Nautilus 2002 Net Sales Surge 61%; EPS Up 50%

The Nautilus Group, Inc. announced reported net sales of $155.5 million for the fourth quarter of 2002 compared to $125.3 million for the corresponding period last year. Earnings per share for the fourth quarter were $0.69, compared to $0.57 for the corresponding period last year.

For the full fiscal year ended December 31, 2002, the Company reported net sales of $584.6 million, up 61% from $363.9 million in 2001. Earnings per share were $2.79, a 50% increase from $1.85 per share generated in 2001.

Commercial/retail sales represented 41% of total sales in the fourth quarter, up from 35% in fourth quarter of 2001. The continued diversification of overall Company product offerings is mainly due to the addition of Schwinn Fitness and StairMaster, which were acquired in September 2001 and February 2002 respectively.

The Company also reiterated their comfort with previously released guidance for 2003. The Company expects 2003 revenue to range from $580 million to $600 million with corresponding earnings per share in the $2.50 to $2.60 range. The Company expects operating cash flow for 2003 to be approximately $85 million to $95 million.

Brian Cook, Chief Executive Officer, offered his perspective on 2002 and the business outlook for 2003, “We are pleased with our fourth quarter and 2002 results. The full year was a record year for our Company both in the direct and commercial/retail segments. We continued to add to our portfolio of highly recognized brand names with the integration of Schwinn Fitness and StairMaster and introduced 16 new products through the retail sales channel and continued to develop and expand our line of commercial fitness products. Also during the year, we grew our direct marketing segment by over 34% year-over-year, in spite of a challenging advertising environment during the latter half of 2002.”

Mr. Cook added, “Our business remains healthy, we have a strong balance sheet, and have consistently produced solid operating results and cash flow. Because of these consistent operating results, our Company is in a strong position to improve upon existing product lines and introduce new products into our direct and commercial/retail sales channels. ”

According to management, the Company is launching a revolutionary patented cardiovascular health and fitness product that will be complementary to the strength-training Bowflex. This product will be unveiled in New York, NY on March 11, 2003 and will be sold through the direct marketing channels starting in the second quarter.

Rod Rice, Chief Financial Officer, stated, “Because of our confidence in future operating results, our Board of Directors has declared a $0.40 per share annual dividend and authorized $50 million stock repurchase program.”

Mr. Rice added, “We will continue to build on this leadership position by improving our core businesses and introducing new products to enable our Company’s long-term growth in the health and fitness industry.”

                       THE NAUTILUS GROUP, INC.
                 Consolidated Statements of Operations
            (In Thousands, Except Share and Per Share Data)


                        Three months ended      Twelve months ended
                            December 31,            December 31,
                       -----------------------------------------------
                          2002        2001        2002        2001
                       ----------- ----------- ----------- -----------

NET SALES             $   155,463 $   125,296 $   584,650 $   363,862

COST OF SALES              72,444      56,612     252,336     140,699
                       ----------- ----------- ----------- -----------

   Gross profit            83,019      68,684     332,314     223,163
                       ----------- ----------- ----------- -----------

OPERATING EXPENSES:
 Selling and marketing     38,913      28,946     145,258      99,813
 General and
  administrative            6,651       5,231      25,893      15,574
 Royalties                  2,299       2,355      10,108       7,363
                       ----------- ----------- ----------- -----------

   Total operating
    expenses               47,863      36,532     181,259     122,750
                       ----------- ----------- ----------- -----------

OPERATING INCOME           35,156      32,152     151,055     100,413
                       ----------- ----------- ----------- -----------

OTHER INCOME:
 Interest income              301         546       1,561       4,024
 Other - net                  548         163         331         381
                       ----------- ----------- ----------- -----------

    Total other
     income, net              849         709       1,892       4,405
                       ----------- ----------- ----------- -----------

INCOME BEFORE INCOME
 TAXES                     36,005      32,861     152,947     104,818

INCOME TAX EXPENSE         12,961      12,331      55,060      38,235
                       ----------- ----------- ----------- -----------

NET INCOME            $    23,044 $    20,530 $    97,887 $    66,583