Nautilus 2009 Annual Report Download - page 13

Table of Contents
of our monthly payment plans or through other sources of consumer financing. These poor economic conditions could in turn lead to substantial
further decreases in our net sales or have a material adverse effect on our operating results, financial condition and cash flows.
We may need to raise additional financing if our financial results do not improve.
We sustained significant operating losses during 2009 and 2008, and if we continue to experience significant operating losses, we will need to
obtain additional debt or equity financing to continue operating. There is no guarantee that we will be able to raise additional funds on favorable
terms, if at all, or that any amount raised will be sufficient to meet our cash requirements. If we are not able to raise additional needed capital, we
would be forced to sharply curtail our operations.
Failure to successfully implement our turnaround strategies may adversely affect revenues and expenses.
To implement our business strategy, we must effectively manage our turnaround in each of our business segments. We expect to continue to
change various aspects of our business, enhance our operations, and attract, retain and manage qualified personnel. Our turnaround efforts could
place an increasing strain on management, financial, product design, marketing, manufacturing, distribution and other resources, and we could
experience operating difficulties in association with our turnaround and restructuring plans. As a result of these and other pressures, our
turnaround strategies involve many risks and uncertainties that could have a material adverse effect on our results of operations, financial
condition and cash flows.
A significant decline in availability of media time or substantially higher advertising rates may hinder our ability to effectively market
our products and may reduce profitability.
We depend on television advertising to market certain of our products sold directly to consumers. Consequently, a marked increase in the price
we must pay for our preferred media time or a reduction in its availability may adversely impact our financial performance.
Our revenues could decline due to changes in credit markets and decisions made by credit providers.
Reductions in consumer lending and the availability of consumer credit could limit the number of customers with the financial means to
purchase our products. In the past, we have partnered with financial service companies, including HSBC, to assist our customers in obtaining
financing to purchase our products. Our present agreement with HSBC helps certain customers obtain financing if they qualify for HSBC’s
private label Bowflex revolving credit card. We cannot be assured that HSBC, or others, will continue to provide consumers with access to credit
or that credit limits under such arrangements will not be reduced. Such restrictions or reductions in the availability of consumer credit could have
a material adverse impact on our results of operations, financial condition and cash flows.
Failure to collect accounts receivable from our customers could adversely affect our ability to operate our business.
Our trade receivables reflect a large and diverse customer base, domestically and internationally. Our trade receivables are generally unsecured
and therefore collection is affected by the economic conditions in each of our principal markets. Collection of receivables due from customers
outside the U.S. may also be negatively impacted by the nature, and extent of our business presence in a particular country and any rights or
protections afforded to our customers under a country’s legal system. We cannot predict, with certainty, future changes in the financial stability
of our customers or in the general economy. We periodically review the credit worthiness of our customers to help gauge collectability and
increase our allowance for doubtful accounts when collection is at risk. However, our actual future losses from uncollectible accounts may differ
from our estimates. Our ability to collect the amounts due from our customers could be impacted by various factors including: a deterioration in
the financial condition of a key customer, inability of customers to obtain bank credit lines, a significant slow-down
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