Nautilus 2001 Annual Report Download - page 28

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Systems, as well as in the commercial and retail products segment due to the addition of Nautilus Nitro commercial equipment and a line of
Nautilus-branded retail products and home gyms.
Sales within our direct business segment increased substantially by 75.3% over prior year levels and accounted for $198.1 million, or 88.5% of
our net sales in 2000, compared with $113.0 million or 84.9% in 1999 of our net sales.
Net sales within our commercial and retail products segment also continued to show growth, increased by 28.6% over 1999 and accounted for
$25.8 million, or 11.5% of our net sales in 2000 as we embarked on expanding our market share and reach in this segment of the market.
GROSS PROFIT
Gross profit grew 71.3% to $148.4 million in 2000, from $86.6 million in 1999. Our gross profit margin increased 1.2% to 66.3% in 2000,
from 65.1% in 1999. This increase was mainly attributable to the growth of direct product sales due to the launch of the Nautilus Sleep System
and the growth in Bowflex revenues enhanced by strong eCommerce sales. The margin within our direct products segment was 70.2% in 2000,
while there was a 36.2% margin within our commercial and retail products segment for 2000.
OPERATING EXPENSES
SELLING AND MARKETING
Selling and marketing expenses grew to $73.5 million in 2000 from $44.6 million in 1999, an increase of 64.7%. This increase in selling and
marketing expenses resulted primarily from the continued expansion of our direct marketing campaign for Bowflex products and Nautilus Sleep
Systems and variable costs associated with our sales growth.
As a percentage of net sales, selling and marketing expenses decreased by 0.7% in 2000 to 32.8%, compared to 33.5% in 1999. Selling and
marketing expenses within our direct products segment were 33.9% of net sales in 2000 compared to 35.2% in 1999. Selling and marketing
expenses within our commercial and retail business traditionally have been a lower percentage of net sales than we have experienced in direct
marketing and were $6.4 million in 2000 compared with $5.1 million in 1999.
GENERAL AND ADMINISTRATIVE
General and administrative expenses grew to $8.8 million in 2000 from $4.2 million in 1999, an increase of 107.8%. As a percentage of net
sales, general and administrative expenses increased to 3.9% in 2000 from 3.2% in 1999. Our direct products segment accounted for $4.0
million of the increase in general and administrative expenses, due primarily to increased staffing and infrastructure expenses necessitated by
our continued growth and the implementation of our information systems. Commercial and retail operations accounted for the remaining
increase of $0.6 million.
ROYALTY
Royalty expense grew to $5.0 million in 2000 from $2.9 million in 1999, an increase of 71.9%. The increase in our royalty expense is
attributable to increased sales of our Bowflex products in 2000, plus new royalty agreements related to our product diversification strategy.
27
2002. EDGAR Online, Inc.