Nautilus 2001 Annual Report Download

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Year Ended December 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 000-25867
DIRECT FOCUS, INC.
(Exact name of registrant as specified in its charter)
WASHINGTON 94-3002667
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification
No.)
1400 NE 136TH AVENUE, VANCOUVER, WA 98684
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 360-694-7722
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, WITHOUT PAR VALUE
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes |X| No |_|
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form
10-K, or any amendment to this Form 10-K. |_|
The aggregate market value of the voting stock held by non-affiliates of the Registrant is $1,047,236,796 as of March 1, 2002 based upon the
last sales price as reported by the Nasdaq National Market System.
The number of shares outstanding of the Registrant's Common Stock as of March 1, 2002 was 35,012,932 shares.
DOCUMENTS INCORPORATED BY REFERENCE
The Registrant has incorporated by reference into Part III of this Form 10-K portions of its Proxy Statement for its 2002 Annual Meeting of
Stockholders.
2002. EDGAR Online, Inc.

Table of contents

  • Page 1
    ... 000-25867 DIRECT FOCUS, INC. (Exact name of registrant as specified in its charter) WASHINGTON (State or other jurisdiction of incorporation or organization) No.) 1400 NE 136TH AVENUE, VANCOUVER, WA (Address of principal executive offices) 94-3002667 (I.R.S. Employer Identification 98684 (Zip Code...

  • Page 2
    DIRECT FOCUS, INC. 2001 FORM 10-K ANNUAL REPORT TABLE OF CONTENTS PAGE ---PART I Item 1. Item 2. Item 3. Item 4. Business Properties Legal Proceedings Submission of Matters to a Vote of Security Holders PART II Item 5. Item 6. Item 7. Item 7A. Item 8. Item 9. Market for Registrant's Common Equity ...

  • Page 3
    ... ON A LIMITED PRODUCT LINE; o EXPIRATION OF IMPORTANT PATENTS; o OUR ABILITY TO EFFECTIVELY DEVELOP, MARKET, AND SELL FUTURE PRODUCTS; o GROWTH MANAGEMENT CHALLENGES, INCLUDING THE GROWTH RESULTING FROM THE ACQUISITION OF THE ASSETS OF THE FITNESS DIVISION OF SCHWINN/GT CORP. IN SEPTEMBER 2001, AND...

  • Page 4
    ..., response mailings, the Internet, and inbound/outbound call centers. We market and sell our Nautilus, Schwinn Fitness, StairMaster and Quinton commercial fitness equipment through our sales force and selected dealers to health clubs, government agencies, hotels, corporate fitness centers, colleges...

  • Page 5
    .... Our retail and commercial product lines include home gyms, free weight equipment, treadmills, indoor cycling equipment, steppers and ellipticals. As a result of our acquisitions, we have also added operations in Switzerland, Germany and England, a sales office in Japan, and a worldwide network of...

  • Page 6
    ...be a driving force as they age. We believe baby boomers will use more of their increasing leisure time for exercise and more of their disposable income for fitness equipment purchases as they strive to counter the effects of aging. TRENDS IN FITNESS EQUIPMENT We market our Nautilus, Bowflex, Schwinn...

  • Page 7
    ...were 32.8 million health club memberships at the end of 2000. The worldwide travel industry has recognized that providing travelers with the fitness equipment required to maintain their regular exercise and fitness programs while away from home enhances customer satisfaction. Fitness facilities have...

  • Page 8
    ... for the direct-marketing channel. When we begin marketing a new product, we typically test and refine our marketing concepts and selling practices while advertising the product in spot television commercials. Production costs for these commercials can range from $50,000 to $150,000. Based on market...

  • Page 9
    ... on our Bowflex line of home exercise equipment. The second, www.nautilussleepsystems.com, focuses on our Nautilus Sleep Systems. In an effort to expand and enhance our web presence, we have added dedicated web site development and management personnel. OPTIMAL USE OF DIRECT MARKETING DATABASE Since...

  • Page 10
    ... is approved, immediately ship the ordered product without the need for cumbersome paperwork. The consumer finance company pays us promptly after submission of the required documentation and subsequently sends to each approved customer a Direct Focus private label credit card that can be used for...

  • Page 11
    ...the machines provide excellent range and direction of motion for a large variety of strength-building exercises. Although Bowflex equipment continues to be our most successful product, due to our product diversification efforts, sales of our Bowflex products, as a percentage of our total sales, have...

  • Page 12
    ... that are specifically designed to support and enhance the performance of our Nautilus Sleep Systems. We advise consumers to use our foundations because conventional box springs tend to sag and wear over time, causing a sleep system to eventually mirror the worn box 12 2002. EDGAR Online, Inc.

  • Page 13
    ... sell our Nautilus, Schwinn Fitness, StairMaster, Quinton and Trimline commercial fitness equipment through our sales force and selected dealers to health clubs, government agencies, hotels, corporate fitness centers, colleges, universities and assisted living facilities. Our commercial direct sales...

  • Page 14
    ... FITNESS INDOOR CYCLING EQUIPMENT. Our line of Schwinn Fitness indoor cycling products are used as part of a cycling-based exercise program that is popular among health clubs worldwide, and offer adjustable resistance, heavy-duty flywheels, plush seats and Schwinn's high-quality construction methods...

  • Page 15
    ... equipment includes multi-station weight machines with models for both home and institutional use. o Elliptical - Schwinn Fitness' elliptical trainers provide a low-impact natural motion workout and feature self-generating computers with multiple exercise programs. StairMaster offers high-end...

  • Page 16
    ... extensions have included the Nautilus Sleep Systems, the Nitro commercial line of strength equipment, and new Nautilus selectorized home gym and free weight equipment. Our research and development competencies have been augmented through the acquisition of Schwinn Fitness and StairMaster. Schwinn...

  • Page 17
    ... and sell our sleep systems and, consequently, may adversely affect our financial performance. COMMERCIAL/RETAIL SEGMENT PRODUCTS COMMERCIAL FITNESS EQUIPMENT. The market for commercial fitness equipment is highly competitive. Our Nautilus, Schwinn Fitness, and StairMaster products compete against...

  • Page 18
    ..., Schwinn Fitness retail equipment and accessories, and StairMaster retail and commercial fitness equipment from our Illinois and Oklahoma facilities using various commercial truck lines. We distribute Nautilus commercial fitness equipment from our Virginia warehouse facilities directly to customers...

  • Page 19
    ... 2001, we employed 825 full-time employees, including 4 executive officers and 15 part-time employees. None of our employees are subject to any collective bargaining agreement. ITEM 2. PROPERTIES Our corporate headquarters is located in Vancouver, Washington. It is a Company-owned 90,000 square foot...

  • Page 20
    ...29,500 square foot building in Independence devoted to used commercial equipment sales and warehousing. In addition to the purchase, we leased, with the option to buy, an 86,000 square foot building in Independence to serve as our East Coast distribution center for Nautilus Sleep System products. We...

  • Page 21
    ... effect on the Company's financial position, results of operations or cash flows. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of our stockholders during the quarter ended December 31, 2001. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND...

  • Page 22
    ...Management's Discussion and Analysis of Financial Condition and Results of Operations." IN THOUSANDS (EXCEPT PER SHARE AMOUNTS STATEMENT OF OPERATIONS DATA Net sales Cost of sales Gross profit Operating expenses: Selling and marketing General and administrative Royalties Litigation settlement Total...

  • Page 23
    ... or materials used. Thorough testing of new products in the development stage helps to identify and correct potential warranty issues prior to manufacturing. Continuing quality control efforts during manufacturing limit our exposure to warranty claims. We track all warranty claims by part and reason...

  • Page 24
    ... by the growth in our direct-marketing business and the continued expansion into the commercial and retail market segments. In 2001, we capitalized on favorable advertising costs and availability to increase the consumer awareness of our Bowflex and Nautilus Sleep System product lines. Meanwhile, we...

  • Page 25
    .... Our direct segment accounted for 80.4% of our aggregate net sales in 2001, down from 88.5% in 2000, as we continued our strategy of diversification into the commercial and retail products segments. Sales within our commercial and retail products segment were $71.3 million in 2001, an increase of...

  • Page 26
    ... marketing expenses will increase in real dollar terms, but not as a percentage of net sales, as we continue to expand our Bowflex and Nautilus Sleep Systems direct-marketing campaign and expand our product diversification efforts in the commercial and retail segment. 25 2002. EDGAR Online, Inc.

  • Page 27
    ... increase of 47.9%. Both our direct and commercial/retail segments have several royalty agreements. The increase in our royalty expenses is primarily attributable to the increased sales of our Bowflex products, along with sales of other products under royalty agreements which have been added as part...

  • Page 28
    ... as in the commercial and retail products segment due to the addition of Nautilus Nitro commercial equipment and a line of Nautilus-branded retail products and home gyms. Sales within our direct business segment increased substantially by 75.3% over prior year levels and accounted for $198.1 million...

  • Page 29
    ... eight quarters in the period ended December 31, 2001. The information for each of these quarters is unaudited and has been prepared on the same basis as the audited financial statements appearing elsewhere in this Annual Report on Form 10-K. In the opinion of management, all necessary adjustments...

  • Page 30
    ...ENDED (In thousands, except per share March 31 Fiscal 2001: Net sales 363,862 Gross profit 223,164 Operating income 100,413 Net income 66,583 Earnings per share Basic * 1.89 Diluted * 1.85 Fiscal 2000: Net sales...32,151 20,530 $ Total .41 .41 .41 ...2001 and August 2001. 28 2002. EDGAR Online, Inc.

  • Page 31
    ... our commercial and retail segment through our acquisition strategy and internal growth. We also expect to materially increase our cash expenditures on spot commercials and infomercials as we expand the direct marketing campaigns for our Bowflex products and Nautilus Sleep Systems. We maintain...

  • Page 32
    ...use the trademark, the patent on our Bowflex Power Rods, a key component of our Bowflex products, expires on April 27, 2004. This patent expiration could trigger the introduction of similar products by competitors and result in a significant decline in our sales and revenues. NEW PRODUCT DEVELOPMENT...

  • Page 33
    ...$363.9 million in 2001. Our organic growth has been complemented by acquisitions of Schwinn Fitness in September 2001 and StairMaster in February 2002. Our rapid growth and recent acquisitions may strain our management team, production facilities, information systems and other resources. In addition...

  • Page 34
    ... sell our direct-marketed products. Consequently, a marked increase in the price we must pay for our preferred media time or a reduction in its availability may adversely impact our financial performance. WE DEPEND ON A SINGLE CONSUMER FINANCE COMPANY TO PROVIDE FINANCING PACKAGES TO OUR CUSTOMERS...

  • Page 35
    ...20, 2001 as a result of the Schwinn Fitness acquisition, the effect of which is to not amortize the goodwill recorded as part of this acquisition but to annually test it for impairment. SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," addresses accounting and reporting...

  • Page 36
    ... near-term changes in related interest rates would have not have a material impact on the Company's financial position, results of operations, or cash flows. ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY FINANCIAL DATA Index to Consolidated Financial Statements Page ---Independent...

  • Page 37
    ... for each of the three years in the period ended December 31, 2001. Our audits also included the financial statement schedule at Item 14. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on the...

  • Page 38
    ...tax asset Total current assets PROPERTY, PLANT AND EQUIPMENT, NET OTHER ASSETS TOTAL ASSETS LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Trade payables Accrued liabilities Income taxes payable Royalty payable to stockholders Customer deposits Total current liabilities LONG-TERM DEFERRED...

  • Page 39
    DIRECT FOCUS, INC. CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 1999, 2000, AND 2001 2002. EDGAR Online, Inc.

  • Page 40
    ...SALES $363,862,384 COST OF SALES 140,698,578 -----------Gross profit 223,163,806 OPERATING EXPENSES: Selling and marketing 99,813,812 General and administrative 15,573,667 Royalties 7,363,067 Litigation settlement -----------Total...75,573,619 -----------148,353,746 2001 73,509,675 8,804,446 4,979...

  • Page 41
    See notes to consolidated financial statements. 37 2002. EDGAR Online, Inc.

  • Page 42
    DIRECT FOCUS, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 1999, 2000, AND 2001 Accumulated Other Comprehensive Loss 123,361 123,361 BALANCES, JANUARY 1, 1999 Net income Public offering Options exercised Stock repurchased Tax ...

  • Page 43
    ... to Stockholders Customer deposits Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property, plant and equipment Proceeds from sale of property, plant and equip Additions to other assets Acquisition cost of Nautilus Acquisition cost of Schwinn Purchase of...

  • Page 44
    NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR CASH AND CASH EQUIVALENTS, END OF YEAR SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION...,907,800 32,400,000 -- -- 250,000 See notes to consolidated financial statements 40 2002. EDGAR Online, Inc.

  • Page 45
    ...Schwinn Fitness SA, which include commercial and retail cardio fitness equipment and accessories, into the commercial/retail segment of the business. CONSOLIDATION The consolidated financial statements of the Company include Direct Focus, Inc., Nautilus HPS, Inc., Nautilus, Inc., DFI Properties, LLC...

  • Page 46
    ... structural frame, welded moving parts and weight stacks, a 120-day warranty on upholstery and padded items, and a one-year warranty on all other parts. The Nautilus and Schwinn Fitness commercial and retail line of fitness products includes lifetime warranty on the frame and 42 2002. EDGAR Online...

  • Page 47
    ... three year warranty on parts, labor, electronics, upholstery, grips and cables, and a five year warranty on motors. Warranty costs are estimated based on the Company's experience and are charged to cost of sales as sales are recognized or as such estimates change. RESEARCH AND DEVELOPMENT Internal...

  • Page 48
    ... operating segment is the commercial and retail products segment, which includes products and operations that are not direct marketed to consumers. Products in this segment include Nautilus and Schwinn commercial and retail fitness equipment and accessories. Accounting policies used by the segments...

  • Page 49
    ... Code on July 16, 2001. The acquired assets include plant, equipment and other property used to manufacture, assemble, distribute and sell fitness equipment, including treadmills, upright stationary bicycles, recumbent stationary bicycles, elliptical machines and stair-climbing machines. The Company...

  • Page 50
    ...,624,985 69,843,214 The results and operations subsequent to the date of acquisition are included in the consolidated statements of the Company. The unaudited pro forma financial information below for the year ended December 31, 2001 and 2000 were prepared as if the transaction had occurred at...

  • Page 51
    ...Estimated Useful Life (in years) ----------Land ...N/A Buildings and improvements ...31.5 Computer equipment ...2-5 Production equipment ...5 Furniture and fixtures ...5 Automobiles ...7 Total property, plant and equipment .. Accumulated depreciation ...(6,805,277) Property, plant and equipment, net...

  • Page 52
    2000 Accrued payroll...4,852,398 Accrued warranty expense...2,413,267 Sales return reserve...2,100,000 Accrued other...1,522,777 -----------Total accrued liabilities...10,888,442 5,344,225 $ $ 3,178,847 447,194 1,307,000 411,184 2001 ============ 47 2002. EDGAR Online, Inc.

  • Page 53
    ... trailers and other equipment used in the Nautilus commercial business. These leases expire over various terms through December 2002. Leased facilities were acquired in 2001 due to the acquisition of the Fitness Division of Schwinn/GT Corp. We lease sales and administrative office space in various...

  • Page 54
    ... rate Expected volatility Expected option lives Weighted-average fair value of options granted A summary of the status of the Company's stock option plans as of December 31, 1999, 2000 and 2001, and changes during the years ended on those dates is presented below. 49 2002. EDGAR Online, Inc.

  • Page 55
    ...financial statement purposes, any reduction in income tax obligations as a result of these tax benefits is credited to common stock. The provision for (benefit from) income taxes consists of the following for the three years ended December 31, 2001: 1999 -----------Current: Federal ...State ...Total...

  • Page 56
    2002. EDGAR Online, Inc.

  • Page 57
    ... statutory income tax rate with the Company's effective income tax rate is as follows: 2000 Federal...State...Other Total 35.00% 1.13% (.13 36.00 2001 35.00% 1.89% (.41)% 36.48% 11. EARNINGS PER SHARE The per share amounts are based on the weighted average number of basic and dilutive common...

  • Page 58
    Basic shares outstanding ...Dilutive effect of stock options ...Diluted shares outstanding ... Average Shares 1999 2000 2001 34,308,957 35,287,604 35,183,632 876,120 709,762 782,406 35,185,077 35,997,366 35,966,038 51 2002. EDGAR Online, Inc.

  • Page 59
    ... cash payment to the competitor, of which $4 million was paid by insurance. This settlement did not affect the ongoing direct marketing campaign for the Company's Bowflex home fitness equipment. Additionally, in the normal course of business, the Company is a party to various other legal claims...

  • Page 60
    ... property, plant, equipment and other property used to manufacture, assemble, distribute and sell fitness equipment, including steppers, stepmills, treadmills and exercise bicycles. The Company intends to continue to use the acquired assets for these purposes. The purchase price for StairMaster...

  • Page 61
    ... the results of future operations of the Company. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information required by this item is included under the captions "ELECTION OF...

  • Page 62
    PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (A)(1) FINANCIAL STATEMENTS See the Consolidated Financial Statements in Item 8. (A)(2) FINANCIAL STATEMENT SCHEDULE DIRECT FOCUS, INC. Schedule II Valuation and Qualifying Accounts Three years ended December 31, 2001 ...

  • Page 63
    ... Asset Purchase Agreement by and between Direct Focus, Inc. Schwinn GT Corp., dated September 6, 2001, and purchase price - Incorporated by reference to Exhibits 2.1 and 2.3(a) of the Company's Form 8-K, as filed with the Securities and Exchange Commission (the "Commission") on October 4, 2001, and...

  • Page 64
    2002. EDGAR Online, Inc.

  • Page 65
    ...Direct, LLC, Nautilus, Inc., and Schwinn Acquisition, LLC Incorporated by reference 2002. EDGAR to Exhibit Online, Inc. 2.1 of the Company's Quarterly Report on Form 10-Q for the nine months ended September 30, 2001, as filed with the Commission on November 14, 2001. Royalty Payment Agreement, dated...

  • Page 66
    ...F. Little. Power of Attorney for James M. Weber. REPORTS ON FORM 8-K The following reports on Form 8-K were filed during the quarter December 31, 2001: o Form 8-K related to the acquisition of Schwinn Fitness filed on October 4, 2001. o Form 8-K/A related to the acquisition of Schwinn Fitness filed...

  • Page 67
    ... duly authorized. Date: March 26, 2002 DIRECT FOCUS, INC. By /s/ Brian R. Cook Brian R. Cook, Chairman and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in...

  • Page 68
    ...M. Weber * By: /s/ Rod W. Rice Rod W. Rice ATTORNEY-IN-FACT Title Chairman and Chief Executive Officer (Principal Executive Officer) Chief Financial Officer and (Principal Financial and Accounting Officer) Director Director Director Director Director Director March 26, 2002 58 2002. EDGAR...

  • Page 69
    ... FOCUS, INC. Pursuant to RCW 23B.10.060 of the Washington Business Corporation Act, the undersigned corporation hereby submits the following amendment to the corporation's Articles of Incorporation: 1. The name of the corporation is Direct Focus, Inc. 2. The text of the amendment as adopted is as...

  • Page 70
    EXHIBIT 10.14 BUSINESS LOAN AGREEMENT BORROWER: LENDER: U.S. BANK NATIONAL ASSOCIATION CORPORATE BANKING DIVISION PL-7 COMMERCIAL LOAN SERVICE WEST 555 S.W. OAK PORTLAND, OR 97204 DIRECT FOCUS, INC. 2200 N.E. 65TH AVENUE VANCOUVER, WA 98661 THIS BUSINESS LOAN AGREEMENT BETWEEN DIRECT FOCUS, INC. ...

  • Page 71
    ...all commercial loans and financial accommodations from Lender to Borrower, whether nor or hereafter existing, and however evidenced, including without limitation those loans and financial accommodations described here in or described on any exhibit or schedule attached to this Agreement from time to...

  • Page 72
    ... of Event of Default under this Agreement. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to lender, as of the date of this Agreement, as of the date of each disbursement of Loan proceeds, as of the date of any renewal, extension or modification of any Loan, and at all times any...

  • Page 73
    ...owners or occupants of any of the properties, or (ii) any actual or threatened litigation or claims of any kind by any person relating to such matters; and (c) Neither Borrower nor any tenant, contractor, agent or other authorized user of any of the properties shall use, generate, manufacture, store...

  • Page 74
    ... intends to use the Loan proceeds solely for business or commercial related purposes. EMPLOYEE BENEFIT PLANS. Each employee benefit plan as to which Borrower may have any liability complies in all material respects with all applicable requirements of law and regulations, and (i) no Reportable Event...

  • Page 75
    ... AS LENDER MAY REQUIRE WITH RESPECT TO BORROWER'S PROPERTIES AND OPERATIONS, IN FORM, AMOUNTS, COVERAGES, AND WITH INSURANCE COMPANIES REASONABLY ACCEPTABLE TO LENDER. BORROWER, UPON REQUEST OF LENDER, WILL DELIVER TO LENDER FROM TIME TO TIME THE POLICIES OR CERTIFICATES 2002. EDGAR Online, Inc.

  • Page 76
    ..., OMISSION OR DEFAULT OF BORROWER OR ANY OTHER PERSON. IN CONNECTION WITH ALL POLICIES COVERING ASSETS IN WHICH LENDER HOLDS OR IS OFFERED A SECURITY INTEREST FOR THE LOANS, BORROWER WILL PROVIDE LENDER WITH SUCH LOSS PAYABLE OR OTHER ENDORSEMENTS AS LENDER MAY REQUIRE. Insurance Reports. FURNISH TO...

  • Page 77
    ... WITHIN SIXTY (60) DAYS OF QUARTER END AND AT THE TIME OF EACH DISBURSEMENT OF LOAN PROCEEDS WITH A CERTIFICATE EXECUTED BY BORROWER'S CHIEF FINANCIAL OFFICER, OR OTHER OFFICER OR PERSON ACCEPTABLE TO LENDER, CERTIFYING THAT THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS AGREEMENT ARE TRUE AND...

  • Page 78
    ... in good faith deems itself insecure, even though no Event of Default shall have occurred. ACCESS LAWS. Without limiting the generality of any provision of this Agreement requiring Borrower to comply with applicable laws, rules, and regulations, Borrower agrees that it will, at all times, comply...

  • Page 79
    ...for any reason. INSOLVENCY. The dissolution or termination of Borrower's existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part of Borrower's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any...

  • Page 80
    ... of any personal claims or defenses that Borrower may have against Lender. COSTS AND EXPENSES. Borrower agrees to pay upon demand all of Lender's expenses, including without limitation attorneys' fees, incurred in connection with the enforcement, modification and collection of this Agreement or in...

  • Page 81
    .... BORROWER ACKNOWLEDGES HAVING READ ALL OF THE PROVISIONS OF THIS BUSINESS LOAN AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF MAY 15, 2001. BORROWER: DIRECT FOCUS, INC. X_____ LENDER: U.S. BANK NATIONAL ASSOCIATION BY: _____ AUTHORIZED OFFICER 2002. EDGAR Online, Inc.

  • Page 82
    ...OF DIRECT FOCUS, INC. Nautilus Fitness Products, Inc., a Washington corporation Nautilus Human Performance Systems, Inc., a Virginia corporation Nautilus, Inc., a Washington corporation Direct Focus Sales Corporation, a Washington corporation DFI Properties, LLC, a Virginia limited liability company...

  • Page 83
    ...333-46936 of Direct Focus, Inc. on Form S-8 of our report dated January 21, 2002 (February 8, 2002, as to Note 17), appearing in the Annual Report on Form 10-K of Direct Focus, Inc. for the year ended December 31, 2001. DELOITTE & TOUCHE LLP Portland, Oregon March 26, 2002 2002. EDGAR Online, Inc.

  • Page 84
    ..., for him and his name, place and stead, in any and all capacities, to sign the Form 10-K of Direct Focus, Inc., a Washington corporation, for the fiscal year ended December 31, 2001, and any amendments or supplements thereto, and to file this Power of Attorney and the Form 10-K, with all exhibits...

  • Page 85
    ..., for him and his name, place and stead, in any and all capacities, to sign the Form 10-K of Direct Focus, Inc., a Washington corporation, for the fiscal year ended December 31, 2001, and any amendments or supplements thereto, and to file this Power of Attorney and the Form 10-K, with all exhibits...

  • Page 86
    ..., for him and his name, place and stead, in any and all capacities, to sign the Form 10-K of Direct Focus, Inc., a Washington corporation, for the fiscal year ended December 31, 2001, and any amendments or supplements thereto, and to file this Power of Attorney and the Form 10-K, with all exhibits...

  • Page 87
    ..., for him and his name, place and stead, in any and all capacities, to sign the Form 10-K of Direct Focus, Inc., a Washington corporation, for the fiscal year ended December 31, 2001, and any amendments or supplements thereto, and to file this Power of Attorney and the Form 10-K, with all exhibits...

  • Page 88
    ..., for him and his name, place and stead, in any and all capacities, to sign the Form 10-K of Direct Focus, Inc., a Washington corporation, for the fiscal year ended December 31, 2001, and any amendments or supplements thereto, and to file this Power of Attorney and the Form 10-K, with all exhibits...

  • Page 89
    End of Filing 2002. EDGAR Online, Inc.