Nautilus 2004 Annual Report Download - page 32

Table of Contents
Our business depends on our ability to source and distribute products in a timely manner. As a result, we rely on the free flow of goods
through open and operational ports worldwide. Labor disputes at various ports create significant risks for our business, particularly if these
disputes result in work slowdowns, lockouts, strikes, or other disruptions during our peak importing seasons, and could have a material adverse
effect on our business, potentially resulting in cancelled orders by customers, unanticipated inventory accumulation, and reduced revenues and
earnings.
Any failure by us to manage acquisitions and other significant transactions successfully could harm our financial results, business and
prospects.
As we have done in the past, we may seek to acquire other businesses in the future. Integrating acquired businesses into our operations
poses significant challenges, particularly with respect to corporate cultures and management teams. Failure to successfully effect the integration
could adversely impact the revenue, earnings and business synergies we expect from the acquisitions. In addition, the process of integrating
acquired businesses may be disruptive to our operations and may cause an interruption of, or a loss of momentum in, our core business.
Our future integration efforts may be jeopardized, and our actual return on investment from such acquisitions may be lower than
anticipated, as a result of various factors, including the following:
• Challenges in the successful integration of the products, services or personnel of the acquired business into our operations;
• Loss of employees or customers that are key to the acquired business;
• Time and money spent by our management team focusing on the integration, which could distract it from our core operations;
• Our potential lack of experience in markets of the acquired businesses;
• Possible inconsistencies in standards, controls, procedures and policies among the combined companies and the need to implement
our financial, accounting, information and other systems; and
Our failure or inability to protect our intellectual property could significantly harm our competitive position.
• The need to coordinate geographically diverse operations.
Protecting our intellectual property is an essential factor in maintaining our competitive position in the health and fitness industry. If we
do not or are unable to adequately protect our intellectual property, our sales and profitability could be adversely affected. We currently hold a
number of patents and trademarks and have several patent and trademark applications pending. However, our efforts to protect our proprietary
rights may be inadequate and applicable laws provide only limited protection.
The introduction of lower priced competing products could significantly harm our ability to generate future revenues and earnings.
Our products are sold in highly competitive markets with limited barriers to entry. As a result the introduction of lower priced competing
products by our competitors could result in a significant decline in our net sales.
Unpredictable events and circumstances relating to our international operations, including our use of foreign manufacturers could
result in cancelled orders, unanticipated inventory accumulation, and reduced revenues and earnings.
A portion of our revenue is derived from sales outside the United States. For the year ended December 31, 2004, international sales
represented approximately 13% of consolidated net sales. In addition, a substantial portion of our products is manufactured outside of the
United States. Accordingly, our future results could be materially adversely
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