Nautilus, Inc. Reports Strong Results For The Fourth Quarter And Full Year 2011

Net sales in the Retail segment for the 2011 fourth quarter totaled $26.5 million, a 10.8% increase compared to the same period last year. The increase reflects improvements in sales of bikes and elliptical products. Operating income for the Retail segment was $5.1 million, a decline of $0.7 million from the same quarter a year ago, primarily due to lower gross margins, offset in part by lower selling and marketing expenses. Retail gross margin was 25.0% in the fourth quarter of 2011, a decline of approximately 620 basis points from the same quarter a year ago, and is mostly due to an increase in new product launch support expenses and increased supply chain costs.

The following table presents comparative net sales by segment for the three months ended December 31, 2011 and 2010:

		Three months ended
Net Sales by Segment		December 31,								Change
(Unaudited and in thousands)		2011				2010				$				%
Direct		$	31,707			$	28,218			$	3,489			12.4	%
Retail		26,501				23,920				2,581				10.8	%
Royalty income		1,777				1,552				225				14.5	%
Total net sales		$	59,985			$	53,690			$	6,295			11.7	%

The following table presents comparative net sales by segment for the years ended December 31, 2011 and 2010:

Net Sales by Segment		Year ended December 31,								Change
(Unaudited and in thousands)		2011				2010				$				%
Direct		$	107,061			$	96,668			$	10,393			10.8	%
Retail		68,591				67,789				802				1.2	%
Royalty income		4,760				3,993				767				19.2	%
Total net sales		$	180,412			$	168,450			$	11,962			7.1	%

The following table presents comparative operating results by segment for the three months ended December 31, 2011 and 2010:

Operating Income (Loss)		Three months ended
by Segment		December 31,
(Unaudited and in thousands)		2011				2010				Change
Direct		$	1,615			$	(1,578	)		$	3,193
Retail		5,069				5,806				(737		)
Unallocated corporate		(1,472		)		(1,874		)		402
Total operating income		$	5,212			$	2,354			$	2,858

The following table presents comparative operating results by segment for the years ended December 31, 2011 and 2010:

Operating Income (Loss)
by Segment		Year ended December 31,
(Unaudited and in thousands)		2011				2010				Change
Direct		$	2,954			$	(10,778	)		$	13,732
Retail		9,489				11,400				(1,911		)
Unallocated corporate		(8,844		)		(10,191		)		1,347
Total operating income (loss)		$	3,599			$	(9,569	)		$	13,168

Balance Sheet

As of December 31, 2011, cash and cash equivalents were $17.4 million, compared to $14.3 million at year end 2010. Working capital was $19.4 million, compared to $15.3 million at year end 2010. Inventory as of December 31, 2011 was $11.6 million, compared to $10.3 million as of December 31, 2010. The Company believes it has adequate inventory to support current demand levels.

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