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01.22.02
DIRECT FOCUS ANNOUNCES RECORD FOURTH QUARTER
AND YEAR-END RESULTS
DIRECT FOCUS ANNOUNCES RECORD FOURTH QUARTER
AND YEAR-END RESULTS
AND YEAR-END RESULTS
Vancouver, WA?January 22, 2002--Direct Focus, Inc. (Nasdaq: DFXI), a leading marketing company for fitness and healthy lifestyle products, today announced its results for the quarter and year ended December 31, 2001.
For the fourth quarter of 2001, Direct Focus reported net sales of $125.3 million, an increase of 77% from $70.6 million for the fourth quarter of 2000. eCommerce sales for the fourth quarter were $18.7 million, up 36% from $13.7 million for the same period of 2000. For 2001, the Company reported net sales of $363.9 million, up 62% from $223.9 million for 2000.
Commercial and retail sales represented 35% of total sales in the fourth quarter, up from 13% in the same period of 2000. The change in sales mix is the result of the acquisition of Schwinn Fitness.
Net income for the fourth quarter of 2001 was $20.5 million or $0.57 per diluted share, up 53% from $13.5 million or $0.37 per diluted share for the same period of 2000. Net income for 2001 was $66.6 million, or $1.85 per diluted share, up 60% from $41.6 million or $1.16 per diluted share for 2000.
The Company recently announced that it has entered into an agreement to acquire substantially all of the assets of StairMaster Sports/Medical, Inc. (?StairMaster?) for approximately $25 million in cash. The sale is subject to bankruptcy court approval and, if approved, is expected to close during the first quarter of 2002. At the end of 2001, Direct Focus had cash and short-term investments of $51.7 million.
?We are very pleased with the successful execution of our growth strategy in 2001,? said Brian Cook, chief executive officer. ?Despite the challenging business environment, we had record sales and earnings for the quarter and year. We added to our portfolio of powerful brand names and diversified our product lines with our acquisition of Schwinn Fitness. Throughout the year, our strategy of selling branded products through multiple sales channels proved to be a winning formula for strengthening our position as a worldwide leader in the fitness and healthy lifestyle markets.?
?In our direct business, we continue to see strong growth. We took advantage of favorable advertising costs and availability during the year to increase consumer awareness of our Bowflex and Nautilus Sleep System product lines. We strengthened our eCommerce sales platform, which is an integral component of the direct sales channel. We also introduced a new high-end Bowflex model towards the end of the year and began marketing nutritional supplements from Champion Nutrition for added product diversity.?
?The results for our commercial and retail business reflect both the vitality of our Schwinn Fitness business and the growing popularity of our new Nautilus commercial and retail products. We greatly expanded our market share when we acquired Schwinn Fitness, and we are extremely pleased with its successful integration into our Company. With our proposed acquisition of StairMaster, we expect to gain another strong fitness brand and offer an increasingly powerful combination of cardiovascular and strength training equipment.?
Direct Focus will host a conference call today to discuss its financial results at 2:00 PM Pacific (5:00 PM Eastern). A listen-only broadcast of the conference call will be available on the Company?s website (www.directfocusinc.com) under ?Investor Relations? or by calling 800-633-8580 (Reservation No. 20214285). A 48-hour replay will be available by calling 800-633-8284 (Reservation No. 20214285). A replay will also be available through February 4, 2002 under ?Investor Relations? on the Company?s website.
About Direct Focus, Inc.
Direct Focus is a leading marketing company for fitness and healthy lifestyle products with direct, retail, and commercial sales channels worldwide. The Company currently markets its Bowflex line of home fitness equipment and Nautilus Sleep Systems directly to consumers, using an effective combination of television advertising, 800-call centers and websites. The Company sells its Nautilus and Schwinn consumer fitness products through retail athletic stores and its Nautilus and Schwinn commercial fitness equipment directly to health clubs and other institutions. The Company is headquartered in Vancouver, Washington. Direct Focus is located on the Web at www.directfocusinc.com.
###
This press release contains forward-looking statements relating to anticipated sales, revenue growth, and the development of Direct Focus' products and services, including statements regarding its Nautilus and Schwinn businesses and the expected acquisition of the assets of StairMaster. Factors that could affect Direct Focus' actual results include its reliance on a limited product line, fluctuations in advertising rates, market acceptance of its existing and future products, growth management challenges including the growth resulting from the acquisition of the assets of Schwinn Fitness in September 2001 and the expected acquisition of the assets of StairMaster in the first quarter of 2002, its limited experience in marketing Nautilus Sleep Systems, a decline in consumer spending due to unfavorable economic conditions, government regulatory action, its ability to effectively identify and negotiate any future strategic acquisitions, its ability to integrate the Schwinn Fitness and StairMaster businesses and any other acquired businesses into its operations, unpredictable events and circumstances relating to international operations including its use of foreign manufacturers, and general economic conditions. A more detailed description of certain factors that could affect actual results include, but are not limited to, those discussed in Direct Focus' annual report on Form 10-K for the fiscal year ended December 31, 2000.DIRECT FOCUS, INC. - CONSOLIDATED
Statement of Operations
DIRECT FOCUS, INC.-CONSOLIDATED
Balance Sheet
For the fourth quarter of 2001, Direct Focus reported net sales of $125.3 million, an increase of 77% from $70.6 million for the fourth quarter of 2000. eCommerce sales for the fourth quarter were $18.7 million, up 36% from $13.7 million for the same period of 2000. For 2001, the Company reported net sales of $363.9 million, up 62% from $223.9 million for 2000.
Commercial and retail sales represented 35% of total sales in the fourth quarter, up from 13% in the same period of 2000. The change in sales mix is the result of the acquisition of Schwinn Fitness.
Net income for the fourth quarter of 2001 was $20.5 million or $0.57 per diluted share, up 53% from $13.5 million or $0.37 per diluted share for the same period of 2000. Net income for 2001 was $66.6 million, or $1.85 per diluted share, up 60% from $41.6 million or $1.16 per diluted share for 2000.
The Company recently announced that it has entered into an agreement to acquire substantially all of the assets of StairMaster Sports/Medical, Inc. (?StairMaster?) for approximately $25 million in cash. The sale is subject to bankruptcy court approval and, if approved, is expected to close during the first quarter of 2002. At the end of 2001, Direct Focus had cash and short-term investments of $51.7 million.
?We are very pleased with the successful execution of our growth strategy in 2001,? said Brian Cook, chief executive officer. ?Despite the challenging business environment, we had record sales and earnings for the quarter and year. We added to our portfolio of powerful brand names and diversified our product lines with our acquisition of Schwinn Fitness. Throughout the year, our strategy of selling branded products through multiple sales channels proved to be a winning formula for strengthening our position as a worldwide leader in the fitness and healthy lifestyle markets.?
?In our direct business, we continue to see strong growth. We took advantage of favorable advertising costs and availability during the year to increase consumer awareness of our Bowflex and Nautilus Sleep System product lines. We strengthened our eCommerce sales platform, which is an integral component of the direct sales channel. We also introduced a new high-end Bowflex model towards the end of the year and began marketing nutritional supplements from Champion Nutrition for added product diversity.?
?The results for our commercial and retail business reflect both the vitality of our Schwinn Fitness business and the growing popularity of our new Nautilus commercial and retail products. We greatly expanded our market share when we acquired Schwinn Fitness, and we are extremely pleased with its successful integration into our Company. With our proposed acquisition of StairMaster, we expect to gain another strong fitness brand and offer an increasingly powerful combination of cardiovascular and strength training equipment.?
Direct Focus will host a conference call today to discuss its financial results at 2:00 PM Pacific (5:00 PM Eastern). A listen-only broadcast of the conference call will be available on the Company?s website (www.directfocusinc.com) under ?Investor Relations? or by calling 800-633-8580 (Reservation No. 20214285). A 48-hour replay will be available by calling 800-633-8284 (Reservation No. 20214285). A replay will also be available through February 4, 2002 under ?Investor Relations? on the Company?s website.
About Direct Focus, Inc.
Direct Focus is a leading marketing company for fitness and healthy lifestyle products with direct, retail, and commercial sales channels worldwide. The Company currently markets its Bowflex line of home fitness equipment and Nautilus Sleep Systems directly to consumers, using an effective combination of television advertising, 800-call centers and websites. The Company sells its Nautilus and Schwinn consumer fitness products through retail athletic stores and its Nautilus and Schwinn commercial fitness equipment directly to health clubs and other institutions. The Company is headquartered in Vancouver, Washington. Direct Focus is located on the Web at www.directfocusinc.com.
###
This press release contains forward-looking statements relating to anticipated sales, revenue growth, and the development of Direct Focus' products and services, including statements regarding its Nautilus and Schwinn businesses and the expected acquisition of the assets of StairMaster. Factors that could affect Direct Focus' actual results include its reliance on a limited product line, fluctuations in advertising rates, market acceptance of its existing and future products, growth management challenges including the growth resulting from the acquisition of the assets of Schwinn Fitness in September 2001 and the expected acquisition of the assets of StairMaster in the first quarter of 2002, its limited experience in marketing Nautilus Sleep Systems, a decline in consumer spending due to unfavorable economic conditions, government regulatory action, its ability to effectively identify and negotiate any future strategic acquisitions, its ability to integrate the Schwinn Fitness and StairMaster businesses and any other acquired businesses into its operations, unpredictable events and circumstances relating to international operations including its use of foreign manufacturers, and general economic conditions. A more detailed description of certain factors that could affect actual results include, but are not limited to, those discussed in Direct Focus' annual report on Form 10-K for the fiscal year ended December 31, 2000.
Statement of Operations
| 3 Mos. Ended December 31, | 12 Mos. Ended December 30, | |||
| 2001 | 2000 | 2001 | 2000 | |
| ------------ | ------------ | ------------ | ------------ | |
| NET SALES | $125,296,164 | $70,629,117 | $363,862,384 | $223,927,365 |
| COST OF SALES | 56,611,284 | 24,677,260 | 140,698,578 | 75,573,619 |
| ------------ | ------------ | ------------ | ------------ | |
| Gross profit | 68,684,880 | 45,951,857 | 223,163,806 | 148,353,746 |
| ------------ | ------------ | ------------ | ------------ | |
| OPERATING EXPENSES | ||||
| Selling and marketing | 28,946,566 | 22,239,255 | 99,813,812 | 73,509,675 |
| General and administrative | 5,231,576 | 2,562,823 | 15,573,667 | 8,804,446 |
| Royalties | 2,355,637 | 1,525,163 | 7,363,067 | 4,979,287 |
| ------------ | ------------ | ------------ | ------------ | |
| Total operation expenses | 36,533,779 | 26,327,241 | 122,750,546 | 87,293,408 |
| ------------ | ------------ | ------------ | ------------ | |
| INCOME FROM OPERATIONS | 32,151,101 | 19,624,616 | 100,413,260 | 61,060,338 |
| ------------ | ------------ | ------------ | ------------ | |
| OTHER INCOME | ||||
| Interest income | 545,431 | 1,222,409 | 4,024,095 | 3,631,993 |
| other -net | 163,798 | 178,278 | 380,623 | 347,175 |
| ------------ | ------------ | ------------ | ------------ | |
| Total other income-net | 709,229 | 1,400,687 | 4,404,718 | 3,979,168 |
| ------------ | ------------ | ------------ | ------------ | |
| INCOME BEFORE INCOME TAXES | 32,860,330 | 21,025,303 | 104,817,978 | 65,039,506 |
| INCOME TAX EXPENSE | 12,330,580 | 7,568,298 | 38,235,314 | 23,413,412 |
| ------------ | ------------ | ------------ | ------------ | |
| NET INCOME | $20,529,750 | $13,457,005 | $66,582,664 | $41,626,094 |
| ------------ | ------------ | ------------ | ------------ | |
| BASIC EARNINGS PER SHARE | $0.59 | $0.38 | $1.89 | $1.18 |
| DILUTED EARNINGS PER SHARE | $0.57 | $0.37 | $1.85 | $1.16 |
| Basic shares outstanding | 34,928,647 | 35,310,897 | 35,183,632 | 35,287,604 |
| Diluted shares outstanding | 35,793,531 | 36,308,320 | 35,966,038 | 35,997,366 |
Balance Sheet
| December 31, 2001 |
December 31, 2000 |
||
| ------------ | ------------ | ||
| ASSETS | |||
| CURRENT ASSETS | |||
| Cash | $35,638,944 | $77,181,064 | |
| Short Term investments | 16,069,691 | - | |
| Trade receivables | 24,858,295 | 4,941,286 | |
| Inventories | 45,516,207 | 12,653,117 | |
| Prepaid expenses and other current assets | 2,006,623 | 591,453 | |
| Notes receivable | 2,671,838 | - | |
| deferred income taxes | 1,425,190 | 950,363 | |
| ------------ | ------------ | ||
| Total Current assets | 128,186,788 | 96,317,283 | |
| ------------ | ------------ | ||
| PROPERTY, PLANT AND EQUIPMENT | 25,228,130 | 16,668,884 | |
| OTHER ASSETS | 40,489,574 | 4,140,277 | |
| TOTAL ASSETS | $193,904,492 | $117,126,444 | |
| ------------ | ------------ | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||
| CURRENT LIABILITIES | |||
| Trade payables | $25,255,352 | $12,335,776 | |
| Accrued liabilities | 10,888,442 | 5,344,225 | |
| Income taxes payable | 4,792,170 | 2,542,967 | |
| Royalty payable to stockholders | 1,885,186 | 1,481,886 | |
| Customer deposits | 999,759 | 2,092,611 | |
| ------------ | ------------ | ||
| Total current liabilities | 43,820,909 | 23,797,465 | |
| ------------ | ------------ | ||
| LONG-TERM DEFERRED INCOME TAXES | 2,669,540 | 462,004 | |
| ------------ | ------------ | ||
| STOCKHOLDERS' EQUITY | |||
| Common stock | 4,900,241 | 16,812,476 | |
| Retained earnings | 142,637,163 | 76,054,499 | |
| Accumulated other comprehensive loss | (123,361) | - | |
| ------------ | ------------ | ||
| Total stockholders' equity | 147,414,043 | 92,866,975 | |
| ------------ | ------------ | ||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $193,904,492 | $117,126,444 | |
| ------------ | ------------ |