An income tax benefit of $34.3 million allowed Nautilus to report net earnings of $32.9 million for the second quarter. Excluding the extraordinary gain, the fitness company had a loss of $1.6 million for the period, compared with $700,000 in the year-ago period. The gross margin improved by 4.4 percentage points to 47.8 percent, but a sales decline and higher marketing expenses led the company to a higher operating loss of $1.7 million, up from $600,000. Revenues declined by 8.4 percent to $36.2 million as a 2.5 percent increase in the Direct segment was offset by a drop of 27.5 percent in the Retail segment. The launch of a new cardio line in the second half should help the company to report growth for the full year. After the release of the first commercial Treadclimber, co-developed and distributed with Star Trac, one new product will be the Bowflex Boost Brand, which will enable customers to track their fitness progress.

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