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Nautilus Experiences Fourth Quarter, Year 2008 Losses

VANCOUVER, WA -- Net sales for Nautilus Inc. were down in both the fourth quarter 2008 and full year 2008, and the company had a net loss in both periods, according to financials released by Nautilus today.

Net sales in fourth quarter 2008 were $92.3 million compared to $146.7 million in 2007, a 37 percent decrease. For the year, net sales were $411 million, down 18 percent from $501 million in 2007.

The company’s fourth quarter 2008 loss of $41.2 million is less than the $45.7 million loss it had in fourth quarter 2007. For the year, the company had a net loss of $90.6 million, which is more than the $55.6 million loss the company had in 2007.

"This decline is primarily due to the late investment by health clubs to modernize existing equipment, reduced Treadclimber sales, tighter inventory controls by dealers that sell mainly into light commercial applications and delays in opening up new gyms," Ed Bramson, CEO of Nautilus, said in a call with analysts. "Excluding Treadclimber sales commercial business revenue was down 29 percent in fourth quarter of 2008 versus fourth quarter of 2007."

The company has been cutting its expenses by various means, including layoffs and closing a manufacturing facility in Tulsa, OK. In late February, Nautilus laid off 50 employees at its Vancouver, WA, headquarters, leaving head count there at 350 people. In October 2007, the company laid off 140 people, 80 of those at its headquarters.

The company plans to reintroduce the Treadclimber this year, but Ed Bramson, CEO of Nautilus, who spoke about the company’s financials in a call with analysts, would not offer a release date. Nautilus has suspended the manufacturing of the Treadclimber twice, most recently in early 2008, due to durability issues.

On the consumer side, a safety issue caused Nautilus to voluntarily recall 78,000 of its Bowflex Ultimate 2 Home Gyms this month. The company received at least 18 reports of injuries from people using the equipment. This is the second time in two years that the company has recalled the Bowflex Home Gym.

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