Nautilus, Inc. Second Quarter 2006 Net Sales Rise 6 Percent; Earnings in Line with Company Guidance

Business Wire, July 31, 2006

VANCOUVER, Wash. -- Nautilus, Inc. (NYSE: NLS), a leading marketer, developer, and manufacturer of branded health and fitness products, today announced results for the three months ended June 30, 2006.

Net sales for the three months ended June 30, 2006, were $137.6 million, compared to $129.6 million for the corresponding period last year, up 6.2 percent. Net income for the quarter was $1.7 million, or $0.05 per diluted share, compared with $3.3 million or $0.10 per diluted share for the year ago quarter, or $0.08 per diluted share on a non-GAAP basis when adjusted for FAS 123R.

"Our channel diversification strategy helped us improve sales in several channels, despite cautious consumer behavior in the wake of high fuel prices and continued interest rate increases," said Gregg Hammann, Chairman and Chief Executive Officer. "Good expense management helped us offset these pressures.

"We finished the quarter with a strong and improving balance sheet. We ended with cash exceeding our short-term borrowings, with inventory steadily improving. This provides us flexibility to consider stock repurchases or acquisitions in addition to working capital requirements.

"We effectively managed the seasonally slowest quarter and are now gearing up for the fall selling season, where we expect positive comps in every channel where we compete.

"We are now at a positive inflection point in our business," Hammann added. "Over the past three years, we have made many improvements to our business, including cleaning up legacy issues, doubling our investment in innovation, developing and executing a revenue-driving multi-brand and multi-channel marketing plan, and making substantial improvements in manufacturing, operations and information systems. After three years of investing in these areas, the foundation of our business is strong and continues to strengthen, positioning us for long-term profitable growth and category leadership.

For the third quarter of 2006, the Company estimates that net sales will be in the $165-180 million range, with expected earnings of $0.16 to $0.24 per diluted share, including about 1.5 cents per share for stock option expensing as required by FAS 123R in 2006. The Company said full year net sales are expected to be within its three-year range of 10-20 percent growth, and earnings expected to be above the high end of its three-year range of 20-30 percent growth.

In addition, the Company announced that its Board of Directors declared a regular quarterly dividend of $0.10 per common share, payable September 8, 2006, to stockholders of record as of August 18, 2006.

The second quarter conference call is scheduled for 4:30 p.m. EDT (1:30 p.m. PDT), July 31, 2006. It will be broadcast live over the Internet hosted at www.nautilusinc.com/events and will be archived online within one hour after completion of the call. In addition, listeners may call 888-214-7566 in North America and 415-537-1815 from outside North America. Participants will include: Gregg Hammann, Chairman and Chief Executive Officer; Bill Meadowcroft, Chief Financial Officer; Tim Hawkins, President of Fitness Equipment; and Mark Meussner, Vice President of Manufacturing.

A telephonic playback will be available from 3:30 p.m. PDT, July 31, through 3:30 p.m. PDT, August 10, 2006. North American callers can dial 800-633-8284, and international callers can dial 402-977-9140 to hear the playback. The passcode is 21299482.

About Nautilus, Inc.

Headquartered in Vancouver, Wash., Nautilus, Inc. (NYSE:NLS) is a pure fitness company that provides tools and education necessary to help people achieve a fit and healthy lifestyle. With a brand portfolio that includes Nautilus(R), Bowflex(R), Schwinn(R)Fitness, StairMaster(R), and Pearl iZUMi(R), Nautilus manufactures and markets a complete line of innovative health and fitness products through direct, commercial, retail, specialty and international channels. The Company was formed in 1986 and had sales of $631 million in 2005. It has 1,600 employees and operations in Washington, Oregon, Colorado, Oklahoma, Texas, Illinois, Virginia, Canada, Switzerland, Germany, United Kingdom, Italy, China, and other locations around the world. More information is at www.nautilusinc.com.

This press release includes forward-looking statements, including statements concerning estimated future sales and earnings, new product introduction, and resolution of operational issues. Factors that could cause Nautilus, Inc. actual results to differ materially from these forward-looking statements include availability of media time and fluctuating advertising rates, a decline in consumer spending due to unfavorable economic conditions, its ability to effectively develop, market, and sell future products, its ability to get foreign-sourced product through customs in a timely manner, its ability to effectively identify, negotiate and integrate any future strategic acquisitions, its ability to protect its intellectual property, introduction of lower-priced competing products, unpredictable events and circumstances relating to international operations including its use of foreign manufacturers, government regulatory action, and general economic conditions. Please refer to our reports and filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K and quarterly reports on Form 10-Q, for a further discussion of these risks and uncertainties. We also caution you not to place undue reliance on forward-looking statements, which speak only as of the date they are made. We undertake no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date they were made or to reflect the occurrence of unanticipated events.