Nautilus, Inc. Announces Results for Second Quarter 2008

Business Wire, July 31, 2008

Significant Restructuring Activity Commenced in the Quarter

VANCOUVER, Wash. -- Fitness company Nautilus, Inc. (NYSE:NLS) today announced results for the second quarter ended June 30, 2008.

Loss from continuing operations for the quarter ended June 30, 2008 was $9.6 million or $0.30 per diluted share after recording restructuring related and other charges of $6.6 million, or $0.14 per diluted share after-tax. The charges principally related to severance, inventory reserves and anticipated settlements related to licensing agreements. In the second quarter of 2007, the Company reported income from continuing operations of $0.7 million or $0.02 per diluted share including a benefit of $18.3 million or $0.34 per diluted share after-tax from a litigation settlement. Results from continuing operations exclude the Company's former apparel business, which is considered a discontinued operation and was sold on April 18, 2008 for $69.4 million. Net loss (including discontinued operations) for the second quarter 2008 was $8.9 million, or $0.28 per diluted share, compared to net income of $1.1 million, or $0.04 per diluted share for the second quarter of 2007.

An important part of our restructuring activities has been the establishment of separate teams with authority and responsibility for the profitability of each of our global business units. We will now be reporting the Commercial, Direct and Retail businesses on a global basis. As a result of changing the reportable business segments in the second quarter of 2008, accounting rules require the Company to perform an interim goodwill impairment test. The Company is in the process of determining whether a goodwill impairment charge is required as of June 30, 2008. An impairment charge, if any, would be a non-cash charge. The Company expects to complete this goodwill impairment assessment prior to the filing of its Form 10-Q for the second quarter.

Net sales from continuing operations for the three months ended June 30, 2008, were $95.6 million compared to $102.5 million for the corresponding period last year, a decrease of 7%. Net sales increases in the Company's Retail business were offset by declines in the Direct business, principally due to a weak consumer and tight credit environment, as well as declines in Commercial sales principally due to suspending sales of the Commercial TreadClimber. We have commenced work on a new Commercial TreadClimber which we expect to introduce at a future date.

As of June 30, 2008, the Company had a net cash position of $4 million and unutilized borrowing availability of approximately $35 million versus net debt of $71 million at December 31, 2007. During the second quarter of 2008, the Company repurchased $2.2 million of common stock. As of July 29, 2008, the Company had repurchased 981,398 shares of common stock at an average price of $5.16 per share or a total of $5.1 million, leaving $4.9 million remaining on the $10 million share repurchase program authorized by our Board of Directors in May 2008.

"In addition to managing our expenses tightly, we are continuing our thorough review of each business unit with a particular focus on profitable growth," stated Edward Bramson, Chairman and Chief Executive Officer of Nautilus, Inc. "The four areas of strategic focus are new product development, resolving channel conflict, expanding our share of the cardio market, and capitalizing on our strong portfolio of brands. In order to improve our profitability in the current economic environment, we have initiated a restructuring program which is expected to reduce fixed costs significantly."

A copy of the presentation detailing the restructuring is available on our website at www.nautilusinc.com/earnings.> Conference Call and Presentation

The conference call is scheduled for 5:00 p.m. EDT (2:00 p.m. PDT), July 31, 2008. 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. The accompanying presentation will be hosted at www.nautilusinc.com/earnings. In addition, listeners may call (866) 394-6821 in North America and (706) 645-0458 from outside North America. Participants from the Company will be Edward Bramson, Chairman and Chief Executive Officer, and Bill Meadowcroft, Chief Financial Officer.

A telephonic playback will be available from 4:00 p.m. PDT, July 31, through 4:00 p.m. PDT, August 14, 2008. North American callers may dial (800) 633-8284 and international callers may dial (402) 977-9140 to hear the playback. The passcode is 21388886.

About Nautilus, Inc.

Headquartered in Vancouver, Wash., Nautilus, Inc. (NYSE:NLS) is a global fitness products company providing innovative, quality solutions to help people achieve a healthy lifestyle. With a brand portfolio including Nautilus[R], Bowflex[R], Schwinn[R]Fitness, StairMaster[R] and Universal[R], Nautilus manufactures and markets innovative fitness products through direct, commercial, retail, and international channels. Formed in 1986, the company had 2007 sales of $502 million. It has 1,100 employees and operations in Washington, Oregon, Colorado, Oklahoma, Virginia, Canada, Switzerland, Germany, United Kingdom, Italy, China and other locations around the world. Website: www.nautilusinc.com