in 2012 earnings before income taxes is
primarily a result of the incremental costs mentioned previously related to
quality systems improvements, volume declines, unfavorable sales mix toward
lower margin customers and unfavorable product mix away from higher margin
products. These factors were partially offset by reduced bad debt expense and
reduced associate costs.

INSTITUTIONAL PRODUCTS GROUP (IPG)

IPG net sales for the fourth quarter increased by 4.3% to $36.0 million
compared to $34.5 million last year. Organic net sales increased 4.1% driven
primarily by strong net sales for interior design projects for long-term care
facilities, dialysis chairs and therapeutic support surfaces partially offset
by declines in institutional beds. Earnings before income taxes were $3.0
million, excluding intangible impairment charges of $0.7 million, compared to
$1.7 million in the fourth quarter of 2011, excluding intangible impairment
charges of $0.6 million and restructuring charges of $0.1 million, as volume
increases and favorable foreign currency transactions were partially offset by
increased freight expense and research and development costs. The increased
research and development expenses for this segment included the costs of
contracted engineering for negative pressure wound therapy products.

For the year ended December31, 2012, IPG net sales increased by 19.8% to
$148.6 million compared to $124.1 million last year. Organic net sales
increased 6.7% with increases in interior design projects for long-term care
facilities and dialysis chairs, which were partially offset by declines in
institutional beds. Earnings before income taxes for the year ended
December31, 2012 were $11.7 million, excluding intangible impairment charges
of $0.7 million, as compared to $13.1 million last year, excluding intangible
impairment charges of $0.6 million and restructuring charges of $0.1 million.
The increase in earnings before income taxes resulted as increased SG&A
expenses, primarily in associate costs, were partially offset by volume
increases and the benefit of an acquisition finalized during the third quarter
of 2011.

EUROPE

For the fourth quarter, European net sales increased 4.1% to $144.8 million
versus $139.2 million for the fourth quarter of last year.Organic net sales
for the quarter increased 7.9%, principally due to increases across all three
product categories. For the fourth quarter of 2012, earnings before income
taxes decreased to $9.3 million, excluding restructuring charges of $1.3
million, as compared to $12.4 million last year, excluding restructuring
charges of $4.2 million and intangible impairment charges of $0.4 million.The
decrease in earnings before income taxes was largely attributable to an
unfavorable sales mix toward lower margin product lines and lower margin
customers, higher warranty expense and increased SG&A expenses, primarily in
associate costs. These factors were partially offset by volume increases.

For the year ended December31, 2012, European net sales increased 0.4% to
$546.5 million versus $544.5 million last year.Organic net sales increased
7.0%, principally due to increases in respiratory therapy products partially
offset by declines in lifestyle and mobility and seating products. For the
year ended December31, 2012, earnings before income taxes decreased to $33.6
million, excluding restructuring charges of $2.1 million, as compared to $39.5
million, excluding restructuring charges of $5.5 million and intangible
impairment charges of $0.4 million last year.The decrease in earnings before
income taxes was largely attributable to an unfavorable sales mix toward lower
margin product lines and lower margin customers, pricing pressure, primarily
in lifestyle and power mobility products, and increased warranty and associate
costs. These factors were partially offset by volume increases.

ASIA/PACIFIC

For the fourth quarter, Asia/Pacific net sales decreased 26.3% to $13.8
million versus $18.7 million last year.Organic net sales for the quarter
decreased 29.3%, caused by net sales declines in all three businesses in the
segment. The Company's Australian and New Zealand distribution businesses
experienced declines in mobility and seating and lifestyle products. The
decline in the Company's subsidiary which produces microprocessor controllers
was primarily related to its contract manufacturing business for companies
outside of the healthcare industry, and to a lesser extent a decline in
electronic components for mobility products. For the fourth quarter, loss
before income taxes was $3.4 million, excluding restructuring charges of $4.3
million, as compared to earnings before income taxes of $1.1 million last
year, excluding goodwill and intangible impairment charges of $39.9 million
and restructuring charges of $0.2 million.The decrease in earnings before
income taxes is primarily attributable to the reduction in net sales volumes
for each of the businesses in this segment. As disclosed in the Company's
third quarter 2012 Form 10-Q, the Company's management team began to
restructure the Company's operations in the Asia/Pacific segment designed to
return the segment to profitability. In Australia, the Company consolidated
offices/warehouses, decreased staffing and exited various activities while
returning to a focus on distribution. At the Company's subsidiary which
produces microprocessor controllers, the Company plans to exit the contract
manufacturing business for companies outside of the healthcare industry.

For the year ended December31, 2012, Asia/Pacific net sales decreased 22.3%
to $67.0 million versus $86.2 million last year.Organic net sales decreased
23.0%, caused by net sales declines in all three businesses in the segment.
The year-to-date loss before income taxes was $6.8 million, excluding
restructuring charges of $5.0 million, as compared to earnings before income
taxes of $5.0 million last year, excluding restructuring charges of $0.2
million and goodwill and intangible impairment charges of $39.9 million.The
decrease in earnings before income taxes is primarily attributable to the
reduction in net sales volumes for each of the businesses in this segment.

DISCONTINUED OPERATION - INVACARE SUPPLY GROUP (ISG)

ISG net sales for the fourth quarter increased 26.0% to $95.2 million compared
to $75.5 million for the same period last year. The net sales increase
occurred in diabetic, enterals, incontinence and urological product
categories. Earnings before income taxes for the fourth quarter were $5.5
million as compared to $5.0 million last year, excluding restructuring charges
of $0.3 million, as volume increases were partially offset by lower gross
margins and increased associate costs.

For the year ended December31, 2012, ISG net sales increased 14.1% to $341.6
million compared to $299.5 million for the same period last year. The net
sales increase occurred in diabetic, incontinence, urological, ostomy and
enteral products. Earnings before income taxes for the year ended December31,
2012 were $16.2 million as compared to $15.1 million last year, excluding
restructuring charges of $0.3 million, as volume increases were partially
offset by higher freight costs and increased bad debt expense.

Federal tax expense amounts for the discontinued operation ISG include a
federal intraperiod tax allocation of $2.0 million and $5.8 million for the
three and twelve months ended December31, 2012, respectively, which increased
tax expense for ISG offset by an equal tax benefit allocated to continuing
operations. The amounts offset for the combined net earnings and net earnings
per share of the Company on a GAAP basis.

FINANCIAL CONDITION

Total debt outstanding was $238.1 million as of December31, 2012, as compared
to $269.5 million as of December31, 2011 (including the convertible debt
discount, which reduced convertible debt and increased equity by $3.3 million
as of December31, 2012 and by $4.1 million as of December31, 2011). The
Company's total debt outstanding as of December31, 2012 consisted of $217.5
million drawn on the revolving credit facility, $13.4 million in convertible
debt and $7.2 million of other debt.

The Company reported $31.2 million of free cash flow^(c) in the fourth quarter
of 2012 as compared to $28.6 million of free cash flow^(c) in the fourth
quarter of 2011. The fourth quarter 2012 free cash flow^(c) was positively
impacted by cash flow benefits from accounts receivable and accrued expenses
partially offset by an increase in inventory and a decline in accounts
payable. Free cash flow^(c) for the year ended December31, 2012 was $49.1
million compared to $80.6 million for the year ended December31, 2011. The
contribution to free cash flow from the discontinued operation ISG is shown in
the table included with this release.

The Company's ratio of debt to adjusted EBITDA^(d) was 2.7 as of December31,
2012 compared to 1.8 as of December31, 2011.

Days sales outstanding associated with continuing operations were 49 days as
of December31, 2012 compared to 50 days as of December31, 2011. Inventory
turns from continuing operations as of December31, 2012 were 4.6, compared to
5.0 as of December31, 2011.

OUTLOOK

In 2013, the Company expects continued pressure on its organic net sales, free
cash flow^(c) and operating profitability. The key drivers of these pressures
include the ongoing quality systems remediation costs, the related diversion
of resources, and the limited production at its Taylor Street wheelchair
manufacturing facility in Elyria, Ohio, due to the consent decree. In
addition, the Company has been unable to invest in the development or
introduction of new products while it focuses its engineering resources on its
quality systems remediation. Further, the consent decree enjoins the Company
from design activities related to wheelchairs and power beds at its corporate
facility until it receives approval from the FDA on the second expert
certification audit. As previously announced, the Company may continue
manufacturing at Taylor Street with certain documentation requirements in
cases of existing orders, medical necessity and repair and replacement of
products currently in use. As the Company educates customers on the new
documentation requirements, particularly the more detailed verification of
medical necessity documentation for new wheelchairs and/or seating systems,
the Company expects to experience slowness in the fulfillment of new
wheelchairs from the Taylor Street facility. The Company is focused on
completing its expert certification audits as quickly and efficiently as
possible.

The Company also is facing external challenges within its North America/HME
segment. In addition to customers coping with prepayment reviews and
post-payment audits of power mobility devices from Medicare and Medicaid, the
Centers for Medicare and Medicaid Services recently announced the bid rates
for the second round of National Competitive Bidding. As mentioned in the
Company's third quarter 2012 earnings announcement, it expects continued
pressure on net sales as providers in the 91 metropolitan statistical areas
deal with finalizing the contracting process for the successful bidders.
Looking forward, the Company is positioned to assist HME providers in managing
these price reductions, and it will remain judicious in its extension of
credit to customers in these areas. The Company has worked closely with
providers over the last two years in preparation for National Competitive
Bidding, offering programs to assist them in improving their operational
efficiency, as well as products that serve to expand market opportunities.

^(a) Adjusted net earnings (loss) per share (EPS) is a non-GAAP financial
measure which is defined as adjusted net earnings (loss)^(b) from continuing
and/or discontinued operations (as noted) divided by adjusted weighted average
shares outstanding - assuming dilution, excluding the dilutive impact of the
convertible debt.The dilutive effect of shares necessary to settle the
conversion spread on the Company's convertible debentures is included in the
calculation of GAAP earnings per share. The share adjustment is 0 shares for
the three and twelve months ended 2012 and 0 and 154,000 shares for the three
and twelve months ended 2011. The Company excludes the shares from the
calculation of adjusted earnings per share, as it intends to satisfy any
conversion spread using cash, as opposed to stock. It should be noted that the
Company's definition of Adjusted EPS may not be comparable to similar measures
disclosed by other companies because not all companies and analysts calculate
Adjusted EPS in the same manner. The Company believes that these types of
exclusions are also recognized by the industry in which it operates as
relevant in computing Adjusted EPS as a supplementary non-GAAP financial
measure used by financial analysts and others in the Company's industry to
meaningfully evaluate operating performance. This financial measure is
reconciled to the related GAAP financial measure in the “Reconciliation” table
included after the Condensed Consolidated Statement of Operations included in
this press release.

^(b) Adjusted net earnings (loss) is a non-GAAP financial measure which is
defined as net earnings (loss) from continuing and/or discontinued operations
(as noted) excluding the impact of restructuring charges ($7.7 million and
$11.4 million pre-tax for the three and twelve months ended December31, 2012
compared to $9.1 million and $10.9 million pre-tax for the three and twelve
months ended December31, 2011), amortization of the convertible debt discount
recorded in interest ($0.1 million and $0.6 million pre-tax for the three and
twelve months ended December31, 2012 compared to $0.1 million and $1.6
million pre-tax for the three and twelve months ended December31, 2011),
asset write-downs related to goodwill and intangibles ($0.8 million pre-tax
for the three and twelve months ended December31, 2012 compared to $49.5
million pre-tax for the three and twelve months ended December31, 2011), loss
on debt extinguishment including debt finance charges and fees ($0.0 and $0.3
million pre-tax for the three and twelve months ended December31, 2012
compared to $0.0 million and $24.2 million pre-tax for the three and twelve
months ended December31, 2011), a discrete fourth quarter tax expense related
to prior years for a foreign tax matter under audit ($0.2 million and $9.3
million for the three and twelve months ended December31, 2012), a one-time
benefit as a result of a tax settlement in Germany ($4.9 million for the
twelve months ended December31, 2011) and changes in tax valuation
allowances.This financial measure is reconciled to the related GAAP financial
measure in the “Reconciliation” table included after the Condensed
Consolidated Statement of Operations included in this press release.

^(c) Free cash flow is a non-GAAP financial measure which is defined as net
cash provided (used) by operating activities, excluding net cash flow impact
related to restructuring activities, less purchases of property and equipment,
net of proceeds from sales of property and equipment.Management believes that
this financial measure provides meaningful information for evaluating the
overall financial performance of the Company and its ability to repay debt or
make future investments (including, for example, acquisitions). This financial
measure is reconciled to the related GAAP financial measure in the
“Reconciliation” table included after the Condensed Consolidated Balance
Sheets included in this press release.

^(d)Adjusted EBITDA (adjusted earnings (loss) before interest, taxes,
depreciation and amortization)is a non-GAAP financial measure which is
defined as net earnings (loss) from continuing and/or discontinued operations
(as noted) excluding the following: interest expense, income taxes (benefit),
depreciation and amortization, as further adjusted to exclude restructuring
charges as adjusted for debt covenant limitations regarding cash charges ($2.6
million for the three and twelve months ended December31, 2012), amortization
of the convertible debt discount (recorded in interest expense), bank fees,
stock option expense, asset write-downs for goodwill and intangible assets and
loss on debt extinguishment including debt finance charges and fees. It should
be noted that the Company's definition of Adjusted EBITDA may not be
comparable to similar measures disclosed by other companies because not all
companies and analysts calculate Adjusted EBITDA in the same manner. The
Company believes that these types of exclusions are also recognized by the
industry in which it operates as relevant in computing Adjusted EBITDA as a
supplementary non-GAAP financial measure widely used by financial analysts and
others in the Company's industry to meaningfully evaluate a company's future
operating performance and cash flow. Moreover, the definition of Adjusted
EBITDA as presented herein also may be useful in reflecting certain debt
covenant measurements under the Company's senior secured credit facility,
although, in particular, a larger acquisition or divestiture during a given
year may make it difficult to replicate the exact calculations for the
covenants. In addition to these recognized purposes, the Company also uses
EBITDA and Adjusted EBITDA to evaluate the Company's performance. This
financial measure is reconciled to the related GAAP financial measure in the
“Reconciliation” table included after the Condensed Consolidated Statement of
Operations included in this press release.

CONFERENCE CALL

As previously announced, the Company will host a conference call for investors
and other interested parties today at 8:30 AM ET to discuss the Company's
performance. Those wishing to participate in the live call should dial
1-888-498-8379, or +1-706-679-5239 for international callers, and enter
meeting ID 89525970. A digital recording will be available two hours after
completion of the conference call from February 8, 2013 through February 15,
2013. To access the recording, US/Canada callers should dial 1-855-859-2056 or
1-404-537-3406 for international callers, and enter the Conference ID
89525970.

Invacare Corporation (NYSE:IVC), headquartered in Elyria, Ohio, is the global
leader in the manufacture and distribution of innovative home and long-term
care medical products that promote recovery and active lifestyles.The Company
currently has 6,000 associates and markets its products in approximately 80
countries around the world. For more information about the Company and its
products, visit Invacare's website at www.invacare.com.

This press release contains forward-looking statements within the meaning of
the “Safe Harbor” provisions of the Private Securities Litigation Reform Act
of 1995. Terms such as “will,” “should,” “could,” “plan,” “intend,” “expect,”
“continue,” “believe” and “anticipate,” as well as similar comments, are
forward-looking in nature that are subject to inherent uncertainties that are
difficult to predict. Actual results and events may differ significantly from
those expressed or anticipated as a result of risks and uncertainties, which
include, but are not limited to, the following: compliance costs, limitations
on the design, production and/or distribution of Invacare's products,
inability to bid on or win certain contracts, or other adverse effects of the
FDA consent decree of injunction; unexpected circumstances or developments
that might delay or adversely impact the results of the third party expert
certification audits or FDA inspections of Invacare's quality systems at the
Elyria, Ohio, facilities impacted by the FDA consent decree, including any
possible requirement to perform additional remediation activities; the failure
or refusal of customers or healthcare professionals to sign necessary
certification forms required by the exceptions to the consent decree; adverse
changes in government and other third-party payor reimbursement levels and
practices both in the U.S. and in other countries (such as, for example, more
extensive pre-payment reviews and post-payment audits by payors, or the
Medicare national competitive bidding program covering nine metropolitan
statistical areas that started in 2011 and an additional 91 metropolitan
statistical areas beginning in July 2013), impacts of the U.S. Affordable Care
Act that was enacted in 2010 (such as, for example, the expected annual impact
on Invacare of the excise tax beginning in 2013 on certain medical devices and
Invacare's ability to successfully offset such impact); legal actions,
regulatory proceedings or Invacare's failure to comply with regulatory
requirements or receive regulatory clearance or approval for Invacare's
products or operations in the United States or abroad; product liability
claims; exchange rate or tax rate fluctuations; inability to design,
manufacture, distribute and achieve market acceptance of new products with
greater functionality or lower costs or new product platforms that deliver the
anticipated benefits of Invacare's globalization strategy; consolidation of
health care providers; lower cost imports; uncollectible accounts receivable;
difficulties in implementing/upgrading Enterprise Resource Planning systems;
risks inherent in managing and operating businesses in many different foreign
jurisdictions; ineffective cost reduction and restructuring efforts; potential
product recalls; possible adverse effects of being leveraged, including
interest rate or event of default risks (particularly as might result from the
impacts associated with the FDA consent decree); decreased availability or
increased costs of materials which could increase Invacare's costs of
producing or acquiring Invacare's products, including possible increases in
commodity costs or freight costs; heightened vulnerability to a hostile
takeover attempt arising from depressed market prices for Company shares;
provisions of Ohio law or in Invacare's debt agreements, shareholder rights
plan or charter documents that may prevent or delay a change in control, as
well as the risks described from time to time in Invacare's reports as filed
with the Securities and Exchange Commission. Except to the extent required by
law, we do not undertake and specifically decline any obligation to review or
update any forward-looking statements or to publicly announce the results of
any revisions to any of such statements to reflect future events or
developments or otherwise.

                                                
INVACARE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                                                   
(In thousands,         Three Months Ended          Twelve Months Ended
except per share       December 31,                December 31,
data)
                       2012         2011          2012           2011
Net sales              $ 360,423     $ 374,190     $ 1,455,461     $ 1,501,639
Cost of products       253,353      254,362      1,010,560      1,020,495   
sold *
Gross Profit           107,070       119,828       444,901         481,144
Selling, general and
administrative         105,273       94,266        414,502         396,532
expenses
Charges related to
restructuring          7,162         8,574         10,904          10,257
activities
Loss on debt
extinguishment
including debt         —             2             312             24,200
finance charges and
associated fees
Asset write-downs to
intangibles and        773           49,480        773             49,480
investments
Interest expense -     2,055        2,064        8,436          9,813       
net
Earnings (Loss) from
Continuing             (8,193    )   (34,558   )   9,974           (9,138      )
Operations before
Income Taxes
Income taxes           2,583        5,120        18,243         9,380       
Net Earnings (Loss)
from Continuing        (10,776   )   (39,678   )   (8,269      )   (18,518     )
Operations
                                                                   
Earnings from
Discontinued           5,535         4,730         16,238          14,725
Operations before
Income Taxes
Income taxes           2,052        80           6,142          320         
Net Earnings from
Discontinued           $ 3,483      $ 4,650      $ 10,096       $ 14,405    
Operations
                                                                    
Net Earnings (Loss)    $ (7,293  )   $ (35,028 )   $ 1,827        $ (4,113    )
                                                                   
Net Earnings (Loss)
per Share—Basic
Continuing             $ (0.34   )   $ (1.25   )   $ (0.26     )   $ (0.58     )
Operations
Discontinued           $ 0.11       $ 0.15       $ 0.32         $ 0.45      
Operations
Net Earnings (Loss)    $ (0.23   )   $ (1.10   )   $ 0.06         $ (0.13     )
per Share—Basic
Weighted Average
Shares                 31,856       31,834       31,641         31,958      
Outstanding—Basic
                                                                   
Net Earnings (Loss)
per Share—Assuming
Dilution
Continuing             $ (0.34   )   $ (1.25   )   $ (0.26     )   $ (0.58     )
Operations **
Discontinued           $ 0.11       $ 0.15       $ 0.32         $ 0.45      
Operations
Net Earnings (Loss)
per Share—Assuming     $ (0.23   )   $ (1.10   )   $ 0.06         $ (0.13     )
Dilution **
Weighted Average
Shares                 31,933       31,866       31,871         32,355      
Outstanding—Assuming
Dilution
                                                                               

* Cost of products sold includes inventory markdowns resulting from
restructuring of $491,000 for the three and twelve months ended December31,
2012 and $277,000 for the three and twelve months ended December31, 2011.

** Net earnings (loss) per share assuming dilution calculated utilizing
weighted average shares outstanding - basic in periods in which there is a net
loss.

                                                   
INVACARE CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET EARNINGS TO ADJUSTED EBITDA ^(1)
                                                      
(In thousands)            Three Months Ended          Twelve Months Ended
                          December 31,                December 31,
                          2012         2011          2012        2011
Continuing Operations:
Net earnings (loss)       $ (10,776 )   $ (39,678 )   $ (8,269 )   $ (18,518 )
Interest expense          2,131         2,262         9,121        11,025
Income taxes              2,583         5,120         18,243       9,380
Depreciation and          9,374        11,192       38,018      38,412    
amortization
EBITDA from continuing    3,312         (21,104   )   57,113       40,299
operations
Restructuring charges     7,653         8,851         11,395       10,534
Cash restructuring
charges covenant          (2,607    )   —             (2,607   )   —
limitation adjustment
Bank fees                 1,413         1,072         4,781        4,483
Loss on debt
extinguishment
including debt finance    —             2             312          24,200
charges and associated
fees
Asset write-downs
related to goodwill and   773           49,480        773          49,480
intangibles
Stock option expense      1,347        1,656        6,545       6,640     
Adjusted EBITDA from      $ 11,891     $ 39,957     $ 78,312    $ 135,636 
continuing operations
                                                                   
Discontinued Operations
- ISG:
Net earnings              $ 3,483       $ 4,650       $ 10,096     $ 14,405
Interest expense *        (1,042    )   (787      )   (3,736   )   (3,062    )
Income taxes              2,052         80            6,142        320
Depreciation and          154          136          575         471       
amortization
EBITDA from               4,647         4,079         13,077       12,134
discontinued operations
Restructuring charges     —            277          (20      )   336       
Adjusted EBITDA from      $ 4,647      $ 4,356      $ 13,057    $ 12,470  
discontinued operations
                                                                   
Combined Operations:
EBITDA from continuing    $ 11,891      $ 39,957      $ 78,312     $ 135,636
operations
EBITDA from               4,647        4,356        13,057      12,470    
discontinued operations
Adjusted EBITDA^(1)       $ 16,538     $ 44,313     $ 91,369    $ 148,106 
                                                                             

^(1) Adjusted EBITDA (earnings (loss) before interest, taxes, depreciation and
amortization)is a non-GAAP financial measure which is defined as net earnings
(loss) from continuing and/or discontinued operations (as noted) excluding the
following: interest expense, income taxes (benefit), depreciation and
amortization, as further adjusted to exclude restructuring charges as adjusted
for debt covenant limitations regarding cash charges, amortization of the
convertible debt discount (recorded in interest expense), bank fees, stock
option expense, asset write-downs for goodwill and intangible assets and loss
on debt extinguishment including debt finance charges and fees. It should be
noted that the Company's definition of Adjusted EBITDA may not be comparable
to similar measures disclosed by other companies because not all companies and
analysts calculate Adjusted EBITDA in the same manner.The Company believes
that these types of exclusions are also recognized by the industry in which it
operates as relevant in computing Adjusted EBITDA as a supplementary non-GAAP
financial measure widely used by financial analysts and others in the
Company's industry to meaningfully evaluate a Company's future operating
performance and cash flow.Moreover, the definition of Adjusted EBITDA as
presented herein also may be useful in reflecting certain debt covenant
measurements under the Company's senior secured credit facility, although, in
particular, a larger acquisition or divestiture during a given year may make
it difficult to replicate the exact calculations for the covenants.In
addition to these recognized purposes, the Company also uses EBITDA and
Adjusted EBITDA to evaluate the Company's performance.

* Amount includes prompt pay discount historically applied against interest
expense as the company had to borrow funds to make the prompt payments. As a
discontinued operation, ISG interest expense no longer reflects an interest
expense allocation based on net assets that would otherwise make the amount an
expense rather than an item of income.

                                                    
INVACARE CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET EARNINGS PER SHARE
TO ADJUSTED EARNINGS PER SHARE ^(2)
                                                       
(In thousands, except per    Three Months Ended        Twelve Months Ended
share data)                  December 31,              December 31,
                             2012        2011         2012        2011
Continuing Operations:
Net earnings (loss) per      $ (0.34  )   $ (1.25  )   $ (0.26  )   $ (0.58  )
share - assuming dilution
Weighted average shares
outstanding- assuming        31,856       31,834       31,641       31,958
dilution *
Net earnings (loss)          (10,776  )   (39,678  )   (8,269   )   (18,518  )
Income taxes                 2,583       5,120       18,243      9,380    
Earnings (loss) before       (8,193   )   (34,558  )   9,974        (9,138   )
income taxes
Restructuring charges        7,653        8,851        11,395       10,534
Amortization of discount     147          78           577          1,565
on convertible debt
Asset write-downs related
to goodwill and              773          49,480       773          49,480
intangibles
Loss on debt
extinguishment including     —           2           312         24,200   
debt finance charges and
associated fees
Adjusted earnings before     380          23,853       23,031       76,641
income taxes
Income taxes                 2,304       6,895       11,116      25,405   
Adjusted net earnings
(loss) from continuing       $ (1,924 )   $ 16,958    $ 11,915    $ 51,236 
operations
                                                                    
Weighted average shares
outstanding - assuming       31,856       31,866       31,871       32,355
dilution *
Less: Diluted shares
related to convertible       —           —           —           (154     )
debt
Adjusted weighted average
shares outstanding -         31,856      31,866      31,871      32,201   
assuming dilution *
Adjusted net earnings
(loss) per share -           $ (0.06  )   $ 0.53      $ 0.37      $ 1.59   
assuming dilution
                                                                    
Discontinued Operations -
ISG:
Net earnings per share -     $ 0.11       $ 0.15       $ 0.32       $ 0.45
assuming dilution
Weighted average shares
outstanding- assuming        31,933       31,866       31,871       32,355
dilution
Net earnings                 3,483        4,650        10,096       14,405
Income taxes **              2,052       80          6,142       320      
Earnings before income       5,535        4,730        16,238       14,725
taxes
Restructuring charges        —           277         (20      )   336      
Adjusted earnings before     5,535        5,007        16,218       15,061
income taxes
Income taxes **              96          80          384         320      
Adjusted net earnings from   $ 5,439     $ 4,927     $ 15,834    $ 14,741 
discontinued operations
                                                                    
Weighted average shares
outstanding - assuming       31,933      31,866      31,871      32,201   
dilution
Adjusted net earnings per    $ 0.17      $ 0.15      $ 0.50      $ 0.46   
share - assuming dilution
                                                                    
Combined Operations:
Adjusted net earnings
(loss) from continuing       $ (1,924 )   $ 16,958     $ 11,915     $ 51,236
operations
Adjusted net earnings from   5,439       4,927       15,834      14,741   
discontinued operations
Adjusted net earnings from   $ 3,515     $ 21,885    $ 27,749    $ 65,977 
combined operations
                                                                    
Weighted average shares
outstanding - assuming       31,933      $ 31,866    $ 31,871    $ 32,201 
dilution *
Adjusted net earnings per
share - assuming             $ 0.11      $ 0.69      $ 0.87      $ 2.05   
dilution^(2)

* Net earnings (loss) per share assuming dilution calculated utilizing
weighted average shares outstanding - basic in periods in which there is a net
loss.

** Tax amounts for the discontinued operation, ISG, only considers state
taxes. The GAAP taxes for ISG include a federal intraperiod tax allocation
expense. GAAP also includes an equal federal tax benefit allocated to
continuing operations. The inclusion of the federal intraperiod tax
allocation, while appropriate for GAAP presentation, would result in a tax
benefit for continued operations which would not be indicative of the tax
expense to be associated with the continuing operations of the company.

^(2) Adjusted Net Earnings (Loss) per share (EPS) is a non-GAAP financial
measure which is defined as net earnings (loss) from continuing and/or
discontinued operations (as noted) excluding the impact of restructuring
charges, amortization of the convertible debt discount (recorded in interest
expense), asset write-downs related to goodwill and intangible assets, loss on
debt extinguishment including debt finance charges and fees, a discrete tax
expense in 2012 related to prior years for a foreign tax matter under audit,
one-time tax benefit as a result of a tax settlement in Germany in 2011 and
changes in tax valuation allowances divided by adjusted weighted average
shares outstanding - assuming dilution, which excludes the dilutive impact of
the convertible debt. The Company is including the dilutive effect of shares
necessary to settle the conversion spread in the GAAP earnings per share ^
calculation. The share adjustment is 0 shares for the three and twelve months
ended December31, 2012 and 0 and 154,000 shares for the three and twelve
months ended December31, 2011. For Adjusted EPS, the Company has excluded
these shares from the calculation as it intends to satisfy the conversion
spread using cash, as opposed to stock. It should be noted that the Company's
definition of Adjusted EPS may not be comparable to similar measures disclosed
by other companies because not all companies and analysts calculate Adjusted
EPS in the same manner.The Company believes that these types of exclusions
are also recognized by the industry in which it operates as relevant in
computing Adjusted EPS as a supplementary non-GAAP financial measure used by
financial analysts and others in the Company's industry to meaningfully
evaluate operating performance.

Business Segments - The Company operates in four primary business segments:
North America / Home Medical Equipment (HME), Institutional Products Group,
Europe and Asia/Pacific.The four reportable segments represent operating
groups, which offer products to different geographic regions.Intersegment
revenue for reportable segments was $31,516,000 and $154,962,000 for the three
and twelve months ended December31, 2012, and $34,773,000 and $136,863,000
for the three and twelve months ended December31, 2011, respectively.

The information for the continuing operation segments and the former segment,
now discontinued operation ISG, and the combination thereof is as follow:

(In thousands)      Three Months Ended         Twelve Months Ended
                     December 31,                December 31,
                     2012         2011          2012           2011
Revenues from
external customers
North America /     $ 165,816     $ 181,786     $ 693,285       $ 746,782
HME
Institutional        36,017        34,542        148,648         124,121
Products Group
Europe               144,822       139,183       546,543         544,537
Asia/Pacific         13,768       18,679       66,985         86,199      
Consolidated -
Continuing          $ 360,423    $ 374,190    $ 1,455,461    $ 1,501,639 
Operations
Discontinued
Operations -         95,172       75,511       341,606        299,491     
Invacare Supply
Group
Combined             $ 455,595    $ 449,701    $ 1,797,067    $ 1,801,130 
Operations
                     
Earnings (loss)
before income
taxes
North America /      $ (3,961  )   $ 2,154       $ 3,563         $ 35,477
HME
Institutional        2,339         930           11,029          12,378
Products Group
Europe               7,984         7,760         31,488          33,579
Asia/Pacific         (7,656    )   (38,967   )   (11,795     )   (35,141     )
All Other            (6,899    )   (6,435    )   (24,311     )   (55,431     )
Consolidated -
Continuing           $ (8,193  )   $ (34,558 )   $ 9,974        $ (9,138    )
Operations
Discontinued
Operations -         5,535        4,730        16,238         14,725      
Invacare Supply
Group
Earnings (loss)
before income        $ (2,658  )   $ (29,828 )   $ 26,212       $ 5,587     
taxes
                                                                 
                                                                 
                                                                 
                                                                 
(In thousands)       Three Months Ended          Twelve Months Ended
                     December 31,                December 31,
                     2012          2011          2012            2011
Restructuring
charges before
income taxes
North America /      $ 2,033       $ 4,353       $ 4,247         $ 4,759
HME
Institutional        —             123           35              123
Products Group
Europe               1,321         4,189         2,093           5,466
Asia/Pacific         4,299        186          5,020          186         
Consolidated -
Continuing           $ 7,653      $ 8,851      $ 11,395       $ 10,534    
Operations
Discontinued
Operations -         —            277          (20         )   336         
Invacare Supply
Group
Combined             $ 7,653      $ 9,128      $ 11,375       $ 10,870    
Operations
                                                                 
Goodwill and
intangible
impairment charges
before income
taxes
North America /      $ 96          $ 8,498       $ 96            $ 8,498
HME
Institutional        677           625           677             625
Products Group
Europe               —             427           —               427
Asia/Pacific         —            39,930       —              39,930      
Consolidated -
Continuing           $ 773        $ 49,480     $ 773          $ 49,480    
Operations
                                                                 
Loss on debt
extinguishment,
including debt
finance charges
and associated
fees and
amortization of
discount on
convertible debt
All Other            $ 147        $ 80         $ 889          $ 25,765    
Consolidated -
Continuing           $ 147        $ 80         $ 889          $ 25,765    
Operations
                                                                 
Earnings (loss)
before income
taxes excluding
restructuring
charges, goodwill
and intangible
impairment
charges, loss on
debt
extinguishment
including debt
finance charges
and associated
fees and
amortization of
discount on
convertible debt
North America /      $ (1,832  )   $ 15,005      $ 7,906         $ 48,734
HME
Institutional        3,016         1,678         11,741          13,126
Products Group
Europe               9,305         12,376        33,581          39,472
Asia/Pacific         (3,357    )   1,149         (6,775      )   4,975
All Other            (6,752    )   (6,355    )   (23,422     )   (29,666     )
Consolidated -
Continuing           $ 380        $ 23,853     $ 23,031       $ 76,641    
Operations
Discontinued
Operations -         $ 5,535      $ 5,007      $ 16,218       $ 15,061    
Invacare Supply
Group
Combined             $ 5,915      $ 28,860     $ 39,249       $ 91,702    
Operations

“All Other” consists of unallocated corporate selling, general and
administrative expenses, which do not meet the quantitative criteria for
determining reportable segments.In addition, “All Other” earnings before
income taxes includes loss on debt extinguishment including finance charges
and associated fees.

Business Segment Net Sales - The following table provides net sales as
reported and as adjusted to exclude the impact of foreign currency translation
and acquisitions comparing quarters ended December31, 2012 to December31,
2011:

                                                                
                                         Foreign
                              Reported   Currency      Acquisition   Adjusted*
                                         Translation   Impact
                                         Impact
North America / HME           (8.8  )%   0.2    %      —             (9.0   )%
Institutional Products        4.3   %    0.2    %      —             4.1    %
Group
Europe                        4.1   %    (3.8   )%     —             7.9    %
Asia/Pacific                  (26.3 )%   3.0    %      —            (29.3  )%
Continuing Operations         (3.7  )%   (1.2   )%     —            (2.5   )%
Discontinued Operations -     26.0  %    —            —            26.0   %
ISG
Combined Operations           1.3   %    (1.0   )%     —            2.3    %
                                                                            

The following table provides net sales as reported and as adjusted to exclude
the impact of foreign currency translation and acquisitions comparing twelve
months ended December31, 2012 to December31, 2011:

                                                                
                                         Foreign
                              Reported   Currency      Acquisition   Adjusted*
                                         Translation   Impact
                                         Impact
North America / HME           (7.2  )%   (0.1   )%     —             (7.1   )%
Institutional Products        19.8  %    —             13.1    %     6.7    %
Group
Europe                        0.4   %    (6.6   )%     —             7.0    %
Asia/Pacific                  (22.3 )%   0.7    %      —            (23.0  )%
Consolidated                  (3.1  )%   (2.5   )%     1.1     %     (1.7   )%
Discontinued Operations -     14.1  %    —            —            14.1   %
ISG
Combined Operations           (0.2  )%   (2.0   )%     0.9     %     0.9    %
                                                                            

*Adjusted net sales percent change equal to reported net sales change less
impact of foreign currency translation and acquisitions.

                                                               
INVACARE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                                                                  
                                                  December 31,    December 31,
                                                  2012            2011
                                                  (In thousands)
Assets
Current Assets
Cash and cash equivalents                         $ 38,791        $  34,924
Trade receivables, net                            198,791         210,391
Installment receivables, net                      2,188           6,671
Inventories, net                                  183,246         168,720
Deferred income taxes and other current assets    41,776          40,451
Assets held for sale                              103,157        67,613
Total Current Assets                              567,949         528,770
Other Assets                                      113,914         125,968
Property and Equipment, net                       118,231         128,340
Goodwill                                          462,200         473,531
Assets held for sale                              —              24,445
Total Assets                                      $ 1,262,294    $  1,281,054
Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable                                  $ 133,048       $  136,451
Accrued expenses                                  135,189         128,693
Accrued income taxes                              2,713           815
Short-term debt and current maturities of         5,427           5,044
long-term obligations
Liabilities held for sale                         23,358         16,936
Total Current Liabilities                         299,735         287,939
Long-Term Debt                                    229,375         260,440
Other Long-Term Obligations                       112,195         106,150
Shareholders’ Equity                              620,989        626,525
Total Liabilities and Shareholders’ Equity        $ 1,262,294    $  1,281,054
                                                                     

                                                    
INVACARE CORPORATION AND SUBSIDIARIES
RECONCILIATION FROM NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES TO FREE CASH FLOW ^(3)
                                                       
(In thousands)               Three Months Ended        Twelve Months Ended
                             December 31,              December 31,
                             2012        2011         2012        2011
Net cash provided by         $ 35,469     $ 32,490     $ 62,291     $ 99,078
operating activities
Plus:
Net cash impact related to   985          2,687        6,735        3,621
restructuring activities
Less:
Purchases of property and    (5,254   )   (6,549   )   (19,932  )   (22,096  )
equipment, net
Free Cash Flow^(3)           $ 31,200    $ 28,628    $ 49,094    $ 80,603 
                                                                    
                                                                    
Cash Flow Impact of
Discontinued Operation,
ISG, included above:
Net cash provided (used)
by ISG operating             $ (1,470 )   $ 656        $ (133   )   $ 663
activities
Plus:
Net cash impact related to
ISG restructuring            —            —            —            —
activities
Less:
ISG Purchases of property    (26      )   (87      )   (572     )   (789     )
and equipment, net
Free Cash Flow^(3) of ISG    $ (1,496 )   $ 569       $ (705   )   $ (126   )
                                                                             

^(3) Free cash flow is a non-GAAP financial measure that is comprised of net
cash provided (used) by operating activities, excluding net cash flow impact
related to restructuring activities less purchases of property and equipment,
net of proceeds from sales of property and equipment.Management believes that
this financial measure provides meaningful information for evaluating the
overall financial performance of the Company and its ability to repay debt or
make future investments (including, for example, acquisitions).

Contact:

Invacare Corporation
Lara Mahoney, 440-329-6393
 
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