Nautilus 2008 Annual Report Download - page 30

Table of Contents
that all or some portion of deferred tax assets will not be realized, a valuation allowance must be established for that amount. If the Company’s
financial results or other relevant facts change, thereby impacting the likelihood of realizing the tax benefit of an uncertain tax position,
significant judgment would be applied in determining the effect of the change on our valuation allowance.
General
Our results of operations may vary significantly from period-to-period. Our revenues will fluctuate due to the seasonality of our industry;
customer buying patterns; product innovation; the nature and level of competition for health and fitness products; our ability to manufacture or
procure products to meet customer demand; and the level of spending on, and effectiveness of, our media and advertising programs. In addition,
our revenues are highly susceptible to economic factors, including, among other things: the overall condition of the U.S. economy and
economies of other countries where we market our products; and the availability of credit, both in the U.S. and abroad. Our profit margins may
vary, in response to the aforementioned factors and our ability to manage product costs and effectively utilize our manufacturing capacity. Profit
margins may also be affected by fluctuations in the costs or availability of materials used to manufacture our products, higher or lower fuel
prices, and changes in the cost of other distribution or manufacturing-related services. Our operating profit or losses may also be affected by the
relative success of strategies we employ to improve the efficiency and effectiveness of our organization. Historically our operating expenses
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 operating expenses have been impacted by asset impairment losses, restructuring charges and other significant unusual or
infrequent expenses.
As a result of the above and other factors, our period-to-period operating results may not be indicative of future performance. You should not
place undue reliance on our operating results and should consider our prospects in light of the risks, expenses and difficulties typically
encountered by us and other companies, both within and outside our industry, in the current economic environment. We may not be able to
successfully address these risks and difficulties and, consequently, we cannot assure you of any future growth or profitability. For more
information, see our discussion of Risk Factors located at Part I, Item IA of this Form 10-K.
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