Nautilus 2013 Annual Report Download - page 56

Assumptions used in calculating the fair value of stock-option grants were as follows:
Expected dividend yield
is based on our current expectation that no dividend payments will be made in future periods.
Risk
-free interest rate is the U.S. Treasury zero-
coupon rate, as of the grant date, for issues having a term approximately equal to the expected
life of the stock option.
Expected life
is the period of time over which stock options are expected to remain outstanding. We calculate expected term based on the
average of the sum of the vesting periods and the full contractual term.
Expected volatility
is the percentage amount by which the price of our common stock is expected to fluctuate annually during the estimated
expected life for stock options. Expected price volatility is calculated using historical daily closing prices over a period matching the weighted-
average expected life, as management believes such changes are the best indicator of future volatility.
We estimate future forfeitures, at the time of grant and in subsequent periods, based on historical turnover rates, previous forfeiture experience
and changes in the business or key personnel that would suggest future forfeitures may differ from historical data. We recognize compensation
expense for only those stock options and other stock-
based awards that are expected to vest. We reevaluate estimated forfeitures each quarter
and, if applicable, recognize a cumulative effect adjustment in the period of the change if the revised estimate of the impact of forfeitures differs
significantly from the previous estimate.
(13) INCOME PER SHARE
The weighted average numbers of shares outstanding used to compute income per share amounts were as follows (in thousands):
The weighted average numbers of shares outstanding listed in the table below were anti-
dilutive and excluded from the computation of Diluted
Income Per Share, primarily because the average market price did not exceed the exercise price. These shares may be dilutive potential common
shares in the future (in thousands):
(14) SEGMENT AND GEOGRAPHIC INFORMATION
We have two reportable segments -
Direct and Retail. Contribution is the measure of profit or loss, defined as net sales less product costs and
directly attributable expenses. Directly attributable expenses include Selling and Marketing expenses, General and Administrative expenses, and
Research and Development expenses that are directly related to segment operations. Segment assets are those directly assigned to an operating
segment's operations, primarily Accounts Receivable, Inventories and Intangible Assets. Unallocated assets primarily include shared information
technology infrastructure, distribution centers, corporate headquarters, Prepaids and Other Current Assets, Deferred Income Tax Assets and
Other Assets. Capital expenditures directly attributable to the Direct and Retail segments were not significant in any period.
49
Year Ended December 31,
2013 2012 2011
Dividend yield
—
%
—
%
—
%
Risk-free interest rate
0.9
%
0.9
%
1.5
%
Expected life (years)
4.75
4.75
4.75
Expected volatility
89
%
92
%
92
%
Year Ended December 31,
2013 2012 2011
Shares used for basic per share calculations
31,072
30,851
30,746
Dilutive effect of outstanding options, PSUs and RSUs
385
123
30
Shares used for diluted per share calculations
31,457
30,974
30,776
As of December 31,
2013 2012 2011
Stock options
304
1,072
1,114
PSUs
12
26
89
RSUs
—
—
217