nautilius13da-082307.htm
As filed with the Securities and Exchange Commission on August 24, 2007

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934
(Amendment No. 2)


Nautilus, Inc.
(Name of Issuer)

Common Stock, No Par Value
(Title of Class of Securities)


63910B102
(CUSIP Number)

Michael L. Zuppone, Esq.
Paul, Hastings, Janofsky & Walker LLP
75 East 55th Street
New York, New York 10022
(212) 318-6906
 (Name, Address and Telephone Number of Person Authorized
 to Receive Notices and Communications)


                                      August 22, 2007                                    
(Date of Event which Requires Filing of this Statement)
 
If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box [  ]
 
The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).
 

CUSIP No. 63910B102
  
Page 2 of 13 Pages
 
1

  NAME OF REPORTING PERSON
  I.R.S. IDENTIFICATION NO. OF ABOVE PERSON

Sherborne Investors LP
2

  CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
 

(a)o

(b)o
3

  SEC USE ONLY
 

 
4

  SOURCE OF FUNDS

OO
5

  CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)

 

o
6

  CITIZENSHIP OR PLACE OF ORGANIZATION

       Delaware

NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
  7
   SOLE VOTING POWER
    0
 
8

  SHARED VOTING POWER

    6,624,479

  
9

  SOLE DISPOSITIVE POWER

    0
  
10

  SHARED DISPOSITIVE POWER

    6,624,479

  
11

  AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

6,624,479
12

  CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
 

o
13

  PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

21.0%
14

  TYPE OF REPORTING PERSON

PN
 
CUSIP No. 63910B102
  
Page 3 of 13 Pages
 
1

  NAME OF REPORTING PERSON
  I.R.S. IDENTIFICATION NO. OF ABOVE PERSON

        Sherborne Investors GP, LLC
2

  CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
 

(a)o

(b)o
3

  SEC USE ONLY

 
 
4

  SOURCE OF FUNDS

OO
5

  CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)

 

o
6

  CITIZENSHIP OR PLACE OF ORGANIZATION

       Delaware

NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
  7
   SOLE VOTING POWER
    0
 
8

  SHARED VOTING POWER

   6,624,479

  
9

  SOLE DISPOSITIVE POWER

    0

  
10

  SHARED DISPOSITIVE POWER
 
    6,624,479

  
11

  AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

6,624,479
12

  CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES

 

o
13

  PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

21.0%
14

  TYPE OF REPORTING PERSON

OO
 
CUSIP No. 63910B102
  
Page 4 of 13 Pages
 
1

  NAME OF REPORTING PERSON
  I.R.S. IDENTIFICATION NO. OF ABOVE PERSON

        Sherborne Investors Management LP
2

  CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
 

(a)o

(b)o
3

  SEC USE ONLY
 

 
4

  SOURCE OF FUNDS

OO
5

  CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)


 

o
6

  CITIZENSHIP OR PLACE OF ORGANIZATION

       Delaware

NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
  7
   SOLE VOTING POWER
    0
 
8

  SHARED VOTING POWER

    6,624,479

  
9

  SOLE DISPOSITIVE POWER

    0

  
10

  SHARED DISPOSITIVE POWER

    6,624,479

  
11

  AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

6,624,479
12

  CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES

 

o
13

  PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

21.0%
14

  TYPE OF REPORTING PERSON

PN
CUSIP No. 63910B102
  
Page 5 of 13 Pages
 
1

  NAME OF REPORTING PERSON
  I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
       
        Sherborne Investors Management GP, LLC
2

  CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
 

(a)o

(b)o
3

  SEC USE ONLY

 
 
4

  SOURCE OF FUNDS

OO
5

  CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)


 

o
6

  CITIZENSHIP OR PLACE OF ORGANIZATION

       Delaware

NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
  7
   SOLE VOTING POWER
    0
 
8

  SHARED VOTING POWER

    6,624,479

  
9

  SOLE DISPOSITIVE POWER

    0

  
10

  SHARED DISPOSITIVE POWER

    6,624,479


  
11

  AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

6,624,479
12

  CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES

 

o
13

  PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

21.0%
14

  TYPE OF REPORTING PERSON

OO
 
CUSIP No. 63910B102
  
Page 6 of 13 Pages
 
1

  NAME OF REPORTING PERSON
  I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
       
        Sherborne Strategic Fund A, LLC
2

  CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP

 

(a)o

(b)o
3

  SEC USE ONLY

 
 
4

  SOURCE OF FUNDS

OO
5

  CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)


 

o
6

  CITIZENSHIP OR PLACE OF ORGANIZATION

       Delaware

NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
  7
   SOLE VOTING POWER
    566,194.220
 
8

  SHARED VOTING POWER

    0

  
9

  SOLE DISPOSITIVE POWER

    566,194.220

  
10

  SHARED DISPOSITIVE POWER

    0

  
11

  AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

566,194.220
12

  CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES

 

o
13

  PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

1.8%
14

  TYPE OF REPORTING PERSON

OO
 
CUSIP No. 63910B102
  
Page 7 of 13 Pages
 
1

  NAME OF REPORTING PERSON
  I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
                
        Sherborne Strategic Fund B, LLC
2

  CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
 

(a)o

(b)o
3

  SEC USE ONLY

 
 
4

  SOURCE OF FUNDS

OO
5

  CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)


 

o
6

  CITIZENSHIP OR PLACE OF ORGANIZATION

       Delaware

NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
  7
   SOLE VOTING POWER
    849,291.330
 
8

  SHARED VOTING POWER

    0

  
9

  SOLE DISPOSITIVE POWER

    849,291.330

  
10

  SHARED DISPOSITIVE POWER

    0

  
11

  AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

849,291.330
12

  CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES

 

o
13

  PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

2.7%
14

  TYPE OF REPORTING PERSON

OO
CUSIP No. 63910B102
  
Page 8 of 13 Pages
 
1

  NAME OF REPORTING PERSON
  I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
                        
Nottingham Investors LLC
2

  CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
 

(a)o

(b)o
3

  SEC USE ONLY

 
 
4

  SOURCE OF FUNDS

OO
5

  CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)


 

o
6

  CITIZENSHIP OR PLACE OF ORGANIZATION

       Delaware

NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
  7
   SOLE VOTING POWER
    5,208,993.450
 
8

  SHARED VOTING POWER

    0
  
9

  SOLE DISPOSITIVE POWER

    5,208,993.450
  
10

  SHARED DISPOSITIVE POWER
    0
  
11

  AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

5,208,993.450
12

  CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
 

o
13

  PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

16.5%
14

  TYPE OF REPORTING PERSON

OO
 
CUSIP No. 63910B102
  
Page 9 of 13 Pages
 
1

  NAME OF REPORTING PERSON
  I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
                        
Edward J. Bramson
2

  CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
 

(a)o

(b)o
3

  SEC USE ONLY

 
 
4

  SOURCE OF FUNDS

OO
5

  CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)


 

o
6

  CITIZENSHIP OR PLACE OF ORGANIZATION

       United Kingdom

NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
  7
   SOLE VOTING POWER
     6,624,479
 
8

  SHARED VOTING POWER
 
    0

  
9

  SOLE DISPOSITIVE POWER

     6,624,479

  
10

  SHARED DISPOSITIVE POWER

    0

  
11

  AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

6,624,479
12

  CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES

 

o
13

  PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

21.0%
14

  TYPE OF REPORTING PERSON

IN

CUSIP No. 63910B102
  
Page 10 of 13 Pages
 
Explanatory Note:  This Amendment No. 2 (this “Amendment”) to Schedule 13D is filed by the Reporting Persons (as defined below in this Explanatory Note) pursuant to Rule 13d-2(a) under the Securities Exchange Act of 1934, as amended. This Amendment amends and supplements the Schedule 13D filed with the U.S. Securities and Exchange Commission (the “Commission”) on July 25, 2007 (the “Initial 13D”) as amended and supplemented by Amendment 1 to the Initial 13D filed with the Commission on July 31, 2007 and relates to the common stock, no par value (“Shares”) of Nautilus, Inc., a Washington corporation (the “Issuer”).
 
The Reporting Persons are:
 
(i)  
Sherborne Investors LP, a Delaware limited partnership and managing member of each of the Funds (as defined below) (“Managing Member”);
 
(ii)  
Sherborne Investors GP, LLC, a Delaware limited liability company and general partner of the Managing Member (“Sherborne Investors GP”);
 
(iii)  
Sherborne Investors Management LP, a Delaware limited partnership and investment manager to the Funds (“Sherborne Management”);
 
(iv)  
Sherborne Investors Management GP, LLC, a Delaware limited liability company and general partner of Sherborne Management (“Sherborne Management GP”);
 
(v)  
Sherborne Strategic Fund A, LLC, a Delaware limited liability company (“Strategic Fund A”);
 
(vi)  
Sherborne Strategic Fund B, LLC, a Delaware limited liability company (“Strategic Fund B”);
 
(vii)  
Nottingham Investors LLC, a Delaware limited liability company (“Nottingham” and, together with Strategic Fund A and Strategic Fund B, the “Funds”); and
 
(viii)  
Edward J. Bramson (“Bramson”), a citizen of the United Kingdom and the managing member of Sherborne Investors GP and Sherborne Management GP.
 
The Covered Persons, for whom information is required to be provided pursuant to Instruction C to Schedule 13D, are Bramson, Mr. Craig L. McKibben and Mr. Gerard L. Eastman (collectively, the “Covered Persons”).  Messrs. McKibben and Eastman are managing directors of Sherborne Investors GP and Sherborne Management GP.

 
Item 4.                 Purpose of Transaction.
 
Item 4 is hereby amended and restated in its entirety as follows:
 
On August 22, 2007, Edward Bramson and Gerard Eastman, principals of the Reporting Persons, met with Robert Falcone, a director and interim chief executive, and Ronald Badie, a director, and other members of the management of the Issuer. The parties discussed a number of issues,
 
CUSIP No. 63910B102
  
Page 11 of 13 Pages
 
including the status of the Issuer’s current operations and operational turnaround plans.  In addition, the parties discussed the current search for a permanent chief executive officer, and also the possibility of adding representatives of the Reporting Persons to the Issuer’s board. Although no understandings or agreements were reached at the meeting, the Reporting Persons expect to have further discussions with representatives of the Issuer regarding these matters in the near future.

The Reporting Persons and the Covered Persons purchased the Shares based on their belief that the Shares, when purchased, were undervalued and represented an attractive investment opportunity. Depending upon various factors, including overall market conditions, other investment opportunities available to the Reporting Persons and the Covered Persons, and the availability of Shares at prices that would make the purchase of additional Shares desirable, the Reporting Persons and the Covered Persons may or may not increase their position in the Issuer through, among other things, the purchase of additional Shares or derivative securities, on the open market or in private transactions or otherwise, on such terms and at such times as the Reporting Persons and the Covered Persons may deem advisable.

The Reporting Persons and the Covered Persons intend to review their investments in the Issuer on a continuing basis and depending on various factors the Reporting Persons and the Covered Persons may deem relevant to their investment decision, including, without limitation, the Issuer’s financial position and strategic direction, the price levels of the Shares, conditions in the securities markets and general economic and industry conditions, the Reporting Persons and the Covered Persons may decide to sell some or all of their Shares, or to continue to hold their existing position in the Shares for investment.  The Reporting Persons and the Covered Persons, if they so elect, may from time to time engage in transactions for the purpose of hedging some or all of their positions in the Shares.

In addition, depending upon the factors mentioned above and other factors the Reporting Persons and the Covered Persons may deem relevant, the Reporting Persons and the Covered Persons may in the future take such other actions with respect to their investment in the Issuer as they deem appropriate including, without limitation, engaging in further discussions with management and/or the Board of Directors of the Issuer concerning opportunities that the Reporting Persons and the Covered Persons believe may exist to improve the business, operations, financial condition and strategic direction of the Issuer, communicating with other shareholders of the Issuer, continuing to seek representation on the Issuer’s Board of Directors or requesting a special meeting of the Issuer pursuant to which Covered Persons could seek representation on the Issuer’s Board of Directors, or changing their intention with respect to any and all matters referred to in this Item 4.

Except as set forth herein or such as would occur upon completion of any of the actions discussed above, no Reporting Person or Covered Person has any present plan or proposal which would relate to or result in any of the matters set forth in subparagraphs (a)-(j) of Item 4 of Schedule 13D.
CUSIP No. 63910B102
  
Page 12 of 13 Pages
 
SIGNATURE

After reasonable inquiry and to the best of its knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct.

Dated:  August 23, 2007
 
  SHERBORNE INVESTORS LP  
     
 
By:   SHERBORNE INVESTORS GP, LLC, its general partner
    
 
  By:  /s/ Craig L. McKibben                                                                                                                   
    Name:  Craig L. McKibben
    Title:    Managing Director
 
  SHERBORNE INVESTORS GP, LLC  
 
  By:  /s/ Craig L. McKibben                                                                                                                            
    Name:  Craig L. McKibben
    Title:    Managing Director
 
  SHERBORNE INVESTORS MANAGEMENT LP  
     
 
By:   SHERBORNE INVESTORS MANAGEMENT GP, LLC, its general partner
    
 
  By:  /s/ Craig L. McKibben                                                                                                              
    Name:  Craig L. McKibben
    Title:    Managing Director
 
  SHERBORNE INVESTORS MANAGEMENT GP, LLC  
 
  By:  /s/ Craig L. McKibben                                                                                                                 
    Name:  Craig L. McKibben
    Title:    Managing Director
CUSIP No. 63910B102
  
Page 13 of 13 Pages
 
  SHERBORNE STRATEGIC FUND A, LLC  
     
 
By:   SHERBORNE INVESTORS LP, its managing member
    
 
  By: SHERBORNE INVESTORS GP, LLC, its general partner 
 
  By:  /s/ Craig L. McKibben                                                                                                                  
    Name:  Craig L. McKibben
    Title:    Managing Director
 
  SHERBORNE STRATEGIC FUND B, LLC  
     
 
By:   SHERBORNE INVESTORS LP, its managing member
    
 
  By: SHERBORNE INVESTORS GP, LLC, its general partner 
 
  By:  /s/ Craig L. McKibben                                                                                                            
    Name:  Craig L. McKibben
    Title:    Managing Director
 
  NOTTINGHAM INVESTORS LLC  
     
 
By:   SHERBORNE INVESTORS LP, its managing member
    
 
  By: SHERBORNE INVESTORS GP, LLC, its general partner 
 
  By:  /s/ Craig L. McKibben                                                                                                                  
    Name:  Craig L. McKibben
    Title:    Managing Director
 
  EDWARD BRAMSON  
 
  /s/ Edward Bramson                                                                        
 
Edward Bramson