DIRECT FOCUS, INC. ANNOUNCES RECORD FIRST QUARTER RESULTS
For the first quarter of 2000, Direct Focus reported net revenue of $42.9 million, an increase of 64% from $26.1 million in the first quarter of 1999. Net income for the first quarter of 2000 was $8.9 million or $0.83 per diluted share, up 98% from $4.5 million or $0.45 per diluted share for the same period of 1999.
eCommerce sales were $5.0 million for the first quarter of 2000, up 28% sequentially from $3.9 million in the previous quarter. The Company recently introduced an online consumer financing program and expects to continue to strengthen its back-office infrastructure, management team and advertising related to expanding its eCommerce sales effort.
While first quarter sales from the Company's Nautilus division increased 10% from the same period of 1999, the Nautilus business experiences seasonal weakness in the first half of the year. The Company expects this division to return to profitability in the second half of 2000 and continues to invest significantly in the Nautilus sales and marketing effort in order to build upon Nautilus' powerful brand equity.
"We are very pleased with our record sales and profits for the quarter," said Brian Cook, President and Chief Executive Officer. "During the first quarter, we continued to see sustained growth for Bowflex and Nautilus products, driven by the strong economy and the growing interest in health and fitness by the aging and affluent Baby Boom generation. We are also pleased with the continued growth in our eCommerce sales and for our new Nautilus Sleep System."
"Going forward, we plan to further expand on the success of our Bowflex products and continue to strengthen our IT infrastructure in order to expand our eCommerce platform. Most importantly, we intend to more fully leverage the powerful Nautilus brand, one of the great names in health and fitness, methodically rolling out new Nautilus-branded products. We are very excited about the opportunities before us."
A replay Internet broadcast of Direct Focus Inc.'s first quarter conference call (3:00 PM Pacific/6:00 PM Eastern) will be available today at www.directfocusinc.com under "Investor Relations."
Direct Focus, Inc. is a leading marketing company for fitness and healthy lifestyle products with a sophisticated 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 strong brand names, television advertising, Web sites, an extensive business intelligence database and integrated customer relationship management systems. The Company also sells its Nautilus commercial fitness equipment directly to health clubs and other institutions, and its Nautilus fitness accessories through retail athletic stores. The Company is headquartered in Vancouver, Washington, and located on the Web at www.directfocusinc.com. This press release contains forward-looking statements relating to anticipated revenues, net income, earnings and the development of the Company's products and services, including statements regarding its Nautilus business. Factors that could affect the Company's actual results include its reliance on a limited product line, market acceptance of its existing and future products and growth management challenges. A more detailed description of certain factors that could affect actual results include, but are not limited to, those discussed in the Company's annual report on Form 10-K for the fiscal year ended December 31, 1999.
Direct Focus, Inc.
Statement of Operations
Three months ended March 31,
2000
1999
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NET SALES
42,906,865
26,112,530
COST OF SALES
10,758,296
7,389,196
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Gross profit
32,148,569
18,723,334
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EXPENSES:
Selling and Marketing
15,816,575
10,088,754
General and administrative
1,959,368
1,101,372
Royalty expense
1,013,987
625,921
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Total operating expenses
18,789,930
11,816,047
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INCOME FROM OPERATIONS
13,358,639
6,907,287
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OTHER INCOME (EXPENSE):
Interest income
615,517
61,923
State business tax and other-net
(39,147)
(78,114)
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Total other income (expense)-net
576,370
(16,191)
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INCOME BEFORE INCOME TAXES
13,935,009
6,891,096
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INCOME TAX EXPENSE
5,016,567
2,411,883
NET INCOME
8,918,442
4,479,213
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BASIC EARNINGS PER SHARE
0.85
0.47
DILUTED EARNINGS PER SHARE
0.83
0.45
Basic shares outstanding
10,491,001
9,517,579
Diluted shares outstanding
10,738,102
9,902,037
DIRECT FOCUS, INC.
Balance Sheets
March 31,
2000December 31,
1999
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ASSETS
CURRENT ASSESTS
Cash
46,127,947
35,703,457
Trade receivables
2,921,649
4,744,213
Inventories
10,469,642
9,167,554
Prepaid expenses and other assests
2,057,854
1,863,951
Deferred income taxes
87,051
820,789
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------------
Total current assets
61,664,143
52,299,964
------------
------------
PROPERTY, PLANT, AND EQUIPMENT
10,994,511
10,644,838
------------
------------
LONG-TERM DEFERRED TAX ASSET
670,213
-
OTHER ASSETS
4,309,916
4,364,963
------------
------------
TOTAL ASSETS
77,638,783
67,309,765
------------
------------
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES
Trade Payables
6,919,347
5,871,369
Income Taxes Payable
5,327,755
2,177,236
Accrued Liabilities
3,948,282
4,051,541
Royalty payable to stockholders
1,002,574
893,563
Customer deposits
1,231,435
1,097,748
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------------
Total current liabilities
18,429,393
14,091,457
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------------
LONG-TERM DEFERRED INCOME TAXES
-
187,484
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------------
STOCKHOLDERS' EQUITY
Common stock
15,862,543
18,602,420
Retained earnings
43,346,847
34,428,405
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------------
Total stockholders' equity
59,209,390
53,030,825
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
77,638,783
67,309,766
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