BW0181 MAY 10,1999 5:08 PACIFIC 08:08 EASTERN
( BW)(WA-DIRECT-FOCUS)(DFXI) Direct Focus, Inc. Sales Up 135 Percent
Business Editors
VANCOUVER, Wash.--(BUSINESS WIRE)--MAY 10, 1999--Direct Focus, Inc. (Nasdaq:DFXI), a direct marketing company, today reported significantly improved sales and earnings for the first quarter ended March 31, 1999.
It is the company's first financial reporting as a Nasdaq traded company.
Sales for the quarter rose 135 percent to $26.1 million from $11.1 million, with 27 percent of that increase, or $4.0 million, coming from the company's Nautilus unit acquired in January 1999. Net income of $4.5 million increased 73 percent from $2.6 million a year ago despite a loss of $200,000 associated with the the Nautilus operation. Earnings per diluted share were $0.45 , up 67 percent from $0.27 in the same 1998 quarter. The 1999 first quarter results do not reflect the addition of 825,000 shares which were sold in a public offering on May 5.
"We're extremely pleased with the results which reflect the integration of the Nautilus operation," said Brian Cook, president and chief executive officer of Direct Focus. "This business was recording significant losses when we acquired it and we have been able to improve its performance in a short period of time. There were some immediate benefits realized by installing new management, a workforce reduction at Nautilus and other synergies as part of the combination." "Our goal is to bring Nautilus to profitability as soon as possible," Cook pointed out. "In addition to our commitment to revitalizing Nautilus' business of supplying fitness equipment to health clubs and other commercial facilities, we intend to leverage the Nautilus name with new consumer products."
Cook noted that in addition to successfully continuing market expansion in the quarter, the company also completed its first offering of common stock in the United States which raised $15.1 million in net proceeds. Direct Focus, which was previously traded on the Toronto Stock Exchange, began trading on Nasdaq on May 5, 1999.
Direct Focus, Inc. currently markets three lines of products -- Bowflex home fitness equipment, Nautilus fitness equipment and Nautilus sleep systems -- directly to customers via advertising on television, printed media and the world wide web.
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
Statements of Income Information
3/31/99 3/31/98
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Net Sales 26,112,530 11,051,299
Cost of Sales 7,389,196 28.3% 2,554,145 23.1%
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Gross profit 18,723,334 71.7% 8,497,154 76.9%
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Operating Expenses
Selling and marketing 10,088,754 38.6% 3,813,204 34.5%
General and administrative 1,101,372 4.2% 526,177 4.7%
Royalty expense 625,921 2.4% 306,071 2.8%
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Total operating expenses 11,816,047 45.2% 4,645,452 42.0%
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Operating Income 6,907,287 26.5% 3,851,702 34.9%
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Other Income (Expense)
Interest income 61,923 0.2% 75,529 0.7%
State business tax and
other - net (78,114) -0.3% (41,044) -0.4%
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Total other expense - net (16,191) -0.1% 34,485 0.3%
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Income Before Income Taxes 6,891,096 26.4% 3,886,187 35.2%
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Income Tax Expense 2,411,883 1,315,158
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Net Income 4,479,213 17.2% 2,571,029 23.3%
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Basic Earnings Per Share 0.47 0.28
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Diluted Earnings Per Share 0.45 0.27
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Basic shares outstanding 9,517,579 9,184,371
Diluted shares outstanding 9,902,037 9,647,751
Direct Focus
Balance Sheet Information:
3/31/99 12/31/98
Assets
Current Assets
Cash 8,587,211 18,910,675
Trade receivables 3,519,360 218,207
Inventories 7,696,781 2,614,673
Prepaid expenses and other assets 213,969 378,409
Deferred income taxes 644,504 215,737
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Total current assets 20,661,825 22,337,701
Furniture and Equipment
Equipment 10,175,390 1,822,205
Furniture and fixtures 480,974 459,297
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10,656,364 2,281,502
Less accumulated depreciation (642,647) (438,790)
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Total furniture and equipment 10,013,717 1,842,712
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Other Assets 4,665,476 192,859
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Total 35,341,018 24,373,272
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Liabilities and Stockholders Equity
Current Liabilities
Trade Payables 5,794,947 3,602,074
Income taxes payable 2,628,225 504,775
Accrued liabilities 3,639,539 1,851,253
Royalty payable to stockholders 611,758 548,211
Customer deposits 356,656 148,937
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Total current Liabilities 13,031,125 6,655,250
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Long-Term Deferred Income Taxes 134,080 66,880
Stockholders' Equity
Common stock 3,611,086 3,565,628
Retained earnings 18,564,727 14,085,514
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Total stockholders' equity 22,175,813 17,651,142
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Total 35,341,018 24,373,272
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--30--APS/se*
CONTACT: Direct Focus, Inc.
Rod Rice, 360/418-6178
or 800/371-3363
KEYWORD: WASHINGTON
INDUSTRY KEYWORD: RETAIL SPORTS EARNINGS
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