Nautilus 2010 Annual Report Download

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NAUTILUS, INC.
FORM 10-K
(Annual Report)
Filed 03/08/11 for the Period Ending 12/31/10
Address 16400 SE NAUTILUS DRIVE
VANCOUVER, WA 98683
Telephone 3606947722
CIK 0001078207
Symbol NLS
SIC Code
3949 - Sporting and Athletic Goods, Not Elsewhere Classified
Industry Recreational Products
Sector Consumer Cyclical
Fiscal Year 12/31
http://www.edgar-online.com
© Copyright 2011, EDGAR Online, Inc. All Rights Reserved.
Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

Table of contents

  • Page 1
    ..., INC. FORM 10-K (Annual Report) Filed 03/08/11 for the Period Ending 12/31/10 Address Telephone CIK Symbol SIC Code Industry Sector Fiscal Year 16400 SE NAUTILUS DRIVE VANCOUVER, WA 98683 3606947722 0001078207 NLS 3949 - Sporting and Athletic Goods, Not Elsewhere Classified Recreational Products...

  • Page 2
    ... Employer Identification No.) 16400 S.E. Nautilus Drive Vancouver, Washington 98683 (Address of principal executive offices, including zip code) (360) 859-2900 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name...

  • Page 3
    ... the registrant is a shell company (as defined in Rule 12b-2 of the Act). The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the last sales price ($1.52) as reported on the New York Stock Exchange as of the last business day of the...

  • Page 4
    ... Supplementary Data Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Controls and Procedures Other Information PART III Directors, Executive Officers and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management and...

  • Page 5
    ... solutions to help people achieve a fit and healthy lifestyle. Our principal business activities include designing, developing, sourcing and marketing high-quality cardio and strength fitness products and related accessories for consumer use, primarily in the United States and Canada. Our products...

  • Page 6
    ... equipment comprised of both cardio and strength products, including TreadClimber specialized cardio machines, treadmills, PowerRod home gyms, Revolution home gyms, and SelectTech dumbbells, each designed specifically for home use. Our Schwinn brand is known for its popular line of exercise bikes...

  • Page 7
    ... on our Internet websites or through company-owned and third-party call centers. During the first eight months of 2010, less than one-third of our direct customers used financing programs offered by our third-party credit providers to purchase our products, compared to approximately one-half in 2009...

  • Page 8
    ... exercise products and demonstrate how this product line has helped numerous satisfied customers achieve their fitness goals. Greater consumer awareness of TreadClimber has lead to increased sales and was primarily accountable for the 17% increase in direct channel sales of cardio-oriented products...

  • Page 9
    ... and pending, covering our fitness equipment. These patents cover a variety of technologies, some of which are utilized in the following products: TreadClimber specialized cardio machines; variable stride ellipticals; selectorized dumbbells; and recumbent exercise bikes. Nautilus is the exclusive...

  • Page 10
    ... in product selling prices and costs and the mix of products sold; • Size and timing of retail customer orders, which, in turn, often depend upon the success of our customers' businesses or specific products; • Changes in the market conditions for consumer fitness equipment; • Changes in...

  • Page 11
    ..., the mix of product sales may vary considerably from time to time as a result of changes in seasonal and geographic demand for particular types of fitness equipment. In addition, our customers may cancel orders, change delivery schedules or change the mix of products ordered with minimal notice...

  • Page 12
    ... is unable to complete production; • Inability to completely control the quality of finished products; • Inability to completely control delivery schedules; • Changes in our contract manufacturer's business models or operations; • Potential increases in our negotiated product costs as...

  • Page 13
    ... importing seasons. Any of these factors could result in reduced sales, canceled sales orders and unanticipated inventory accumulation and have a material adverse effect on our operating results, financial position and cash flows. Unpredictable events and circumstances relating to our international...

  • Page 14
    ... product cycle, from design to distribution, and we use such systems as a method of communication between employees, as well as our customers. In addition, we use information systems to maintain our accounting records, assist in collection and customer service efforts, and forecast operating results...

  • Page 15
    ... financing programs. Item 1B. Unresolved Staff Comments None. Item 2. Properties Following is a summary of our principal properties as of December 31, 2010 : Owned or Leased Location Primary Function(s) Washington Oregon Canada China Corporate headquarters and customer call center Warehouse...

  • Page 16
    ... Stock Our common stock is listed on the New York Stock Exchange (the "NYSE") and trades under the symbol "NLS." On February 28, 2011, the closing sale price of our common stock was $2.66 per share, as reported on the NYSE. As of February 28, 2011, there were 67 holders of record of our common stock...

  • Page 17
    ...expect that increased sales of TreadClimber products should more than offset anticipated declines in home gym sales by the second half of 2011. In September 2010, we completed our transition to a new consumer credit program with a new primary third-party financing provider, GE Money Bank ("GE"), and...

  • Page 18
    ...our financial position and results of operations. Product Warranty Obligations Our products carry limited defined warranties for defects in materials or workmanship. Our product warranties generally obligate us to pay for the cost of replacement parts, cost of shipping the parts to our customers and...

  • Page 19
    ... of materials used to manufacture our products, product warranty costs, higher or lower fuel prices, and changes in costs of other distribution or manufacturing-related services. Our operating profits or losses may also be affected by the relative success of strategies we employ to improve...

  • Page 20
    ... $ Year Ended December 31, (In thousands) 2010 2009 Change % Change Net sales: Direct business Retail business Unallocated corporate (royalty income) Total net sales Gross profit: Direct business Retail business Unallocated corporate Total gross profit Gross profit margin (% of net sales): Direct...

  • Page 21
    ...11.0)% $ $ $ Cardio products include: treadclimbers, treadmills, exercise bikes and ellipticals. The Bowflex TreadClimber is sold exclusively through our direct channel. (2) Strength products include: home gyms, selectorized dumbbells, kettlebell weights, weight benches and accessories. (1) 19

  • Page 22
    ... increased sales of TreadClimber products should more than offset anticipated declines in home gym sales in our direct channel by the second half of 2011. In September 2010, we completed our transition to a new consumer credit program with a new primary third-party financing provider, GE Money Bank...

  • Page 23
    ... of information technology software; contract termination costs of $0.9 million related to a warehouse distribution service agreement for our U.S. parts; and $0.6 million in severance costs related to personnel reductions. Intangible Asset Impairments No asset impairment losses were incurred in 2010...

  • Page 24
    ... operating needs. In addition, we completed our transition to a new primary third-party consumer credit financing provider during the third quarter of 2010, which management believes has resulted in the improved availability of credit for our customers and increased sales in our direct business...

  • Page 25
    ... of credit and $2.0 million used for purchases of equipment. Cash provided by financing activities of $4.7 million in 2010 consisted of $5.0 million in long-term borrowings from a related party, partially offset by $0.3 million paid for financing costs related to our new bank agreement and long-term...

  • Page 26
    ... of assets, capital expenditures, dividends, changes in our business operations and change of control transactions. The Purchase Agreement includes customary events of default, including nonpayment, insolvency, breach of warranty or covenant, cross-default of the Loan Agreement, material adverse...

  • Page 27
    ...months, consumers tend to be involved in outdoor activities, including exercise, which impacts sales of fitness equipment used indoors. This seasonality can have a significant effect on our operating results, inventory levels and working capital needs. NEW ACCOUNTING PRONOUNCEMENTS No new accounting...

  • Page 28
    Table of Contents Item 8. Financial Statements and Supplementary Data Index to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of December 31, 2010 and 2009 Consolidated Statements of Operations for the years ended December 31,...

  • Page 29
    ... ACCOUNTING FIRM To the Board of Directors and Stockholders of Nautilus, Inc. Vancouver, Washington We have audited the accompanying consolidated balance sheets of Nautilus, Inc. and subsidiaries (the "Company") as of December 31, 2010 and 2009 , and the related consolidated statements of operations...

  • Page 30
    ... operation held-for-sale Deferred income tax assets Total current assets Restricted cash Property, plant and equipment, net Goodwill Other intangible assets, net Other assets Total assets LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Trade payables Accrued liabilities Warranty...

  • Page 31
    ..., except per share amounts) Year Ended December 31, 2010 2009 Net sales Cost of sales Gross profit Operating expenses: Selling and marketing General and administrative Research and development Restructuring Intangible asset impairments Total operating expenses Operating loss Other income (expense...

  • Page 32
    ...NAUTILUS, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE LOSS (In thousands) Accumulated Other Comprehensive Income (1) Common Stock Shares Amount Retained Earnings Total...tax benefit of $15 Comprehensive loss Stock-based compensation expense Balances at December 31, 2010 (1)...

  • Page 33
    ... taxes Trade payables Accrued liabilities, including warranty obligations Net cash provided by (used in) operating activities Cash flows from investing activities: Proceeds from sale of discontinued operations Proceeds from other asset sales Refunds of escrow deposits Purchases of equipment and...

  • Page 34
    ... through direct advertising, catalogs and the Internet. The retail segment offers products through a network of independent retail companies with stores located in the United States and Canada, as well as Internet-based merchandising. The Company's commercial business, formerly a reportable segment...

  • Page 35
    ... the case of leasehold improvements, the lease term, including renewal periods if the Company expects to exercise its renewal options. Depreciation on furniture, equipment and information systems is determined based on estimated useful lives, which generally range from three-to-five years. Goodwill...

  • Page 36
    ..., generally obligate Nautilus to pay the costs of supplying and shipping replacement parts to customers and, in certain instances, pay for labor and other costs to service products. Outstanding product warranty periods range from sixty days to the lifetime of certain product components. The Company...

  • Page 37
    Table of Contents development costs for products under development or being researched, if any, are expensed as the contracted work is performed. Income taxes - Nautilus accounts for income taxes based on the asset and liability method, whereby deferred tax assets and liabilities are recognized for ...

  • Page 38
    ...per month for the use of Sherborne's New York office space and administrative, information technology and communications services to support the Company's Chief Executive Officer. Nautilus paid Sherborne Investors $0.2 million in reimbursements each in 2010 and 2009, which is included in general and...

  • Page 39
    ... of 2009, the Company completed the sale of its StairMaster and Schwinn commercial product lines and also recorded an $8.8 million adjustment to reduce the estimated pre-tax disposal loss related to the commercial business. Following is the adjustment to previously reported amount of estimated pre...

  • Page 40
    ... Payments Balance as of December 31, 2010 Fitness Apparel Business $ $ - 456 (135) 321 1,460 (1,305) 476 $ $ - 2,391 (937) 1,454 1,355 (649) 2,160 $ $ - 2,847 (1,072) 1,775 2,815 (1,954) 2,636 In 2008 the Company completed the sale of its discontinued fitness apparel business, Pearl...

  • Page 41
    ... in the Company's consolidated statements of operations for the year ended December 31, 2009 (in thousands): 2009 Employee termination severance costs Facility lease termination costs Abandoned leasehold improvements Abandoned information technology software and related service agreements Contract...

  • Page 42
    ... and segment management regularly reviews the operating results of that component. The Company has determined that its reporting units are its direct and retail business segments. The Company's estimates of reporting unit fair values generally are based on an analysis of discounted expected future...

  • Page 43
    ... years) December 31, 2010 2009 Indefinite life trademarks Patents Total cost Accumulated amortization - patents N/A 1 to 16 $ $ 9,052 18,154 27,206 (8,432) 18,774 $ $ 9,052 18,154 27,206 (6,368) 20,838 In 2009, in light of various changes in long-term product strategies, the Company tested...

  • Page 44
    ...retained obligations related to the Company's former commercial business, now a discontinued operation, for which sales volume and related product warranty expense accruals have declined each year since 2007. In addition, a significant portion of product warranty payments in 2010 and 2009 related to...

  • Page 45
    ...'s Chairman and Chief Executive Officer, and Craig L. McKibben, a member of the Company's Board of Directors. Pursuant to the Purchase Agreement, the Company issued to the Purchasers $6,096,996 in aggregate principal amount at maturity of its Increasing Rate Senior Discount Notes Due December 31...

  • Page 46
    ... of assets, capital expenditures, dividends, changes in the Company's business operations and change of control transactions. The Purchase Agreement includes customary events of default, including nonpayment, insolvency, breach of warranty or covenant, cross-default of the Loan Agreement, material...

  • Page 47
    ... for doubtful accounts Inventory valuation Capitalized indirect inventory costs Stock-based compensation expense Net operating loss carryforward Basis difference on assets held-for-sale Capital loss carryforward Basis difference on long-lived assets Other Less: Valuation allowance Total deferred...

  • Page 48
    ... The timing and manner in which the Company is permitted to utilize its net operating loss carryforwards may be limited by Internal Revenue Code Section 382, Limitation on Net Operating Loss Carry-forwards and Certain Built-in-Losses Following Ownership Change . As of December 31, 2010 , the Company...

  • Page 49
    ... Company's U.S. federal income tax returns for 2003 through 2010 are open to review by the U.S. Internal Revenue Service. The Company's state income tax returns for 2004 through 2010 are open to review, depending on the respective statute of limitation in each state. In addition, the Company files...

  • Page 50
    ... December 31, 2010 (in thousands, except contractual life and exercise price): Options Outstanding Weighted Average Remaining Contractual Life (Years) WeightedAverage Exercise Price Options Exercisable WeightedAverage Exercise Price Range of Exercise Prices Number Outstanding Number of Options...

  • Page 51
    ... In April 2010 the Company granted 146,000 performance stock unit awards to key members of its executive team. The performance stock unit awards are subject to both time-based vesting (one-third annually over three years) and achievement of a stock price target of two times the grant date price. If...

  • Page 52
    ...business discontinued operation is not a reportable segment. Contribution is the measure of profit or loss used by the Company's chief operating decision maker, and is defined as net sales, less product costs and directly-attributable expenses. Directly-attributable expenses include employment costs...

  • Page 53
    ...the United States, primarily in Canada, represented approximately 10% of consolidated net sales in 2010 and 2009 . (17) COMMITMENTS AND CONTINGENCIES Operating Leases The Company leases property and equipment under non-cancelable operating leases which, in the aggregate, extend through 2016. Many of...

  • Page 54
    ... and suppliers, under which the Company may indemnify them against claims arising from use of their products or services; agreements with customers, under which the Company may indemnify them against claims arising from their use or sale of the Company's products; real estate and equipment leases...

  • Page 55
    ... it 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...

  • Page 56
    ..., summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under...

  • Page 57
    Table of Contents There were no material changes in our internal control over financial reporting during the fourth quarter of 2010 . Item 9B. Other Information None. 55

  • Page 58
    ...the Board of Directors in our Proxy Statement. If the Proxy Statement is not filed with the SEC by April 30, 2011, such information will be included in an amendment to this Annual Report on Form 10-K filed by April 30, 2011. Item 14. Principal Accounting Fees and Services The information required by...

  • Page 59
    ... (a)(1) Financial Statements See the Consolidated Financial Statements in Item 8. (a)(2) Financial Statement Schedule There are no financial statement schedules filed as part of this annual report, since the required information is included in the consolidated financial statements, including the...

  • Page 60
    Table of Contents Signature Title * Edward J. Bramson Chairman and Chief Executive Officer (Principal Executive Officer) Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) Director / S/ K ENNETH L. F ISH Kenneth L. Fish * Ronald P. Badie * Richard A. Horn ...

  • Page 61
    ... for the three months ended September 30, 2006, as filed with the Commission on November 9, 2006. Form of Employee Incentive Stock Option Agreement under the Company Stock Option Plan - Incorporated by reference to Exhibit 10.3 to the Company's Annual Report on Form 10-K for the year ended December...

  • Page 62
    ...by reference to Exhibit 10.10 to the Company's Annual Report on Form 10-K for the year ended December 31, 2003, as filed with the Commission on March 15, 2004. Office Lease Agreement, dated June 30, 2009, between Columbia Tech Center LLC and the Company - Incorporated by reference to Exhibit 10.1 of...

  • Page 63
    ...fiscal year ended December 31, 2009 as filed with the Commission on March 8, 2010. Private Label Consumer Credit Card Program Agreement, dated June 15, 2010, by and between the Company and GE Money Bank - Incorporated by reference to Exhibit 10.1 of the Company's Form 10-Q for the three months ended...

  • Page 64
    ... 10.3 of the Company's Form 10-Q for the three months ended September 30, 2010 as filed with the Commission on November 9, 2010. First Amendment dated November 6, 2010 to Private Label Consumer Credit Card Program Agreement, dated June 15, 2010, by and between the Company and GE Money Bank. 10.30...

  • Page 65
    ... Agreement dated December 15, 2010, between the Company and Hy Cite Corporation [Confidential treatment has been requested with respect to a portion of this Exhibit]. Executive Employment Agreement, dated September 21, 2007, between the Company and Wayne M. Bolio. Executive Employment Agreement...

  • Page 66
    ... Consumer Credit Card Program Agreement, made as of June 15, 2010 (as amended, modified and supplemented from time to time, the " Agreement ") by and between GE Money Bank (" Bank ") and Nautilus, Inc. (" Retailer "). Capitalized terms used herein and not otherwise defined have the meanings given...

  • Page 67
    ... Information collected on the Credit Application only as allowed by the Agreement, the Bank Privacy Disclosures, and applicable law. (v) Consistent with its obligations under Section 13.5(d), Retailer acknowledges that it is responsible for any breach of security of its systems used to collect...

  • Page 68
    IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly authorized officers, all as of the day and year first above written. NAUTILUS, INC. By: /s/ William McMahon Its: SVP Consumer GE MONEY BANK By: /s/ Glenn Marino Its: EVP

  • Page 69
    ... control with the Company, Merchant or their respective ultimate parents. c. " Applicable Law " means collectively or individually any applicable federal, state or local law, rule, regulation or judicial, governmental or administrative order, decree, ruling, opinion or interpretation. d. " Business...

  • Page 70
    ... the form of disclosures made to Credit Customers under the Program. n. " Goods " means the products sold by Merchant in the ordinary course of Merchant's business to consumers for individual, family, personal or household use. o. " Internet Application " means any Credit Agreement under the Program...

  • Page 71
    ... ownership in the Company of the Credit Agreement and Account shall be deemed to occur on the date the payment of the Purchase Price by the Company to Merchant pursuant to Section 2 c (the " Purchase Date "). In the event the customer or Merchant cancels the relevant sale of Goods during the period...

  • Page 72
    ... Account using terms different than set forth in the Credit Documents shall not constitute approval of such modifications by the Company and, notwithstanding Section 5 j , Merchant shall be responsible for any liability or damages arising directly from such unapproved modifications. e. Credit Review...

  • Page 73
    ... Credit Agreement, Disclosure Statement and Sales Slip with all Goods shipped. f. Telephone Applications . With respect to Telephone Applications, Merchant shall: (i) Make sure all information requested on the Telephone Application is complete. (ii) Using the verbal scripts provided by the Company...

  • Page 74
    ...to the applicant, including such other disclosures as may be required by Company, using a recording medium acceptable to Company. (iv) Email or otherwise make electronically available the Credit Agreement and Disclosure Statement, together with the e-consent required by the Company from time to time...

  • Page 75
    ... binding contract) and (ii) not in any manner which would discriminate against an applicant or discourage an applicant from applying for credit. b. Corporate Power and Authority . That the Company has full corporate power and authority to enter into this Agreement; that all corporate action required...

  • Page 76
    ...this Agreement. Neither Company nor any of their directors, officers, employees or assigns has been excluded from any federal or state health care program or has otherwise been sanctioned or excluded from doing business with any federal or state government agency or program. g. Sale and Transfer in...

  • Page 77
    ... the goods, services or warranties purchased; or (4) the Credit Customer has not authorized the Credit Sale. (iv) Merchant fails to deliver to Company the Sales Slip, Credit Agreement, verbal recording, or other required records of the transaction within the times required in this Agreement. (v) The...

  • Page 78
    ...per year during the Term and during regular business hours), such books, records and accounts and all or any part of the Company's operations and activities as may be necessary to determine the completeness and accuracy of Chargebacks required to be made under this Agreement (collectively, " Company...

  • Page 79
    ... adequate services in connection with each Credit Sale pursuant to standard customs and trade practices and any applicable manufacturer's warranties, and to provide such repairs, service and replacements and take such other corrective action as may be required by Applicable Law. b. Company agree...

  • Page 80
    ...person's use, assembly, disassembly or storage of the Goods and any warranties or services purchased by Credit Customer; (v) any claim or complaint of a third party in connection with Merchant's advertisements and promotions relating to the Program which have not been reviewed or approved by Company...

  • Page 81
    ... to Company all Credit Agreements, Disclosure Statements, Sales Slips, credits and other data related to Credit Agreements and Accounts purchased by the Company through the date of termination unless previously provided. Neither shall be liable to the other party for any direct or indirect damages...

  • Page 82
    ... whether the Credit Agreements and Accounts are owned by Company, solicit Credit Customer for any other credit or other types of accounts or financial products or insurance services offered by Company and/or any of its Affiliates. However, Company agrees not to use the name, logo, or service mark of...

  • Page 83
    ..., or overnight/express courier service or mail. Section 20. Amendments and Supplementary Documents. If a modification is reasonably determined by Company or Merchant to be required by any Applicable Law, such party shall notify the other party, and either party may terminate this Agreement if an...

  • Page 84
    ... provided at law or in equity; provided that, in no event shall any breach of this Agreement by the Company give rise to the right or remedy by Merchant to discontinue the performance of its obligations pursuant to Section 6 . The foregoing sentence shall in no way limit any claim for damages or...

  • Page 85
    Nautilus, Inc. By: Title: Date: /s/ Kenneth L. Fish CFO Hy Cite Corporation By: Title: /s/ John Burczyk VP / General Counsel Date: December 15, 2010 December 15, 2010

  • Page 86
    EXHIBIT A TO HY CITE MERCHANT AGREEMENT ***Confidential portion has been omitted pursuant to a request for confidential treatment and has been filed separately with the Commission.

  • Page 87
    ... of a key Employer policy or this Agreement by Employee (including, but not limited to, acts of harassment or discrimination, use of unlawful drugs or drunkenness on Employer's premises during normal work hours); (iv) insubordination (i.e. conduct such as refusal to follow direct orders of the...

  • Page 88

  • Page 89
    ... employment under this Agreement by the Company without Cause or by Employee for Good Reason (as defined hereunder), then, in lieu of any further salary, bonus, or other payments for periods subsequent to the Date of Termination, the Company shall pay to the Employee severance equal to 6 months base...

  • Page 90
    ...any other time upon the Company's request, Employee agrees to return all documents and property belonging to the Company in his possession including, but not limited to, customer lists, contracts, agreements, licenses, business plans, equipment, software, software programs, products, work-inprogress...

  • Page 91
    ... any and all prior agreements and understandings concerning Employee's severance or payments due upon termination of employment. This Agreement may be changed only by a written document signed by Employee and the Company. ix) Governing Law/Jurisdiction/Venue . This Agreement shall be governed by...

  • Page 92
    ... of a key Employer policy or this Agreement by Employee (including, but not limited to, acts of harassment or discrimination, use of unlawful drugs or drunkenness on Employer's premises during normal work hours); (iv) insubordination (i.e. conduct such as refusal to follow direct orders of the...

  • Page 93

  • Page 94
    ...employment under this Agreement by the Company without Cause or by Employee for Good Reason (as defined hereunder), then, in lieu of any further salary, bonus, or other payments for periods subsequent to the Date of Termination, the Company shall pay to the Employee severance equal to 12 months base...

  • Page 95
    ...any other time upon the Company's request, Employee agrees to return all documents and property belonging to the Company in his possession including, but not limited to, customer lists, contracts, agreements, licenses, business plans, equipment, software, software programs, products, work-inprogress...

  • Page 96
    ... any and all prior agreements and understandings concerning Employee's severance or payments due upon termination of employment. This Agreement may be changed only by a written document signed by Employee and the Company. ix) Governing Law/Jurisdiction/Venue . This Agreement shall be governed by...

  • Page 97

  • Page 98
    ... of a key Employer policy or this Agreement by Employee (including, but not limited to, acts of harassment or discrimination, use of unlawful drugs or drunkenness on Employer's premises during normal work hours); (iv) insubordination (i.e. conduct such as refusal to follow direct orders of the...

  • Page 99

  • Page 100
    ... employment under this Agreement by the Company without Cause or by Employee for Good Reason (as defined hereunder), then, in lieu of any further salary, bonus, or other payments for periods subsequent to the Date of Termination, the Company shall pay to the Employee severance equal to 6 months base...

  • Page 101
    ...any other time upon the Company's request, Employee agrees to return all documents and property belonging to the Company in his possession including, but not limited to, customer lists, contracts, agreements, licenses, business plans, equipment, software, software programs, products, work-inprogress...

  • Page 102
    ... any and all prior agreements and understandings concerning Employee's severance or payments due upon termination of employment. This Agreement may be changed only by a written document signed by Employee and the Company. ix) Governing Law/Jurisdiction/Venue . This Agreement shall be governed by...

  • Page 103
    ... move to Vancouver, WA. Provided you satisfy eligibility criteria, you may participate in Nautilus, Inc.'s generally applicable benefit programs. Details about current benefit programs, including policies concerning medical insurance coverage, are contained in the Company's employee handbook and...

  • Page 104
    ...this form completed and on file for all Company employees. While it is our belief that our relationship will be a positive one, it is appropriate to advise you that the Company is an "at-will" employer and does not offer employment on a fixed-term basis and either you or the Company can terminate it...

  • Page 105
    ... OF NAUTILUS, INC. Nautilus, Inc., a Washington corporation Nautilus International Holdings, S.A., a Swiss corporation Nautilus International, S.A., a Swiss corporation Nautilus Switzerland, S.A., a Swiss corporation Nautilus International GmbH, a German corporation Nautilus Fitness UK Ltd...

  • Page 106
    ...79643 and 333-46936 on Form S-8 of our reports dated March 8, 2011 , relating to the consolidated financial statements of Nautilus, Inc. appearing in this Annual Report on Form 10-K of Nautilus, Inc. and subsidiaries for the year ended December 31, 2010 . /s/ Deloitte & Touche LLP Portland, Oregon...

  • Page 107
    ... in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and Any fraud, whether or not material, that involves management or other employees who...

  • Page 108
    ... in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and Any fraud, whether or not material, that involves management or other employees who...

  • Page 109
    ... States Code), the undersigned officer of Nautilus, Inc., a Washington corporation (the "Company"), does hereby certify that: To my knowledge, the Annual Report on Form 10-K for the year ended December 31, 2009 (the "Form 10-K") of the Company fully complies with the requirements of Section 13(a) or...

  • Page 110
    ... States Code), the undersigned officer of Nautilus, Inc., a Washington corporation (the "Company"), does hereby certify that: To my knowledge, the Annual Report on Form 10-K for the year ended December 31, 2009 (the "Form 10-K") of the Company fully complies with the requirements of Section 13(a) or...