The Nautilus Group, Inc. reported that fourth quarter net sales were $152.8 million compared to $155.5 million for the corresponding period last year. Net income during the
period was $9.4 million, or $0.28 per diluted share, compared to $23.0 million, or $0.69 per diluted share, for the corresponding period in the previous year.
The Company's net sales for the year ended December 31, 2003 were $498.8 million compared to $584.7 million for last year. Net income during the year was $34.4 million or $1.04 per diluted share, compared to $97.9 million, or $2.79 per diluted share, last year.
Gregg Hammann, President and Chief Executive Officer, commented,
“2003 was a challenging year for Nautilus. Our management and
employees worked through a difficult environment to identify the
Company's strengths and market opportunities. We conducted extensive
research on the fitness equipment market and determined that we were
missing a very large part of this $5 billion market. By working more
closely with our customers across multiple channels to provide
innovative and differentiated products we will begin to capitalize on
Nautilus' strong portfolio of health and fitness brands.”
“Over the coming years, Nautilus will continue to focus on
positioning the Company as an innovator and brand leader in the health
and fitness industries,” Mr. Hammann continued. “We plan to expand our
consumer base by repositioning our brands and improving our
distribution channels. We will continue to introduce new and
differentiated products and maximize operating efficiencies to
increase revenue and profitability, while maintaining a commitment to
superior customer service.”
“From a product development perspective, we are pleased with our
progress in 2003 and are encouraged by the market reception of our new
products. We introduced several new innovative fitness products,
including SelectTech. This free weight adjustable dumbbell product
received national recognition for one of the best new innovative
fitness products of the year by several national magazines. In
addition, Consumer Reports just ranked one of our Schwinn consumer
treadmills as Best Buy and one of our Nautilus treadmills as a Very
Good Buy. Consumer Reports ranked our new TreadClimber as best TV
consumer cardio product. Bowflex was named best TV consumer strength
product by Consumer Reports. Based on our current R&D product release
schedule, we believe we will be well positioned for the 2004 consumer
fitness season for which retailers will begin taking delivery of
inventory in the second half of this year.”
Rod Rice, Chief Financial Officer, stated, “We look forward to
accelerating the pace of innovation over the coming quarters to
position Nautilus as the clear leader in the health and fitness
industries. We will be increasing our research and development
investment in 2004 as we take a longer-term focus on creating new
products and improving existing ones. At the same time, we continue to
maintain a tight control on expenditures and work to reduce costs.”
At December 31, 2003, Nautilus had $72.6 million in cash and cash
equivalents, a 47% increase over 2002 cash and short-term investments,
with no debt.
Today, the Board of Directors has declared a regular quarterly
dividend of $0.10 per common share, payable March 10, 2004, to
shareholders of record at the close of business on February 19, 2004.
Mr. Hammann concluded, “We are excited about our long-term
prospects as we build a foundation for clear and sustainable growth.
Nautilus has the most recognized brands in the health and fitness
industry, and we have identified significant untapped market
opportunities for our brands. In the past, we have been primarily
focused on selling strength products through our direct channel, but
our research shows that 80% of our target consumer market buys fitness
products through the retail channel and 60% of the dollars are spent
on consumer cardiovascular products. We will continue to be the leader
in selling strength and cardio brands through our direct channel, but
over the long term we will focus on forging partnerships with key
commercial, specialty retail and sporting goods customers as well as
continuing to focus on our direct consumer business.”
“In light of our current turnaround position, we remain cautious
about guidance and believe it is prudent at this time to provide only
detailed guidance for the first quarter. As we move to a more
diversified revenue stream, we expect to experience seasonality
similar to the retail and commercial sales channels. We believe our
revenue and earnings will be lower in the first half of 2004 compared
to the latter half of the year, with the second quarter experiencing
the most softness. In addition, we will be increasing our research and
development investment in 2004. Our first quarter revenue is expected
to be in the range of $120 to $130 million, with earnings per share in
the range of $0.18 to $0.20. We are projecting our gross profit margin
to be in the range of 46% to 49%, with operating cash flow in the
range of $9 to $10 million. We will provide additional guidance, as
well as an update on the progress of our turnaround, during our first
quarter conference call. ”
THE NAUTILUS GROUP, INC.
Consolidated Statements of Operations
(In Thousands, Except Share and Per Share Data)
(Unaudited)
Three months ended Twelve months ended
December 31, December 31,
------------------------- ------------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
NET SALES $152,827 $155,463 $498,836 $584,650
COST OF SALES 84,546 72,396 252,690 252,083
----------- ----------- ----------- -----------
Gross profit 68,281 83,067 246,146 332,567
OPERATING EXPENSES:
Selling and
marketing 39,557 38,913 149,245 145,257
General and
administrative 12,207 6,677 37,098 26,017
Related-party
royalties 1,718 1,997 6,556 9,089
Third-party
royalties 462 302 1,431 1,019
----------- ----------- ----------- -----------
Total operating
expenses 53,944 47,889 194,330 181,382
----------- ----------- ----------- -----------
OPERATING INCOME 14,337 35,178 51,816 151,185
OTHER INCOME:
Interest income 246 301 839 1,561
Other - net 61 527 1,098 202
----------- ----------- ----------- -----------
Total other income,
net 307 828 1,937 1,763
----------- ----------- ----------- -----------
INCOME BEFORE INCOME
TAXES 14,644 36,006 53,753 152,948
INCOME TAX EXPENSE 5,272 12,962 19,351 55,061
----------- ----------- ----------- -----------
NET INCOME $9,372 $23,044 $34,402 $97,887
=========== =========== =========== ===========
BASIC EARNINGS PER
SHARE $0.29 $0.69 $1.06 $2.84
DILUTED EARNINGS PER
SHARE $0.28 $0.69 $1.04 $2.79
