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

Stocks in this article: NLS

For further information, see "Balance Sheet Information" attached hereto.

Conference Call

Nautilus will host a conference call to discuss the Company's operating results for the second quarter ended June 30, 2012 at 4:30 p.m. ET (1:30 p.m. PT) on Monday, August 6, 2012. The call will be broadcast live over the Internet hosted at http://www.nautilusinc.com/events and will be archived online within one hour after completion of the call. In addition, listeners may call (800) 268-5851 in North America and international listeners may call (303) 223-2692. Participants from the Company will include Bruce M. Cazenave, Chief Executive Officer and William B. McMahon, Chief Operating Officer.

A telephonic playback will be available from 6:30 p.m. ET, August 6, 2012, through 6:30 p.m. ET, August 20, 2012. Participants can dial (800) 633-8284 in North America and international participants can dial (402) 977-9140 to hear the playback. The passcode for the playback is 21600716.

About Nautilus, Inc.

Headquartered in Vancouver, Washington, Nautilus, Inc. (NYSE: NLS) is a global fitness products company providing innovative, quality solutions to help people achieve a healthy lifestyle. With a brand portfolio including Nautilus ®, Bowflex ®, TreadClimber ® ,Schwinn ®, Schwinn Fitness TM, Universal ® and CoreBody Reformer™, Nautilus markets innovative fitness products through Direct and Retail channels. Websites: www.nautilusinc.com, www.bowflex.com, www.schwinnfitness.com, www.treadclimber.com and www.corebody.com.

This press release includes forward-looking statements (statements which are not historical facts) within the meaning of the Private Securities Litigation Reform Act of 1995, including statements concerning: the Company's prospects, resources or capabilities; current or future financial trends; future operating results; expected profitability and the timing thereof; and future plans for introduction of new products. Factors that could cause Nautilus, Inc.'s actual results to differ materially from these forward-looking statements include our ability to acquire inventory from sole source foreign manufacturers at acceptable costs, within timely delivery schedules and that meet our quality control standards, availability and price of media time consistent with our cost and audience profile parameters, greater than anticipated costs associated with launch of new products, a decline in consumer spending due to unfavorable economic conditions, softness in the retail marketplace, an adverse change in the availability of credit for our customers who finance their purchases, our ability to pass along vendor raw material price increases and increased shipping costs, our ability to effectively develop, market and sell future products, our ability to protect our intellectual property, the introduction of competing products, and our ability to get foreign-sourced product through customs in a timely manner. Additional assumptions, risks and uncertainties are described in detail in our registration statements, reports and other filings with the Securities and Exchange Commission, including the "Risk Factors" set forth in our Annual Report on Form 10-K, as supplemented by our quarterly reports on Form 10-Q. Such filings are available on our website or at www.sec.gov. You are cautioned that such statements are not guarantees of future performance and that actual results or developments may differ materially from those set forth in the forward-looking statements. We undertake no obligation to publicly update or revise forward-looking statements to reflect subsequent events or circumstances.

RESULTS OF OPERATIONS INFORMATION

The following summary contains information from our consolidated statements of operations for the three and six months ended June 30, 2012 and 2011:

Results of Operations Information Three months ended June 30,   Six months ended June 30,
(Unaudited and in thousands, except per share amounts) 2012   2011 2012   2011
Net sales $ 39,583 $ 34,724 $ 90,845   $ 83,025
Cost of sales 22,415   20,181   49,772     46,395  
Gross profit 17,168   14,543   41,073     36,630  
Operating expenses:
Selling and marketing 12,557 12,219 28,623 27,084
General and administrative 4,291 4,277 8,301 8,969
Research and development 919   724   1,919     1,477  
Total operating expenses 17,767   17,220   38,843   37,530  
Operating (loss) income (599 ) (2,677 ) 2,230 (900 )
Other (expense) income, net (80 ) (52 ) 2   (141 )
(Loss) income from continuing operations before

income taxes

(679 ) (2,729 ) 2,232 (1,041 )
Income tax (benefit) expense (193 ) (533 ) 71   34  
(Loss) income from continuing operations (486 ) (2,196 ) 2,161 (1,075 )
Income (loss) from discontinued operation, net of income taxes 322   (1,072 ) 197     (587 )
Net (loss) income $ (164 ) $ (3,268 ) $ 2,358     $ (1,662 )
(Loss) income per basic and diluted share:
Continuing operations $ (0.02 ) $ (0.07 ) $ 0.07 $ (0.03 )
Discontinued operation 0.01 (0.04 ) 0.01 (0.02 )
Net loss (0.01 ) (0.11 ) 0.08 (0.05 )
Weighted average shares outstanding:
Basic 30,878 30,745 30,878 30,745
Diluted 30,878 30,745 30,987 30,745
 

SEGMENT INFORMATION

The following table presents comparative net sales by segment for the three months ended June 30, 2012 and 2011:

Net Sales by Segment   Three months ended June 30,   Change
(Unaudited and in thousands) 2012   2011 $   %
Direct $ 24,707 $ 22,455 $ 2,252 10.0 %
Retail 14,030 11,417 2,613 22.9 %
Royalty income 846   852   (6 ) (0.7 )%
Total net sales $ 39,583   $ 34,724   $ 4,859   14.0 %
 

The following table presents comparative operating results by segment for the three months ended June 30, 2012 and 2011:

Operating Loss by Segment   Three months ended June 30,  
(Unaudited and in thousands) 2012   2011 Change
Direct $ 993 $ (1,022 ) $ 2,015
Retail 1,088 872 216
Unallocated corporate (2,680 ) (2,527 ) (153 )
Total operating loss $ (599 ) $ (2,677 ) $ 2,078  
 

The following table presents comparative net sales by segment for the six months ended June 30, 2012 and 2011:

Net Sales by Segment   Six months ended June 30,   Change
(Unaudited and in thousands) 2012   2011 $   %
Direct $ 58,441 $ 52,709 $ 5,732 10.9 %
Retail 30,669 28,380 2,289 8.1 %
Royalty income 1,735   1,936   (201 ) (10.4 )%
Total net sales $ 90,845   $ 83,025   $ 7,820   9.4 %
 

The following table presents comparative operating results by segment for the six months ended June 30, 2012 and 2011:

Operating Income (Loss) by Segment   Six months ended June 30,  
(Unaudited and in thousands) 2012   2011 Change
Direct $ 4,021 $ 1,178 $ 2,843
Retail 3,355 3,101 254
Unallocated corporate (5,146 ) (5,179 ) 33
Total operating income (loss) $ 2,230   $ (900 ) $ 3,130
 

The following summary contains information from our consolidated balance sheets as of June 30, 2012 (unaudited) and December 31, 2011:

Balance Sheet Information As of
(In thousands) June 30, 2012   December 31, 2011
Assets
Cash and cash equivalents $ 16,131 $ 17,427
Trade receivables, net 10,627 23,780
Inventories 12,591 11,601
Prepaids and other current assets 4,002   5,279
Total current assets 43,351 58,087
Property, plant and equipment, net 5,460 4,405
Goodwill 2,859 2,873
Other intangible assets, net 15,691 16,716
Other assets 639   732
Total assets $ 68,000   $ 82,813
Liabilities and Stockholders' Equity
Trade payables $ 16,926 $ 28,563
Accrued liabilities 6,489 7,218
Warranty obligations, current portion 1,939 1,803
Deferred income tax liabilities 1,184   1,064
Total current liabilities 26,538 38,648
Long-term notes payable 5,598
Warranty obligations, non-current 214 214
Income taxes payable, non-current 3,555 3,658
Deferred income tax liabilities, non-current 1,665 1,434
Other long-term liabilities 1,412 1,308
Stockholders' equity 34,616   31,953
Total liabilities and stockholders' equity $ 68,000   $ 82,813
 




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