VANCOUVER, WA -- A month after Nautilus Inc. released falling net sales for second quarter 2007, Gregg Hammann stepped down as president and chief executive officer of the Vancouver, WA-based equipment manufacturer. He also resigned his seat on the company’s board. Robert S. Falcone, Nautilus’s lead independent director, will serve as chairman, president and chief executive officer on an interim basis, according to the company.

The company’s independent directors have formed a search committee and will begin looking for a new chief executive officer.

“I have enjoyed the opportunity to lead this great company over the past four years. It has been a pleasure to work with such talented people throughout the organization,” Hammann says. “Nautilus is a company with tremendous potential and I wish all the employees continued success in the years ahead.”

Nautilus' sales have been dropping recently. Net sales for the second quarter of 2007 were down 15 percent coming in at $117.1 million compared to $137.6 million in the second quarter 2006. Net income for second quarter 2007 was $1.1 million, or $0.04 per share, compared to $1.7 million or $0.05 per share for the second quarter of 2006.

It was a similar story for the first quarter of 2007, with net sales dropping 14 percent to $158.8 million from $185 million in the first quarter of 2006. Net income fell from $5.2 million, or $0.16 per share, in the first quarter of 2006 to $2.5 million, or $0.08 per share, in the first quarter of 2007.

“Our quarter was primarily affected by a softer-than-expected consumer environment in the North American home fitness market served by our retail and direct channels, especially within the home exercise gym segment,” Hammann says in a Nautilus quarterly report released on July 16. “Meanwhile, our international, apparel and commercial businesses are performing in line with our growth plans. While we cannot control the consumer spending environment, we believe by implementing a better brand assortment at retail, launching new advertising, achieving greater brand leverage, and better marketing and sell through support, we will improve our results in the retail and direct channels.”

Falcone has more than 33 years of management and board experience. He is president and CEO of GCR Custom Research, served as chief financial officer of Nike Inc., and was a partner of Price Waterhouse LLP. He is a board member and former audit committee chairman of RadioShack Corp.

“I look forward to serving our employees, customers and shareholders as interim CEO,” Falcone said. “During this important transition period for our company, the board of directors and I are committed to working with our employees to enhance our position as a leader in the strength and fitness industry and charting a course for the future that will deliver strong returns for our shareholders.”

Nautilus 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.

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