Nautilus, Inc. Reports Improved Results For The Second Quarter 2012

The Company reported net loss (including discontinued operation) of $0.2 million for the second quarter of 2012, compared to net loss of $3.3 million for the second quarter of 2011. Net loss per diluted share for the second quarter of 2012 was $(0.01), compared to $(0.11) for the same quarter a year ago. Net loss for the 2012 second quarter included income from discontinued operation of $0.3 million, or $0.01 per diluted share, compared to loss from discontinued operation of $1.1 million, or $(0.04) per diluted share, for the 2011 second quarter.

Mr. Cazenave continued, “It is gratifying for our team to generate such strong revenue growth along with gross margin improvement during our seasonally slowest and traditionally weakest financial quarter of the year. With this improved performance, we now have confidence to invest in a more robust innovation platform, applying new learning from recently completed consumer research, to better position the company in terms of product diversification and improved top and bottom line growth in the future. Short term, we do anticipate softness in the Retail business as our retail partners continue to rationalize their fitness product offerings across their entire supply base. As a result of this softness and the incremental investment to launch new products, we believe that the improved operating results we experienced in the first half of the year are not indicative of likely results for the remainder of the year. We will continue to focus on implementing our long term business strategy and, despite the added new product launch investments and the challenges in Retail, we expect to achieve profitability in the second half of this year.”

For further information, see "Results of Operations Information" attached hereto.

Segment Results

Net sales for the Direct segment were $24.7 million in the second quarter of 2012, an increase of 10.0% over the comparable period last year, reflecting strong demand for the Company's cardio products. The higher sales were also partly driven by increased advertising effectiveness and higher U.S. consumer credit approval rates, which rose to 30% in the 2012 second quarter from 24% for the same period last year.

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