Nautilus 2015 Annual Report Download - page 4
Download and view the complete annual report
Please find page 4 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.PART I
Forward-Looking Statements
This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as
"plan," "expect," "aim," "believe," "project," "intend," "estimate," "will," "should," "could," and other terms of similar meaning typically identify forward-looking
statements. The forward-looking statements in this report include, without limitation: our prospects, resources or capabilities; current or future financial trends;
future operating results; future plans for introduction of new products; anticipated demand for our new and existing products; anticipated benefits of the acquisition
of Octane Fitness; maintenance of appropriate inventory levels; growth in revenues and profits; leverage of operating expenses; future revenues from licenses of
our intellectual property; results of increased media investment in the Direct segment; continued improvement in operating margins; expectations for increased
research and development expenses; anticipated capital expenditures; fluctuations in net sales due to seasonality; and our ability to continue to fund our operating
and capital needs for the following twelve-month period. Forward-looking statements also include any statements related to our expectations regarding future
business and financial performance or conditions, anticipated sales growth across markets, distribution channels and product categories, expenses and gross
margins, profits or losses, losses from discontinued operations, settlements of warranty obligations, the anticipated outcome of litigation to which we are a party,
new product introductions, financing and working capital requirements and resources. These forward-looking statements, and others we make from time-to-time,
are subject to a number of risks and uncertainties. Many factors could cause actual results to differ materially from those projected in forward-looking statements,
including the risks described in Part I, Item 1A of this report and in other reports we file with the Securities and Exchange Commission. We do not undertake any
duty to update forward-looking statements after the date they are made or conform them to actual results or to changes in circumstances or expectations.
Item 1. Business
OVERVIEW
Founded in 1986, Nautilus, Inc. and subsidiaries (collectively, "Nautilus" or the "Company") is a consumer fitness products company headquartered in Vancouver,
Washington and incorporated in the State of Washington in January 1993. We are committed to providing innovative, quality solutions to help people achieve their
fitness goals through 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, but also in international markets outside North
America. 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 companies to reach consumers in both the home use as well as commercial use markets in the United States and internationally. We also derive a
portion of our revenue from the licensing of our brands and intellectual property.
BUSINESS STRATEGY
We are focused on developing and marketing consumer fitness equipment and related products to help people enjoy healthier lives. Our products are targeted to
meet the needs of a broad range of consumers, including fitness enthusiasts and individuals who are seeking the benefits of regular exercise. We have diversified
our business by expanding our portfolio of high quality fitness equipment into multiple product lines utilizing our well-recognized brand names. We are focused on
consumer markets and specialty and commercial distribution channels, and view the continual innovation of our product offerings as a key aspect of our business
strategy. We regularly refresh our existing product lines with new technologies and finishes, and focus significant effort and resources on the development or
acquisition of innovative new fitness products for introduction to the marketplace at periodic intervals.
Our strategies incorporate the individual characteristics of our Direct and Retail businesses. Our Direct business focuses on: (i) the development of, or acquisition
of rights to, unique products; (ii) the application of creative, cost-effective ways to communicate the benefits of their use; and (iii) making various payment options
available to our customers. We are particularly attentive to Direct business metrics that provide feedback regarding the effectiveness of our media marketing
programs and attractiveness of third-party consumer financing programs.
1