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FORM 10-Q
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[x]
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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[ ]
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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NAUTILUS, INC.
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||
(Exact name of Registrant as specified in its charter)
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||
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Washington
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94-3002667
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(State or other jurisdiction of
incorporation or organization)
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|
(I.R.S. Employer
Identification No.)
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Item 1.
|
|
||
Item 2.
|
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||
Item 3.
|
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Item 4.
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||
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Item 1.
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Legal Proceedings
|
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Item 1A.
|
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Item 2.
|
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Item 6.
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||
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As of
|
||||||
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June 30, 2014
|
|
December 31, 2013
|
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
38,285
|
|
|
$
|
40,979
|
|
Marketable securities
|
19,050
|
|
|
—
|
|
||
Trade receivables, net of allowances of $34 and $53
|
8,895
|
|
|
25,336
|
|
||
Inventories
|
23,229
|
|
|
15,824
|
|
||
Prepaids and other current assets
|
5,069
|
|
|
6,927
|
|
||
Income taxes receivable
|
73
|
|
|
80
|
|
||
Deferred income tax assets
|
6,204
|
|
|
4,441
|
|
||
Total current assets
|
100,805
|
|
|
93,587
|
|
||
|
|
|
|
||||
Property, plant and equipment, net
|
8,680
|
|
|
8,499
|
|
||
Goodwill
|
2,746
|
|
|
2,740
|
|
||
Other intangible assets, net
|
11,595
|
|
|
12,615
|
|
||
Long-term deferred income tax assets
|
20,899
|
|
|
25,725
|
|
||
Other assets
|
311
|
|
|
401
|
|
||
Total assets
|
$
|
145,036
|
|
|
$
|
143,567
|
|
|
|
|
|
||||
Liabilities and Shareholders' Equity
|
|
|
|
||||
Trade payables
|
$
|
31,997
|
|
|
$
|
37,192
|
|
Accrued liabilities
|
8,122
|
|
|
9,123
|
|
||
Warranty obligations, current portion
|
2,075
|
|
|
1,610
|
|
||
Total current liabilities
|
42,194
|
|
|
47,925
|
|
||
Warranty obligations, non-current
|
—
|
|
|
28
|
|
||
Income taxes payable, non-current
|
3,533
|
|
|
2,577
|
|
||
Other long-term liabilities
|
1,232
|
|
|
1,472
|
|
||
Total liabilities
|
46,959
|
|
|
52,002
|
|
||
Commitments and contingencies (Note 12)
|
|
|
|
|
|
||
Shareholders' equity:
|
|
|
|
||||
Common stock - no par value, 75,000 shares authorized, 31,278 and 31,162 shares issued and outstanding
|
7,348
|
|
|
6,769
|
|
||
Retained earnings
|
90,483
|
|
|
84,552
|
|
||
Accumulated other comprehensive income
|
246
|
|
|
244
|
|
||
Total shareholders' equity
|
98,077
|
|
|
91,565
|
|
||
Total liabilities and shareholders' equity
|
$
|
145,036
|
|
|
$
|
143,567
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Net sales
|
$
|
48,546
|
|
|
$
|
36,242
|
|
|
$
|
120,450
|
|
|
$
|
95,456
|
|
Cost of sales
|
23,766
|
|
|
18,913
|
|
|
57,189
|
|
|
47,433
|
|
||||
Gross profit
|
24,780
|
|
|
17,329
|
|
|
63,261
|
|
|
48,023
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Selling and marketing
|
15,690
|
|
|
13,768
|
|
|
37,463
|
|
|
32,394
|
|
||||
General and administrative
|
4,959
|
|
|
3,982
|
|
|
10,762
|
|
|
8,929
|
|
||||
Research and development
|
1,752
|
|
|
1,303
|
|
|
3,655
|
|
|
2,430
|
|
||||
Total operating expenses
|
22,401
|
|
|
19,053
|
|
|
51,880
|
|
|
43,753
|
|
||||
Operating income (loss)
|
2,379
|
|
|
(1,724
|
)
|
|
11,381
|
|
|
4,270
|
|
||||
Other income (expense):
|
|
|
|
|
|
|
|
||||||||
Interest income
|
16
|
|
|
—
|
|
|
24
|
|
|
1
|
|
||||
Interest expense
|
(5
|
)
|
|
(6
|
)
|
|
(12
|
)
|
|
(15
|
)
|
||||
Other, net
|
(56
|
)
|
|
130
|
|
|
(117
|
)
|
|
21
|
|
||||
Total other income (expense)
|
(45
|
)
|
|
124
|
|
|
(105
|
)
|
|
7
|
|
||||
Income (loss) from continuing operations before income taxes
|
2,334
|
|
|
(1,600
|
)
|
|
11,276
|
|
|
4,277
|
|
||||
Income tax provision (benefit)
|
836
|
|
|
(34,268
|
)
|
|
4,030
|
|
|
(33,915
|
)
|
||||
Income from continuing operations
|
1,498
|
|
|
32,668
|
|
|
7,246
|
|
|
38,192
|
|
||||
Discontinued operations:
|
|
|
|
|
|
|
|
||||||||
Income (loss) from discontinued operations before income taxes
|
(322
|
)
|
|
113
|
|
|
(834
|
)
|
|
(261
|
)
|
||||
Income tax provision (benefit) from discontinued operations
|
619
|
|
|
(82
|
)
|
|
481
|
|
|
(91
|
)
|
||||
Income (loss) from discontinued operations
|
(941
|
)
|
|
195
|
|
|
(1,315
|
)
|
|
(170
|
)
|
||||
Net income
|
$
|
557
|
|
|
$
|
32,863
|
|
|
$
|
5,931
|
|
|
$
|
38,022
|
|
|
|
|
|
|
|
|
|
||||||||
Basic income per share from continuing operations
|
$
|
0.05
|
|
|
$
|
1.05
|
|
|
$
|
0.23
|
|
|
$
|
1.23
|
|
Basic income (loss) per share from discontinued operations
|
(0.03
|
)
|
|
0.01
|
|
|
(0.04
|
)
|
|
(0.01
|
)
|
||||
Basic net income per share
(1)
|
$
|
0.02
|
|
|
$
|
1.06
|
|
|
$
|
0.19
|
|
|
$
|
1.23
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted income per share from continuing operations
|
$
|
0.05
|
|
|
$
|
1.04
|
|
|
$
|
0.23
|
|
|
$
|
1.22
|
|
Diluted income (loss) per share from discontinued operations
|
(0.03
|
)
|
|
0.01
|
|
|
(0.04
|
)
|
|
(0.01
|
)
|
||||
Diluted net income per share
|
$
|
0.02
|
|
|
$
|
1.05
|
|
|
$
|
0.19
|
|
|
$
|
1.21
|
|
Shares used in per share calculations:
|
|
|
|
|
|
|
|
||||||||
Basic
|
31,226
|
|
|
31,058
|
|
|
31,203
|
|
|
31,003
|
|
||||
Diluted
|
31,598
|
|
|
31,430
|
|
|
31,586
|
|
|
31,360
|
|
||||
|
|
|
|
|
|
|
|
||||||||
(1)
May not add due to rounding.
|
|
|
|
|
|
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Net income
|
$
|
557
|
|
|
$
|
32,863
|
|
|
$
|
5,931
|
|
|
$
|
38,022
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Unrealized gain (loss) on marketable securities, net of income tax expense of $0, $0, $0 and $0
|
3
|
|
|
—
|
|
|
(10
|
)
|
|
—
|
|
||||
Foreign currency translation, net of income tax expense (benefit) of $(4), $12, $1 and $21
|
176
|
|
|
(185
|
)
|
|
12
|
|
|
(332
|
)
|
||||
Comprehensive income
|
$
|
736
|
|
|
$
|
32,678
|
|
|
$
|
5,933
|
|
|
$
|
37,690
|
|
|
Six months ended June 30,
|
||||||
|
2014
|
|
2013
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Income from continuing operations
|
$
|
7,246
|
|
|
$
|
38,192
|
|
Loss from discontinued operations
|
(1,315
|
)
|
|
(170
|
)
|
||
Net income
|
5,931
|
|
|
38,022
|
|
||
Adjustments to reconcile net income to cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
1,832
|
|
|
1,644
|
|
||
Bad debt expense
|
32
|
|
|
417
|
|
||
Inventory lower-of-cost-or-market adjustments
|
863
|
|
|
92
|
|
||
Stock-based compensation expense
|
520
|
|
|
134
|
|
||
Loss on asset dispositions
|
—
|
|
|
4
|
|
||
Deferred income taxes, net of valuation allowance
|
2,851
|
|
|
(34,414
|
)
|
||
Excess tax deficiency related to stock-based awards
|
174
|
|
|
—
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Trade receivables, net
|
16,297
|
|
|
13,082
|
|
||
Inventories
|
(8,253
|
)
|
|
5,334
|
|
||
Prepaids and other current assets
|
1,938
|
|
|
1,377
|
|
||
Income taxes
|
372
|
|
|
(34
|
)
|
||
Trade payables
|
(5,193
|
)
|
|
(16,155
|
)
|
||
Accrued liabilities, including warranty obligations
|
(179
|
)
|
|
(2,678
|
)
|
||
Net cash provided by operating activities
|
17,185
|
|
|
6,825
|
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
||||
Purchase of marketable securities
|
(19,050
|
)
|
|
—
|
|
||
Proceeds from sale of assets of discontinued operations
|
—
|
|
|
110
|
|
||
Purchases of property, plant and equipment
|
(987
|
)
|
|
(1,941
|
)
|
||
Net cash used in investing activities
|
(20,037
|
)
|
|
(1,831
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from exercise of stock options
|
234
|
|
|
275
|
|
||
Excess tax deficiency related to stock-based awards
|
(174
|
)
|
|
—
|
|
||
Net cash provided by financing activities
|
60
|
|
|
275
|
|
||
|
|
|
|
||||
Effect of exchange rate changes on cash and cash equivalents
|
98
|
|
|
(106
|
)
|
||
Increase (decrease) in cash and cash equivalents
|
(2,694
|
)
|
|
5,163
|
|
||
Cash and cash equivalents:
|
|
|
|
||||
Beginning of period
|
40,979
|
|
|
23,207
|
|
||
End of period
|
$
|
38,285
|
|
|
$
|
28,370
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Cash paid for interest
|
$
|
12
|
|
|
$
|
16
|
|
Cash paid for income taxes, net
|
261
|
|
|
188
|
|
•
|
removes inconsistencies and weaknesses in revenue requirements;
|
•
|
provides a more robust framework for addressing revenue issues;
|
•
|
improves comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets;
|
•
|
provides more useful information to users of financial statements through improved disclosure requirements; and
|
•
|
simplifies the preparation of financial statements by reducing the number of requirements to which an entity must refer.
|
|
Facilities
Leases
|
||
Balance, December 31, 2013
|
$
|
831
|
|
Adjustments
|
—
|
|
|
Payments
|
(127
|
)
|
|
Balance, June 30, 2014
|
$
|
704
|
|
|
As of
|
||||||
|
June 30, 2014
|
|
December 31, 2013
|
||||
Finished goods
|
$
|
21,919
|
|
|
$
|
14,259
|
|
Parts and components
|
1,310
|
|
|
1,565
|
|
||
Total inventories
|
$
|
23,229
|
|
|
$
|
15,824
|
|
|
Estimated
Useful Life
(in years)
|
|
As of
|
||||||||
|
|
June 30, 2014
|
|
December 31, 2013
|
|||||||
Leasehold improvements
|
5
|
to
|
20
|
|
$
|
2,870
|
|
|
$
|
2,869
|
|
Computer software and equipment
|
3
|
to
|
7
|
|
40,172
|
|
|
35,554
|
|
||
Machinery and equipment
|
3
|
to
|
5
|
|
5,818
|
|
|
5,648
|
|
||
Furniture and fixtures
|
5
|
|
711
|
|
|
688
|
|
||||
Work in progress
|
N/A
|
|
394
|
|
|
4,281
|
|
||||
Total cost
|
|
|
|
|
49,965
|
|
|
49,040
|
|
||
Accumulated depreciation
|
|
|
|
|
(41,285
|
)
|
|
(40,541
|
)
|
||
Total property, plant and equipment, net
|
|
|
|
|
$
|
8,680
|
|
|
$
|
8,499
|
|
Balance, January 1, 2013
|
$
|
2,940
|
|
Currency exchange rate adjustment
|
(200
|
)
|
|
Balance, December 31, 2013
|
2,740
|
|
|
Currency exchange rate adjustment
|
6
|
|
|
Balance, June 30, 2014
|
$
|
2,746
|
|
|
Estimated
Useful Life
(in years)
|
|
As of
|
||||||||
|
|
June 30, 2014
|
|
December 31, 2013
|
|||||||
Other intangible assets:
|
|
|
|
|
|
|
|
||||
Indefinite-lived trademarks
|
N/A
|
|
$
|
9,052
|
|
|
$
|
9,052
|
|
||
Patents
|
8
|
to
|
16
|
|
18,154
|
|
|
18,154
|
|
||
|
|
|
|
|
27,206
|
|
|
27,206
|
|
||
Accumulated amortization - patents
|
|
|
|
|
(15,611
|
)
|
|
(14,591
|
)
|
||
Other intangible assets, net
|
|
|
|
|
$
|
11,595
|
|
|
$
|
12,615
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Patent amortization
|
$
|
510
|
|
|
$
|
512
|
|
|
$
|
1,020
|
|
|
$
|
1,025
|
|
|
As of
|
||||||
|
June 30, 2014
|
|
December 31, 2013
|
||||
Payroll and related liabilities
|
$
|
3,014
|
|
|
$
|
4,244
|
|
Other
|
5,108
|
|
|
4,879
|
|
||
Total accrued liabilities
|
$
|
8,122
|
|
|
$
|
9,123
|
|
•
|
Level 1 - observable inputs such as quoted prices (unadjusted) in active liquid markets for identical securities as of the reporting date;
|
•
|
Level 2 - other significant directly or indirectly observable inputs, including quoted prices for similar securities, interest rates, prepayment speeds and credit risk; or observable market prices in markets with insufficient volume and/or infrequent transactions; and
|
•
|
Level 3 - significant inputs that are generally unobservable inputs for which there is little or no market data available, including our own assumptions in determining fair value.
|
|
|
June 30, 2014
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Cash Equivalents
|
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
|
$
|
1,965
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,965
|
|
Commercial paper
|
|
—
|
|
|
9,498
|
|
|
—
|
|
|
9,498
|
|
||||
Variable-rate demand notes
|
|
—
|
|
|
8,000
|
|
|
—
|
|
|
8,000
|
|
||||
Total Cash Equivalents
|
|
1,965
|
|
|
17,498
|
|
|
—
|
|
|
19,463
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Available for Sale Securities
|
|
|
|
|
|
|
|
|
||||||||
Certificates of deposit
|
|
—
|
|
|
4,165
|
|
|
—
|
|
|
4,165
|
|
||||
Corporate bonds
|
|
—
|
|
|
7,888
|
|
|
—
|
|
|
7,888
|
|
||||
Commercial paper
|
|
—
|
|
|
6,997
|
|
|
—
|
|
|
6,997
|
|
||||
Total Available for Sale Securities
|
|
—
|
|
|
19,050
|
|
|
—
|
|
|
19,050
|
|
||||
Total assets measured at fair value
|
|
$
|
1,965
|
|
|
$
|
36,548
|
|
|
$
|
—
|
|
|
$
|
38,513
|
|
|
|
Six months ended June 30,
|
||||||
|
|
2014
|
|
2013
|
||||
Balance, beginning of period
|
|
$
|
1,638
|
|
|
$
|
2,492
|
|
Accruals
|
|
1,318
|
|
|
718
|
|
||
Adjustments
|
|
—
|
|
|
(186
|
)
|
||
Payments
|
|
(881
|
)
|
|
(862
|
)
|
||
Balance, end of period
|
|
$
|
2,075
|
|
|
$
|
2,162
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||
Shares used to calculate basic income per share
|
31,226
|
|
|
31,058
|
|
|
31,203
|
|
|
31,003
|
|
Dilutive effect of outstanding options, performance stock units and restricted stock units
|
372
|
|
|
372
|
|
|
383
|
|
|
357
|
|
Shares used to calculate diluted income per share
|
31,598
|
|
|
31,430
|
|
|
31,586
|
|
|
31,360
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||
Stock options
|
271
|
|
|
307
|
|
|
282
|
|
|
306
|
|
Performance stock units
|
151
|
|
|
75
|
|
|
84
|
|
|
88
|
|
|
Three months ended June 30,
|
||||||
|
2014
|
|
2013
|
||||
Net sales:
|
|
|
|
||||
Direct
|
$
|
32,355
|
|
|
$
|
25,314
|
|
Retail
|
15,039
|
|
|
10,175
|
|
||
Unallocated royalty income
|
1,152
|
|
|
753
|
|
||
Consolidated net sales
|
$
|
48,546
|
|
|
$
|
36,242
|
|
Contribution:
|
|
|
|
||||
Direct
|
$
|
3,889
|
|
|
$
|
508
|
|
Retail
|
1,325
|
|
|
140
|
|
||
Unallocated royalty income
|
1,152
|
|
|
753
|
|
||
Consolidated contribution
|
$
|
6,366
|
|
|
$
|
1,401
|
|
|
|
|
|
||||
Reconciliation of consolidated contribution to income
from continuing operations:
|
|
|
|
||||
Consolidated contribution
|
$
|
6,366
|
|
|
$
|
1,401
|
|
Amounts not directly related to segments:
|
|
|
|
||||
Operating expenses
|
(3,987
|
)
|
|
(3,125
|
)
|
||
Other income (expense), net
|
(45
|
)
|
|
124
|
|
||
Income tax (expense) benefit
|
(836
|
)
|
|
34,268
|
|
||
Income from continuing operations
|
$
|
1,498
|
|
|
$
|
32,668
|
|
|
Six months ended June 30,
|
||||||
|
2014
|
|
2013
|
||||
Net sales:
|
|
|
|
||||
Direct
|
$
|
83,091
|
|
|
$
|
67,949
|
|
Retail
|
35,142
|
|
|
25,309
|
|
||
Unallocated royalty income
|
2,217
|
|
|
2,198
|
|
||
Consolidated net sales
|
$
|
120,450
|
|
|
$
|
95,456
|
|
Contribution:
|
|
|
|
||||
Direct
|
$
|
14,242
|
|
|
$
|
7,217
|
|
Retail
|
3,834
|
|
|
2,100
|
|
||
Unallocated royalty income
|
2,217
|
|
|
2,198
|
|
||
Consolidated contribution
|
$
|
20,293
|
|
|
$
|
11,515
|
|
|
|
|
|
||||
Reconciliation of consolidated contribution to income
from continuing operations:
|
|
|
|
||||
Consolidated contribution
|
$
|
20,293
|
|
|
$
|
11,515
|
|
Amounts not directly related to segments:
|
|
|
|
||||
Operating expenses
|
(8,912
|
)
|
|
(7,245
|
)
|
||
Other income (expense), net
|
(105
|
)
|
|
7
|
|
||
Income tax (expense) benefit
|
(4,030
|
)
|
|
33,915
|
|
||
Income from continuing operations
|
$
|
7,246
|
|
|
$
|
38,192
|
|
|
Three months ended June 30,
|
|
Change
|
|||||||||||
|
2014
|
|
2013
|
|
$
|
|
%
|
|||||||
Net sales
|
$
|
48,546
|
|
|
$
|
36,242
|
|
|
$
|
12,304
|
|
|
33.9
|
%
|
Cost of sales
|
23,766
|
|
|
18,913
|
|
|
4,853
|
|
|
25.7
|
%
|
|||
Gross profit
|
24,780
|
|
|
17,329
|
|
|
7,451
|
|
|
43.0
|
%
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|||||||
Selling and marketing
|
15,690
|
|
|
13,768
|
|
|
1,922
|
|
|
14.0
|
%
|
|||
General and administrative
|
4,959
|
|
|
3,982
|
|
|
977
|
|
|
24.5
|
%
|
|||
Research and development
|
1,752
|
|
|
1,303
|
|
|
449
|
|
|
34.5
|
%
|
|||
Total operating expenses
|
22,401
|
|
|
19,053
|
|
|
3,348
|
|
|
17.6
|
%
|
|||
Operating income (loss)
|
2,379
|
|
|
(1,724
|
)
|
|
4,103
|
|
|
238.0
|
%
|
|||
Other income (expense):
|
|
|
|
|
|
|
|
|||||||
Interest income
|
16
|
|
|
—
|
|
|
16
|
|
|
|
|
|||
Interest expense
|
(5
|
)
|
|
(6
|
)
|
|
1
|
|
|
|
|
|||
Other
|
(56
|
)
|
|
130
|
|
|
(186
|
)
|
|
|
|
|||
Total other income (expense), net
|
(45
|
)
|
|
124
|
|
|
(169
|
)
|
|
|
|
|||
Income (loss) from continuing operations before income taxes
|
2,334
|
|
|
(1,600
|
)
|
|
3,934
|
|
|
|
|
|||
Income tax expense (benefit)
|
836
|
|
|
(34,268
|
)
|
|
35,104
|
|
|
|
||||
Income from continuing operations
|
1,498
|
|
|
32,668
|
|
|
(31,170
|
)
|
|
|
||||
Income (loss) from discontinued operations, net of income taxes
|
(941
|
)
|
|
195
|
|
|
(1,136
|
)
|
|
|
||||
Net income
|
$
|
557
|
|
|
$
|
32,863
|
|
|
$
|
(32,306
|
)
|
|
|
|
|
Six months ended June 30,
|
|
Change
|
|||||||||||
|
2014
|
|
2013
|
|
$
|
|
%
|
|||||||
Net sales
|
$
|
120,450
|
|
|
$
|
95,456
|
|
|
$
|
24,994
|
|
|
26.2
|
%
|
Cost of sales
|
57,189
|
|
|
47,433
|
|
|
9,756
|
|
|
20.6
|
%
|
|||
Gross profit
|
63,261
|
|
|
48,023
|
|
|
15,238
|
|
|
31.7
|
%
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|||||||
Selling and marketing
|
37,463
|
|
|
32,394
|
|
|
5,069
|
|
|
15.6
|
%
|
|||
General and administrative
|
10,762
|
|
|
8,929
|
|
|
1,833
|
|
|
20.5
|
%
|
|||
Research and development
|
3,655
|
|
|
2,430
|
|
|
1,225
|
|
|
50.4
|
%
|
|||
Total operating expenses
|
51,880
|
|
|
43,753
|
|
|
8,127
|
|
|
18.6
|
%
|
|||
Operating income
|
11,381
|
|
|
4,270
|
|
|
7,111
|
|
|
166.5
|
%
|
|||
Other income (expense):
|
|
|
|
|
|
|
|
|||||||
Interest income
|
24
|
|
|
1
|
|
|
23
|
|
|
|
||||
Interest expense
|
(12
|
)
|
|
(15
|
)
|
|
3
|
|
|
|
||||
Other
|
(117
|
)
|
|
21
|
|
|
(138
|
)
|
|
|
||||
Total other income (expense), net
|
(105
|
)
|
|
7
|
|
|
(112
|
)
|
|
|
||||
Income from continuing operations before income taxes
|
11,276
|
|
|
4,277
|
|
|
6,999
|
|
|
|
||||
Income tax expense (benefit)
|
4,030
|
|
|
(33,915
|
)
|
|
37,945
|
|
|
|
||||
Income from continuing operations
|
7,246
|
|
|
38,192
|
|
|
(30,946
|
)
|
|
|
||||
Loss from discontinued operations, net of income taxes
|
(1,315
|
)
|
|
(170
|
)
|
|
(1,145
|
)
|
|
|
||||
Net income
|
$
|
5,931
|
|
|
$
|
38,022
|
|
|
$
|
(32,091
|
)
|
|
|
|
Three months ended June 30,
|
|
Change
|
|||||||||||
|
2014
|
|
2013
|
|
$
|
|
%
|
|||||||
Net sales:
|
|
|
|
|
|
|
|
|
||||||
Direct
|
$
|
32,355
|
|
|
$
|
25,314
|
|
|
$
|
7,041
|
|
|
27.8
|
%
|
Retail
|
15,039
|
|
|
10,175
|
|
|
4,864
|
|
|
47.8
|
%
|
|||
Royalty income
|
1,152
|
|
|
753
|
|
|
399
|
|
|
53.0
|
%
|
|||
|
$
|
48,546
|
|
|
$
|
36,242
|
|
|
$
|
12,304
|
|
|
33.9
|
%
|
Cost of sales:
|
|
|
|
|
|
|
|
|
|
|
||||
Direct
|
$
|
12,389
|
|
|
$
|
10,721
|
|
|
$
|
1,668
|
|
|
15.6
|
%
|
Retail
|
11,377
|
|
|
8,192
|
|
|
3,185
|
|
|
38.9
|
%
|
|||
Royalty income
|
—
|
|
|
—
|
|
|
—
|
|
|
|
||||
|
$
|
23,766
|
|
|
$
|
18,913
|
|
|
$
|
4,853
|
|
|
25.7
|
%
|
Gross profit:
|
|
|
|
|
|
|
|
|
|
|
||||
Direct
|
$
|
19,966
|
|
|
$
|
14,593
|
|
|
$
|
5,373
|
|
|
36.8
|
%
|
Retail
|
3,662
|
|
|
1,983
|
|
|
1,679
|
|
|
84.7
|
%
|
|||
Royalty income
|
1,152
|
|
|
753
|
|
|
399
|
|
|
53.0
|
%
|
|||
|
$
|
24,780
|
|
|
$
|
17,329
|
|
|
$
|
7,451
|
|
|
43.0
|
%
|
Gross margin:
|
|
|
|
|
|
|
|
|
|
|||||
Direct
|
61.7
|
%
|
|
57.6
|
%
|
|
410
|
|
basis points
|
|||||
Retail
|
24.4
|
%
|
|
19.5
|
%
|
|
490
|
|
basis points
|
|
Six months ended June 30,
|
|
Change
|
|||||||||||
|
2014
|
|
2013
|
|
$
|
|
%
|
|||||||
Net sales:
|
|
|
|
|
|
|
|
|||||||
Direct
|
$
|
83,091
|
|
|
$
|
67,949
|
|
|
$
|
15,142
|
|
|
22.3
|
%
|
Retail
|
35,142
|
|
|
25,309
|
|
|
9,833
|
|
|
38.9
|
%
|
|||
Royalty income
|
2,217
|
|
|
2,198
|
|
|
19
|
|
|
0.9
|
%
|
|||
|
$
|
120,450
|
|
|
$
|
95,456
|
|
|
$
|
24,994
|
|
|
26.2
|
%
|
Cost of sales:
|
|
|
|
|
|
|
|
|||||||
Direct
|
$
|
30,807
|
|
|
$
|
27,879
|
|
|
$
|
2,928
|
|
|
10.5
|
%
|
Retail
|
26,382
|
|
|
19,554
|
|
|
6,828
|
|
|
34.9
|
%
|
|||
Royalty income
|
—
|
|
|
—
|
|
|
—
|
|
|
|
||||
|
$
|
57,189
|
|
|
$
|
47,433
|
|
|
$
|
9,756
|
|
|
20.6
|
%
|
Gross profit:
|
|
|
|
|
|
|
|
|||||||
Direct
|
$
|
52,284
|
|
|
$
|
40,070
|
|
|
$
|
12,214
|
|
|
30.5
|
%
|
Retail
|
8,760
|
|
|
5,755
|
|
|
3,005
|
|
|
52.2
|
%
|
|||
Royalty income
|
2,217
|
|
|
2,198
|
|
|
19
|
|
|
0.9
|
%
|
|||
|
$
|
63,261
|
|
|
$
|
48,023
|
|
|
$
|
15,238
|
|
|
31.7
|
%
|
Gross margin:
|
|
|
|
|
|
|
|
|||||||
Direct
|
62.9
|
%
|
|
59.0
|
%
|
|
390
|
|
basis points
|
|||||
Retail
|
24.9
|
%
|
|
22.7
|
%
|
|
220
|
|
basis points
|
Dollars in thousands
|
Three months ended June 30,
|
|
Change
|
||||
|
2014
|
|
2013
|
|
$
|
|
%
|
Selling and Marketing
|
$15,690
|
|
$13,768
|
|
$1,922
|
|
14.0%
|
As % of Net Sales
|
32.3%
|
|
38.0%
|
|
|
|
|
Dollars in thousands
|
Six months ended June 30,
|
|
Change
|
||||
|
2014
|
|
2013
|
|
$
|
|
%
|
Selling and Marketing
|
$37,463
|
|
$32,394
|
|
$5,069
|
|
15.6%
|
As % of Net Sales
|
31.1%
|
|
33.9%
|
|
|
|
|
Dollars in thousands
|
Three months ended June 30,
|
|
Change
|
||||
|
2014
|
|
2013
|
|
$
|
|
%
|
Media advertising
|
$8,182
|
|
$7,310
|
|
$872
|
|
11.9%
|
Dollars in thousands
|
Six months ended June 30,
|
|
Change
|
||||
|
2014
|
|
2013
|
|
$
|
|
%
|
Media advertising
|
$18,849
|
|
$17,274
|
|
$1,575
|
|
9.1%
|
Dollars in thousands
|
Three months ended June 30,
|
|
Change
|
||||
|
2014
|
|
2013
|
|
$
|
|
%
|
General and Administrative
|
$4,959
|
|
$3,982
|
|
$977
|
|
24.5%
|
As % of Net Sales
|
10.2%
|
|
11.0%
|
|
|
|
|
Dollars in thousands
|
Six months ended June 30,
|
|
Change
|
||||
|
2014
|
|
2013
|
|
$
|
|
%
|
General and Administrative
|
$10,762
|
|
$8,929
|
|
$1,833
|
|
20.5%
|
As % of Net Sales
|
8.9%
|
|
9.4%
|
|
|
|
|
Dollars in thousands
|
Three months ended June 30,
|
|
Change
|
||||
|
2014
|
|
2013
|
|
$
|
|
%
|
Research and Development
|
$1,752
|
|
$1,303
|
|
$449
|
|
34.5%
|
As % of Net Sales
|
3.6%
|
|
3.6%
|
|
|
|
|
Dollars in thousands
|
Six months ended June 30,
|
|
Change
|
||||
|
2014
|
|
2013
|
|
$
|
|
%
|
Research and Development
|
$3,655
|
|
$2,430
|
|
$1,225
|
|
50.4%
|
As % of Net Sales
|
3.0%
|
|
2.5%
|
|
|
|
|
Dollars in thousands
|
Three months ended June 30,
|
|
Change
|
||||
|
2014
|
|
2013
|
|
$
|
|
%
|
Income Tax Provision (Benefit)
|
$836
|
|
$(34,268)
|
|
$35,104
|
|
n/m
|
Effective tax rate
|
35.8%
|
|
n/m
|
|
|
|
|
Dollars in thousands
|
Six months ended June 30,
|
|
Change
|
||||
|
2014
|
|
2013
|
|
$
|
|
%
|
Income Tax Provision (Benefit)
|
$4,030
|
|
$(33,915)
|
|
$37,945
|
|
n/m
|
Effective tax rate
|
35.7%
|
|
n/m
|
|
|
|
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 1.
|
Legal Proceedings
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Period
|
|
(a)
Total Number of
Shares (or Units)
Purchased
(1)
|
(b)
Average
Price Paid
per Share (or Unit)
|
(c)
Total Number of
Shares (or Units)
Purchased as Part
of Publicly Announced Plans or Programs
|
(d)
Maximum Number
(or Approximate Dollar
Value) of Shares (or
Units) that May Yet Be Purchased Under the Plans or Programs
|
||
April 1 - April 30
|
|
1,688
|
$
|
8.33
|
|
—
|
—
|
May 1 - May 31
|
|
1,996
|
10.83
|
|
—
|
—
|
|
June 1 - June 30
|
|
1,998
|
11.09
|
|
—
|
—
|
|
Total
|
|
5,682
|
10.18
|
|
—
|
—
|
|
(1)
Consists of shares withheld from the vesting portion of a restricted stock unit award granted to Bruce M. Cazenave, our Chief Executive Officer. We will withhold from each monthly vesting portion of the award the number of shares sufficient to satisfy Mr. Cazenave's tax withholding obligation incident to such vesting, unless Mr. Cazenave should first elect to satisfy the tax obligation by cash payment to us. We do not have any publicly announced equity securities repurchase plans or programs.
|
Exhibit No.
|
|
Description
|
|
|
|
10.1
|
|
First Lease Modification Agreement, dated June 19, 2014, to the Office Lease by and between Nautilus, Inc. and Columbia Tech Center, L.L.C. dated July 25, 2011.
|
|
|
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
|
|
|
|
31.2
|
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
|
|
|
|
32.1
|
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) of the Securities and Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
101
|
|
The following financial statements from Nautilus, Inc.'s quarterly report on Form 10-Q for the three months ended June 30, 2014, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets (unaudited), (ii) Condensed Consolidated Statements of Operations (unaudited), (iii) Condensed Consolidated Statements of Comprehensive Income (unaudited), (iv) Condensed Consolidated Statements of Cash Flows (unaudited) and (v) Notes to Condensed Consolidated Financial Statements (unaudited).
|
|
N
AUTILUS
, I
NC
.
|
|
|
|
|
August 7, 2014
|
By:
|
/
S
/ Bruce M. Cazenave
|
|
|
Bruce M. Cazenave
|
|
|
Chief Executive Officer
(Principal Executive Officer)
|
|
N
AUTILUS
, I
NC
.
|
|
|
|
|
August 7, 2014
|
By:
|
/
S
/ Sidharth Nayar
|
|
|
Sidharth Nayar
|
|
|
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Nautilus, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses 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
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
August 7, 2014
|
By:
|
/s/ Bruce M. Cazenave
|
Date
|
|
Bruce M. Cazenave
|
|
|
Chief Executive Officer
(Principal Executive Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Nautilus, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses 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
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
August 7, 2014
|
By:
|
/s/ Sidharth Nayar
|
Date
|
|
Sidharth Nayar
|
|
|
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
August 7, 2014
|
By:
|
/s/ Bruce M. Cazenave
|
Date
|
|
Bruce M. Cazenave
|
|
|
Chief Executive Officer
(Principal Executive Officer) |
August 7, 2014
|
By:
|
/s/ Sidharth Nayar
|
Date
|
|
Sidharth Nayar
|
|
|
Chief Financial Officer
(Principal Financial and Accounting Officer) |