EX-99 2 dex99.htm NAUTILUS, INC. PRESS RELEASE Nautilus, Inc. Press Release

Exhibit 99

 

LOGO

 

FOR IMMEDIATE RELEASE

 

CONTACTS:    Nautilus, Inc.    Integrated Corporate Relations, Inc.
     Ron Arp    John Mills
     (360)418-6169    (310)395-2215 or (203)222-9013

 

NAUTILUS, INC. THIRD QUARTER 2005 NET SALES RISE 33 PERCENT;

COMPANY MEETS ITS EARNINGS GUIDANCE

 

VANCOUVER, Wash. – (November 2, 2005) –Nautilus, Inc. (NYSE: NLS), a leading marketer, developer, and manufacturer of branded health and fitness products, today announced results for the three months ended September 30, 2005, with net sales growth of 33 percent including its new apparel division, and net income growth of 32 percent excluding a gain on the sale of land last year.

 

Net sales for the three months ended September 30, 2005, were $163.3 million compared to $123.2 million for the corresponding period last year, up 33 percent. Net income for the quarter was $8.3 million, or $0.24 per diluted share, up from $7.5 million, or $0.22 per share, or 11 percent for the corresponding period last year. The year ago quarter included a pretax $1.8 million gain on sale of land, which contributed $0.03 per share.

 

“We are pleased with our revenue and earnings results for the third quarter and first nine months of 2005,” said Gregg Hammann, Chairman and Chief Executive Officer. “Our campaign to bring complete assortments of high-quality branded fitness equipment into retail and specialty retail locations, where 80 percent of consumers shop for fitness products, continues to diversify our sales channels. Even with this positive performance, we need to improve our go-to-market effectiveness on new product innovations in order to capitalize on the opportunities we have ahead of us. This needed improvement, combined with some softness in the marketplace, has prompted us to take a more conservative view of the fourth quarter.”

 

“As we look forward, with five leading fitness brands, strong marketing and customer relationships, a wave of new product innovation, and the best position our company has ever had across diverse sales channels, we are very excited about our growth opportunities. Fitness is becoming a necessity around the world as our global society comes to grips with the health consequences of inactivity. We continue to believe our strategic business plan will deliver top line growth of 15 to 20 percent, and bottom line growth of 20 to 30 percent.”

 

For the fourth quarter of 2005, the Company estimates that net sales will grow approximately 25 percent compared to the same period last year. Meanwhile, fourth quarter 2005 earnings are expected to grow to $0.44 to $0.48 per diluted share, up from $0.42 per share during the year ago quarter when the Company achieved 50 percent earnings improvement. The Company expects its full year 2005 earnings to be $1.06 to $1.10, on annual sales of around $660 million.


The Company reported that it repurchased approximately 190,000 shares of stock during the third quarter at an average price of $23.75, as part of a $100 million buyback authorized by its Board earlier in the year.

 

In addition, the Company announced that its Board of Directors declared a regular quarterly dividend of $0.10 per common share, payable December 9, 2005, to stockholders of record as of November 20, 2005.

 

The conference call is scheduled for 5 p.m. EST (2 p.m. PST) November 2, 2005. It will be broadcast live over the Internet hosted at www.nautilusinc.com/events and will be archived online within one hour after completion of the call. In addition, listeners may call (888) 939-6306 from anywhere in North America, and (415) 537-1883 from outside North America. Participants will include: Gregg Hammann, Chairman and Chief Executive Officer; Bill Meadowcroft, Chief Financial Officer; and Tim Hawkins, Chief Customer Officer and Chief Marketing Officer.

 

A telephonic playback will be available from 7:00 p.m. PST November 2 through 7:00 p.m. PST, November 12, 2005. North American callers can dial (800) 633-8284 and other international callers can dial (402) 977-9140 to hear the playback. The passcode is 21265682.

 

About Nautilus, Inc.

 

Headquartered in Vancouver, Wash., Nautilus, Inc. (NYSE:NLS) is a pure fitness company that provides tools and education necessary to help people achieve a fit and healthy lifestyle. With a brand portfolio that includes Nautilus(R), Bowflex(R), Schwinn(R)Fitness, StairMaster(R), Trimline(R) and Pearl iZUMi(R), Nautilus manufactures and markets a complete line of innovative health and fitness products through direct, commercial, retail, specialty and international channels. The Company was formed in 1986 and had sales of $524 million in 2004. It has 1,400 employees and operations in Washington, Colorado, Oklahoma, Texas, Illinois, Virginia, Canada, Switzerland, Germany, United Kingdom, Italy, China, and other locations around the world. More information is at www.nautilusinc.com.

 

This press release includes forward-looking statements. Factors that could cause Nautilus, Inc. actual results to differ materially from these forward-looking statements include availability of media time and fluctuating advertising rates, a decline in consumer spending due to unfavorable economic conditions, its ability to effectively develop, market, and sell future products, its ability to get foreign-sourced product through customs in a timely manner, its ability to effectively identify, negotiate and integrate any future strategic acquisitions, its ability to protect its intellectual property, introduction of lower-priced competing products, unpredictable events and circumstances relating to international operations including its use of foreign manufacturers, government regulatory action, and general economic conditions. Please refer to our reports and filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K and quarterly reports on Form 10-Q, for a further discussion of these risks and uncertainties. We also caution you not to place undue reliance on forward-looking statements, which speak only as of the date they are made. We undertake no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date they were made or to reflect the occurrence of unanticipated events.


NAUTILUS, INC.

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share Data)

(Unaudited)

 

     September 30,
2005


    December 31,
2004


 

ASSETS

                

CURRENT ASSETS:

                

Cash and cash equivalents

   $ 7,430     $ 19,266  

Short-term investments

     —         85,319  

Trade receivables

     92,202       95,593  

Inventories

     83,913       49,104  

Prepaid expenses and other current assets

     14,158       9,427  

Short-term notes receivable

     2,396       2,503  

Deferred tax assets

     5,405       4,661  
    


 


Total current assets

     205,504       265,873  

PROPERTY, PLANT AND EQUIPMENT, net

     61,401       46,350  

GOODWILL

     56,629       29,755  

OTHER ASSETS, net

     45,373       17,663  
    


 


TOTAL ASSETS

   $ 368,907     $ 359,641  
    


 


LIABILITIES AND STOCKHOLDERS’ EQUITY

                

CURRENT LIABILITIES:

                

Trade payables

   $ 58,369     $ 57,861  

Accrued liabilities

     24,161       24,703  

Income taxes payable

     950       10,803  

Customer deposits

     3,309       2,957  

Current portion of long term debt

     900       —    
    


 


Total current liabilities

     87,689       96,324  

DEFERRED TAX LIABILITIES

     10,216       11,081  

OTHER NONCURRENT LIABILITIES

     200       200  

LONG-TERM DEBT

     5,605       —    

STOCKHOLDERS’ EQUITY:

                

Common stock

     13,609       10,682  

Unearned stock compensation

     (949 )     (1,204 )

Retained earnings

     249,494       238,474  

Accumulated other comprehensive income

     3,043       4,084  
    


 


Total stockholders’ equity

     265,197       252,036  
    


 


TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

   $ 368,907     $ 359,641  
    


 



NAUTILUS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands, Except Share and Per Share Data)

(Unaudited)

 

     Three Months Ended
September 30,


    Nine Months Ended
September 30,


 
     2005

   2004

    2005

   2004

 

NET SALES

   $ 163,308    $ 123,182     $ 449,277    $ 354,257  

COST OF SALES

     91,022      64,577       242,164      189,475  
    

  


 

  


Gross profit

     72,286      58,605       207,113      164,782  

OPERATING EXPENSES:

                              

Selling and marketing

     44,526      38,039       129,425      110,392  

General and administrative

     11,146      6,540       34,567      21,095  

Research and development

     2,856      1,697       8,768      4,784  

Royalties

     1,297      1,051       3,952      4,693  
    

  


 

  


Total operating expenses

     59,825      47,327       176,712      140,964  
    

  


 

  


OPERATING INCOME

     12,461      11,278       30,401      23,818  

OTHER INCOME (EXPENSE):

                              

Interest income

     145      371       1,460      913  

Other, net

     31      (1 )     542      (2 )
    

  


 

  


Total other income, net

     176      370       2,002      911  
    

  


 

  


INCOME BEFORE INCOME TAXES

     12,637      11,648       32,403      24,729  

INCOME TAX EXPENSE

     4,366      4,193       11,373      8,902  
    

  


 

  


NET INCOME

   $ 8,271    $ 7,455     $ 21,030    $ 15,827  
    

  


 

  


BASIC EARNINGS PER SHARE

   $ 0.25    $ 0.23     $ 0.63    $ 0.48  

DILUTED EARNINGS PER SHARE

   $ 0.24    $ 0.22     $ 0.62    $ 0.47  

Weighted average shares outstanding:

                              

Basic shares outstanding

     33,549,008      32,662,043       33,366,839      32,675,273  

Diluted shares outstanding

     34,364,768      33,620,578       34,089,907      33,398,357  


NAUTILUS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(Unaudited)

 

     Nine Months Ended
September 30,


 
     2005

    2004

 

CASH FLOWS FROM OPERATING ACTIVITIES:

                

Net income

   $ 21,030     $ 15,827  

Adjustments to reconcile net income to net cash provided by operating activities:

                

Depreciation and amortization

     11,066       9,245  

Amortization of unearned stock compensation

     255       255  

Amortization of discount on long-term debt

     12       —    

Loss (gain) on sale of property, plant and equipment

     15       (1,774 )

Tax benefit of exercise of nonqualified options

     1,942       315  

Deferred income taxes

     2,032       748  

Changes in assets and liabilities, net of acquisition

     (29,702 )     13,880  
    


 


Net cash provided by operating activities

     6,650       38,496  
    


 


CASH FLOWS FROM INVESTING ACTIVITIES:

                

Additions to property, plant and equipment

     (23,210 )     (4,049 )

Proceeds from sale of property, plant and equipment

     2,972       649  

Net (increase) decrease in other assets

     (306 )     180  

Acquisition, net of cash acquired

     (73,688 )     —    

Purchases of short-term investments

     (49,352 )     (93,026 )

Proceeds from maturities of short-term investments

     134,671       61,469  

Net (increase) decrease in notes receivable

     107       138  
    


 


Net cash used in investing activities

     (8,806 )     (34,639 )
    


 


CASH FLOWS FROM FINANCING ACTIVITIES:

                

Principal payments on long-term debt

     (89 )     —    

Cash dividends paid on common stock

     (10,010 )     (9,802 )

Stock repurchases

     (4,580 )     —    

Proceeds from exercise of stock options

     5,565       1,827  
    


 


Net cash used in financing activities

     (9,114 )     (7,975 )
    


 


Effect of foreign currency exchange rate changes

     (566 )     (140 )
    


 


NET DECREASE IN CASH AND CASH EQUIVALENTS

   $ (11,836 )   $ (4,258 )

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

     19,266       21,352  
    


 


CASH AND CASH EQUIVALENTS, END OF PERIOD

   $ 7,430     $ 17,094