EXHIBIT 99.1
ICON Health & Fitness, Inc.
For the first quarter of fiscal 2004
ended August 30, 2003
ICON Health & Fitness Reports Financial Results for the First Fiscal Quarter
2004 Ended August 30, 2003
For the three-month period ended August 30, 2003, ICON reported net sales of
$197.8 million, compared to $170.2 million for the three month period ended
August 31, 2002, which represents a $27.6 million, or a 16.2% increase over the
prior-year period. Sales increased primarily due to increased customer demand.
Net loss for the three-month period ended August 30, 2003 was $1.7 million,
compared to a net loss of $3.4 million for the three-month period ended August
31, 2002. Net loss before taxes for the three-month period ended August 30,
2003 was $1.3 million, compared to a net loss before taxes of $4.6 million for
the three-month period ended August 31, 2002. The provision for taxes for the
three-month period ended August 30, 2003 was $0.4 million compared to a benefit
of $1.2 million in the three-month period ended August 31, 2002. Depreciation
and amortization for the three-month period ended August 30, 2003 was $5.5
million compared to $4.2 million for the three-month period ended August 31,
2002. Interest expense, including amortization of deferred financing fees, for
the three-month period ended August 30, 2003 was $6.0 million versus the prior
year's comparable period interest expense and deferred financing fees of $6.7
million.
The market for exercise equipment is highly seasonal, with peak periods
occurring from late fall through February. 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, ICON builds product inventory to prepare for the
heavy demand anticipated during the upcoming peak season. This operating
strategy helps ICON to realize the efficiencies of a steady pace of year-round
production.
The Company has established earnings before net interest expense, income taxes,
depreciation and amortization ("EBITDA") as an indicator of operating
performance and as a measure of cash generating ability. EBITDA for the
three-month period ended August 30, 2003 was $10.2 million, or 5.2% of net
sales, compared to $6.3 million, or 3.7% of net sales, for the three-month
period ended August 31, 2002. This increase resulted primarily from increased
customer demand for the Company's products. Management considers EBITDA to be
one measure of the cash flows from operations of the Company before debt service
that provides a relevant basis for comparison, and EBITDA is presented to assist
investors in analyzing the performance of the Company. 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 the overall financial performance of the
Company. The Company's calculation of EBITDA may be different from the
calculation used by other companies and, therefore, comparability may be
limited.
The following is a reconciliation of net income (loss) to EBITDA for the first
quarter ended August 30, 2003:
First Quarter
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Net income $(1.7)
Add back:
Depreciation and Amortization 5.5
Provision for income tax 0.4
Interest expense 6.0
Amortization of deferred
financing fees -
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EBITDA $10.2
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Total assets for the three-month period ended August 30, 2003 and the fiscal
year ended May 31, 2003 were $509.5 million and $465.1 million, respectively.
This increase represents higher raw materials on hand directly related to
production for the upcoming busy season. Management believes the current level
of inventory reflects normal seasonal production activities. Net debt (current
portion of long-term debt plus long-term debt less cash) for the three-month
period ended August 30, 2003 and the fiscal year ended May 31, 2003 was $293.0
million and $239.6 million, respectively. This increase represents the build up
of inventory for the busy season. Capital expenditures for the three months
ended August 30, 2003 were $5.6 million versus the prior year's comparable
period capital expenditures of $4.6 million.
ICON Health & Fitness, Inc. will hold a conference call with investors on
Wednesday, October 15th; at 4:30 p.m. EST to discuss its financial results for
the first quarter of fiscal 2004 filed on Form 10-Q with the Securities and
Exchange Commission on October 14, 2003. The Form 10-Q can be accessed at
www.sec.gov. ICON Chairman and CEO, Scott Watterson, President and COO, Gary
Stevenson and CFO, Fred Beck will co-host the call.
To participate by phone, please dial 888-323-9686. Callers should ask to be
connected to the ICON Health & Fitness earnings conference call.
ICON Health & Fitness, Inc. is the world's largest manufacturer and marketer
of fitness equipment. The company is headquartered in Logan, Utah and has more
than 4,500 employees worldwide. ICON develops, manufactures and markets fitness
equipment under the following company-owned brand names: NordicTrack, ProForm,
HealthRider, Weslo, Weider, IMAGE and Free Motion, as well as Reebok and Gold's
Gym under license.
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; capital
spending by larger customers in the telecommunications industry and other
business segments; the mix of sales between premium and non-premium 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 ICON's
filings with the Securities and Exchange Commission. Forward-looking statements
speak only as of the day that they are made, and ICON 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) 435 750 5000
fbeck@iconfitness.com