Nautilus, Inc. Exercises Option to Acquire Xiamen, China Manufacturing Facility
Transaction Expected to Improve Gross and Operating Margins, Closes at Year-End
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VANCOUVER, WA–Jun 29, 2007 — Taking a significant step toward achieving its long-range financial operating margin targets, Nautilus, Inc. (NYSE:NLS – News) has exercised a purchase option to acquire the assets of its largest contract manufacturer, Xiamen, China-based Land America Health and Fitness Co., Ltd.
The all cash-transaction of approximately $72 million is expected to close January 2, 2008 and improve company gross margins by at least 1.5-2.0 percentage points in 2008.
“A diversified manufacturing and supply base is important to maximize our margin potential and to mitigate supply risks,” said Gregg Hammann, Chairman and CEO of Nautilus, Inc. “In addition to benefiting from manufacturing margins, we expect to see significant improvement by optimizing flow and expanding the range of home fitness products made at the facility.”
Land America has made the popular Bowflex® home exercise gyms for more than eight years and began manufacturing Bowflex® TreadClimber® cardio trainers for the company last year. In addition, Nautilus and Land America teams have built a new production line to manufacture and ship additional products from the facility later in 2007.
The acquisition of Land America involves four modern buildings on a 15-acre site in an economic development zone near Xiamen, China, as well as a trading company, Treuriver Investments Ltd. The Land America organization was honored by Nautilus a year ago as its supplier of the year for routinely achieving Nautilus standards for quality and delivery.
Hammann said the company will continue to work with its other contract manufacturing partners in Asia and its domestic manufacturing plants in Oklahoma and Virginia to facilitate growth and improve margins.
About Nautilus, Inc.
Headquartered in Vancouver, Wash., Nautilus, Inc. (NYSE:NLS) is a pure fitness company that provides tools and education necessary to help people achieve a fit and healthy lifestyle. With a brand portfolio that includes Nautilus®, Bowflex®, Schwinn®Fitness, StairMaster®, and Pearl iZUMi®, Nautilus manufactures and markets a complete line of innovative health and fitness products through direct, commercial, retail, specialty and international channels. The Company was formed in 1986 and had sales of $680 million in 2006. It has 1,500 employees and operations in Washington, Oregon, Colorado, Oklahoma, Illinois, Virginia, Canada, Switzerland, Germany, United Kingdom, Italy, China, Australia, and other locations around the world. More information is at www.nautilusinc.com.
