Nautilus Sees Pearl Izumi Acquisition Help Boost Sales 33%

Nautilus, Inc. announced net sales for the three months ended September 30, 2005, were $163.3 million compared to $123.2 million for the corresponding period last year, up 33%. Net income for the quarter was $8.3 million, or 24 cents per diluted share, up from $7.5 million, or 22 cents per share, or 11% for the corresponding period last year. The year ago quarter included a pretax $1.8 million gain on sale of land, which contributed 3 cents per share.

“We are pleased with our revenue and earnings results for the third quarter and first nine months of 2005,” said Gregg Hammann, chairman and CEO. “Our campaign to bring complete assortments of high-quality branded fitness equipment into retail and specialty retail locations, where 80% of consumers shop for fitness products, continues to diversify our sales channels. Even with this positive performance, we need to improve our go-to-market effectiveness on new product innovations in order to capitalize on the opportunities we have ahead of us. This needed improvement, combined with some softness in the marketplace, has prompted us to take a more conservative view of the fourth quarter.”

“As we look forward, with five leading fitness brands, strong marketing and customer relationships, a wave of new product innovation, and the best position our company has ever had across diverse sales channels, we are very excited about our growth opportunities. Fitness is becoming a necessity around the world as our global society comes to grips with the health consequences of inactivity. We continue to believe our strategic business plan will deliver top line growth of 15% to 20%, and bottom line growth of 20% to 30%.”

For the fourth quarter of 2005, the company estimates that net sales will grow approximately 25% compared to the same period last year. Meanwhile, fourth quarter 2005 earnings are expected to grow to 44 cents to 48 cents per diluted share, up from 42 cents per share during the year ago quarter when the company achieved 50% earnings improvement. The company expects its full year 2005 earnings to be $1.06 to $1.10, on annual sales of around $660 million.

The company reported that it repurchased approximately 190,000 shares of stock during the third quarter at an average price of $23.75, as part of a $100 million buyback authorized by its Board earlier in the year.

In addition, the company announced that its Board of Directors declared a regular quarterly dividend of $0.10 per common share, payable December 9, 2005, to stockholders of record as of November 20, 2005.

                            NAUTILUS, INC.
                CONSOLIDATED STATEMENTS OF OPERATIONS
           (In Thousands, Except Share and Per Share Data)
                             (Unaudited)


                         Three Months Ended       Nine Months Ended
                           September 30,            September 30,
                       ----------------------- -----------------------
                           2005        2004        2005        2004
                       ----------- ----------- ----------- -----------

NET SALES                $163,308    $123,182    $449,277    $354,257

COST OF SALES              91,022      64,577     242,164     189,475
                       ----------- ----------- ----------- -----------

     Gross profit          72,286      58,605     207,113     164,782

OPERATING EXPENSES:
  Selling and marketing    44,526      38,039     129,425     110,392
  General and
   administrative          11,146       6,540      34,567      21,095
  Research and
   development              2,856       1,697       8,768       4,784
  Royalties                 1,297       1,051       3,952       4,693
                       ----------- ----------- ----------- -----------

     Total operating
      expenses             59,825      47,327     176,712     140,964
                       ----------- ----------- ----------- -----------

OPERATING INCOME           12,461      11,278      30,401      23,818

OTHER INCOME (EXPENSE):
  Interest income             145         371       1,460         913
  Other, net                   31          (1)        542          (2)
                       ----------- ----------- ----------- -----------

     Total other
      income, net             176         370       2,002         911
                       ----------- ----------- ----------- -----------

INCOME BEFORE INCOME
 TAXES                     12,637      11,648      32,403      24,729

INCOME TAX EXPENSE          4,366       4,193      11,373       8,902
                       ----------- ----------- ----------- -----------

NET INCOME                 $8,271      $7,455     $21,030     $15,827
                       =========== =========== =========== ===========

BASIC EARNINGS PER
 SHARE                      $0.25       $0.23       $0.63       $0.48

DILUTED EARNINGS PER
 SHARE                      $0.24       $0.22       $0.62       $0.47