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FORM 8-K. ---CURRENT REPORT
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): September 9, 1997
INVACARE CORPORATION
(Exact Name of Registrant as Specified in its Charter)
OHIO
(State or Other Jurisdiction of Incorporation)
0-12938 95-2680965
(Commission File No.) (IRS Employer Identification No.)
899 Cleveland Street, P.O. Box 4028, Elyria, Ohio
(Address of Principal Executive Offices)
44036
(Zip Code)
(216) 329-6000
(Registrant's Telephone Number, Including Area Code)
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Invacare Corporation Announces Acceleration of Strategic Initiatives, Third
Quarter Charge and Authorization of Stock Repurchase Program
Elyria, OH - (September 9, 1997) - Invacare Corporation (NASDAQ: IVCR)
today announced that certain strategic initiatives would be accelerated in
order to more quickly lower its operating cost structure to meet the current
and projected competitive environment.
A. Malachi Mixon, III, Invacare's chairman and chief executive officer,
stated "These accelerated initiatives and other items will result in a
third-quarter pre-tax charge of approximately $61.0 million, or $1.27 per
share.
Among other things, the charge provides for accelerated global
manufacturing facility consolidations, accelerated global systems'
initiatives including year 2000 compliance, elimination of unprofitable
non-strategic product lines and an increase in the company's reserve for bad
debts to conservatively reflect the increased provider credit risk caused by
recently enacted Medicare reimbursement cuts which become effective January
1, 1998."
"The current competitive climate requires that we accelerate these
activities in order to maintain and improve the company's position as the
total lowest-cost supplier in the industry," continued Mixon, "and to provide
a base from which to reaccelerate growth in both sales and earnings in 1998
and beyond. In effect, we will strengthen our position of industry leadership
by attacking on all fronts instead of phasing these actions over the next
three years."
Commenting on the current market environment and operating issues
facing Invacare for the balance of the year, Mixon stated, "While pricing
pressure continues to intensify and sales to the company's largest customer
are below expectations, Invacare expects to meet current analyst earnings
estimates in the third and fourth quarters, excluding the impact of the
non-recurring charge."
"The industry is experiencing a difficult operating environment in
1997," continued Mixon, "as among other things, the strong dollar and
reimbursement pressures in Europe resulted in flat European market growth,
and the uncertainty created by the Medicare budget debate in the United
States caused dealer/providers to be cautious about their purchases. However,
the overall demographics impacting our industry remain favorable and the
consumer-choice upgrade provision contained in the Balanced Budget Act of
1997 provides exciting opportunities for our company with its broad and
expanding product line."
Mixon also stated that Invacare is expanding its target market
definition to include all post-acute markets in addition to home care. These
markets include nursing homes, sub-acute and acute long-term care, hospice,
independent living centers, assisted-living centers and retirement homes. A
separate sales and marketing organization has been created to focus on these
new markets.
"The expanded definition and a renewed focus on product areas in which
Invacare has relatively low market shares are part of the company's strategy
to return internally generated sales growth to the 12% to 15% range annually
beginning in 1998," Mixon said. "The specific financial goals the company has
established for itself include internal sales growth of 12% to 15% augmented
by 12% to 15% sales growth from an increased focus on R&D and acquisitions."
He indicated that the company has financing in place to support acquisitions
that augment its existing business as well as provide entry into markets that
fit the expanded business definition. In the area of new product development,
additional resources have been committed to internally develop new products
in higher growth/higher margin categories.
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The company's three-year compound earnings growth objective is 17% to
20%, with potentially higher growth from accretive acquisitions.
Mixon stated that the cost savings realized from the acceleration of
the company's strategic initiatives will help to offset expected continued
price deterioration as well as allow for expanded investment in sales and
marketing programs and the increased focus on R&D. Pricing pressure is
expected to continue in 1998 due to continued customer consolidation,
increased competitive activity and the fact that a large customer purchase
contract is up for bid at the end of 1997.
Mixon concluded by saying that the company's board of directors and
management are enthusiastic about the future of the company as Invacare
remains the leader in a growing industry and is well-positioned with its
broad product line and financial flexibility. To demonstrate this confidence
in the company's future, Mixon announced that the board has authorized the
company to repurchase up to 5,000,000 shares of common stock. The stock
repurchases will be made from time to time depending on market conditions and
the cash requirements of the company's acquisition and internal growth
initiatives.
Invacare Corporation is the world's leading manufacturer and
distributor of home health care products and mobility products for people
with disabilities. The company's headquarters are in Elyria, Ohio, and the
firm has manufacturing plants in the United States, Australia, Canada,
Germany, France, Mexico, New Zealand, Portugal, Switzerland and the United
Kingdom. Products are distributed worldwide through more than 10,000
professional home care providers, institutions and retail outlets.
With the exception of the historical information contained in this
release, certain of the matters described herein contain forward-looking
statements, including those statements relating to earnings and sales growth
estimates and objectives, that involve risks and uncertainties which might
cause the results of such forward-looking statements to differ materially
from those anticipated. Such risks and uncertainties for the company include
price pressure from competitors exceeding current expectations, successful
implementation of the company's cost-reduction programs, the availability of
attractive acquisition opportunities, further government action reducing
reimbursement levels and foreign currency exchange rates, as well as the
other risks detailed from time to time in the company's SEC filings.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
INVACARE CORPORATION
By: /S/ Thomas R. Miklich
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September 9,1997 Chief Financial Officer