Nautilus 2008 Annual Report Download - page 31

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Table of Contents
COMPARISON OF THE YEARS ENDED DECEMBER 31, 2008 AND DECEMBER 31, 2007
The table below sets forth selected financial information derived from our consolidated financial statements. The discussion that follows should
be read in conjunction with the consolidated financial statements and the related notes.
Net Sales
Net sales were $411.2 million in 2008, compared to $501.5 million in 2007, or a decline of 18.0%. The decline in net sales reflects lower net
revenues in all business segments.
In the direct business, net sales declined $63.4 million, to $185.7 million in 2008, compared to $249.1 million in 2007, or a decrease of 25.4%.
The decrease in net sales was primarily the result of declines in the sales of rod-based home gyms and the home version of certain TreadClimber
products. In 2008, the Company reduced promotions in an effort to raise the profit margin percentage on rod based gyms, thus resulting in lower
sales when compared to 2007. Also during 2008, the Company experienced a decline in the demand for home TreadClimbers. As a result, the
Company changed it’s pricing strategy in late 2008 in order to increase volumes and also discontinued two of the highest priced TreadClimber
models.
27
Year Ended December 31,
$ Change
% Change
(In thousands)
2008
2007
Net sales:
Direct channel
$
185,704
$
249,057
$
(63,353
)
-
25.4
%
Retail channel
106,715
114,697
(7,982
)
-
7.0
%
Commercial channel
115,251
134,592
(19,341
)
-
14.4
%
Royalty income
3,508
3,125
383
12.3
%
Total net sales
411,178
501,471
(90,293
)
-
18.0
%
Cost of sales
260,541
322,108
(61,567
)
-
19.1
%
Gross profit
150,637
179,363
(28,726
)
-
16.0
%
Gross profit as a percent of sales
36.6
%
35.8
%
Operating expenses:
Selling and marketing
135,342
179,826
(44,484
)
-
24.7
%
General and administrative
46,526
49,360
(2,834
)
-
5.7
%
Research and development
8,469
10,336
(1,867
)
-
18.1
%
Goodwill impairment
29,755
—
29,755
N/A
Restructuring
13,986
26,753
(12,767
)
-
47.7
%
Litigation settlement
—
(
18,300
)
18,300
N/A
Total operating expenses
234,078
247,975
(13,897
)
-
5.6
%
Operating loss
(83,441
)
(68,612
)
(14,829
)
-
21.6
%
Other income (expense):
Interest income
229
364
(135
)
-
37.1
%
Interest expense
(1,753
)
(5,014
)
3,261
-
65.0
%
Other income (expense), net
(3,744
)
1,234
(4,978
)
-
403.4
%
Total other income (expense)
(5,268
)
(3,416
)
(1,852
)
54.2
%
Loss before income taxes
(88,709
)
(72,028
)
(16,681
)
23.2
%
Income tax expense (benefit)
4,290
(26,216
)
30,506
-
116.4
%
Loss from continuing operations
(92,999
)
(45,812
)
(47,187
)
-
103.0
%
Income (loss) from discontinued operations, net of tax
2,411
(9,801
)
12,212
-
124.6
%
Net loss
$
(90,588
)
$
(55,613
)
$
(34,975
)
-
62.9
%