Nautilus, Inc. has completed the sale and licensing of certain assets of its commercial business to Xiamen World Gear Sports Goods Co., Ltd. The sale was completed pursuant to the terms of two previously disclosed asset purchase agreements by and between the company and Fit Dragon International, Ltd.
Under the terms of the asset purchase agreements, the company received a cash payment of approximately $7.9 million at closing and expects to receive approximately $2.0 million in additional cash payments within sixty days of closing and another $1.0 million over the next three years. In addition, the company is entitled to receive certain royalties based on World Gear's post-closing sales of Schwinn® commercial indoor cycling and StairMaster® products.
The company said it had previously announced its intention to divest itself of its commercial business in order to enable its management team to focus its resources on its branded consumer retail and direct businesses. The aforementioned agreements do not involve Schwinn® products which are sold in the retail and direct sales channels, which Nautilus will continue to sell. Nautilus continues to work with Robert W. Baird & Co. to divest its remaining commercial assets, including Nautilus-branded strength and cardio lines and the manufacturing plant in Virginia.
“We are pleased that we have completed this important step toward our goal of focusing exclusively on our direct and retail channels,” said Edward Bramson CEO of Nautilus. “We believe this divesture is in the best interest of our shareholders and will enable us to better leverage the new operating model of our restructured company. We are confident that the expected divesture of the remaining Nautilus-branded strength and cardio commercial lines during 2010 will ensure that these commercial products will continue to be available for health clubs and fitness centers for the future.”
The company also announced that a federal income tax refund of approximately $12.1 million which it previously expected to receive by March 31, 2010 is now expected to be received earlier, prior to Jan. 31, 2010.
Pursuant to the sale of the commercial business unit assets referred to above, the Loan Agreement with Bank of America was terminated and all related security interests were released. At Sep. 30, 2009 and Dec. 29, 2009 there were no borrowings under the Loan Agreement.
Bramson concluded, “With the sale of these commercial assets and our anticipated federal tax refund, we enter 2010 with a much improved balance sheet and as a more focused and healthier company.”
