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07.17.01
DIRECT FOCUS ANNOUNCES RECORD SECOND QUARTER RESULTS
DIRECT FOCUS ANNOUNCES RECORD SECOND QUARTER RESULTS
Vancouver, WA?July 17, 2001 Direct Focus, Inc. (Nasdaq: DFXI), a marketing company for fitness and healthy lifestyle products with a direct business model, today announced its results for the quarter ended June 30, 2001.
For the second quarter of 2001, Direct Focus reported net sales of $75.0 million, an increase of 56% from $48.1 million for the second quarter of 2000. Net income for the second quarter of 2001 was $14.6 million or $0.61 per diluted share, up 78% from $8.2 million or $0.34 per diluted share for the same period of 2000.
The Company also reported strong contributions from its eCommerce channel. eCommerce sales for the second quarter were $12.8 million, up 94% from $6.6 million for the same period of 2000. As of June 30, 2001, the Company had cash and short-term investments of $94.7 million, up from $77.2 million on December 31, 2000.
During the quarter, Direct Focus continued to strengthen its position in the fitness and healthy lifestyle markets. The Company announced a financial agreement with Champion Nutrition and expects to begin selling Champion?s nutritional supplements through its direct business segment in August 2001. The Company also expanded its management team with the appointment of Kevin Lamar as president.
?We are very pleased with our strong sales and profits for the second quarter, which is seasonally our slowest quarter,? said Brian Cook, chief executive officer. ?We continue to see sustained sales growth as we leverage our direct business model and powerful brand names. We believe that our Bowflex and Nautilus products are addressing the fitness and healthy lifestyles needs of our customers, and we expect Champion?s nutritional supplements to be a natural extension of these product lines.?
?In our direct business segment, sales of our Bowflex products and our Nautilus Sleep System continue to meet our growth targets. We are also pleased with the continued strength of our eCommerce channel, which has proven to be a strong complement to our data-driven business model. In our commercial and retail segment, we expect to introduce new products to our line of Nautilus home equipment later this summer, and we believe this business segment is well positioned for growth in the second half of the year, which is historically its best season.?
A listen-only broadcast of Direct Focus? second quarter conference call (2:00 PM Pacific/5:00 PM Eastern) will be available today on the Internet at www.directfocusinc.com under ?Investor Relations? or by calling 888-209-3786 (Reservation No. 19300124). A 48-hour phone replay will be available by calling 800-633-8284 or +1 858-812-6440 (Reservation No. 19300124). A replay will also be available through July 30, 2001 on the Internet at www.directfocusinc.com under ?Investor Relations.?
About Direct Focus, Inc.
Direct Focus, Inc. is a marketing company for fitness and healthy lifestyle products with a direct business model. 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 Web sites. The Company also sells its Nautilus commercial fitness equipment directly to health clubs and other institutions, and its Nautilus consumer fitness products through retail athletic stores. 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 and the development of Direct Focus' products and services, including statements regarding its Nautilus business. 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, 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 second quarter of 2001, Direct Focus reported net sales of $75.0 million, an increase of 56% from $48.1 million for the second quarter of 2000. Net income for the second quarter of 2001 was $14.6 million or $0.61 per diluted share, up 78% from $8.2 million or $0.34 per diluted share for the same period of 2000.
The Company also reported strong contributions from its eCommerce channel. eCommerce sales for the second quarter were $12.8 million, up 94% from $6.6 million for the same period of 2000. As of June 30, 2001, the Company had cash and short-term investments of $94.7 million, up from $77.2 million on December 31, 2000.
During the quarter, Direct Focus continued to strengthen its position in the fitness and healthy lifestyle markets. The Company announced a financial agreement with Champion Nutrition and expects to begin selling Champion?s nutritional supplements through its direct business segment in August 2001. The Company also expanded its management team with the appointment of Kevin Lamar as president.
?We are very pleased with our strong sales and profits for the second quarter, which is seasonally our slowest quarter,? said Brian Cook, chief executive officer. ?We continue to see sustained sales growth as we leverage our direct business model and powerful brand names. We believe that our Bowflex and Nautilus products are addressing the fitness and healthy lifestyles needs of our customers, and we expect Champion?s nutritional supplements to be a natural extension of these product lines.?
?In our direct business segment, sales of our Bowflex products and our Nautilus Sleep System continue to meet our growth targets. We are also pleased with the continued strength of our eCommerce channel, which has proven to be a strong complement to our data-driven business model. In our commercial and retail segment, we expect to introduce new products to our line of Nautilus home equipment later this summer, and we believe this business segment is well positioned for growth in the second half of the year, which is historically its best season.?
A listen-only broadcast of Direct Focus? second quarter conference call (2:00 PM Pacific/5:00 PM Eastern) will be available today on the Internet at www.directfocusinc.com under ?Investor Relations? or by calling 888-209-3786 (Reservation No. 19300124). A 48-hour phone replay will be available by calling 800-633-8284 or +1 858-812-6440 (Reservation No. 19300124). A replay will also be available through July 30, 2001 on the Internet at www.directfocusinc.com under ?Investor Relations.?
About Direct Focus, Inc.
Direct Focus, Inc. is a marketing company for fitness and healthy lifestyle products with a direct business model. 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 Web sites. The Company also sells its Nautilus commercial fitness equipment directly to health clubs and other institutions, and its Nautilus consumer fitness products through retail athletic stores. 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 and the development of Direct Focus' products and services, including statements regarding its Nautilus business. 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, 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 June 30, | 6 Mos. Ended June 30, | |||
| 2001 | 2000 | 2001 | 2000 | |
| ------------ | ------------ | ------------ | ------------ | |
| NET SALES | $75,009,612 | $48,131,564 | $149,864,337 | $95,464,163 |
| COST OF SALES | 25,772,168 | 16,941,196 | 51,076,157 | 32,125,708 |
| ------------ | ------------ | ------------ | ------------ | |
| Gross profit | 49,237,444 | 31,190,368 | 98,788,180 | 63,338,455 |
| ------------ | ------------ | ------------ | ------------ | |
| EXPENSES | ||||
| Selling and marketing | 22,633,450 | 16,401,562 | 45,785,085 | 32,216,335 |
| General and administrative | 3,413,795 | 1,823,892 | 6,616,438 | 3,782,303 |
| Royalties | 1,658,637 | 1,151,326 | 3,321,542 | 2,165,313 |
| ------------ | ------------ | ------------ | ------------ | |
| Total operation expenses | 27,705,882 | 19,376,780 | 55,723,065 | 38,163,951 |
| ------------ | ------------ | ------------ | ------------ | |
| INCOME FROM OPERATIONS | 21,531,562 | 11,813,588 | 43,065,115 | 25,174,504 |
| ------------ | ------------ | ------------ | ------------ | |
| OTHER INCOME | ||||
| Interest income | 1,117,757 | 824,195 | 2,512,502 | 1,439,712 |
| other -net | 85,433 | 124,179 | 186,833 | 85,031 |
| ------------ | ------------ | ------------ | ------------ | |
| Total other income(expense)-net | 1,203,190 | 948,374 | 2,699,335 | 1,524,743 |
| ------------ | ------------ | ------------ | ------------ | |
| INCOME BEFORE INCOME TAXES | 22,734,752 | 12,761,962 | 45,764,450 | 26,699,247 |
| INCOME TAX EXPENSE | 8,184,512 | 4,595,161 | 16,475,052 | 9,611,728 |
| ------------ | ------------ | ------------ | ------------ | |
| NET INCOME | $14,550,240 | $8,166,801 | $29,289,398 | $17,087,519 |
| ------------ | ------------ | ------------ | ------------ | |
| BASIC EARNINGS PER SHARE | $0.62 | $0.35 | $1.24 | $0.73 |
| DILUTED EARNINGS PER SHARE | $0.61 | $0.34 | $1.22 | $0.71 |
| Basic shares outstanding | 23,404,499 | 23,433,831 | 23,531,486 | 23,519,291 |
| Diluted shares outstanding | 24,002,708 | 23,987,666 | 24,081,838 | 24,041,057 |
Balance Sheet
| June 30,2001 | December 31,2000 | ||
| ------------ | ------------ | ||
| ASSETS | |||
| CURRENT ASSETS | |||
| Cash | $70,676,871 | $77,181,064 | |
| Short Term Investments | 24,001,776 | - | |
| Trade receivables | 4,469,352 | 4,941,286 | |
| Inventories | 22,064,231 | 12,653,117 | |
| Prepaid expenses and other current assets | 825,795 | 591,453 | |
| Notes receivable | 1,991,899 | - | |
| Deferred income taxes | 1,291,976 | 950,363 | |
| ------------ | ------------ | ||
| Total Current assets | 125,321,900 | 96,317,283 | |
| ------------ | ------------ | ||
| PROPERTY, PLANT AND EQUIPMENT | 17,239,461 | 16,668,884 | |
| OTHER ASSETS | 4,284,952 | 4,140,277 | |
| TOTAL ASSETS | $146,846,313 | $117,126,444 | |
| ------------ | ------------ | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||
| CURRENT LIABILITIES | |||
| Trade payables | $19,988,929 | $12,335,776 | |
| Accrued liabilities | 7,244,749 | 5,344,225 | |
| Income taxes payable | 1,707,435 | 2,542,967 | |
| Royalty payable to stockholders | 1,575,637 | 1,481,886 | |
| Customer deposits | 1,050,869 | 2,092,611 | |
| ------------ | ------------ | ||
| Total current liabilities | 31,567,619 | 23,797,465 | |
| ------------ | ------------ | ||
| LONG-TERM DEFERRED TAX LIAILITY | 731,357 | 462,004 | |
| ------------ | ------------ | ||
| STOCKHOLDERS' EQUITY | |||
| Common stock | 9,203,440 | 16,812,476 | |
| Retained earnings | 105,343,897 | 76,054,499 | |
| ------------ | ------------ | ||
| Total stockholders' equity | 114,547,337 | 92,866,975 | |
| ------------ | ------------ | ||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $146,846,313 | $117,126,444 | |
| ------------ | ------------ |