SOURCE: Nautilus, Inc.

April 25, 2007 16:10 ET

Nautilus, Inc. Announces First Quarter 2007 Results

VANCOUVER, WA -- (MARKET WIRE) -- April 25, 2007 -- Pure fitness company Nautilus, Inc. (NYSE: NLS) today announced results for the three months ended March 31, 2007.

Net sales for the three months ended March 31, 2007, were $158.8 million, compared to $185.0 million for the corresponding period last year, down 14 percent. Net income for the quarter was $2.5 million, or $0.08 per share, compared to $5.2 million or $0.16 per share for the first quarter of 2006. Gross margins reached 46.1 percent, the highest level in seven quarters.

"As we reported earlier, our international, apparel and commercial businesses performed well," said Gregg Hammann, Chairman and CEO of Nautilus, Inc. "However, we experienced sluggish trends in the North American market for home fitness equipment in the first quarter, causing cancellation of expected retail replenishment orders and softness in direct."

"We expect to achieve stronger net sales through new innovation and new promotions planned as the next fitness cycle begins the second half of the year. Meanwhile, our gross margin-improving activities that began in the back half of 2005 were evident again this quarter. Our efforts to bring efficiencies to manufacturing, distribution, packaging, shipping and transportation are putting us in an excellent position to improve bottom line results as sales pick up."

For the second quarter of 2007, the company expects net sales of $135-140 million and expected earnings of $0.03-$0.06 per share. For the full year, the company expects net sales growth of 5-10 percent and earnings growth of 20-30 percent.

The first quarter 2007 investor conference call is scheduled for 5 p.m. EDT (2 p.m. PDT) Wednesday, April 25, 2007. 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 800-576-7258 in North America and 212-748-2760 from outside North America. Participants will include: Gregg Hammann, Chairman and Chief Executive Officer; and Bill Meadowcroft, Chief Financial Officer.

A telephonic playback will be available from 4:00 p.m. PDT April 25 through 4:00 p.m. PDT, May 9, 2007. North American callers can dial 800-633-8284, and international callers can dial 402-977-9140 to hear the playback. The passcode is 21333672.

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®, Bowflex®, Schwinn® Fitness, StairMaster®, and Pearl iZUMi®, Nautilus manufactures and markets a complete line of innovative health and fitness products through direct, commercial, retail, and international channels. The Company was formed in 1986 and had sales of $680 million in 2006. It has 1,500 employees and operations in Washington, Oregon, Colorado, Oklahoma, Illinois, Virginia, Canada, Switzerland, Germany, United Kingdom, Italy, China, and other locations around the world. More information is at www.nautilusinc.com

Safe Harbor Statement:

This press release includes forward-looking statements, including statements concerning estimated future sales and earnings, new product introduction, and operational improvement. 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
                         (Unaudited, in thousands)

                                                    March 31,  December 31,
                                                       2007        2006
                                                  ------------ ------------
ASSETS
CURRENT ASSETS:
 Cash and cash equivalents                        $      4,745 $      4,262
 Trade receivables (net of allowance for doubtful
  accounts of $3,499 and $3,893 at March 31, 2007
  and December 31, 2006, respectively)                  98,025      137,714
 Inventories                                            89,856       75,832
 Prepaid expenses and other current assets              24,393       23,093
 Short-term notes receivable                             2,600        2,461
 Assets held for sale                                    1,677        1,677
 Deferred tax assets                                     5,557        5,722
                                                  ------------ ------------
     Total current assets                              226,853      250,761
PROPERTY, PLANT AND EQUIPMENT (at cost, net of
 accumulated depreciation of $54,658 and $51,262
 at March 31, 2007 and December 31, 2006,
 respectively)                                          51,423       52,658
GOODWILL                                                65,095       65,037
INTANGIBLE AND OTHER ASSETS, net                        56,473       56,486
                                                  ------------ ------------
TOTAL ASSETS                                      $    399,844 $    424,942
                                                  ============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
 Trade payables                                   $     52,382 $     61,375
 Accrued liabilities                                    27,692       31,444
 Short-term borrowings                                  37,200       47,500
 Income tax payable                                      1,336        4,551
 Customer deposits                                       1,894        2,229
 Current portion of long-term debt                         205          259
                                                  ------------ ------------
     Total current liabilities                         120,709      147,358
LONG-TERM DEBT                                           4,070        4,158
NON-CURRENT INCOME TAX LIABILITIES                       3,191           --
NON-CURRENT DEFERRED TAX LIABILITIES                    15,401       16,792
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
 Common stock - no par value, 75,000 shares
  authorized; 31,545 and 31,482 shares issued and
  outstanding at March 31, 2007 and December 31,
  2006, respectively                                     2,581        1,026
 Retained earnings                                     249,403      251,418
 Accumulated other comprehensive income                  4,489        4,190
                                                  ------------ ------------
  Total stockholders' equity                           256,473      256,634
                                                  ------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY        $    399,844 $    424,942
                                                  ============ ============



                              NAUTILUS, INC.
                    CONSOLIDATED STATEMENTS OF INCOME
            (Unaudited, in thousands, except per share amounts)

                                                        Three Months
                                                       Ended March 31,
                                                  ------------------------
                                                      2007         2006
                                                  ------------ -----------
NET SALES                                         $    158,839 $   184,990
COST OF SALES                                           85,571     105,678
                                                  ------------ -----------
  Gross profit                                          73,268      79,312
                                                  ------------ -----------

OPERATING EXPENSES:
 Selling and marketing                                  50,776      52,154
 General and administrative                             13,323      13,650
 Research and development                                3,215       3,268
 Royalties                                               1,319       1,579
                                                  ------------ -----------
     Total operating expenses                           68,633      70,651
                                                  ------------ -----------
OPERATING INCOME                                         4,635       8,661
OTHER INCOME (EXPENSE):
 Interest income                                            75         138
 Interest expense                                         (941)       (589)
 Other income, net                                         252          15
                                                  ------------ -----------
     Total other expense                                  (614)       (436)
                                                  ------------ -----------
INCOME BEFORE INCOME TAXES                               4,021       8,225
INCOME TAX EXPENSE                                       1,557       3,024
                                                  ------------ -----------
NET INCOME                                        $      2,464 $     5,201
                                                  ============ ===========
EARNINGS PER SHARE:
  BASIC                                           $       0.08 $      0.16
  DILUTED                                         $       0.08 $      0.16
WEIGHTED AVERAGE SHARES OUTSTANDING:
  BASIC                                                 31,508      32,796
  DILUTED                                               31,729      33,025