Nautilus 2013 Annual Report Download - page 11

could result in a decline in our revenues derived from these products. A significant decline in our sales of these products would have a material
adverse effect on our operating results, financial position and cash flows.
Portions of our operating expenses and costs of goods sold are relatively fixed, and we may have limited ability to reduce expenses
sufficiently in response to any revenue shortfalls.
Many of our operating expenses are relatively fixed. We may not be able to adjust our operating expenses or other costs sufficiently to
adequately respond to any revenue shortfalls. If we are unable to reduce operating expenses or other costs quickly in response to any declines in
revenue, it would negatively impact our operating results, financial condition and cash flows.
If we are unable to anticipate consumer preferences or to effectively develop, market and sell future products, our future revenues and
operating results could be adversely affected.
Our future success depends on our ability to effectively develop, market and sell new products that respond to new and evolving consumer
preferences. Accordingly, our revenues and operating results may be adversely affected if we are unable to develop or acquire rights to new
products that satisfy consumer preferences. In addition, any new products that we market may not generate sufficient revenues to recoup their
acquisition, development, production, marketing, selling and other costs.
Further decline or weaker than expected recovery in consumer spending likely would negatively affect our product revenues and
earnings.
Success of each of our products depends substantially on the amount of discretionary funds available to our customers. Global credit and
financial markets have experienced extreme disruptions in the recent past, including severely diminished liquidity and credit availability,
declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability. There
can be no assurance that there will not be further deterioration in these conditions. Further decline or weaker than expected recovery in general
economic conditions could further depress consumer spending, especially spending for discretionary consumer products such as ours. Poor
economic conditions could in turn lead to substantial decreases in our net sales or have a material adverse effect on our operating results,
financial position and cash flows.
Our business is affected by seasonality which results in fluctuations in our operating results.
We experience fluctuations in aggregate sales volume during the year. Sales are typically strongest in the first and fourth quarters, followed by
the third quarter, and are generally weakest in the second quarter. However, 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. As a result, we may not be able to accurately predict our
quarterly sales. Accordingly, our results of operations are likely to fluctuate significantly from period to period.
Government regulatory actions could disrupt our marketing efforts and product sales.
Various international and U.S. federal, state and local governmental authorities, including the Federal Trade Commission, the Consumer Product
Safety Commission, the Securities and Exchange Commission and the Consumer Financial Protection Bureau, regulate our product and
marketing efforts. Our sales and profitability could be significantly harmed if any of these authorities commence a regulatory enforcement action
that interrupts our marketing efforts, results in a product recall or negative publicity, or requires changes in product design.
Substantially higher advertising rates or a significant decline in availability of media time may hinder our ability to effectively market
our products and may reduce profitability.
We depend on television advertising to market certain products sold directly to consumers. Consequently, a marked increase in the price we must
pay for our preferred media time and/or a reduction in its availability may adversely impact our financial performance.
We may be unable to adapt to significant changes in media consumption habits, which could diminish the effectiveness or efficiency of
our advertising.
New television technologies and services, such as video
-on-
demand, digital video recorders and Internet streaming services are changing
traditional patterns of television viewing. Additionally, consumer attention is increasingly fragmented across a variety of games, apps, the
Internet and other digital media. If we are unable to successfully adapt our media strategies to new television
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