The Federal District Court in Salt Lake City, Utah has refused to modify the terms of a jury verdict against Nautilus, Inc. initially issued in November 2005. The jury had previously found Nautilus liable for certain language in the Company's advertising and promotions that began in 1987 and ceased in early 2004.
The case, which began in 2002, involves the manner in which the Company described its Bowflex home gyms in advertising, and a name it used to describe a belt on 1,100 Trimline treadmills manufactured in 2002. On November 15, 2005 the jury found for Icon Health & Fitness in the amount of $7.8 million and the Court subsequently added another $325,000 to this amount. By order dated April 3, 2006, the Court refused to modify the amount of the jury verdict.
Nautilus intends to appeal this matter to the appropriate Federal Court of Appeals. Nautilus believes this verdict is inconsistent with the law and evidence presented at trial and that the evidence does not support the damage award. In light of the appeals process, the Company has not accrued any material amounts for this case at this time. When filing its appeal, Nautilus will post a bond or letter of credit in the amount of the judgment.