Nautilus 2005 Annual Report Download - page 53

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Table of Contents
3. OPERATING SEGMENTS
Segment information is prepared on the same basis that the Company’s management reviews financial information for decision-making
purposes. The Company’s Chief Executive Officer is the Chief Operating Decision Maker as defined by SFAS No. 131, “Disclosures about
Segments of an Enterprise and Related Information.” The Company’s operating segments are fitness equipment and fitness apparel. This is a
restatement of previous operating segment disclosure that consisted of direct, commercial/retail, and corporate segments.
The fitness equipment segment includes the Nautilus, Bowflex, Schwinn, StairMaster, and Trimline brands and related operations
involved in selling and marketing these branded fitness products to consumers through direct, commercial, retail, specialty retail, and
international sales channels. The fitness equipment segment also consists of corporate overhead costs consisting mainly of director costs,
general legal and accounting fees, and salaries of corporate personnel. The treasury function is part of the fitness equipment segment so interest
income from investments and interest expense from short-term borrowings are also included. Accounting policies used by this segment are the
same as those disclosed in Note 1.
The fitness apparel segment predominantly includes products sold under the Pearl Izumi brand (see note 4) and related operations
involved in selling and marketing these branded apparel products to consumers through direct, commercial, retail, and international sales
channels. Accounting policies used by this segment are the same as those disclosed in Note 1.
The geographic distribution of the Company’s international net sales is mostly concentrated in the United Kingdom, Germany, and
Canada. Sales outside the U.S. represented approximately 14%, 13% and 13% of consolidated net sales for the three years ended December 31,
2005, 2004 and 2003, respectively. Long-lived assets outside the U.S. were approximately $5.3 million, $0.4 million and $0.6 million at
December 31, 2005, 2004 and 2003, respectively.
The following table presents information about the Company’s two operating segments:
52
Fitness
Equipment
Fitness
Apparel Total
Year ended December 31, 2005:
Net sales
$
607,274
$
24,036
$
631,310
Interest income
1,162
17
1,179
Depreciation and amortization expense
15,245
731
15,976
Income tax expense
11,570
723
12,293
Gross profit
267,776
11,038
278,814
Segment net income
21,649
1,351
23,000
Segment assets
335,067
78,219
413,286
Additions to property, plant and equipment
31,428
343
31,771
Goodwill and other assets
51,173
57,602
108,775
Year ended December 31, 2004:
Net sales
$
523,837
$
—
$
523,837
Interest income
1,357
—
1,357
Depreciation and amortization expense
11,972
—
11,972
Income tax expense
15,662
—
15,662
Gross profit
244,794
—
244,794
Segment net income
29,985
—
29,985
Segment assets
359,641
—
359,641
Additions to property, plant and equipment
9,043
—
9,043
Goodwill and other assets
47,418
47,418
Year ended December 31, 2003:
Net sales
$
498,836
$
—
$
498,836
Interest income
839
—
839
Depreciation and amortization expense
12,274
—
12,274
Income tax expense
19,351
—
19,351
Gross profit
251,816
—
251,816
Segment net income
34,402
—
34,402
Segment assets
311,935
—
311,935
Additions to property, plant and equipment
7,017
—
7,017
Goodwill and other assets
47,021
47,021