Nautilus 2007 Annual Report Download - page 14

Table of Contents
If we are unable to anticipate consumer preferences or to effectively develop, market and sell future products, our future revenues and
earnings could be adversely affected
Our future success depends on our ability to develop or acquire the rights to, and then effectively produce, market, and sell new products that
create and/or respond to new and evolving consumer demands. Accordingly, our net sales and profitability may be harmed if we are unable to
develop, or acquire the rights to new or different products that satisfy consumers’
preferences. In addition, any new products that we market may
not generate sufficient net sales or profits to recoup their development or acquisition costs.
A delay in getting foreign sourced products through customs in a timely manner could result in cancelled orders and unanticipated
inventory accumulation
Many of our imported products are subject to duties, tariffs or quotas that affect the cost and quantity of various types of goods imported into the
U.S. or our other sales markets. The countries in which our products are produced or sold may adjust or impose new quotas, duties, tariffs or
other restrictions. Further, 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. Any of these
factors could have a material adverse effect on our business, potentially resulting in reduced revenues and earnings, cancelled orders by
customers, and/or unanticipated inventory accumulation.
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 revenues is derived from sales outside the U.S.; for the year ended December 31, 2007, international sales, including sales from
the International division and Canada, represented approximately 21% of our consolidated net sales. In addition, a substantial portion of our
products is manufactured outside of the U.S. Accordingly, our future results could be materially adversely affected by a variety of factors,
including changes in a specific country’s or region’s political or economic conditions, trade restrictions, import and export licensing
requirements, changes in regulatory requirements, additional efforts to comply with a variety of foreign laws and regulations, and longer
payment cycles in certain countries thus requiring us to finance customer purchases for a period of time longer than those made in the U.S.
Failure or inability to protect our intellectual property could significantly harm our competitive position
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 may 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.
Intense competition may have a negative impact on our net sales and operating results
Our products are sold in highly competitive markets with limited barriers to entry. As a result, introduction of lower priced competing products
could result in a significant decline in our net sales and operating results.
Inability to effectively manage our distribution facilities may harm our business and financial results
Our ability to meet customer expectations, manage inventory, complete sales and achieve objectives for operating efficiencies depends on the
proper operation of our existing distribution facilities and the timely
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