ICON Health & Fitness reported that net sales for the third quarter of fiscal 2004 ended February 28, 2004 decreased $16.0 million, or 4.7%, to $328.0 million from $344.0 million in the comparable period in 2003. The decrease in sales was not attributable to a single customer, distributor or any other specific factor. The decrease was across several product lines. Sales of cardiovascular and other equipment in the third quarter of fiscal 2004 decreased $24.3 million, or 8.6%, to $259.1 million. Sales of strength training equipment in the third quarter of fiscal 2004 increased $8.4 million, or 13.9%, to $68.9 million.
Gross profit in the third quarter of fiscal 2004 was $102.5 million, or 31.3% of net sales, compared to $106.1 million, or 30.8% of net sales, in the third quarter of fiscal 2003. This increase in margin was largely due to changes in product mix and manufacturing efficiencies.
Income from operations decreased $7.5 million, or 19.9%, to $30.1 million in the third quarter of fiscal 2004. Expressed as a percentage of net sales, income from operations was 9.2% in the third quarter of fiscal 2004 compared with 10.9% in the third quarter of fiscal 2003.
As a result of the foregoing factors, EBITDA (as defined under “Seasonality”) decreased $6.2 million or 14.6% to $36.3 million in the third quarter of fiscal 2004. Expressed as a percentage of net sales, EBITDA was 11.1% in the third quarter of fiscal 2004 compared with 12.4% in the third quarter of fiscal 2003.
Interest expense, including amortization of deferred financing fees, increased $0.2 million, or 3.1%, to 6.7 million for the third quarter of fiscal 2004. Expressed as a percentage of net sales, interest expense, including amortization of deferred financing fees, was 2.0% in the third quarter of fiscal 2004 and 1.9% in the third quarter of fiscal 2003.
Net income was $18.2 million for the third quarter of fiscal 2004, compared to net income in the third quarter of fiscal 2003 of $20.3 million, a decrease of 10.3% over the same period last year.
For the Three Months Ended
February 28, 2004 March 1, 2003
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Net sales $328,032 $343,983
Cost of sales 225,490 237,849
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Gross profit 102,542 106,134
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Operating expenses:
Selling 42,635 43,064
Research and development 3,612 3,210
General and administrative 26,166 22,284
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Total operating expenses 72,413 68,558
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Income from operations 30,129 37,576
Interest expense 6,430 6,340
Amortization of deferred
financing fees 277 184
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Income before income taxes 23,422 31,052
Provision for income taxes 5,194 10,728
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Net income 18,228 20,324
Other comprehensive income(loss),
comprised of foreign currency
translation adjustment, net of
income tax benefit of $1,123 in
2004 and net of income tax expense
of $375 in 2003. (1,832) 611
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Comprehensive income $16,396 $20,935
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