8-K

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 1, 2005

ICON HEALTH & FITNESS INC.
(Exact name of registrant as specified in its charter)

COMMISSION FILE NUMBER:  333-93711

DELAWARE	87-0531206
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1500 South 1000 West

Logan, UT, 84321

(Address and zip code of principal executive offices)

(435) 750-5000
(Registrant's telephone number, including area code)

CHECK THE APPROPRIATE BOX BELOW IF THE FORM 8-K FILING IS INTENDED TO SIMULTANEOUSLY SATISFY THE FILING OBLIGATION OF THE REGISTRANT UNDER ANY OF THE FOLLOWING PROVISIONS:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

1 of 2

Item 2.02	RESULTS OF OPERATIONS AND FINANCIAL CONDITION
	On September 2, 2005, ICON Health & Fitness, Inc. announced by press release its earnings for the three months and fiscal year ended May 31, 2005. A copy of the press release is attached hereto as Exhibit 99.1.
Item 7.01	REGULATION FD DISCLOSURE
	On September 2, 2005, ICON Health & Fitness, Inc. announced by press release its earnings for the three months and fiscal year ended May 31, 2005. A copy of the press release is attached hereto as Exhibit 99.1.
Item 9.01	FINCANCIAL STATEMENTS AND EXHIBITS

Exhibit
   99.1 Press Release of ICON Health & Fitness, Inc. dated September 2, 2005, announcing earnings for the three months and fiscal year ended May 31, 2005.

SIGNATURE

ICON HEALTH & FITNESS, INC.

By: /s/ S. Fred Beck

Name: S. Fred Beck

Title:   Chief Financial Officer

Date:   September 2, 2005

EXHIBIT INDEX

Exhibit
Number Description                                                                                                      

99.1 Press Release of ICON Health & Fitness, Inc. dated September 2, 2005, announcing earnings for the three months and fiscal year ended May 31, 2005.

2 of 2

EX-99

ICON Health & Fitness, Inc. Results of Operations for the three and twelve months ended May 31, 2005 September 2, 2005

For the three months ended May 31, 2005, ICON Health & Fitness, Inc. (the “Company”) reported net sales of $190.7 million, compared to $199.0 million for the three months ended May 31, 2004, which represents a $8.3 million, or a 4.2% decrease over the Corresponding three-month period ended May 31, 2004. For the year ending May 31, 2005, ICON reported net sales of $898.1 million, compared to $992.2 million for the year ended May 31, 2004, which represents a $94.1 million, or 9.5%, decrease over the corresponding year ended May 31, 2004. The decrease in sales can be attributed to a consolidation of customers in the department store channel of distribution, the timing of buying patterns in that channel and a decline in the direct to consumer channel.

During the second quarter of fiscal 2005, management determined that the Company's JumpKing, Inc. ("JumpKing") subsidiary would discontinue manufacturing, marketing, and distributing all outdoor recreational equipment (“Outdoor Recreational Equipment Operations”) which includes trampolines, spas, and other non-exercise related products. The Outdoor Recreational Equipment Operations were not part of the Company’s core business operations or its strategic focus. The Outdoor Recreational Equipment Operations were not making a positive contribution to the Company’s earnings and also required a substantial investment in working capital. The Outdoor Recreational Equipment Operations have been classified as a discontinued operation and its expenses are not included in the results of continuing operations. The results of operations for the year ended May 31, 2005 for the Outdoor Recreational Equipment Operations have been reclassified to loss from discontinued operations. As of May 31, 2005, we have approximately $19.9 million of assets that have been written down to $9.5 million, which consist of inventory of approximately $12.5 million written down to $3.3 million, fixed assets of approximately $1.3 million written down to $1.1 million and accounts receivable of $5.1 million that remained at its stated value. The loss from operations, net of tax, for the outdoor recreational equipment was $31.7 million and $3.1 million for the fiscal years ended May 31, 2005 and 2004, respectively. We expect to complete this discontinuation of our outdoor recreational operations by the second quarter of fiscal 2006. The outdoor recreational equipment operations were not part of our core business operations or our strategic focus. We are in the process of finding a buyer for the remaining assets. The outdoor recreational operations were not making a positive contribution to our earnings and also required a substantial investment in working capital.

Net loss for the three months ended May 31, 2005 was $70.3 million, compared to net loss of $8.5 million for the three months ended May 31, 2004. Net loss before taxes, minority interest and discontinued operations for the three months ended May 31, 2005 was $42.2 million, compared to a net loss before taxes, minority interest and discontinued operations of $8.0 million for the three months ended May 31, 2004. The provision for taxes for the three months ended May 31, 2005 was $19.1 million compared to a provision of $1.1 million in the three months ended May 31, 2004. Depreciation and amortization for three months ended May 31, 2005 was $7.6 million compared to $3.9 million for the three months ended May 31, 2004. Interest expense, including amortization of deferred financing fees, for the three months ended May 31, 2005 was $7.0 million versus the prior year's comparable period interest expense and amortization of deferred financing fees of $6.6 million. The loss from discontinued operations for the three months ended May 31, 2005 net of a tax benefit of $2.7 million was $6.4 million compared to a gain on discontinued operations of $0.7 million net of tax benefit of $0.2 million for the three months ended May 31, 2004.

Net loss for the year ended May 31, 2005 was $110.0 million, compared to net income of $23.4 million for the year ended May 31, 2004. Net loss before taxes for the year ended May 31, 2005 was $66.3 million, compared to a net income before taxes of $44.3 million for the year ended May 31, 2004. The benefit from taxes for the year ended May 31, 2005 was $7.0 million compared to a provision of $15.9 million in the year ended May 31, 2004. Depreciation and amortization for the year ended May 31, 2005 was $25.4 million compared to $20.7 million for the year ended May 31, 2004. Interest expense, including amortization of deferred financing fees, for the nine months ended May 31, 2005 was $28.9 million versus the prior year's comparable period interest expense and amortization of deferred financing fees of $26.0 million. The loss from discontinued operations for the year ended May 31, 2005 net of a tax benefit of $19.4 million was $31.7 million compared to a loss on discontinued operations of $3.1 million net of tax benefit of $1.9 million for the year ended May 31, 2004.

EBITDA for the three months ended May 31, 2005 was negative $27.4 million compared to $2.5 million for the three months ended May 31, 2004. EBITDA for the year ended May 31, 2005 was negative $11.6 million compared to $91.0 million for the year ended May 31, 2004.

To supplement our consolidated financial statements presented in accordance with GAAP, we use the non-GAAP measure of earnings before income taxes, depreciation and amortization (“EBITDA”) which is adjusted from our GAAP results to exclude certain expenses. These non-GAAP adjustments are provided to enhance the reader's overall understanding of our current financial performance and our prospects for the future. We believe the non-GAAP results provide useful information to both management and investors by excluding certain expenses that we believe are not indicative of our core operating results. The non-GAAP measures are included to provide us and investors with an alternative method for assessing our operating results in a manner that is focused on the performance of our ongoing operations and to provide a more consistent basis for comparison between quarters. For example, EBITDA can be used to measure our ability to service debt, fund capital expenditures and expand our business. Further, these non-GAAP results are one of the primary indicators we use for planning and forecasting in future periods. In addition, since we have historically reported non-GAAP results to the investment community, we believe the inclusion of non-GAAP numbers provides consistency in our financial reporting. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with accounting principles generally accepted in the United States.

We define EBITDA as income before interest expense, income tax expense, depreciation and amortization and certain non-recurring items. The loss on discontinuing operations incurred in the year ended May 31, 2005 meets the definition of "non-recurring" in relevant SEC guidelines.

This information should not be considered as an alternative to any measure of performance as promulgated under accounting principles generally accepted in the United States, nor should it be considered as an indicator of our overall financial performance. Our calculation of EBITDA may be different from the calculation used by other companies and, therefore, comparability may be limited.

The following table reconciles net income (loss) to EBITDA for the fourth quarter and the fiscal year ended May 31, 2005 and May 31 2004, respectively:

Fourth
Quarter Fiscal
Year

Fiscal Year 2005
Net income (loss)	$	(70.3	)	$	(110.0	)
Add back:
Depreciation and amortization		7.6			25.4
Provision for (Benefit from) income taxes		19.1			(7.0	)
Interest expense		8.0			21.1
Amortization of deferred financing fees		0.3			1.1
Discontinued operations		9.2			51.1

EBITDA $ (27.4 ) $ (11.6 )

Fourth
Quarter Fiscal
Year

Fiscal Year 2004
Net income (loss)	$	(8.5	)	$	23.4
Add back:
Depreciation and amortization		3.9			20.7
Provision for income taxes		1.1			15.9
Interest expense		6.3			25.1
Amortization of deferred financing fees		0.3			0.9
Discontinued operations		(0.6	)		5.0

EBITDA $ 2.5 $ 91.0

The following table reconciles cash flow from operating activities to EBITDA for the fourth quarter and fiscal year ended May 31, 2005.

Fourth
Quarter Fiscal
Year

Fiscal Year 2005
Cash provided by (used in) operating activities	$	69.8		$	(14.6	)
Net change in operating assets
and liabilities		(134.9	)		(58.5	)
Interest expense		6.7			27.8
Discontinued operations		9.2			51.1
Current income tax (benefit) provision		21.8			(17.4	)

EBITDA $ (27.4 ) $ (11.6 )

Fourth
Quarter Fiscal
Year

Fiscal Year 2004
Net cash provided by operating activities	$	50.2		$	10.6
Net change in operating assets
and liabilities		(50.1	)		37.8
Interest expense		6.3			25.1
Discontinued operations		(0.6	)		5.0
Current income tax (benefit) provision		(3.3	)		12.5

EBITDA $ 2.5 $ 91.0

Total assets as of May 31, 2005 and May 31, 2004 were $460.7 million and $558.5 million, respectively. The decrease in assets was primarily attributable to the decreases in accounts receivable, discontinued assets, deferred tax assets and inventory. Accounts receivable decreased as a result of lower sales for the period and partially due to decreased direct response receivables which are financed over a longer period of time. The decrease in deferred tax assets can be attributed to the deferred tax valuation allowance. Accounting guidelines suggest that when a company has a cumulative loss over a three-year period that a valuation allowance should e provided. Although the Company income in two of the last three years, the loss in the third year exceeded the accumulative income in the previous two years. The Company recorded a $41.7 million valuation allowance on its net deferred tax assets. The decrease in inventory can be attributed to more improved process planning and more efficient working capital management. Net debt (current portion of long-term debt plus long-term debt less cash) for the year ended May 31, 2005 and the fiscal year ended May 31, 2004 was $282.1 million and $283.9 million, respectively. This decrease represents decreased borrowings on the revolver. Capital expenditures were $39.9 million compared to capital expenditures of $23.8 million in the year ended May 31, 2004. Capital expenditures in China were $19.1 million as of May 31, 2005 and $9.0 million as of May 31, 2004.

The Company is one of the largest manufacturers and marketers of fitness equipment. The Company is headquartered in Logan, Utah and has approximately 3,500 employees worldwide. The Company develops, manufactures and markets fitness equipment under the following company-owned brand names: ProForm, NordicTrack, Weslo, HealthRider, Image, Weider, Epic, Free Motion Fitness and, under license, Reebok and Gold's Gym.

The market for exercise equipment is highly seasonal, with peak periods occurring from late fall through early spring. As a result, the first and fourth quarters of every year are generally the Company's weakest periods in terms of sales. During these periods, the Company builds product inventory to prepare for the heavy demand anticipated during the peak season. This operating strategy helps the Company to realize the efficiencies of a steady pace of year-round production.

The Company will hold a conference call with investors on Wednesday, September 7, 2005; at 10:00 a.m. EST to discuss its financial results for fiscal 2005 filed on Form 10-K with the Securities and Exchange Commission on September 2, 2005. The Form 10-K can be accessed at www.sec.gov. ICON Chairman and CEO, David J. Watterson and CFO, Fred Beck, will co-host the call. To participate by phone, please dial 888-455-0047. Callers should ask to be connected to the "ICON EARNINGS" conference call.

A telephonic playback will be available approximately one hour after the call ends through 1:59 P.M. (CT), September 14, 2005. To listen to the playback, please dial 800-583-8102.

This press release contains forward-looking statements that involve a variety of business risks and other uncertainties that could cause actual results to differ materially. These risks and uncertainties include the possibility of changes or fluctuations in global economic conditions; currency exchange rates; product demand and industry capacity; competitive products and pricing; availability and costs of critical components and materials; new product development and commercialization; order activity and demand from major customers; the mix of sales between high margin and low margin products; possible disruption in commercial activities due to terrorist activity and armed conflict; ability to obtain financing and capital on commercially reasonable terms; acquisition and divestiture activities; the level of excess or obsolete inventory; the ability to enforce patents; product and components performance issues; and litigation. These and other risk factors are identified in the Company's filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the day that they are made, and the Company undertakes no obligation to update them in light of new information or future events.

For more information, please contact:

Fred Beck
CFO and Treasurer
Tel. 1-435-786-5000
fbeck@iconfitness.com