Nautilus 2008 Annual Report Download - page 35

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Table of Contents
COMPARISON OF THE YEARS ENDED DECEMBER 31, 2007 AND DECEMBER 31, 2006
The table below sets forth selected information derived from our consolidated financial statements for the periods presented. The discussion that
follows should be read in conjunction with the consolidated financial statements and related notes.
Net Sales
Net sales were $501.5 million in 2007, compared to $617.3 million in 2006, a decrease of $115.8 million or 18.8%. The decline reflects lower
sales in our direct and retail businesses, partially offset by higher sales in our commercial business as a result of sales increases in certain
international locations.
In the direct business , net sales declined 12.0%, to $249.1 million in 2007, compared to $283.0 million in 2006. The decrease in net sales was
primarily due to a decrease in sales of rod based home gyms. The decrease in sales of rod based home gyms, resulted primarily from reduced
advertising for rod based home gyms, as the Company shifted advertising to the Revolution and TreadClimber products, and a higher number of
similar power rod products being sold at our retail partner locations during 2007. During 2007 we experienced increased advertising costs which
led to fewer ads being purchased for the same dollars due to increased competition for advertising space. The decrease in sales of rod based
home gyms was slightly offset by an increase in sales volume for our Bowflex Revolution and the Bowflex TreadClimbers. Sales of these
products increased as a result
31
Year Ended December 31,
$ Change
% Change
(In thousands)
2007
2006
Net sales :
Direct channel
$
249,057
$
283,006
$
(33,949
)
-
12.0
%
Retail channel
114,697
208,617
(93,920
)
-
45.0
%
Commercial channel
134,592
124,152
10,440
8.4
%
Royalty income
3,125
1,496
1,629
108.9
%
Total net sales
501,471
617,271
(115,800
)
-
18.8
%
Cost of sales
322,108
350,893
(28,785
)
-
8.2
%
Gross profit
179,363
266,378
(87,015
)
-
32.7
%
Gross profit as a percent of sales
35.8
%
43.2
%
Operating expenses:
Selling and marketing
179,826
175,307
4,519
2.6
%
General and administrative
49,360
46,897
2,463
5.3
%
Research and development
10,336
9,416
920
9.8
%
Restructuring
26,753
—
26,753
NA
Litigation settlement
(18,300
)
—
(
18,300
)
NA
Total operating expenses
247,975
231,620
16,355
7.1
%
Operating income (loss)
(68,612
)
34,758
(103,370
)
-
297.4
%
Other income (expense):
Interest income
364
710
(346
)
-
48.7
%
Interest expense
(5,014
)
(2,576
)
(2,438
)
94.6
%
Other income, net
1,234
1,124
110
9.8
%
Total other income (expense)
(3,416
)
(742
)
(2,674
)
360.4
%
Income (loss) before income taxes
(72,028
)
34,016
(106,044
)
-
311.7
%
Income tax expense (benefit)
(26,216
)
9,096
(35,312
)
-
388.2
%
Income (loss) from continuing operations
(45,812
)
24,920
(70,732
)
-
283.8
%
Income (loss) from discontinued operations, net of tax
(9,801
)
4,180
(13,981
)
-
334.5
%
Net income (loss)
$
(55,613
)
$
29,100
$
(84,713
)
-
291.1
%