Nautilus, Inc. has entered into definitive agreements for the sale of certain assets of its commercial business to Fit Dragon International Ltd. for $12.3 million. The company had previously announced its intention to divest itself of its commercial business in order to enable its team to invest all resources on its branded consumer retail and direct businesses.
The company will receive a net cash payment of $10.9 million and approximately $1.4 million in liabilities are being assumed by the buyer. Nautilus will receive approximately $7.9 million cash at closing, $2.0 million within 60 days, and the remaining $1.0 million over the next three years. In addition, Nautilus will be entitled to receive certain royalties based on the buyer's post-closing sales of Schwinn commercial indoor cycling and StairMaster products.
The transactions are subject to customary conditions to closing and are scheduled to close on or before December 30, 2009.
The agreements provide for the sale of certain assets of StairMaster and Schwinn Fitness, including the licensing of indoor cycling products for the Schwinn Fitness brand for use in the commercial channel. The company retains certain rights to the Schwinn brand and will continue to market Schwinn fitness products in the Consumer channel, including both retail and direct to consumer.
Nautilus will also retain certain rights to sell StairMaster products in the retail and direct to consumer markets.
The company reported a $22.9 million loss from discontinued operations, which represents the divested Commercial business, for the third quarter of 2009 The loss from discontinued operations in the third quarter 2008 was $11.9 million.
Nautilus continues to work with Robert W. Baird & Co. to divest its remaining commercial assets, including the strength and cardio lines and the manufacturing plant in Virginia.
With the disposition of these commercial businesses, Nautilus plans to focus exclusively on the consumer marketplace. As part of that effort, Bill McMahon has been promoted to senior vice president and general manager for the entire Consumer business reporting directly to Edward Bramson, CEO of Nautilus. In addition, the company announced that Sebastien Goulet, general manager Commercial business and SVP manufacturing, has elected to leave the company to pursue other opportunities.