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Nautilus Pushes through Losses to Expand Plant

Vancouver, WA — Despite recording a loss from continuing operations of $35.4 million in the third quarter of 2008, Nautilus Inc. has negotiated a deal to spend $1.7 million to expand its manufacturing facility in Grayson County, VA. The expansion makes room for the company to add production of one of its cardio equipment lines to the plant, where about 60 jobs are expected to be added, according to a release from Virginia Gov. Tim Kaine's office.

Numbers for fourth quarter 2008 had not been released as of press time, but in the third quarter of last year, Nautilus had a loss from continuing operations of $14.4 million, including charges of $7.1 million related to a large bad debt and severance costs. The third quarter's net sales from continuing operations were $93.7 million, which was a decrease of 18.7 percent from $115.3 million in the corresponding period last year. The net sales decline in the direct business was primarily due to the weak consumer and tight credit environments, according to Ed Bramson, chairman and CEO of Nautilus. The decline in the commercial business was primarily because of the suspension of sales of the company's commercial TreadClimber, he says.

Inventory was down in third quarter 2008 from the same time last year, and Bramson says he expects inventory to be down for the year as well.

In a call with analysts after release of the financials, Bramson said that the biggest opportunities for Nautilus are in the commercial and international sectors. Even though steel prices are declining, the company won't see the effects until early 2009, he said.

By press time, the company had not responded to requests for additional information about the Virginia plant expansion.

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