Nautilus 2008 Annual Report Download

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NAUTILUS, INC.
FORM 10-K
(Annual Report)
Filed 03/16/09 for the Period Ending 12/31/08
Address 16400 SE NAUTILUS DRIVE
VANCOUVER, WA 98683
Telephone 3606947722
CIK 0001078207
Symbol NLS
SIC Code
3949 - Sporting and Athletic Goods, Not Elsewhere Classified
Industry Retail (Catalog & Mail Order)
Sector Services
Fiscal Year 12/31
http://www.edgar-online.com
© Copyright 2009, EDGAR Online, Inc. All Rights Reserved.
Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

Table of contents

  • Page 1
    ... (Annual Report) Filed 03/16/09 for the Period Ending 12/31/08 Address Telephone CIK Symbol SIC Code Industry Sector Fiscal Year 16400 SE NAUTILUS DRIVE VANCOUVER, WA 98683 3606947722 0001078207 NLS 3949 - Sporting and Athletic Goods, Not Elsewhere Classified Retail (Catalog & Mail Order) Services...

  • Page 2
    ... the registrant is a shell company (as defined in Rule 12b-2 of the Act). The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the last sales price ($5.08) as reported on the New York Stock Exchange as of the last business day of the...

  • Page 3
    The registrant has incorporated by reference into Part III of this Form 10-K portions of its Proxy Statement for its 2009 Annual Meeting of Shareholders.

  • Page 4
    ... of Operation Quantitative and Qualitative Disclosures About Market Risk Financial Statements and Supplementary Data Changes in and Disagreements With Accountants on Accounting and Financial Disclosure Controls and Procedures Other Information PART III Directors, Executive Officers and Corporate...

  • Page 5
    ... PART I Item 1. Business OVERVIEW Nautilus, Inc., a global fitness products company headquartered in Vancouver, Washington, is committed to providing innovative, quality solutions to help people achieve a fit and healthy lifestyle. Our principal business activities include designing, developing...

  • Page 6
    ... ® home gym, SelectTech ® dumbbells, weight benches, treadmills, and TreadClimber cardio machines specifically designed for home use. Our Schwinn Fitness brand is known for its popular line of indoor cycling equipment, upright and recumbent exercise bikes and ellipticals. During 2009, we plan to...

  • Page 7
    ...: Direct Channel Retail Channel Commercial Channel Bowflex Rod-based home gyms Revolution home gyms TreadClimber* Treadmill Nautilus Strength equipment Treadmill Elliptical TreadClimber Upright and recumbent bikes Schwinn Recumbent, indoor cycling and upright bikes Elliptical Airdyne StairMaster...

  • Page 8
    ... Nautilus, Schwinn Fitness, and StairMaster commercial fitness equipment through an internal sales force and network of distributors in the U.S. and abroad. Our primary customers include health clubs, governmental agencies, hotels, corporate fitness centers, colleges, universities, assisted living...

  • Page 9
    ...strength and resistance products, such as Nautilus One; free weights; high-use StairMaster cardio products; and other pieces of fitness equipment marketed as part of a workout "circuit." Circuit training involves the use of a series of machines targeting a specific muscle or muscle group. Completing...

  • Page 10
    ... our commercial business were also manufactured in Tulsa, Oklahoma. In July 2008, we decided to close our Tulsa manufacturing plant as part of a company-wide restructuring strategy. The StairMaster products and specialized treadmills, are now produced at our Independence location. Elliptical bikes...

  • Page 11
    .... Retail Business We sell Nautilus, Schwinn Fitness, and Bowflex products through our retail business. These products compete globally against products sold by other retail fitness equipment companies such as Johnson Health Tech and ICON Health and Fitness. We believe our strength products compare...

  • Page 12
    ... circuit-training strength products to provide our commercial customers a suite of fitness products. EMPLOYEES As of February 28, 2009, we have approximately 850 employees. Management considers its relationship with employees to be good. None of our employees are subject to any collective bargaining...

  • Page 13
    ...New York Stock Exchange and trades under the symbol "NLS." Our principal executive offices are located at 16400 SE Nautilus Drive, Vancouver, Washington 98683, and our telephone number is (360) 859-2900. The internet address of our corporate website is http://www.nautilus.com. We file annual reports...

  • Page 14
    ... with adequate working capital to operate our business. We are able to borrow the lesser of $30 million or the borrowing capacity, which is based primarily on the domestic value of inventory and accounts receivable, as adjusted for certain items identified in the credit facility. Seasonal changes in...

  • Page 15
    ... to market and sell out direct marketed products. Consequently, a marked increase in the price we must pay for our preferred media time or a reduction in its availability may adversely impact our financial performance. Our revenues could decline due to changes in credit markets and decisions...

  • Page 16
    ... in product selling prices and costs and the mix of products sold; The size and timing of customer orders, which, in turn, often depend upon the success of our customers' businesses or specific products; Changes in the market conditions for consumer and commercial fitness equipment; Changes in...

  • Page 17
    ... and cost of television advertising time; The effectiveness of our media and advertising programs; and Customer consolidation in our retail or commercial segments, or the bankruptcy of any of our larger customers. These trends and factors could harm our business, operating results, financial...

  • Page 18
    ...products could result in a significant decline in our net sales, operating results, financial condition and cash flows. Inability to effectively manage our distribution facilities may harm our business and financial results. Our ability to meet customer expectations, manage inventory, complete sales...

  • Page 19
    ..., the mix of product sales may vary considerably from time to time as a result of changes in seasonal and geographic demand for particular types of fitness equipment. In addition, our customers may cancel orders, change delivery schedules or change the mix of products ordered with minimal notice...

  • Page 20
    ...and warranty costs. In order to be successful, we must attract, retain and motivate key employees, and failure to do so may have an adverse impact on our business. Our future success depends on our ability to attract and retain key executives, managers, product development engineers, sales personnel...

  • Page 21
    ... properties owned or leased by the Company as of December 31, 2008. Reportable Segment Location Primary Function(s) Owned or Leased Corporate Retail and Direct Commercial Commercial Commercial Commercial Commercial Commercial Corporate Commercial Commercial Direct Commercial Commercial Commercial...

  • Page 22
    ... dormant. In and around April 2008, following BioSig's hiring of new counsel and the re-assignment of the case to a new federal judge, the litigation activity in this matter increased. The Company does not believe that its use of heart rate monitors purchased from third parties infringe the...

  • Page 23
    ... provides information about the Company's equity compensation plans as of December 31, 2008: Number of securities remaining available for Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) Weighted average exercise price of outstanding options, warrants...

  • Page 24
    ... Results of Operation (the "MD&A") should be read in conjunction with our consolidated financial statements and related notes located at Item 8 of this Form 10-K. EXECUTIVE OVERVIEW Nautilus is a global fitness products company providing innovative, quality solutions to help people achieve a fit and...

  • Page 25
    ... more efficient product handling; We ceased direct business sales through our Australian subsidiary and closed those operations; We sold our apparel division, Dash America, Inc. d/b/a Pearl iZumi; We closed our Canadian call center and consolidated our call center operations in Vancouver, Washington...

  • Page 26
    ... ICON Health and Fitness; $26.8 million in restructuring charges; a $4.8 million bad debt expense due to the bankruptcy of a customer; and $2.7 million in costs incurred by the Company in countering the action of Sherborne Investors. The reduction in operating expenses, compared to the prior year...

  • Page 27
    ... passes upon shipment or upon receipt by the customer, depending on the country of the sale and the specific terms of the sales arrangement. Revenues for products sold to our direct and retail customers are recognized at the time of shipment. Revenue is recognized for commercial product sales...

  • Page 28
    ...'s products carry limited defined warranties for defects in materials or workmanship. Our warranties generally obligate us to pay for the costs to manufacture or purchase warranty parts, ship the parts to our customers, and, in certain instances, service costs to replace the warranty part. We record...

  • Page 29
    ... position, results of operations and cash flows. Income Tax Provisions We account for income taxes based on the asset and liability method, whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying...

  • Page 30
    ... have been influenced by media costs to produce and air advertisements, facility costs, operating costs of our information and communications systems, costs to develop and maintain our internet sites, bad debts costs and personnel related costs to attract and retain key personnel. In addition, our...

  • Page 31
    ...the consolidated financial statements and the related notes. (In thousands) Year Ended December 31, 2008 2007 $ Change % Change Net sales: Direct channel Retail channel Commercial channel Royalty income Total net sales Cost of sales Gross profit Gross profit as a percent of sales Operating expenses...

  • Page 32
    ...16.9 million in warranty and inventory reserves related to the commercial TreadClimber and a commercial elliptical product. Operating Expenses Selling and Marketing Our selling and marketing expenses principally consist of media and advertising expenses for our direct business, costs associated with...

  • Page 33
    ... and administrative expenses in 2008 included: charges of $2.0 million for legal and contract settlement costs; $1.3 million in asset impairments related to the suspension of operations in our China sales office; $1.1 million in impairment charges on the StairMaster trade name; $1.1 million write...

  • Page 34
    ... operating expenses as a result of the legal settlement. Other Income (Expense) Interest expense decreased to $1.8 million in 2008, compared to $5.0 million in 2007, as proceeds from the sale of the Company's fitness apparel business were used to reduce borrowings. During 2008, the Company recorded...

  • Page 35
    ... the consolidated financial statements and related notes. (In thousands) Year Ended December 31, 2007 2006 $ Change % Change Net sales : Direct channel Retail channel Commercial channel Royalty income Total net sales Cost of sales Gross profit Gross profit as a percent of sales Operating expenses...

  • Page 36
    .... The decline in this business was mainly due to a shift in strategy as we limited the number of power-rod home gyms being offered into this market to more clearly differentiate and segment products by business segment. During 2007 the Company provided a greater level of support to its customers in...

  • Page 37
    ... related to changes in strategic plans regarding products and marketing arrangements that were cancelled. Litigation Settlement During 2007, the Company settled a lawsuit with ICON Health and Fitness, Inc. and as a result we received the rights to utilize a variety of fitness equipment related...

  • Page 38
    ....1 million in net payments to reduce our short-term borrowings, principally using funds received from the sale of our apparel business in the 2008 second quarter, and paid $2.0 million in financing fees, legal expenses and other costs to establish the revolving credit agreement. During 2008, we also...

  • Page 39
    ... and accounts receivable in the U.S., as adjusted for certain items identified in the Loan Agreement. At March 10, 2009, the Company had unused availability of approximately $12 million under the credit line. The Loan Agreement contains a financial covenant, as well as limitations on capital...

  • Page 40
    ...-sized sales office or to use a distributor model. The Company's 2008 results of operations include approximately $3.8 million in charges due to uncertainties regarding access to, and the future recovery of, certain assets of the Company's China subsidiary . Off-Balance Sheet Arrangements At times...

  • Page 41
    ... impacts sales of fitness equipment used indoors. This seasonality can have a significant affect on our inventory levels, working capital needs and the utilization of resources in our manufacturing and warehousing locations. NEW ACCOUNTING PRONOUNCEMENTS Refer to Note 1 to the consolidated financial...

  • Page 42
    ... and Supplementary Data Index to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of December 31, 2008 and 2007 Consolidated Statements of Operations for the years ended December 31, 2008, 2007, and 2006 Consolidated Statements...

  • Page 43
    ... ACCOUNTING FIRM To the Board of Directors and Stockholders of Nautilus, Inc. Vancouver, Washington We have audited the accompanying consolidated balance sheets of Nautilus, Inc. and subsidiaries (the "Company") as of December 31, 2008 and 2007, and the related consolidated statements of operations...

  • Page 44
    ...Contents NAUTILUS, INC. CONSOLIDATED BALANCE SHEETS (In Thousands) December 31, 2008 2007 ASSETS Current assets: Cash and cash equivalents Trade receivables, net Inventories Prepaid expenses and other current assets Income taxes receivable Assets of discontinued operations Deferred tax assets Total...

  • Page 45
    ... of Contents NAUTILUS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands, except per share amounts) 2008 Years Ended December 31, 2007 2006 Net sales Cost of sales Gross profit Operating expenses: Selling and marketing General and administrative Research and development Goodwill impairment...

  • Page 46
    ... of Contents NAUTILUS, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME (LOSS) YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006 (In Thousands) Common Stock Shares Amount Unearned Stock Compensation Retained Earnings Accumulated Other Comprehensive Income Total Stockholders...

  • Page 47
    ... asset purchase agreement with Land America Provision for long-term receivables Stock-based compensation expense Litigation settlement Loss on sale of assets Stock option income tax deficiencies (benefits) Deferred tax valuation allowance Deferred income taxes Other Changes in operating assets...

  • Page 48
    Table of Contents NAUTILUS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) 2008 Years Ended December 31, 2007 2006 Cash flows from investing activities: Purchases of property, plant and equipment Proceeds from sale of assets Expenditures related to terminated purchase agreement with Land...

  • Page 49
    ..., Bowflex, Schwinn Fitness and StairMaster. The Company's goal is to develop and market fitness equipment and related products to help people enjoy healthier lives. Nautilus was founded in 1986 and incorporated in the State of Washington in 1993. The Company's headquarters is located in Vancouver...

  • Page 50
    ... factors, changes in technology and product life cycles. (h) Property, Plant and Equipment, net - Property, plant and equipment is stated at cost, net of accumulated depreciation. Improvements or betterments which add new functionality or significantly extend the life of an asset are capitalized...

  • Page 51
    ... passes upon shipment or upon receipt by the customer, depending on the country of the sale and the specific terms of the sales arrangement. Revenues for products sold to our direct and retail customers are recognized at the time of shipment. Revenue is recognized for commercial product sales...

  • Page 52
    ...'s products carry limited defined warranties for defects in materials or workmanship. Our warranties generally obligate us to pay for the costs to manufacture or purchase warranty parts, ship the parts to our customers, and, in certain instances, service costs to replace the warranty part. We record...

  • Page 53
    ...as they are incurred. Commercial advertising production costs are recorded as prepaid expenses until the first commercial is shown on television, at which time such costs are expensed. Advertising costs are included in selling and marketing expenses. Total advertising and promotion expenses were $67...

  • Page 54
    ...Sherborne Investors") under which the Company is obligated to reimburse Sherborne Investors, $20,000 per month, for the use of Sherborne's New York office space and administrative, information technology and communications services to support the Company's Chief Executive Officer. (v) New Accounting...

  • Page 55
    ... product handling; We ceased direct business sales through our Australian subsidiary and closed those operations; and We transitioned the activities from our Canadian call center to our call center located in Vancouver, Washington. In October 2007 the Company entered into a series of agreements...

  • Page 56
    ... and other employee costs Impairment of acquired technology Termination of purchase agreement with Land America Other $ 4,861 - 8,000 1,125 $13,986 $ 3,193 3,000 19,364 1,196 $26,753 Restructuring costs are reported in our corporate segment to allow for a comparable review of operating income or...

  • Page 57
    ... component constitutes a business for which discrete financial information is available and segment management regularly reviews the operating results of that component. The Company has determined its reporting units are the direct, retail, and commercial businesses and its corporate function. Our...

  • Page 58
    .... Stairmaster products are sold through the Company's commercial segment. In 2007, the Company settled litigation with ICON Health & Fitness, Inc, thereby providing us with rights to use a variety of fitness equipment patents and technologies. The settlement was valued at $18.3 million and reported...

  • Page 59
    ... and provides the Company with a revolving secured credit line which is available to fund the Company's letters of credit, working capital needs and for other general business purposes, including acquisition financing. The interest rate under the Loan Agreement is either, prime rate plus zero to 75...

  • Page 60
    ... falling below the limits allowed under the Loan Agreement, the Company would have been in default for failing to meet the financial covenant during most of 2008. On March 10, 2009, the Company entered into a Fifth Amendment of the Loan Agreement, whereby the financial covenant was revised...

  • Page 61
    ... primarily due to uncertainty regarding the Company's ability to utilize net operating loss carry-forwards generated in 2008 and other net deferred tax assets. The Company's net deferred tax assets (liabilities) as presented in its consolidated balance sheets are as follows: (In thousands) December...

  • Page 62
    ..., management believes that the Company will be subject to the limitation set forth in Section 382. At December 31, 2008, the Company had approximately $31.1 million in U.S. federal net operating loss carry forwards and an undetermined amount of income tax credits and state net operating loss carry...

  • Page 63
    .... The Company's U.S. federal income tax returns for 2005 through 2008 are open to review by the U.S. Internal Revenue Service. The 2004 tax year was open as of December 31, 2007. The Company's U.S. state tax returns are open from 2002 through 2008 depending on each state's statute of limitation. In...

  • Page 64
    ... million during the year ended December 31, 2008. The Company does not intend to repurchase any additional shares at this time. 2005 Long-Term Incentive Plan In 2005, Nautilus shareholders approved the 2005 Long-Term Incentive Plan (the "2005 Plan") to enhance the Company's ability to attract and...

  • Page 65
    ... options totaled approximately $3.8 million, which is expected to be recognized over a weighted average period of 2.5 years. During 2008 and 2007, the Company was contractually obligated to accelerate vesting of certain stock options upon the termination of its former Chief Executive Officers and...

  • Page 66
    ...unit awards to key members of its executive team. The performance unit awards vest if the Company meets earnings targets set by the Compensation Committee of the Board of Directors. The fair value of the performance units is based on the closing market price of the Company's common stock on the date...

  • Page 67
    ... will be met. At December 31, 2008, the weighted-average grant date fair value of the Company's outstanding performance stock unit awards was $15.60 per unit. At December 31, 2008 there was approximately $0.5 million of total unrecognized compensation cost related to the performance stock units. The...

  • Page 68
    ... of the direct, commercial and retail business segments as well as the corporate functions. Each business segment is focusing on operating effectiveness, capital management, market position and product innovation. As a result of the reorganization, the Company revised its business segments to...

  • Page 69
    ... Company's reportable segments: (In thousands) Year ended December 31, 2008: Net sales Gross profit Depreciation and amortization expense Operating income (loss) Interest expense, net Income tax expense (benefit) from continuing operations Income (loss) from continuing operations Total assets Year...

  • Page 70
    ...purchase agreement, severance costs of $3.2 million; and $3.0 million related to our discontinued use of intellectual property acquired from ICON Health and Fitness, Inc. Net sales in the U.S. represented approximately 78%, 79%, and 83% of consolidated net sales for the years ended December 31, 2008...

  • Page 71
    ... on our consolidated financial position, results of operations or cash flows. As such, no liabilities are recorded at December 31, 2008. Contingencies Arising from China Sales Operations In December 2008, the Company initiated discussions to suspend operations in its Shanghai, China sales office and...

  • Page 72
    ... quarter of 2007, management committed to a plan to sell the operations of our fitness apparel division, which operated under the trade name Pearl Izumi. On April 18, 2008 the Company completed its sale of Pearl Izumi. All assets, liabilities and results of operations associated with Pearl Izumi...

  • Page 73
    ... table summarizes the Company's unaudited quarterly financial data for the years ended December 31, 2008 and 2007: (In thousands, except per share) March 31 June 30 QUARTER ENDED September 30 December 31 Total 2008: Net sales Gross profit Operating loss Loss from continuing operations Income (loss...

  • Page 74
    ...and warranty costs China inventory reserve Operating Loss Goodwill impairment charge Restructuring charges Stairmaster trade name impairment charge China accounts receivable reserve China asset impairments Deferred financing costs Bad debt Legal and contract settlement costs Shareholder action costs...

  • Page 75
    ... OVER FINANCIAL REPORTING Disclosure Controls and Procedures As of December 31, 2008, we conducted an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of...

  • Page 76
    ... over financial reporting as of December 31, 2008, as stated in their following report. Changes In Internal Control Over Financial Reporting During the fourth quarter of 2008, the Company re-organized certain functions in its European operations and converted the financial application system used by...

  • Page 77
    ... subsidiary, Nautilus International S.A., entered into a Fifth Amendment to Loan and Security Agreement (the "Amendment") in respect of the Loan and Security Agreement dated as of January 16, 2008 between the Company and Bank of America, N.A. The Amendment reduced the amount of the credit line from...

  • Page 78
    ... standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended December 31, 2008, of the Company and our report dated March 16, 2009 expressed an unqualified opinion on those financial statements. /s/ DELOITTE & TOUCHE...

  • Page 79
    ...Corporate Governance The information required by this item is included under the captions Election of Directors , Section 16(a) Beneficial Ownership Reporting Compliance, Executive Officers and Information Concerning the Board of Directors in the Company's Proxy Statement for its 2009 Annual Meeting...

  • Page 80
    ... consolidated financial statements, including the notes thereto, or the circumstances requiring inclusion of such schedules are not present. (a)(3) Exhibit Index See the Exhibit Index beginning on page 78 for a description of the documents that are filed as Exhibits to this Annual Report on Form 10K...

  • Page 81
    ...and lawful attorney-in-fact and agent to act in his name, place and stead and to execute in the name and on behalf of each person, individually and in each capacity stated below, and to file any and all amendments to this report, with all exhibits thereto, and other documents in connection therewith...

  • Page 82
    ... Shimano American Corporation - Incorporated by reference to Exhibit 2.1 of the Company's Current Report on Form 8-K as filed with the Commission on February 22, 2008. First Amendment to Stock Purchase Agreement dated as of April 18, 2008 by and among Nautilus, Inc., Shimano American Corporation and...

  • Page 83
    ...to Exhibit 10.283 to the Company's Annual Report on Form 10K for the year ended December 31, 2007, as filed with the Commission on March 17, 2008. Forbearance Agreement, dated February 15, 2008, by and among the Company, Nautilus International, S.A. and Bank of America N.A., the lead agent under the...

  • Page 84
    ...10.30 to the Company's Annual Report on Form 10-K for the year ended December 31, 2007, as filed with the Commission on March 17, 2008. Second Amendment to Loan and Security Agreement dated as of March 31, 2008 among the Company, Nautilus International S.A. and Bank of America, N.A., in its capacity...

  • Page 85
    ... "), and NAUTILUS INTERNATIONAL S.A. , a Swiss private share company (" Swiss Borrower ", and together with US Borrower, collectively, " Borrowers "). RECITALS A. Borrowers, Agent and the Lenders have previously entered into that certain Loan and Security Agreement dated as of January 16, 2008 (as...

  • Page 86
    ... plus (iii) the Foreign Assets Formula Amount, plus (iv) the Equipment Formula Amount, minus (vi) the Availability Reserve." (d) The definition of "Dominion Account" in Section 1.1 of the Loan Agreement is hereby amended and restated in its entirety to read as follows: " Dominion Account : a special...

  • Page 87
    ... $20,000,000; or" (g) Clause (l) of the definition of "Permitted Asset Disposition" in Section 1.1 of the Loan Agreement is hereby amended and restated in its entirety to read as follows: "sale or Disposition of US Borrower's real Property located at 12032 Highway 155N, Tyler, Texas for Net Proceeds...

  • Page 88
    ... and on the Commitment Termination Date." (m) The first sentence of Section 5.7 of the Loan Agreement is hereby amended and restated in its entirety to read as follows: "The ledger balance in the main Dominion Account of US Borrower as of the end of a Business Day shall be applied to the Obligations...

  • Page 89
    ...to reduce advance rates." (p) Section 8.2.1 of the Loan Agreement is hereby amended and restated in its entirety to read as follows: " Records and Schedules of Accounts . Each Borrower shall keep accurate and complete records of its Accounts, including all payments and collections thereon, and shall...

  • Page 90
    ... that in the event that a Trigger Period commences in between measurement dates, this covenant shall be measured for the immediately preceding measurement date at the time of commencement of such Trigger Period. * Certain information has been redacted from this page and filed separately with the...

  • Page 91
    ... Loan Agreement. (v) Section 14.1(d)(iv) of the Loan Agreement is hereby amended and restated in its entirety to read as follows: "increase any advance rate, decrease the Books and Records Block or increase total Commitments; or" 2. Consultant . Borrowers acknowledge and agree that if the aggregate...

  • Page 92
    ... giving effect to Federal laws relating to national banks). The consent to forum and arbitration provisions set forth in Section 14.14 of the Loan Agreement are hereby incorporated in this Amendment by reference. 6. Counterparts . This Amendment may be executed in any number of counterparts and by...

  • Page 93
    ...execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate...the Loan Agreement, each Borrower hereby acknowledges and agrees that, as of the date hereof, ...matter hereof and is the final expression and agreement of the parties hereto with respect ...

  • Page 94
    IN WITNESS WHEREOF, the parties have entered into this Amendment as of the date first above written. BORROWERS NAUTILUS, INC. , a Washington corporation By: Name: Title: NAUTILUS INTERNATIONAL S.A. , a Swiss private share company By: Name: Title:

  • Page 95
    AGENT AND LENDERS BANK OF AMERICA, N.A. , as Agent and as sole Lender By: Name: Title:

  • Page 96
    SCHEDULE 1.1(a) to Loan and Security Agreement COMMITMENTS OF LENDERS Bank of America, NA: Revolver Commitment: Total Commitments: $30,000,000 $30,000,000

  • Page 97
    SCHEDULE E to Loan and Security Agreement EBITDA - NON-RECURRING CHARGES FOR DECEMBER 2008 * * Certain information has been redacted from this page and filed separately with the Commission. Confidential treatment has been requested with respect to the redacted portion.

  • Page 98
    ... corporation Nautilus Fitness UK Ltd., a United Kingdom corporation Nautilus Fitness Italy S.r.l., an Italian corporation Nautilus Fitness Canada, Inc., a Canadian corporation Nautilus (Shanghai) Fitness Co., Ltd., a Chinese corporation Nautilus Fitness Australia Pty Ltd., an Australian corporation

  • Page 99
    ...relating to the adoption of Financial Accounting Standards Board Interpretation No. 48), and the effectiveness of Nautilus, Inc.'s internal control over financial reporting, appearing in this Annual Report on Form 10-K of Nautilus, Inc. for the year ended December 31, 2008. /s/ DELOITTE & TOUCHE LLP...

  • Page 100
    ...financial information; and Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. By: /s/ Edward J. Bramson Edward J. Bramson, Chairman and Chief Executive Officer March 16, 2009 Date

  • Page 101
    ... in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and Any fraud, whether or not material, that involves management or other employees who...

  • Page 102
    ...(b) of Section 1350, Chapter 63 of Title 18, United States Code), the undersigned officer of Nautilus, Inc., a Washington corporation (the "Company"), does hereby certify that: To my knowledge, the Annual Report on Form 10-K for the year ended December 31, 2008 (the "Form 10-K") of the Company fully...

  • Page 103
    ...(b) of Section 1350, Chapter 63 of Title 18, United States Code), the undersigned officer of Nautilus, Inc., a Washington corporation (the "Company"), does hereby certify that: To my knowledge, the Annual Report on Form 10-K for the year ended December 31, 2008 (the "Form 10-K") of the Company fully...