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09.13.01
DIRECT FOCUS ANNOUNCES SUCCESSFUL BID TO ACQUIRE FITNESS DIVISION OF SCHWINN FOR APPROXIMATELY $65 MILLION
DIRECT FOCUS ANNOUNCES SUCCESSFUL BID TO ACQUIRE FITNESS DIVISION OF SCHWINN FOR APPROXIMATELY $65 MILLION
DIRECT FOCUS ANNOUNCES SUCCESSFUL BID TO ACQUIRE FITNESS DIVISION OF SCHWINN FOR APPROXIMATELY $65 MILLION
VANCOUVER, WA – September 13, 2001 – Direct Focus, Inc. (Nasdaq: DFXI), a marketing company for fitness and healthy lifestyle products with a direct business model, announced today that it was the successful bidder to acquire substantially all of the assets of Schwinn/GT’s fitness equipment division (“Schwinn Fitness”) through a bankruptcy auction, pending a final court order by the U.S. Bankruptcy Court for the District of Colorado. The Direct Focus bid was linked to a successful bid submitted by Pacific Cycle LLC for the purchase of substantially all of the assets of Schwinn/GT’s bicycle division.
Under the terms of the bid, Direct Focus anticipates it will pay approximately $65 million in cash for Schwinn Fitness, which will be accounted for under the purchase accounting method. The Company expects the transaction to close on or before September 21, 2001, subject to the final court order and expiration of the Hart-Scott-Rodino waiting period. Schwinn Fitness had annual revenue in 2000 in excess of $100 million and strong positive operating cash flows. Direct Focus expects this acquisition to be accretive to revenue and earnings in 2002 and beyond.
“We are very pleased with the success of our bid,” said Brian Cook, CEO of Direct Focus. “Our management team is very familiar with Schwinn Fitness. Kevin Lamar, who joined us as our President in June, was instrumental in growing the Schwinn Fitness business from $20 million in annual sales to over $100 million in annual sales from 1989 to 2000.”
“Like our purchase of the assets of Nautilus International, Inc. in January 1999 and the subsequent turnaround and growth of those operations, expansion through acquisitions is an important part of our strategy. At the end of the second quarter, we reported $94.7 million in cash and short term investments. We believe this acquisition is an excellent use of our financial and management resources, and offers significant growth opportunities.”
“We believe Schwinn Fitness’ strong brand and quality fitness products will be an excellent fit with our growing portfolio of fitness and healthy lifestyle products,” said Kevin Lamar, President of Direct Focus. “Schwinn Fitness offers a popular line of cardio-equipment, which includes treadmills, stationary bikes and steppers sold under the Schwinn and Trimline brands. These products will complement our Nautilus line of strength-building products, and we expect to gain powerful distribution synergies through the combined product lines and sales effort.”
Due to the recent national tragedy and the timing of this transaction, Direct Focus is not scheduling an immediate conference call. The Company expects to hold a special conference call to discuss the acquisition in more detail on Monday, September 17, 2001 (2:00 PM Pacific/5:00 PM Eastern). Further instructions will be announced.
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.
Under the terms of the bid, Direct Focus anticipates it will pay approximately $65 million in cash for Schwinn Fitness, which will be accounted for under the purchase accounting method. The Company expects the transaction to close on or before September 21, 2001, subject to the final court order and expiration of the Hart-Scott-Rodino waiting period. Schwinn Fitness had annual revenue in 2000 in excess of $100 million and strong positive operating cash flows. Direct Focus expects this acquisition to be accretive to revenue and earnings in 2002 and beyond.
“We are very pleased with the success of our bid,” said Brian Cook, CEO of Direct Focus. “Our management team is very familiar with Schwinn Fitness. Kevin Lamar, who joined us as our President in June, was instrumental in growing the Schwinn Fitness business from $20 million in annual sales to over $100 million in annual sales from 1989 to 2000.”
“Like our purchase of the assets of Nautilus International, Inc. in January 1999 and the subsequent turnaround and growth of those operations, expansion through acquisitions is an important part of our strategy. At the end of the second quarter, we reported $94.7 million in cash and short term investments. We believe this acquisition is an excellent use of our financial and management resources, and offers significant growth opportunities.”
“We believe Schwinn Fitness’ strong brand and quality fitness products will be an excellent fit with our growing portfolio of fitness and healthy lifestyle products,” said Kevin Lamar, President of Direct Focus. “Schwinn Fitness offers a popular line of cardio-equipment, which includes treadmills, stationary bikes and steppers sold under the Schwinn and Trimline brands. These products will complement our Nautilus line of strength-building products, and we expect to gain powerful distribution synergies through the combined product lines and sales effort.”
Due to the recent national tragedy and the timing of this transaction, Direct Focus is not scheduling an immediate conference call. The Company expects to hold a special conference call to discuss the acquisition in more detail on Monday, September 17, 2001 (2:00 PM Pacific/5:00 PM Eastern). Further instructions will be announced.
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.