VANCOUVER, Wash.--(BUSINESS WIRE)--Sept. 13, 2001--Direct Focus, Inc. (Nasdaq:DFXI), a marketing company for fitness and healthy lifestyle products with a direct business model, announced today that it was the successful bidder to acquire substantially all of the assets of Schwinn/GT's fitness equipment division ("Schwinn Fitness") through a bankruptcy auction, pending a final court order by the U.S. Bankruptcy Court for the District of Colorado. The Direct Focus bid was linked to a successful bid submitted by Pacific Cycle LLC for the purchase of substantially all of the assets of Schwinn/GT's bicycle division.

Under the terms of the bid, Direct Focus anticipates it will pay approximately $65 million in cash for Schwinn Fitness, which will be accounted for under the purchase accounting method. The Company expects the transaction to close on or before September 21, 2001, subject to the final court order and expiration of the Hart-Scott-Rodino waiting period. Schwinn Fitness had annual revenue in 2000 in excess of $100 million and strong positive operating cash flows. Direct Focus expects this acquisition to be accretive to revenue and earnings in 2002 and beyond.

"We are very pleased with the success of our bid," said Brian Cook, CEO of Direct Focus. "Our management team is very familiar with Schwinn Fitness. Kevin Lamar, who joined us as our President in June, was instrumental in growing the Schwinn Fitness business from $20 million in annual sales to over $100 million in annual sales from 1989 to 2000."

"Like our purchase of the assets of Nautilus International, Inc. in January 1999 and the subsequent turnaround and growth of those operations, expansion through acquisitions is an important part of our strategy. At the end of the second quarter, we reported $94.7 million in cash and short term investments. We believe this acquisition is an excellent use of our financial and management resources, and offers significant growth opportunities."

"We believe Schwinn Fitness' strong brand and quality fitness products will be an excellent fit with our growing portfolio of fitness and healthy lifestyle products," said Kevin Lamar, President of Direct Focus. "Schwinn Fitness offers a popular line of cardio-equipment, which includes treadmills, stationary bikes and steppers sold under the Schwinn and Trimline brands. These products will complement our Nautilus line of strength-building products, and we expect to gain powerful distribution synergies through the combined product lines and sales effort."

About Direct Focus, Inc.
Direct Focus, Inc. is a marketing company for fitness and healthy lifestyle products with a direct business model. The Company currently markets its Bowflex line of home fitness equipment and Nautilus Sleep Systems directly to consumers, using an effective combination of television advertising, 800-call centers and Web sites. The Company also sells its Nautilus commercial fitness equipment directly to health clubs and other institutions, and its Nautilus consumer fitness products through retail athletic stores. The Company is headquartered in Vancouver, Washington. Direct Focus is located on the Web at www.directfocusinc.com.

Schwinn/GT released this press release in July:
Boulder, Co July 16, 2001 - Schwinn/GT Corp. announced today that it has entered into a sale agreement with Huffy Corporation (NYSE: HUF) for the purchase of its Cycling Division. Schwinn/GT also announced it has commenced proceedings under Chapter 11 of the U.S. Bankruptcy Code. This filing is necessary to allow Schwinn/GT to complete the sale of the cycling business. The Company filed its Chapter 11 petition in the United States Bankruptcy Court for the District of Colorado in Denver. In accordance with Section 363 of the Bankruptcy Code, other companies will have an opportunity to submit bids for the cycling division through a Court supervised competitive bidding process. Consummation of the proposed transaction is subject to, among other things, expiration of the statutory Hart-Scott-Rodino Act waiting period applicable to acquisitions in bankruptcy.

The Chapter 11 filing includes Schwinn Cycling & Fitness Inc., GT Bicycles, Inc., Riteway Distribution, Inc., Hebb Industries, Inc. and certain other U. S. affiliates. The Company’s subsidiaries in Switzerland, France and Japan are not included in the filing.

Under the terms of the current sale agreement, Huffy will pay in excess of $60 million subject to adjustment to acquire substantially all of the assets of Schwinn/GT's Cycling Division.

The Company has reached an agreement with a group of lenders led by Comerica Bank to provide up to $30 million in debtor-in-possession (DIP) financing. The funding will be used to maintain normal business operations in the Fitness Division and to ensure the orderly sale of the cycling business to Huffy.

Don Graber, Chairman, President and CEO of Huffy Corporation, said, “An opportunity such as this comes along only rarely. The SchwinnÒ brand is one of the most widely recognized brand names in the world and together with GTÒ and other brands would strengthen our existing brand portfolio. The Schwinn and GT brands are ideal candidates for multi-channel distribution, capitalizing on Huffy’s marketing and brand management expertise.”

Jeff Sinclair, Schwinn’s Chief Executive Officer, stated, “With the sale of the Cycling Division well on its way, we are now turning our attention to the Fitness Division. Operations at Fitness are continuing without interruption. Although it will take a little time to return the Fitness Division to business as usual, we expect to make substantial progress in the coming weeks.

“With the priority status provided under the Bankruptcy Code for goods and services that are delivered after the filing, we anticipate the continued support of our vendors to meet the product needs of our fitness customers,” Mr. Sinclair added.

Mr. Sinclair also noted that since the Company’s operations in Switzerland, France and Japan are not included in the Chapter 11 filing, it will be “business as usual for these entities. Our overseas subsidiaries are financially independent from our domestic operations and are continuing to operate without interruption.”

In anticipation of the Cycling Division sale, the Company announced it will downsize its Cycling Division workforce. The Company will deliver letters to 300 Cycling Division employees to fulfill any obligations the Company may have under the Workers Adjustment and Retraining Notification Act.

“I am mindful of the impact these actions will have on our cycling employees and we will make every reasonable effort to make this as smooth a transition for them as possible. I recognize the many contributions our employees have made to the Company over the years and regret the loss of employment that may be associated with this transaction,” Mr. Sinclair said.

And Yeti released this press release:
Yeti Cycles, LLC, a newly formed affiliate of Volant Sports, a Colorado based manufacturer of high-end skis, announced today that it has purchased the Yeti brand and its assets from Schwinn Cycling and Fitness.

According to Volant's President and CEO, Mark Soderberg, the acquisition is part of a strategy to diversify into other recreational sports. "We have looked at the bicycle industry for quite some time, but, until now, haven't found the right brand." Soderberg said. "Yeti is a perfect match - it is high-end, innovative, and committed to producing the best product available."

There will be a heavy investment in engineering and design to help Yeti regain its position as high-end market leader. Yeti plans to introduce several new models in the spring of 2000. While new to the bike industry, there are several bike industry veterans already in-house. Chris Conroy, previously of Brunswick Bicycles and Scott Sports Group, has joined Volant as Vice President and General Manager of Yeti Cycles, LLC. Peter Turner, who was engineering manager at Rock Shox two years ago, will head the engineering efforts. Yeti Cycles will retain some key Yeti personnel from the Boulder and Durango facility.

Yeti's rich race heritage will continue to be a major focus for the brand. "Our race team will be the cornerstone of our product development efforts," Conroy said. Marla Streb, one of the top female downhill racers in the world, will continue to race for Yeti. The company is planning to expand the race program. "We hope to have a major new sponsor in the next few months," Conroy said.

Yeti will open a new high-tech manufacturing facility in Colorado. While the new Yeti facility will feature time-tested welding techniques honed in the original Durango production facility, it will also add a high-tech touch with a laser that will miter tubes to precise tolerances. Conroy said they hope to have the new facility up and running in the next two months, with the first new Yeti's rolling off the line in December.

Volant Sports manufactures and markets a unique line of performance-enhancing ski equipment, featuring the patented and award-winning Volant stainless steel cap technology for easy turning and superior edge-hold. Volant Sports is based in Wheat Ridge, CO.

— MountainZone.com Staff