Nautilus 2003 Annual Report Download - page 40

Download and view the complete annual report

Please find page 40 of the 2003 Nautilus annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 93

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93

Table of Contents
convenient consumer financing is an important tool in our direct marketing efforts and induces many of our customers to make purchases when
they otherwise would not. Consumers may be less likely to purchase our products if the consumer finance market were to deteriorate so that
financing is less available or less convenient to our customers. Although we believe we could enter into similar arrangements with other
providers if needed, a failure by our current providers to adequately service our customers could temporarily disrupt sales.
Changes in foreign conditions could impair our international sales.
A portion of our revenue is derived from sales outside the United States. For the year ended December 31, 2003, international sales represented
approximately 13% of consolidated net sales. In addition, a substantial portion of our products is manufactured outside of the United States.
Accordingly, our future results could be materially adversely affected by a variety of factors, including changes in foreign currency exchange
rates, changes in a specific country’s or region’s political or economic conditions, trade restrictions, import and export licensing requirements,
the overlap of different tax structures or changes in international tax laws, changes in regulatory requirements, compliance with a variety of
foreign laws and regulations and longer payment cycles in certain countries.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We have primarily invested cash with banks and in liquid debt instruments purchased with maturity dates of less than one year. Our bank
deposits may exceed federally insured limits, and there is risk of loss of the entire principal with any debt instrument. To reduce risk of loss, we
limit our exposure to any individual debt issuer and require certain minimum ratings for debt instruments that we purchase.
Foreign Exchange Risk
The Company is exposed to foreign exchange risk from currency fluctuations, mainly in Europe. Given the relative size of the Company’s
current foreign operations, the Company does not believe the exposure to changes in applicable foreign currencies to be material, such that it
could have a significant impact on our current or near-term financial position, results of operations, or cash flows. Management estimates the
maximum impact on stockholders’ equity of a 10% change in any applicable foreign currency to be $1.3 million.
Interest Rate Risk
The Company has financed its growth through cash generated from operations. At December 31, 2003, the Company had no outstanding
borrowings and was not subject to any related interest rate risk.
The Company invests in liquid debt instruments purchased with maturity dates of less than one year. Due to the short-term nature of those
investments, management believes that any reasonably possible near-term changes in related interest rates would not have a material impact on
the Company’s financial position, results of operations, or cash flows.
-
39
-