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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 19, 1999
DIRECT FOCUS, INC.
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(Exact name or registrant as specified in its charter)
Washington 000-25867 94300267
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
2200 NE 65th Avenue, Vancouver, Washington 98661
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(Address of principal executive offices and Zip Code)
Registrant's telephone number, including area code: (360) 694-7722
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DIRECT FOCUS, INC.
FORM 8-K
ITEM 5. OTHER EVENTS.
On July 19, 1999, Direct Focus, Inc. (the "Company"), issued a press release
announcing that it had reached an agreement with Soloflex, Inc. ("Soloflex"), to
settle pending litigation. Under terms of the settlement, the Company will make
an $8 million cash payment to Soloflex, of which $4 million is being paid by the
Company's insurers. As a result of the settlement, the Company will take a
one-time, after-tax charge of approximately $2.6 million against second quarter
earnings. A copy of the press release is attached to this Form 8-K as Exhibit
99.1 and is incorporated by reference herein.
ITEM 7. EXHIBITS.
The following exhibit is filed herewith and this list constitutes the exhibit
index.
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Exhibit No. Document Description
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<S> <C>
99.1 Press Release, dated July 19, 1999.
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SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DIRECT FOCUS, INC.
July 28, 1999 By: s/ Brian R. Cook
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(Date) Brian R. Cook, President and Chief
Executive Officer
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EXHIBIT 99.1
DIRECT FOCUS, INC. SETTLES LAWSUIT WITH SOLOFLEX, INC.
VANCOUVER, WA...July 19, 1999...Direct Focus, Inc. (Nasdaq: DFXI) announced
today that it reached an agreement with Soloflex, Inc., to settle pending
litigation. As a result of the settlement, Direct Focus, Inc. will take a
one-time, after-tax charge of approximately $2.6 million against second
quarter earnings. Despite the one-time charge, the company expects to announce
positive net earnings in its second quarter earnings release on July 26, 1999.
Under terms of the settlement, Direct Focus will make an $8 million cash payment
to Soloflex, of which $4 million is being paid by insurance.
Rod Rice, chief financial officer of Direct Focus, stated that "after payment of
this settlement, Direct Focus remains in a strong cash position and continues to
generate strong positive cash flow."
"We made no admission of guilt in the settlement and continue to believe that
Soloflex's claims were without merit," said Brian Cook, president and chief
executive officer of Direct Focus. "However, when the court denied our motions
to have the case dismissed before trial, we were faced with a lengthy jury trial
and the possibility of a large jury verdict, including multiple damages as
allowed under federal law. Under those circumstances, we determined that it was
in the best interests of our shareholders to settle the case on terms that will
have no negative long-term impact on Direct Focus."
"This settlement does not affect the ongoing direct marketing campaign for our
Bowflex home fitness equipment," said Cook. "We will continue to aggressively
market our Bowflex product line using television commercials and infomercials."
Direct Focus 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 Internet.
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."
