Invacare Lowers Fourth-Quarter Earnings Guidance

ELYRIA, Ohio–Invacare Corp. announced its fourth-quarter sales
and earnings will be below expectations, citing problems with the
implementation of a new $20-million enterprise resource planning
system.

The company said last week that it expects a revenue shortfall
of $30 million for the quarter due to lost revenue from
difficulties in processing orders using the new accounting system
and an inability to ship products on time. The disruption also has
resulted in additional overtime in manufacturing, distribution
centers and customer service and added costs in expediting products
to customers, the manufacturing giant said.

Net sales for the quarter will likely range from $370 million to
$380 million, 3 to 6 percent lower than sales for the fourth
quarter last year. For the full year, the company expects a net
sales increase between 9 and 10 percent, compared to a prior
guidance of between 11 and 12 percent.

Commenting on the results, Invacare Chairman and CEO Mal Mixon
said, “Although we are disappointed with the likely fourth-quarter
results and the adjustment to previous guidance, the company
continues to execute on its previously announced plans to reduce
costs and reconfirms that these cost-reduction initiatives should
result in annualized pre-tax savings of at least $25 million as
Invacare enters 2006. The fourth-quarter impacts of the ERP are
disappointing, but this is a one-time event and does not change our
outlook for 2006 and beyond of significantly improved profitability
arising from our cost-reduction actions.”

The company expects major issues with the new system to be
resolved by the end of the year. “Our order intake capability has
substantially recovered and, with the addition of added processing
capacity and a few remaining application refinements, we are
confident we will be in a position to offer our customers
significantly enhanced service and support early next year,” Mixon
said.

According to Reuters, the computer system is the second stage of
a three-part Oracle Corp. software implementation to automate
Invacare’s North American home care business.