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Fitness financials: Nautilus terminates shareholder rights plan, plus Town Sports, GSI, Finish Line, Sears

Nautilus terminates shareholder rights plan, Town Sports CFO resigns, GSI releases prelim '07 profit below analyst expectation, to acquire e-Dialog, Finish Line and UBS to appeal order for $1.5 billion Genesco acquisition, and Sears CEO steps down, names interim successor.

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Nautilus terminates shareholder rights plan

Nautilus (NYSE: NLS) said it amended its shareholder rights plan to effectively terminate it.

Under the plan, if any person or group acquired 20 percent or more of the voting power of Nautilus’ outstanding common stock without the approval of its board, then the plan would have been activated and diluted their voting power.

The amendment changed the date of expiration from Oct. 28, 2010, to Jan. 22, 2008.

Accordingly, the rights have expired, and the plan has been terminated.

Town Sports CFO resigns

CFO Richard Pyle is resigning from Town Sports International (Nasdaq: CLUB) to pursue other interests, effective March 31. The company added that Pyle will remain a consultant to Town Sports.

Pyle spent eight years with the company. He previously was vice president of finance and was promoted to senior vice president of finance in November 2007.

Daniel Gallagher, also a senior vice president of finance, will become CFO upon Pyle’s departure.

GSI releases prelim ’07 profit below analyst expectation, to acquire e-Dialog

GSI Commerce (Nasdaq: GSIC), which provides online commerce services for customers including retailers and manufacturers, reported preliminary 2007 operating income below analyst expectations.

Profit from operations for the year ended Dec. 29 is expected to be $5.3 million to $6.3 million, down significantly from $9.6 million in fiscal 2006, according to GSI. It also is below the company’s most recent guidance of $8 million to $11 million.

The company said results missed expectations due to higher-than-expected amortization of intangibles related to its acquisition of Accretive Commerce.

GSI expects 2007 revenue to be between $748 million to $750 million, up about 23 percent from $609.6 million in fiscal 2006. The company previously said it expected revenue between $737 million and $757 million for 2007.

Analysts said they expect 2007 operating profit of $10.8 million on revenue of $748.1 million.

GSI said it is completing its fiscal 2007 year-end tax provision and will not estimate net income until the process is finished.

It also said it will take a $5.1 million loss from the sale of marketable securities.

For fiscal 2008, the company predicts revenue of about $1 billion, while analysts expect revenue of $949.7 million.

In other company news: GSI said it agreed to acquire e-Dialog, an email marketing company, for $157 million in cash and stock. The deal is expected to close in 30 days. GSI said the acquisition will expand its marketing services portfolio.

Under terms of the deal, GSI will pay $147.8 million in cash and $9.2 million in stock. It will also make cash payment of $750,000 in fiscal 2009 if revenue targets are made in fiscal 2008.

Finish Line, UBS to appeal order for $1.5 billion Genesco acquisition

Finish Line (Nasdaq: FINL) and investment bank UBS plan to appeal a Nashville judge’s order that a $1.5 billion purchase of Genesco must go through. They want a Tennessee appeals court to decide the case before the March 3 start of a separate federal lawsuit filed New York.

UBS, which agreed to finance all but $11 million of the buyout, wants its commitment declared void because the Swiss bank argues the combined Genesco-Finish Line entity would become insolvent.

Finish Line and UBS said in documents filed in Nashville Chancery Court that a successful appeal could make the New York case unnecessary. They also argued that an appeal would be problematic if Genesco prevails in the New York case, because UBS’ commitment letter expires on April 30 and Finish Line would likely be forced to finish the buyout.

A judge ruled in December that the buyers had no grounds for getting out of the agreement, ordering the deal to go through after dismissing claims that Genesco withheld key financial information that could have signaled worse-than-expected earnings after the deal closed in June. Genesco responded that its earnings were reflective of a drop in performance by its competitors, including Finish Line. The order, though, won’t be final until after the results of the New York case are known.

Sears CEO steps down, names interim successor

Sears Holdings (Nasdaq: SHLD) President and CEO Aylwin Lewis is stepping down and will be succeeded by W. Bruce Johnson, an executive vice president of supply chain and operations who will fill the role on an interim basis. The company added Lewis will also resign from Sears’ board.

The 121-year-old retailer, which owns 3,800 Sears and Kmart stores in the U.S. and Canada, has been plagued by falling sales and increased competition from companies such as Wal-Mart Stores and Target.

Sears’ shares, which reached a high of $195.18 in April, fell $0.51 to $98.49 in late morning trading on Jan. 28 after trading as low as $96.04 earlier in the session.

Chairman Edward Lampert announced plans last week to change the company’s organizational structure in an effort to improve performance. The new structure will include five types of units: operating businesses, support businesses, brands, online and real estate.

The reorganization announcement came after Sears gave investors its latest round of bad news, announcing it would likely post fourth-quarter earnings well below Wall Street forecasts as eroding sales push its profit down as much as 57 percent.

The company said it expects to earn between $350 million and $470 million, or $2.59 to $3.48 per share, for the quarter ending Feb. 2 — far less than the $4.43 per share sought by analysts. Sears earned $820 million in the fourth quarter a year earlier.

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