Nautilus 2012 Annual Report Download - page 10

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Table of Contents
Trademarks
We own many trademarks including Nautilus
®
, Bowflex
®
, PowerRod
®
, Revolution
®
, TreadClimber
®
, SelectTech
®
, Trimline
®
, Airdyne
®
,
CoreBody Reformer
TM
and Universal
®
. Nautilus is the exclusive licensee under the mark Schwinn
®
for indoor fitness products. We believe that
having distinctive trademarks that are readily identifiable by consumers is an important factor in creating a market for our products, maintaining
a strong company identity and developing brand loyalty among our customers. In addition, we have granted licenses to certain third-parties to
use the Nautilus, Schwinn and TreadClimber tradenames on commercial fitness products, for which we receive royalty income and expanded
consumer awareness of our brands.
Each federally registered trademark is renewable indefinitely if the trademark is still in use at the time of renewal. We are not aware of any
material claims of infringement or other challenges to our trademark rights in our major markets.
Patents
Building our intellectual property portfolio is an important factor in maintaining our competitive position in the health and fitness equipment
industry. We have followed a policy of filing applications for U.S. and non-U.S. patents on utility and design inventions that we deem valuable
to our business.
We maintain a portfolio of patents related to our Bowflex® TreadClimber® specialized cardio machines. The portfolio is comprised of
approximatel y 24 i ssued U.S. patents covering various product features and other technologies associated with our TreadClimber® products.
Expiration dates for individual patents within this portfolio range from 2013 to 2025.
Additionally, we own or license patents covering a variety of technologies, some of which are utilized in our variable stride ellipticals,
selectorized dumbbells and recumbent exercise bikes. Nautilus is also the exclusive licensee of patents that cover the Bowflex Revolution home
gyms. Patent protection for these technologies extends as far as 2020.
We protect our proprietary rights vigorously and take prompt, reasonable actions to prevent counterfeit products and other infringement on our
intellectual property. Expiration or invalidity of these or other patents could trigger the introduction of similar products by our competitors.
BACKLOG
Historically, our backlog has not been a significant factor in our business. Our customer order backlog as of December 31, 2012 and 2011 was
approximately $0.1 million and $0.6 million, respectively.
SIGNIFICANT CUSTOMERS
In 2012 and 2011, Amazon.com accounted for more than 10 percent, but less than 15 percent, of our consolidated net sales. No individual
customer accounted for 10 percent or more of our consolidated net sales in 2010.
ENVIRONMENTAL AND OTHER REGULATORY MATTERS
Our operations are subject to various laws and regulations both domestically and abroad. In the United States, federal, state and local regulations
impose standards on our workplace and our relationship with the environment. For example, the U.S. Environmental Protection Agency,
Occupational Safety and Health Administration and other federal agencies have the authority to promulgate regulations that may impact our
operations. In particular, we are subject to legislation placing restrictions on our generation, emission, treatment, storage and disposal of
materials, substances and wastes. Such legislation includes: the Toxic Substances Control Act; the Resource Conservation and Recovery Act; the
Clean Air Act; the Clean Water Act; the Safe Drinking Water Act; and the Comprehensive Environmental Response and the Compensation and
Liability Act (also known as Superfund). We are also subject to the requirements of the Consumer Product Safety Commission and the Federal
Trade Commission, in addition to regulations concerning employee health and safety matters.
Our operations and certain disposed components of our former Commercial business expose us to claims related to environmental matters.
Although compliance with federal, state, local and international environmental legislation has not had a material adverse effect on our financial
condition or results of operations in the past, there can be no assurance that material costs or liabilities will not be incurred in connection with
such environmental matters in the future.
5