Nautilus 2012 Annual Report Download - page 16

Table of Contents
systems to maintain our accounting records, assist in trade receivables collection and customer service efforts, and forecast operating results and
cash flows.
System failures or service interruptions may occur as the result of a number of factors, including: computer viruses; hacking or other unlawful
activities by third parties; disasters; equipment, hardware or software failures; ineffective implementation of new systems or systems upgrades;
cable outages, extended power failures, or our inability or failure to properly protect, repair or maintain our communication and information
systems. To mitigate the risk of business interruption, we have in place a disaster recovery program that targets our most critical operational
systems. If our disaster recovery system is ineffective, in whole or in part, or efforts conducted by us or third-parties to prevent or respond to
system interruptions in a timely manner are ineffective, our ability to conduct operations would be significantly affected. If we do not consider
the potential impact of critical decisions related to systems or process design and implementation, this could lead to operational challenges and
increased costs. Any of the aforementioned factors could have a material adverse affect on our operating results, financial position and cash
flows.
Our current primary enterprise resource planning system is highly customized to our business and we may experience difficulties as we
transition to new systems during 2013. Difficulties or delays in implementing our new information systems or significant system failures could
disrupt our operations and have a material adverse effect on our operating results, financial position and cash flows.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
Following is a summary of our principal properties as of December 31, 2012 :
Each of our principal properties is used by both our Direct segment and our Retail segment. Our properties generally are well-maintained,
adequate and suitable for their intended purposes and we believe our existing properties will meet our operational needs for the foreseeable
future. If we require additional warehouse or office space in the future, we believe we will be able to obtain such space on commercially
reasonable terms.
Item 3. Legal Proceedings
We are party to various legal proceedings and claims arising from normal business activities. In addition, our tax filings are subject to audit by
authorities in the jurisdictions where we conduct business, which may result in assessments of additional taxes. Management believes the
Company has adequately provided for obligations that would result from these legal and tax proceedings where it is probable the Company will
pay some amounts and the amounts can be reasonably estimated. In some cases, however, it is too early to predict a final outcome. Management
believes that the ultimate resolution of these matters will not have a material effect on the Company's financial position, results of operations or
cash flows.
Item 4. Mine Safety Disclosures
Not applicable.
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Location Primary Function(s)
Owned or
Leased
Washington Corporate headquarters and customer call center Leased
Oregon
Warehouse and distribution Leased
Canada Warehouse, distribution and showroom Leased
China
Quality assurance office Leased