Exhibit 99
FOR IMMEDIATE RELEASE
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| CONTACTS: | | Nautilus, Inc. | | Integrated Corporate Relations, Inc. |
| | Ron Arp | | John Mills |
| | (360) 859-2514 | | (310) 395-2215 |
NAUTILUS, INC. FIRST QUARTER 2006 NET SALES RISE 18 PERCENT;
EARNINGS IN LINE WITH COMPANY GUIDANCE
VANCOUVER, Wash. – (May 3, 2006) –Nautilus, Inc. (NYSE: NLS), a leading marketer, developer, and manufacturer of branded health and fitness products, today announced results for the three months ended March 31, 2006.
Net sales for the three months ended March 31, 2006, were $185.0 million, compared to $156.4 million for the corresponding period last year, up 18.3 percent. Net income for the quarter was $5.2 million, or $0.16 per diluted share including about 1.5 cents for stock option expensing, down from $9.4 million, or $0.28 per diluted share, for the first quarter of 2005.
“Our net sales and earnings were on plan with our guidance and we continued to gain market share with our leading fitness brands,” said Gregg Hammann, Chairman and Chief Executive Officer. “Furthermore, our balance sheet and cash flow improvements were better than projected. Inventories were down about $20 million from year-end levels to $76 million, and short-term borrowings net of cash down about $30 million to $1.5 million.
“The manufacturing issues that slowed our performance in the fourth quarter are behind us, with all six new cardio products now in production. Our enterprise resource planning system conversion is in the business implementation phase this year for our commercial, specialty, retail and portions of our direct business. Although we are still getting used to the new system, it is helping identify additional areas for operational improvement and we expect it to improve our accounting close process.
“Our Company is focused on achieving leverage through operating excellence. To achieve that goal, we have put in place an initiative called QC2 to take costs out of the system and improve margins. It stands for quality, customer service, and cost takeout.
“The quality component includes increasing the number of on-floor quality engineers in our domestic plants and improving first-time yield. The customer service element includes self-service order status capabilities and delivery improvements. The cost take-out elements consist of six focus areas: streamlining our domestic manufacturing; reducing the number of distribution centers and improving product flow; moving packaging upstream to our suppliers; direct shipping products to customers bypassing our distribution centers; continuing to look for cost savings in partnership with our suppliers, and; discontinuing older and redundant product SKUs in our line.
“These initiatives already are being activated and had some positive impact in the first quarter. We are continuing to refine them in the second quarter as we prepare for a strong back half of the year.”
For the second quarter of 2006, the slowest quarter of the year due to seasonality, the Company estimates that net sales will be in the $145-150 million range, with expected earnings of $0.04 to $0.07 per diluted share, including about 1.5 cents per share for stock option expensing as required by FAS 123R in 2006.
The first quarter 2006 conference call is scheduled for 5 p.m. EDT (2 p.m. PDT) May 3, 2006. 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 800-746-1483 from anywhere in North America, and 415-537-1903 from outside North America. Participants will include: Gregg Hammann, Chairman and Chief Executive Officer; Bill Meadowcroft, Chief Financial Officer; and Tim Hawkins, President of Fitness Equipment.
A telephonic playback will be available from 7:00 p.m. EDT May 3 through 4:00 p.m. EDT, May 15, 2006. North American callers can dial 800-633-8284 and other international callers can dial 402-977-9140 to hear the playback. The passcode is 21290173.
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), 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 $631 million in 2005. It has about 1,600 employees and operations in Washington, Oregon, 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, including statements concerning estimated future sales and earnings, new product introduction, and resolution of operational issues. 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,
2006 | | December 31,
2005 |
ASSETS | | | | | | |
CURRENT ASSETS: | | | | | | |
Cash and cash equivalents | | $ | 9,461 | | $ | 7,984 |
Trade receivables, net | | | 112,066 | | | 116,908 |
Inventories | | | 76,201 | | | 96,084 |
Prepaid expenses and other current assets | | | 5,497 | | | 8,369 |
Short-term notes receivable | | | 2,485 | | | 2,496 |
Asset held for sale | | | — | | | 6,115 |
Current deferred tax assets | | | 8,189 | | | 7,235 |
| | | | | | |
Total current assets | | | 213,899 | | | 245,191 |
PROPERTY, PLANT AND EQUIPMENT, net | | | 57,370 | | | 59,320 |
GOODWILL | | | 64,404 | | | 64,404 |
OTHER ASSETS, net | | | 43,962 | | | 44,371 |
| | | | | | |
TOTAL ASSETS | | $ | 379,635 | | $ | 413,286 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | |
CURRENT LIABILITIES: | | | | | | |
Trade payables | | $ | 51,136 | | $ | 61,132 |
Accrued liabilities | | | 28,370 | | | 29,097 |
Short-term borrowings | | | 11,000 | | | 40,147 |
Income taxes payable | | | 8,519 | | | 3,810 |
Customer deposits | | | 3,216 | | | 3,327 |
Current portion of other long-term debt | | | 437 | | | 707 |
| | | | | | |
Total current liabilities | | | 102,678 | | | 138,220 |
OTHER NONCURRENT LIABILITIES | | | 5,626 | | | 5,610 |
NONCURRENT DEFERRED TAX LIABILITY | | | 15,977 | | | 16,990 |
STOCKHOLDERS’ EQUITY: | | | | | | |
Common stock | | | 2,760 | | | 1,602 |
Retained earnings | | | 250,044 | | | 248,123 |
Accumulated other comprehensive income | | | 2,550 | | | 2,741 |
| | | | | | |
Total stockholders’ equity | | | 255,354 | | | 252,466 |
| | | | | | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | 379,635 | | $ | 413,286 |
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NAUTILUS, INC.
Consolidated Statements of Income
(Unaudited, in thousands, except per share amounts)
| | | | | | | |
| | | Three months ended
March 31, |
| | | 2006 | | | 2005 |
NET SALES | | $ | 184,990 | | | $ | 156,388 |
COST OF SALES | | | 105,678 | | | | 79,615 |
| | | | | | | |
Gross profit | | | 79,312 | | | | 76,773 |
OPERATING EXPENSES: | | | | | | | |
Selling and marketing | | | 52,154 | | | | 44,922 |
General and administrative | | | 13,650 | | | | 13,436 |
Research and development | | | 3,268 | | | | 2,803 |
Royalties | | | 1,579 | | | | 1,474 |
| | | | | | | |
Total operating expenses | | | 70,651 | | | | 62,635 |
| | | | | | | |
OPERATING INCOME | | | 8,661 | | | | 14,138 |
OTHER INCOME (Expense): | | | | | | | |
Interest income (expense) | | | (451 | ) | | | 517 |
Other income | | | 15 | | | | 51 |
| | | | | | | |
Total other income (expense), net | | | (436 | ) | | | 568 |
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INCOME BEFORE INCOME TAXES | | | 8,225 | | | | 14,706 |
INCOME TAX EXPENSE | | | 3,024 | | | | 5,277 |
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NET INCOME | | $ | 5,201 | | | $ | 9,429 |
| | | | | | | |
BASIC EARNINGS PER SHARE | | $ | 0.16 | | | $ | 0.28 |
DILUTED EARNINGS PER SHARE | | $ | 0.16 | | | $ | 0.28 |
Weighted average shares outstanding: | | | | | | | |
Basic shares outstanding | | | 32,796 | | | | 33,168 |
Diluted shares outstanding | | | 33,025 | | | | 34,039 |
