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02.22.00
DIRECT FOCUS, INC. ANNOUNCES RECORD FOURTH QUARTER RESULTS
DIRECT FOCUS, INC. ANNOUNCES RECORD FOURTH QUARTER RESULTS
Vancouver, WA-February 22, 2000-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 and year ended December 31, 1999.
For the fourth quarter of 1999, Direct Focus reported net revenue of $37.9 million, an increase of 102% from $18.8 million in the fourth quarter of 1998. For 1999, the Company reported net revenue of $121.0 million, up 111% from $57.3 million for 1998. Excluding revenue of $19.1 million from the Nautilus division, acquired in January 1999, net revenue for 1999 increased 78% from 1998.
Net income for the fourth quarter of 1999 was $9.0 million or $0.84 per diluted share, up 80% from $5.0 million or $0.52 per diluted share for the same period of 1998. Net income for 1999 was $20.3 million or $1.95 per diluted share, up 62% from $12.5 million or $1.28 per diluted share for the previous year. Net income for the Nautilus division for the fourth quarter of 1999 was $765,000 or $0.07 per diluted share.
eCommerce sales were $3.9 million for the fourth quarter, up 56% sequentially from $2.5 million in the previous quarter. The Company expects to continue to strengthen its back-office infrastructure, management team, advertising and consumer financing programs related to expanding its eCommerce sales effort.
"We are very pleased with our record sales and profits for the quarter and the year," said Brian Cook, President and Chief Executive Officer. "During the fourth quarter, we continued to see growing sales of our Bowflex and Nautilus products. Throughout the quarter, demand for our Bowflex product was stronger than expected. We also began the initial roll out of our Nautilus Sleep System near the end of the quarter."
"During the year, we dramatically improved the sales and achieved profitability in our Nautilus division. In the coming year, we expect to more fully leverage the strong brand awareness of Nautilus. Building on the early success of our eCommerce effort, we believe we are well-positioned to leverage our direct marketing experience, consumer data and strong brands to reach more targeted households. We are very excited about the opportunities before us."
A replay Internet broadcast of Direct Focus Inc.'s fourth quarter conference call (2:00 PM Pacific/5:00 PM Eastern) will be available today 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 fitness accessories 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 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, growth management challenges and difficulties integrating the Company's Nautilus operations. A more detailed description of certain factors that could affect actual results include, but are not limited to, those discussed in the Company's registration statement on Form S-1 in the section entitled "Risk Factors."
For the fourth quarter of 1999, Direct Focus reported net revenue of $37.9 million, an increase of 102% from $18.8 million in the fourth quarter of 1998. For 1999, the Company reported net revenue of $121.0 million, up 111% from $57.3 million for 1998. Excluding revenue of $19.1 million from the Nautilus division, acquired in January 1999, net revenue for 1999 increased 78% from 1998.
Net income for the fourth quarter of 1999 was $9.0 million or $0.84 per diluted share, up 80% from $5.0 million or $0.52 per diluted share for the same period of 1998. Net income for 1999 was $20.3 million or $1.95 per diluted share, up 62% from $12.5 million or $1.28 per diluted share for the previous year. Net income for the Nautilus division for the fourth quarter of 1999 was $765,000 or $0.07 per diluted share.
eCommerce sales were $3.9 million for the fourth quarter, up 56% sequentially from $2.5 million in the previous quarter. The Company expects to continue to strengthen its back-office infrastructure, management team, advertising and consumer financing programs related to expanding its eCommerce sales effort.
"We are very pleased with our record sales and profits for the quarter and the year," said Brian Cook, President and Chief Executive Officer. "During the fourth quarter, we continued to see growing sales of our Bowflex and Nautilus products. Throughout the quarter, demand for our Bowflex product was stronger than expected. We also began the initial roll out of our Nautilus Sleep System near the end of the quarter."
"During the year, we dramatically improved the sales and achieved profitability in our Nautilus division. In the coming year, we expect to more fully leverage the strong brand awareness of Nautilus. Building on the early success of our eCommerce effort, we believe we are well-positioned to leverage our direct marketing experience, consumer data and strong brands to reach more targeted households. We are very excited about the opportunities before us."
A replay Internet broadcast of Direct Focus Inc.'s fourth quarter conference call (2:00 PM Pacific/5:00 PM Eastern) will be available today 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 fitness accessories 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 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, growth management challenges and difficulties integrating the Company's Nautilus operations. A more detailed description of certain factors that could affect actual results include, but are not limited to, those discussed in the Company's registration statement on Form S-1 in the section entitled "Risk Factors."
DIRECT FOCUS, INC.
STATEMENT OF OPERATIONS
Three months ended Dec 31, Twelve months ended Dec 31,
1999 1998 1999 1998
-------- ------- ------- -------
NET SALES 37,888,838 18,808,871 121,018,477 57,296,880
COST OF SALES 10,880,800 3,801,596 34,422,577 12,442,307
----------- ----------- ----------- -----------
Gross profit 27,008,038 15,007,275 86,595,900 44,854,573
----------- ----------- ----------- -----------
EXPENSES:
Selling and
marketing 11,590,956 6,843,154 44,629,825 22,642,885
General and
administrative 684,661 (44,443) 4,236,804 1,700,956
Royalty expense 905,337 555,894 2,897,278 1,622,726
Litigation expense -- -- 4,000,000 --
----------- ----------- ----------- -----------
Total operating
expenses 13,180,954 7,354,605 55,763,907 25,966,567
----------- ----------- ----------- -----------
INCOME FROM
OPERATIONS 13,827,084 7,652,670 30,831,993 18,888,006
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest income 422,688 223,253 1,003,586 526,961
State business
tax and other - net 125,638 (103,688) 2,737 (221,889)
----------- ----------- ----------- -----------
Total other
expense - net 548,326 119,565 1,006,323 305,072
----------- ----------- ----------- -----------
INCOME BEFORE
INCOME TAXES 14,375,410 7,772,235 31,838,316 19,193,078
----------- ----------- ----------- -----------
INCOME TAX EXPENSE 5,406,112 2,749,196 11,495,425 6,707,584
NET INCOME 8,969,298 5,023,039 20,342,891 12,485,494
----------- ----------- ----------- -----------
BASIC EARNINGS
PER SHARE 0.86 0.54 2.00 1.34
DILUTED EARNINGS
PER SHARE 0.84 0.52 1.95 1.28
Basic shares
outstanding 10,429,746 9,336,525 10,165,617 9,336,525
Diluted shares
outstanding 10,720,779 9,725,958 10,425,208 9,725,958
DIRECT FOCUS, INC.
BALANCE SHEETS
December 31, December 31,
1999 1998
------------ ------------
ASSETS
CURRENT ASSETS
Cash 35,703,457 18,910,675
Trade receivables 4,744,213 218,207
Inventories 9,167,554 2,614,673
Prepaid expenses and other
assets 1,863,951 378,409
Deferred income taxes 820,789 215,737
---------- ----------
Total current assets 52,299,964 22,337,701
---------- ----------
PROPERTY, PLANT, AND EQUIPMENT 10,644,838 1,842,712
---------- ----------
OTHER ASSETS 4,364,963 192,859
---------- ----------
TOTAL ASSETS 67,309,765 24,373,272
========== ==========
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES
Trade Payables 5,871,369 3,602,074
Income taxes payable 2,177,236 504,775
Accrued liabilities 4,051,541 1,851,253
Royalty payable to stockholders 893,563 548,211
Customer deposits 1,097,748 148,937
---------- ----------
Total current Liabilities 14,091,456 6,655,250
---------- ----------
LONG-TERM DEFERRED INCOME TAXES 187,484 66,880
---------- ----------
STOCKHOLDERS' EQUITY
Common stock 18,602,420 3,565,628
Retained earnings 34,428,405 14,085,514
---------- ----------
Total stockholders' equity 53,030,824 17,651,142
---------- ----------
TOTAL LIABILITIES
AND STOCKHOLDER'S EQUITY 67,309,765 24,373,272
========== ==========