On May 26, 2005 the federal district court in Seattle dismissed the remaining claims in Nautilus' patent infringement case against Icon Health and Fitness. Therefore, the patent infringement case has been dismissed and will not proceed to trial as previously scheduled.

This case is one of three cases Nautilus has on file against Icon Health and Fitness. Nautilus will appeal this case to the Federal Circuit Court of Appeals, which has previously ruled in our favor in two separate appeals on this matter. In addition to appealing this patent case, we will continue to prosecute the two trademark infringement cases against Icon Health and Fitness.

We believe this matter will have no bearing on the success of our operating plans or our operating results. Nautilus is driving growth by bringing innovative branded fitness products to consumers wherever they shop and exercise and we are fully committed to protecting the intellectual property of our innovative brands. We believe vigorously protecting intellectual property is fundamental to any company committed to bringing a fast pace of innovation to their customers and industry.