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Nautilus, Inc. Reports Results For The Third Quarter 2012

Stocks in this article: NLS

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; future plans for introduction of new products; expected profitability and the timing thereof and results anticipated to be achieved from the restructuring of the Company’s operating platform, including expectations regarding future growth in revenues, leverage of operating expenses, and continued improvement in operating margins. Factors that could cause Nautilus, Inc.'s actual results to differ materially from these forward-looking statements include our ability to timely acquire inventory that meets our quality control standards from sole source foreign manufacturers at acceptable costs, 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 our actual results 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 developments, events or circumstances.

RESULTS OF OPERATIONS INFORMATION

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

Results of Operations Information   Three months ended

September 30,

  Nine months ended

September 30,

(Unaudited and in thousands, except per share amounts)   2012   2011 2012   2011
Net sales $ 38,052 $ 37,402 $ 128,897   $ 120,427
Cost of sales 19,511   21,605   69,283     68,000  
Gross profit 18,541   15,797   59,614     52,427  
Operating expenses:
Selling and marketing 12,434 11,517 41,057 38,601
General and administrative 4,371 4,134 12,672 13,103
Research and development 1,038   859   2,957     2,336  
Total operating expenses 17,843   16,510   56,686   54,040  
Operating income (loss) 698 (713 ) 2,928 (1,613 )
Other expense, net (107 ) (176 ) (105 ) (317 )

Income (loss) from continuing operations before income taxes

591 (889 ) 2,823 (1,930 )
Income tax benefit (625 ) (1,170 ) (554 ) (1,136 )
Income (loss) from continuing operations 1,216 281 3,377 (794 )
Loss from discontinued operation, net of income taxes (265 ) (373 ) (68 )   (960 )
Net income (loss) $ 951   $ (92 ) $ 3,309     $ (1,754 )
Income (loss) per basic and diluted share:
Continuing operations $ 0.04 $ 0.01 $ 0.11 $ (0.03 )
Discontinued operation (0.01 ) (0.01 ) 0.00 (0.03 )
Net income (loss) 0.03 0.00 0.11 (0.06 )
Weighted average shares outstanding:
Basic 30,892 30,747 30,892 30,746
Diluted 30,942 30,747 31,006 30,746

SEGMENT INFORMATION

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

Net Sales by Segment   Three months ended

September 30,

  Change
(Unaudited and in thousands) 2012   2011 $   %
Direct $ 25,103 $ 22,645 $ 2,458 10.9 %
Retail 11,388 13,710 (2,322 ) (16.9 )%
Royalty income 1,561   1,047   514   49.1 %
Total net sales $ 38,052   $ 37,402   $ 650   1.7 %

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

Operating Income (Loss) by Segment   Three months ended

September 30,

 
(Unaudited and in thousands) 2012   2011 Change
Direct $ 1,947 $ 161 $ 1,786
Retail 827 1,319 (492 )
Unallocated corporate (2,076 ) (2,193 ) 117  
Total operating income (loss) $ 698   $ (713 ) $ 1,411  

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

Net Sales by Segment   Nine months ended

September 30,

  Change
(Unaudited and in thousands) 2012   2011 $   %
Direct $ 83,544 $ 75,354 $ 8,190 10.9 %
Retail 42,057 42,090 (33 ) (0.1 )%
Royalty income 3,296   2,983   313   10.5 %
Total net sales $ 128,897   $ 120,427   $ 8,470   7.0 %

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

Operating Income (Loss) by Segment   Nine months ended

September 30,

 
(Unaudited and in thousands) 2012   2011 Change
Direct $ 5,968 $ 1,339 $ 4,629
Retail 4,182 4,420 (238 )
Unallocated corporate (7,222 ) (7,372 ) 150  
Total operating income (loss) $ 2,928   $ (1,613 ) $ 4,541  

BALANCE SHEET INFORMATION

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

Balance Sheet Information   As of
(In thousands)   September 30, 2012   December 31, 2011
Assets
Cash and cash equivalents $ 15,209 $ 17,427
Trade receivables, net 11,735 23,780
Inventories 16,900 11,601
Prepaids and other current assets 5,313   5,279
Total current assets 49,157 58,087
Property, plant and equipment, net 5,811 4,405
Goodwill 2,979 2,873
Other intangible assets, net 15,178 16,716
Other assets 711   732
Total assets $ 73,836   $ 82,813
Liabilities and Stockholders' Equity
Trade payables $ 21,117 $ 28,563
Accrued liabilities 7,110 7,218
Warranty obligations, current portion 1,848 1,803
Deferred income tax liabilities 1,158   1,064
Total current liabilities 31,233 38,648
Long-term notes payable 5,598
Warranty obligations, non-current 214 214
Income taxes payable, non-current 2,891 3,658
Deferred income tax liabilities, non-current 1,660 1,434
Other long-term liabilities 2,057 1,308
Stockholders' equity 35,781   31,953
Total liabilities and stockholders' equity $ 73,836   $ 82,813




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