Nautilus 2015 Annual Report Download - page 20
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Please find page 20 of the 2015 Nautilus annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.(1) Income tax benefit in 2013 includes a $38.9 million credit related to the reversal of our deferred tax asset valuation allowance.
(2) The decreases in cash and investments and working capital at December 31, 2015 compared to December 31, 2014 were primarily due to our purchase of
Octane on December 31, 2015. See Note 2 of Notes to Consolidated Financial Statements for additional information.
(3) The increase in long-term notes payable at December 31, 2015 compared to December 31, 2014 was due to our purchase of Octane on December 31, 2015.
See Notes 2 and 12 of Notes to Consolidated Financial Statements for additional information.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with the consolidated financial statements and
related notes that are included in Part II, Item 8 of this Form 10-K. This discussion contains forward-looking statements based upon current expectations that
involve risks and uncertainties.
Our results of operations may vary significantly from period-to-period. Our revenues typically fluctuate due to the seasonality of our industry, customer buying
patterns, product innovation, the nature and level of competition for health and fitness products, our ability to procure products to meet customer demand, the level
of spending on, and effectiveness of, our media and advertising programs and our ability to attract new customers and maintain existing sales relationships. In
addition, our revenues are highly susceptible to economic factors, including, among other things, the overall condition of the economy and the availability of
consumer credit in both the United States and Canada. Our profit margins may vary in response to the aforementioned factors and our ability to manage product
costs. Profit margins may also be affected by fluctuations in the costs or availability of materials used to manufacture our products, product warranty costs, the cost
of fuel, and changes in costs of other distribution or manufacturing-related services. Our operating profits or losses may also be affected by the efficiency and
effectiveness of our organization. Historically, our operating expenses have been influenced by media costs to produce and distribute advertisements of our
products on television, the Internet and other media, facility costs, operating costs of our information and communications systems, product supply chain
management, customer support and new product development activities. In addition, our operating expenses have been affected from time-to-time by asset
impairment charges, restructuring charges and other significant unusual or infrequent expenses.
As a result of the above and other factors, our period-to-period operating results may not be indicative of future performance. You should not place undue reliance
on our operating results and should consider our prospects in light of the risks, expenses and difficulties typically encountered by us and other companies, both
within and outside our industry. We may not be able to successfully address these risks and difficulties and, consequently, we cannot assure you any future growth
or profitability. For more information, see our discussion of Risk Factors located at Part I, Item 1A of this Form 10-K.
OVERVIEW
We are committed to providing innovative, quality 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,
Canada and Europe. Our products are sold under some of the most-recognized brand names in the fitness industry: Nautilus ® , Bowflex ® , Octane Fitness ® ,
Schwinn ® and Universal ® .
We market our products through two distinct distribution channels, Direct and Retail, which we consider to be separate business segments. Our Direct business
offers products directly to consumers through television advertising, catalogs and the Internet. Our Retail business offers our products through a network of
independent retail companies and specialty retailers with stores and websites located in the United States and internationally. We also derive a portion of our
revenue from the licensing of our brands and intellectual property.
Our net sales in 2015 were $335.8 million , an increase of $61.3 million , or 22.3% , compared to net sales of $274.4 million in 2014 . Net sales of our Direct
segment increased $50.0 million , or 28.5% , compared to 2014 , primarily due to increased consumer demand for our cardio products, especially the Max Trainer
® . Net sales of our Retail segment increased by $13.0 million , or 13.9% in 2015 , compared to 2014 , primarily due to growth in the lineup of cardio products
launched in late 2013 and fall of 2014.
Income from continuing operations was $26.8 million , or $0.85 per diluted share, in 2015 , compared to $20.4 million , or $0.64 per diluted share, in 2014 .
Income from continuing operations in 2015 and 2014 included a $2.4 million and a $1.2 million credit related to the reversal of our deferred tax asset valuation
allowance, respectively. Results for 2015 were also negatively impacted
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