|
|
|
FORM
|
10-Q
|
|
|
☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
NAUTILUS, INC.
|
||
(Exact name of Registrant as specified in its charter)
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||
|
|
|
Washington
|
|
94-3002667
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock, no par value
|
NLS
|
New York Stock Exchange
|
|
|
|
|
|
Item 1.
|
|
||
Item 2.
|
|
||
Item 3.
|
|
||
Item 4.
|
|
||
|
|
|
|
|
|
|
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Item 1.
|
|
||
Item 1A.
|
|
||
Item 6.
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||
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|
As of
|
||||||
|
June 30, 2019
|
|
December 31, 2018
|
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
7,921
|
|
|
$
|
38,125
|
|
Available-for-sale securities
|
—
|
|
|
25,392
|
|
||
Trade receivables, net of allowances of $47 and $99
|
29,039
|
|
|
45,847
|
|
||
Inventories
|
51,981
|
|
|
68,465
|
|
||
Prepaids and other current assets
|
7,158
|
|
|
7,980
|
|
||
Income taxes receivable
|
3,042
|
|
|
5,653
|
|
||
Total current assets
|
99,141
|
|
|
191,462
|
|
||
Property, plant and equipment, net
|
22,340
|
|
|
22,216
|
|
||
Operating lease right-of-use assets
|
22,524
|
|
|
—
|
|
||
Goodwill
|
—
|
|
|
63,452
|
|
||
Other intangible assets, net
|
44,856
|
|
|
55,240
|
|
||
Other assets
|
4,406
|
|
|
574
|
|
||
Total assets
|
$
|
193,267
|
|
|
$
|
332,944
|
|
Liabilities and Shareholders' Equity
|
|
|
|
||||
Trade payables
|
$
|
31,540
|
|
|
$
|
87,265
|
|
Accrued liabilities
|
9,318
|
|
|
8,370
|
|
||
Operating lease liabilities, current portion
|
3,657
|
|
|
—
|
|
||
Warranty obligations, current portion
|
3,045
|
|
|
3,213
|
|
||
Note payable, current portion, net of unamortized debt issuance costs of $0 and $7
|
—
|
|
|
15,993
|
|
||
Total current liabilities
|
47,560
|
|
|
114,841
|
|
||
Operating lease liabilities, non-current
|
20,860
|
|
|
—
|
|
||
Warranty obligations, non-current
|
2,443
|
|
|
2,362
|
|
||
Income taxes payable, non-current
|
3,677
|
|
|
3,427
|
|
||
Deferred income tax liabilities, non-current
|
3,108
|
|
|
11,888
|
|
||
Other non-current liabilities
|
103
|
|
|
1,837
|
|
||
Debt payable, non-current, net of unamortized debt issuance costs of $262 and $7
|
20,600
|
|
|
15,993
|
|
||
Total liabilities
|
98,351
|
|
|
150,348
|
|
||
Commitments and contingencies (Note 17)
|
|
|
|
|
|
||
Shareholders' equity:
|
|
|
|
||||
Common stock - no par value, 75,000 shares authorized, 29,728 and
29,545 shares issued and outstanding
|
213
|
|
|
215
|
|
||
Retained earnings
|
95,629
|
|
|
183,290
|
|
||
Accumulated other comprehensive loss
|
(926
|
)
|
|
(909
|
)
|
||
Total shareholders' equity
|
94,916
|
|
|
182,596
|
|
||
Total liabilities and shareholders' equity
|
$
|
193,267
|
|
|
$
|
332,944
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net sales
|
$
|
59,004
|
|
|
$
|
75,498
|
|
|
$
|
143,404
|
|
|
$
|
190,311
|
|
Cost of sales
|
41,487
|
|
|
41,850
|
|
|
90,045
|
|
|
97,792
|
|
||||
Gross profit
|
17,517
|
|
|
33,648
|
|
|
53,359
|
|
|
92,519
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Selling and marketing
|
17,631
|
|
|
22,084
|
|
|
51,674
|
|
|
58,847
|
|
||||
General and administrative
|
9,443
|
|
|
6,327
|
|
|
17,098
|
|
|
13,237
|
|
||||
Research and development
|
3,849
|
|
|
4,035
|
|
|
8,160
|
|
|
8,536
|
|
||||
Goodwill and intangible impairment charge
|
72,008
|
|
|
—
|
|
|
72,008
|
|
|
—
|
|
||||
Total operating expenses
|
102,931
|
|
|
32,446
|
|
|
148,940
|
|
|
80,620
|
|
||||
Operating (loss) income
|
(85,414
|
)
|
|
1,202
|
|
|
(95,581
|
)
|
|
11,899
|
|
||||
Other (expense) income:
|
|
|
|
|
|
|
|
||||||||
Interest income
|
(3
|
)
|
|
294
|
|
|
162
|
|
|
566
|
|
||||
Interest expense
|
(223
|
)
|
|
(268
|
)
|
|
(428
|
)
|
|
(561
|
)
|
||||
Other, net
|
171
|
|
|
31
|
|
|
(222
|
)
|
|
18
|
|
||||
Total other (expense) income, net
|
(55
|
)
|
|
57
|
|
|
(488
|
)
|
|
23
|
|
||||
(Loss) income from continuing operations before income taxes
|
(85,469
|
)
|
|
1,259
|
|
|
(96,069
|
)
|
|
11,922
|
|
||||
Income tax (benefit) expense
|
(6,725
|
)
|
|
252
|
|
|
(8,841
|
)
|
|
2,775
|
|
||||
(Loss) income from continuing operations
|
(78,744
|
)
|
|
1,007
|
|
|
(87,228
|
)
|
|
9,147
|
|
||||
Discontinued operations:
|
|
|
|
|
|
|
|
||||||||
Loss from discontinued operations before income taxes
|
(51
|
)
|
|
(11
|
)
|
|
(65
|
)
|
|
(28
|
)
|
||||
Income tax expense of discontinued operations
|
73
|
|
|
68
|
|
|
150
|
|
|
132
|
|
||||
Loss from discontinued operations
|
(124
|
)
|
|
(79
|
)
|
|
(215
|
)
|
|
(160
|
)
|
||||
Net (loss) income
|
$
|
(78,868
|
)
|
|
$
|
928
|
|
|
$
|
(87,443
|
)
|
|
$
|
8,987
|
|
|
|
|
|
|
|
|
|
||||||||
Basic (loss) income per share from continuing operations
|
$
|
(2.65
|
)
|
|
$
|
0.03
|
|
|
$
|
(2.94
|
)
|
|
$
|
0.30
|
|
Basic loss per share from discontinued operations
|
—
|
|
|
—
|
|
|
(0.01
|
)
|
|
(0.01
|
)
|
||||
Basic net (loss) income per share(1)
|
$
|
(2.66
|
)
|
|
$
|
0.03
|
|
|
$
|
(2.95
|
)
|
|
$
|
0.30
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted (loss) income per share from continuing operations
|
$
|
(2.65
|
)
|
|
$
|
0.03
|
|
|
$
|
(2.94
|
)
|
|
$
|
0.30
|
|
Diluted loss per share from discontinued operations
|
—
|
|
|
—
|
|
|
(0.01
|
)
|
|
(0.01
|
)
|
||||
Diluted net (loss) income per share(1)
|
$
|
(2.66
|
)
|
|
$
|
0.03
|
|
|
$
|
(2.95
|
)
|
|
$
|
0.29
|
|
Shares used in per share calculations:
|
|
|
|
|
|
|
|
||||||||
Basic
|
29,678
|
|
|
30,193
|
|
|
29,626
|
|
|
30,253
|
|
||||
Diluted
|
29,678
|
|
|
30,476
|
|
|
29,626
|
|
|
30,533
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net (loss) income
|
$
|
(78,868
|
)
|
|
$
|
928
|
|
|
$
|
(87,443
|
)
|
|
$
|
8,987
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
|
|
||||||||
Unrealized (loss) gain on available-for-sale securities, net of income tax expense (benefit) of $1, $11, $6 and $(7)
|
(9
|
)
|
|
34
|
|
|
6
|
|
|
(3
|
)
|
||||
(Loss) gain on derivative securities, effective portion, net of income tax expense (benefit) of $(106), $4, $(139) and $32
|
(123
|
)
|
|
12
|
|
|
(223
|
)
|
|
156
|
|
||||
Foreign currency translation, net of income tax expense (benefit) of $(9), $3, $(64) and $0
|
72
|
|
|
(338
|
)
|
|
200
|
|
|
(455
|
)
|
||||
Other comprehensive (loss) income
|
(60
|
)
|
|
(292
|
)
|
|
(17
|
)
|
|
(302
|
)
|
||||
Comprehensive (loss) income
|
$
|
(78,928
|
)
|
|
$
|
636
|
|
|
$
|
(87,460
|
)
|
|
$
|
8,685
|
|
|
Common Stock
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Total Shareholders' Equity
|
|||||||||||
|
Shares
|
|
Amount
|
|
|
|
||||||||||||
Balances at December 31, 2018
|
29,545
|
|
|
$
|
215
|
|
|
$
|
183,290
|
|
|
$
|
(909
|
)
|
|
$
|
182,596
|
|
Net loss
|
—
|
|
|
—
|
|
|
(8,575
|
)
|
|
—
|
|
|
(8,575
|
)
|
||||
Unrealized gain on marketable securities, net of income tax expense of $5
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|
15
|
|
||||
Loss on derivative securities, effective portion, net of income tax benefit of $33
|
—
|
|
|
—
|
|
|
—
|
|
|
(100
|
)
|
|
(100
|
)
|
||||
Foreign currency translation adjustment,
net of income tax benefit of $55 |
—
|
|
|
—
|
|
|
—
|
|
|
128
|
|
|
128
|
|
||||
Stock-based compensation expense
|
—
|
|
|
(147
|
)
|
|
(218
|
)
|
|
—
|
|
|
(365
|
)
|
||||
Common stock issued under equity
compensation plan, net of shares withheld for tax payments |
48
|
|
|
(68
|
)
|
|
—
|
|
|
—
|
|
|
(68
|
)
|
||||
Balances at March 31, 2019
|
29,593
|
|
|
—
|
|
|
174,497
|
|
|
(866
|
)
|
|
173,631
|
|
||||
Net loss
|
—
|
|
|
—
|
|
|
(78,868
|
)
|
|
—
|
|
|
(78,868
|
)
|
||||
Unrealized loss on marketable securities, net of income tax expense of $1
|
—
|
|
|
—
|
|
|
—
|
|
|
(9
|
)
|
|
(9
|
)
|
||||
Loss on derivative securities, effective portion, net of income tax benefit of $106
|
—
|
|
|
—
|
|
|
—
|
|
|
(123
|
)
|
|
(123
|
)
|
||||
Foreign currency translation adjustment,
net of income tax benefit of $9 |
—
|
|
|
—
|
|
|
—
|
|
|
72
|
|
|
72
|
|
||||
Stock-based compensation expense
|
—
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
9
|
|
||||
Common stock issued under equity
compensation plan, net of shares withheld for tax payments |
87
|
|
|
36
|
|
|
—
|
|
|
—
|
|
|
36
|
|
||||
Common stock issued under employee stock purchase plan
|
48
|
|
|
168
|
|
|
—
|
|
|
—
|
|
|
168
|
|
||||
Balances at June 30, 2019
|
29,728
|
|
|
$
|
213
|
|
|
$
|
95,629
|
|
|
$
|
(926
|
)
|
|
$
|
94,916
|
|
|
Common Stock
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Total Shareholders' Equity
|
|||||||||||
|
Shares
|
|
Amount
|
|
|
|
||||||||||||
Balances at December 31, 2017
|
30,305
|
|
|
$
|
—
|
|
|
$
|
179,448
|
|
|
$
|
(259
|
)
|
|
$
|
179,189
|
|
Net income
|
—
|
|
|
—
|
|
|
8,059
|
|
|
—
|
|
|
8,059
|
|
||||
Unrealized loss on marketable securities, net of income tax benefit of $18
|
—
|
|
|
—
|
|
|
—
|
|
|
(37
|
)
|
|
(37
|
)
|
||||
Gain on derivative securities, effective portion, net of income tax expense of $28
|
—
|
|
|
—
|
|
|
—
|
|
|
144
|
|
|
144
|
|
||||
Foreign currency translation adjustment,
net of income tax benefit of $3 |
—
|
|
|
—
|
|
|
—
|
|
|
(117
|
)
|
|
(117
|
)
|
||||
Stock-based compensation expense
|
—
|
|
|
479
|
|
|
—
|
|
|
—
|
|
|
479
|
|
||||
Common stock issued under equity
compensation plan, net of shares withheld for tax payments |
67
|
|
|
(99
|
)
|
|
—
|
|
|
—
|
|
|
(99
|
)
|
||||
Repurchased shares
|
(211
|
)
|
|
(150
|
)
|
|
(2,568
|
)
|
|
—
|
|
|
(2,718
|
)
|
||||
Balances at March 31, 2018
|
30,161
|
|
|
230
|
|
|
184,939
|
|
|
(269
|
)
|
|
184,900
|
|
||||
Net income
|
—
|
|
|
—
|
|
|
928
|
|
|
—
|
|
|
928
|
|
||||
Unrealized gain on marketable securities, net of income tax expense of $11
|
—
|
|
|
—
|
|
|
—
|
|
|
34
|
|
|
34
|
|
||||
Gain on derivative securities, effective portion, net of income tax expense of $4
|
—
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|
12
|
|
||||
Foreign currency translation adjustment,
net of income tax expense of $3 |
—
|
|
|
—
|
|
|
—
|
|
|
(338
|
)
|
|
(338
|
)
|
||||
Stock-based compensation expense
|
—
|
|
|
268
|
|
|
—
|
|
|
—
|
|
|
268
|
|
||||
Common stock issued under equity
compensation plan, net of shares withheld for tax payments |
87
|
|
|
(198
|
)
|
|
—
|
|
|
—
|
|
|
(198
|
)
|
||||
Common stock issued under employee stock purchase plan
|
20
|
|
|
232
|
|
|
—
|
|
|
—
|
|
|
232
|
|
||||
Repurchased shares
|
(31
|
)
|
|
(70
|
)
|
|
(178
|
)
|
|
—
|
|
|
(248
|
)
|
||||
Balances at June 30, 2018
|
30,237
|
|
|
$
|
462
|
|
|
$
|
185,689
|
|
|
$
|
(561
|
)
|
|
$
|
185,590
|
|
|
Six Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
Cash flows from operating activities:
|
|
|
|
||||
(Loss) income from continuing operations
|
$
|
(87,228
|
)
|
|
$
|
9,147
|
|
Loss from discontinued operations
|
(215
|
)
|
|
(160
|
)
|
||
Net (loss) income
|
(87,443
|
)
|
|
8,987
|
|
||
Adjustments to reconcile net (loss) income to cash (used in) provided by
|
|
|
|
||||
operating activities:
|
|
|
|
||||
Depreciation and amortization
|
5,192
|
|
|
4,468
|
|
||
Provision (benefit) for allowance for doubtful accounts
|
52
|
|
|
(39
|
)
|
||
Inventory lower-of-cost-or-market/NRV adjustments
|
491
|
|
|
179
|
|
||
Stock-based compensation (benefit) expense
|
(356
|
)
|
|
747
|
|
||
Loss on asset dispositions
|
536
|
|
|
1
|
|
||
Goodwill and intangible impairment charge
|
72,008
|
|
|
—
|
|
||
Deferred income taxes, net of valuation allowance
|
(9,372
|
)
|
|
1,323
|
|
||
Other
|
(108
|
)
|
|
23
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Trade receivables
|
16,755
|
|
|
17,506
|
|
||
Inventories
|
16,457
|
|
|
10,821
|
|
||
Prepaids and other assets
|
2,329
|
|
|
(734
|
)
|
||
Income taxes receivable
|
2,611
|
|
|
(4,115
|
)
|
||
Trade payables
|
(56,234
|
)
|
|
(20,659
|
)
|
||
Accrued liabilities and other liabilities, including warranty obligations
|
(134
|
)
|
|
(1,919
|
)
|
||
Net cash (used in) provided by operating activities
|
(37,216
|
)
|
|
16,589
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of available-for-sale securities
|
—
|
|
|
(29,522
|
)
|
||
Proceeds from sales and maturities of available-for-sale securities
|
25,271
|
|
|
26,815
|
|
||
Purchases of property, plant and equipment
|
(3,874
|
)
|
|
(4,228
|
)
|
||
Purchases of other investments in non-controlled affiliates
|
(3,500
|
)
|
|
—
|
|
||
Net cash provided by (used in) investing activities
|
17,897
|
|
|
(6,935
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from long-term debt
|
529
|
|
|
—
|
|
||
Payments on long-term debt
|
(11,667
|
)
|
|
(8,000
|
)
|
||
Payments for stock repurchases
|
—
|
|
|
(3,127
|
)
|
||
Proceeds from employee stock purchases
|
168
|
|
|
—
|
|
||
Proceeds from exercise of stock options
|
75
|
|
|
492
|
|
||
Tax payments related to stock award issuances
|
(107
|
)
|
|
(396
|
)
|
||
Net cash used in financing activities
|
(11,002
|
)
|
|
(11,031
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
117
|
|
|
(587
|
)
|
||
Decrease in cash and cash equivalents
|
(30,204
|
)
|
|
(1,964
|
)
|
||
Cash and cash equivalents:
|
|
|
|
||||
Beginning of period
|
38,125
|
|
|
27,893
|
|
||
End of period
|
$
|
7,921
|
|
|
$
|
25,929
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Cash paid for interest
|
$
|
677
|
|
|
$
|
558
|
|
Cash (received) paid for income taxes, net
|
(2,324
|
)
|
|
6,366
|
|
||
Supplemental disclosure of non-cash investing activities:
|
|
|
|
||||
Capital expenditures incurred but not yet paid
|
$
|
537
|
|
|
$
|
437
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Product sales
|
|
$
|
56,326
|
|
|
$
|
71,470
|
|
|
$
|
136,458
|
|
|
$
|
181,220
|
|
Extended warranties and services
|
|
1,168
|
|
|
1,737
|
|
|
3,637
|
|
|
5,219
|
|
||||
Other(1)
|
|
1,510
|
|
|
2,291
|
|
|
3,309
|
|
|
3,872
|
|
||||
Net sales
|
|
$
|
59,004
|
|
|
$
|
75,498
|
|
|
$
|
143,404
|
|
|
$
|
190,311
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
United States
|
|
$
|
48,897
|
|
|
$
|
65,498
|
|
|
$
|
119,085
|
|
|
$
|
169,079
|
|
Canada
|
|
3,557
|
|
|
3,283
|
|
|
11,486
|
|
|
9,066
|
|
||||
All other
|
|
6,550
|
|
|
6,717
|
|
|
12,833
|
|
|
12,166
|
|
||||
Net sales
|
|
$
|
59,004
|
|
|
$
|
75,498
|
|
|
$
|
143,404
|
|
|
$
|
190,311
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Balance, beginning of period
|
$
|
479
|
|
|
$
|
693
|
|
|
$
|
816
|
|
|
$
|
1,084
|
|
Cash additions
|
351
|
|
|
304
|
|
|
512
|
|
|
993
|
|
||||
Revenue recognition
|
(268
|
)
|
|
(249
|
)
|
|
(766
|
)
|
|
(1,329
|
)
|
||||
Balance, end of period
|
$
|
562
|
|
|
$
|
748
|
|
|
$
|
562
|
|
|
$
|
748
|
|
|
Measurement Alternative - No Readily Determinable Fair Value
|
||
Other assets
|
$
|
3,500
|
|
|
|
|
|
•
|
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, 2019
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Cash Equivalents
|
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3
|
|
Total cash equivalents
|
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||
Derivatives
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts
|
|
—
|
|
|
62
|
|
|
—
|
|
|
62
|
|
||||
Total derivatives
|
|
—
|
|
|
62
|
|
|
—
|
|
|
62
|
|
||||
Total assets measured at fair value
|
|
$
|
3
|
|
|
$
|
62
|
|
|
$
|
—
|
|
|
$
|
65
|
|
|
|
December 31, 2018
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Cash Equivalents
|
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
|
$
|
7,646
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,646
|
|
Total cash equivalents
|
|
7,646
|
|
|
—
|
|
|
—
|
|
|
7,646
|
|
||||
Available-for-Sale Securities
|
|
|
|
|
|
|
|
|
||||||||
Certificates of deposit(1)
|
|
—
|
|
|
10,379
|
|
|
—
|
|
|
10,379
|
|
||||
Corporate bonds
|
|
—
|
|
|
7,522
|
|
|
—
|
|
|
7,522
|
|
||||
U.S. government bonds
|
|
—
|
|
|
7,491
|
|
|
—
|
|
|
7,491
|
|
||||
Total available-for-sale securities
|
|
—
|
|
|
25,392
|
|
|
—
|
|
|
25,392
|
|
||||
Derivatives
|
|
|
|
|
|
|
|
|
||||||||
Interest rate swap contract
|
|
—
|
|
|
363
|
|
|
—
|
|
|
363
|
|
||||
Foreign currency forward contracts
|
|
—
|
|
|
240
|
|
|
—
|
|
|
240
|
|
||||
Total derivatives
|
|
—
|
|
|
603
|
|
|
—
|
|
|
603
|
|
||||
Total assets measured at fair value
|
|
$
|
7,646
|
|
|
$
|
25,995
|
|
|
$
|
—
|
|
|
$
|
33,641
|
|
|
|
Balance Sheet Classification
|
|
As of
|
||||||
|
|
|
June 30, 2019
|
|
December 31, 2018
|
|||||
Derivative instruments designated as cash flow hedges:
|
|
|
|
|
|
|
||||
Interest rate swap contract
|
|
Prepaids and other current assets
|
|
$
|
—
|
|
|
$
|
291
|
|
|
|
Other assets
|
|
—
|
|
|
72
|
|
||
|
|
|
|
$
|
—
|
|
|
$
|
363
|
|
|
|
|
|
|
|
|
||||
Derivative instruments not designated as cash flow hedges:
|
|
|
|
|
|
|
||||
Foreign currency forward contracts
|
|
Prepaids and other current assets
|
|
$
|
—
|
|
|
$
|
240
|
|
|
|
Accrued liabilities
|
|
62
|
|
|
—
|
|
||
|
|
|
|
$
|
62
|
|
|
$
|
240
|
|
|
|
Statement of Operations Classification
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|||||||||
Derivative instruments designated as cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
||||||||
(Loss) income recognized in other comprehensive (loss) income before reclassifications
|
|
---
|
|
$
|
(93
|
)
|
|
$
|
54
|
|
|
$
|
(128
|
)
|
|
$
|
214
|
|
Income reclassified from accumulated other comprehensive (loss) income to earnings for the effective portion
|
|
Interest expense
|
|
44
|
|
|
54
|
|
|
125
|
|
|
75
|
|
||||
Income tax expense
|
|
Income tax (benefit) expense
|
|
(14
|
)
|
|
(12
|
)
|
|
(30
|
)
|
|
(17
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Derivative instruments not designated as cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) recognized in earnings
|
|
Other, net
|
|
$
|
218
|
|
|
$
|
(895
|
)
|
|
$
|
(287
|
)
|
|
$
|
(1,924
|
)
|
Income tax (expense) benefit
|
|
Income tax (benefit) expense
|
|
(32
|
)
|
|
204
|
|
|
69
|
|
|
448
|
|
|
As of
|
||||||
|
June 30, 2019
|
|
December 31, 2018
|
||||
Finished goods
|
$
|
46,363
|
|
|
$
|
63,257
|
|
Parts and components
|
5,618
|
|
|
5,208
|
|
||
Total inventories
|
$
|
51,981
|
|
|
$
|
68,465
|
|
|
Estimated
Useful Life
(in years)
|
|
As of
|
||||||||
|
|
June 30, 2019
|
|
December 31, 2018
|
|||||||
Automobiles
|
5
|
|
$
|
23
|
|
|
$
|
23
|
|
||
Leasehold improvements
|
4
|
to
|
20
|
|
3,831
|
|
|
3,782
|
|
||
Computer software and equipment
|
2
|
to
|
7
|
|
23,073
|
|
|
23,776
|
|
||
Machinery and equipment
|
3
|
to
|
5
|
|
17,565
|
|
|
16,756
|
|
||
Furniture and fixtures
|
5
|
to
|
20
|
|
2,832
|
|
|
2,827
|
|
||
Work in progress(1)
|
N/A
|
|
3,305
|
|
|
1,590
|
|
||||
Total cost
|
|
|
|
|
50,629
|
|
|
48,754
|
|
||
Accumulated depreciation
|
|
|
|
|
(28,289
|
)
|
|
(26,538
|
)
|
||
Total property, plant and equipment, net
|
|
|
|
|
$
|
22,340
|
|
|
$
|
22,216
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Depreciation expense
|
$
|
1,632
|
|
|
$
|
1,244
|
|
|
$
|
3,307
|
|
|
$
|
2,873
|
|
|
Direct
|
|
Retail
|
|
Total
|
||||||
Balance, January 1, 2018
|
$
|
2,335
|
|
|
$
|
59,695
|
|
|
$
|
62,030
|
|
Currency exchange rate adjustment
|
(185
|
)
|
|
5
|
|
|
(180
|
)
|
|||
Business acquisition
|
1,602
|
|
|
—
|
|
|
1,602
|
|
|||
Balance, December 31, 2018
|
3,752
|
|
|
59,700
|
|
|
63,452
|
|
|||
Currency exchange rate adjustment
|
55
|
|
|
—
|
|
|
55
|
|
|||
Goodwill impairment charge
|
(3,807
|
)
|
|
(59,700
|
)
|
|
(63,507
|
)
|
|||
Balance, June 30, 2019
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Estimated
Useful Life
(in years)
|
|
As of
|
||||||||
|
|
June 30, 2019
|
|
December 31, 2018
|
|||||||
Indefinite-lived trademarks(1)
|
N/A
|
|
$
|
14,752
|
|
|
$
|
23,252
|
|
||
Definite-lived trademarks
|
5
|
to
|
15
|
|
2,850
|
|
|
2,850
|
|
||
Patents
|
7
|
to
|
24
|
|
14,243
|
|
|
14,243
|
|
||
Customer relationships
|
10
|
to
|
15
|
|
24,700
|
|
|
24,700
|
|
||
|
|
|
|
|
56,545
|
|
|
65,045
|
|
||
Accumulated amortization - definite-lived intangible assets
|
|
|
|
|
(11,689
|
)
|
|
(9,805
|
)
|
||
Other intangible assets, net
|
|
|
|
|
$
|
44,856
|
|
|
$
|
55,240
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Amortization expense
|
$
|
1,074
|
|
|
$
|
785
|
|
|
$
|
1,884
|
|
|
$
|
1,595
|
|
Remainder of 2019
|
$
|
1,610
|
|
2020
|
3,198
|
|
|
2021
|
3,168
|
|
|
2022
|
3,168
|
|
|
2023
|
3,168
|
|
|
Thereafter
|
15,792
|
|
|
|
$
|
30,104
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||
|
June 30, 2019
|
|
June 30, 2019
|
||||
Operating lease expense
|
$
|
1,138
|
|
|
$
|
2,257
|
|
|
As of
|
||
|
June 30, 2019
|
||
2019 - remaining
|
$
|
2,318
|
|
2020
|
4,691
|
|
|
2021
|
4,717
|
|
|
2022
|
4,567
|
|
|
2023
|
3,813
|
|
|
Thereafter
|
8,081
|
|
|
Total undiscounted lease payments
|
28,187
|
|
|
Less imputed interest
|
(3,670
|
)
|
|
Total lease liabilities
|
$
|
24,517
|
|
|
As of
|
||
|
December 31, 2018
|
||
Year ending:
|
|
||
2019
|
$
|
5,366
|
|
2020
|
5,279
|
|
|
2021
|
4,147
|
|
|
2022
|
2,729
|
|
|
2023
|
1,698
|
|
|
Thereafter
|
2,647
|
|
|
Total minimum lease payments
|
$
|
21,866
|
|
|
As of
|
||||||
|
June 30, 2019
|
|
December 31, 2018
|
||||
Payroll and related liabilities
|
$
|
4,440
|
|
|
$
|
3,620
|
|
Other
|
4,878
|
|
|
4,750
|
|
||
Total accrued liabilities
|
$
|
9,318
|
|
|
$
|
8,370
|
|
|
|
Six Months Ended June 30,
|
||||||
|
|
2019
|
|
2018
|
||||
Balance, beginning of period
|
|
$
|
5,575
|
|
|
$
|
6,117
|
|
Accruals
|
|
2,703
|
|
|
1,834
|
|
||
Payments
|
|
(2,790
|
)
|
|
(2,249
|
)
|
||
Balance, end of period
|
|
$
|
5,488
|
|
|
$
|
5,702
|
|
|
Unrealized Gain (Loss) on Available-for-Sale Securities
|
|
Gain (Loss) on Derivative Securities
|
|
Foreign Currency Translation Adjustments
|
|
Accumulated Other Comprehensive Income (Loss)
|
||||||||
Balance, March 31, 2019
|
$
|
9
|
|
|
$
|
123
|
|
|
$
|
(998
|
)
|
|
$
|
(866
|
)
|
Current period other comprehensive income (loss) before reclassifications
|
3
|
|
|
(93
|
)
|
|
72
|
|
|
(18
|
)
|
||||
Amounts reclassified from accumulated other comprehensive (loss) income
|
(12
|
)
|
|
(30
|
)
|
|
—
|
|
|
(42
|
)
|
||||
Net other comprehensive (loss) income during period
|
(9
|
)
|
|
(123
|
)
|
|
72
|
|
|
(60
|
)
|
||||
Balance, June 30, 2019
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(926
|
)
|
|
$
|
(926
|
)
|
|
Unrealized Gain (Loss) on Available-for-Sale Securities
|
|
Gain (Loss) on Derivative Securities
|
|
Foreign Currency Translation Adjustments
|
|
Accumulated Other Comprehensive Income (Loss)
|
||||||||
Balance, January 1, 2019
|
$
|
(6
|
)
|
|
$
|
223
|
|
|
$
|
(1,126
|
)
|
|
$
|
(909
|
)
|
Current period other comprehensive income (loss) before reclassifications
|
19
|
|
|
(128
|
)
|
|
200
|
|
|
91
|
|
||||
Amounts reclassified from accumulated other comprehensive (loss) income
|
(13
|
)
|
|
(95
|
)
|
|
—
|
|
|
(108
|
)
|
||||
Net other comprehensive income (loss) during period
|
6
|
|
|
(223
|
)
|
|
200
|
|
|
(17
|
)
|
||||
Balance, June 30, 2019
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(926
|
)
|
|
$
|
(926
|
)
|
|
|
|
|
|
|
|
|
|
Unrealized Gain (Loss) on Available-for-Sale Securities
|
|
Gain (Loss) on Derivative Securities
|
|
Foreign Currency Translation Adjustments
|
|
Accumulated Other Comprehensive Income (Loss)
|
||||||||
Balance, March 31, 2018
|
$
|
(101
|
)
|
|
$
|
360
|
|
|
$
|
(528
|
)
|
|
$
|
(269
|
)
|
Current period other comprehensive income (loss) before reclassifications
|
34
|
|
|
54
|
|
|
(338
|
)
|
|
(250
|
)
|
||||
Amounts reclassified from accumulated other comprehensive (loss) income
|
—
|
|
|
(42
|
)
|
|
—
|
|
|
(42
|
)
|
||||
Net other comprehensive income (loss) during period
|
34
|
|
|
12
|
|
|
(338
|
)
|
|
(292
|
)
|
||||
Balance, June 30, 2018
|
$
|
(67
|
)
|
|
$
|
372
|
|
|
$
|
(866
|
)
|
|
$
|
(561
|
)
|
|
Unrealized Loss on Available-for-Sale Securities
|
|
Gain (Loss) on Derivative Securities
|
|
Foreign Currency Translation Adjustments
|
|
Accumulated Other Comprehensive Income (Loss)
|
||||||||
Balance, January 1, 2018
|
$
|
(64
|
)
|
|
$
|
216
|
|
|
$
|
(411
|
)
|
|
$
|
(259
|
)
|
Current period other comprehensive (loss) income before reclassifications
|
(3
|
)
|
|
214
|
|
|
(455
|
)
|
|
(244
|
)
|
||||
Amounts reclassified from accumulated other comprehensive (loss) income
|
—
|
|
|
(58
|
)
|
|
—
|
|
|
(58
|
)
|
||||
Net other comprehensive (loss) income during period
|
(3
|
)
|
|
156
|
|
|
(455
|
)
|
|
(302
|
)
|
||||
Balance, June 30, 2018
|
$
|
(67
|
)
|
|
$
|
372
|
|
|
$
|
(866
|
)
|
|
$
|
(561
|
)
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
Number of Shares
|
|
Repurchased Amount
|
|
Average Price Per Share
|
|||||
December 31, 2018
|
|
75,813
|
|
|
$
|
1,008,652
|
|
|
$
|
13.30
|
|
March 31, 2019
|
|
—
|
|
|
—
|
|
|
—
|
|
||
June 30, 2019
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Totals to date
|
|
75,813
|
|
|
$
|
1,008,652
|
|
|
$
|
13.30
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Shares used to calculate basic income (loss) per share
|
29,678
|
|
|
30,193
|
|
|
29,626
|
|
|
30,253
|
|
Dilutive effect of outstanding stock options, performance stock units and restricted stock units
|
—
|
|
|
283
|
|
|
—
|
|
|
280
|
|
Shares used to calculate diluted income (loss) per share
|
29,678
|
|
|
30,476
|
|
|
29,626
|
|
|
30,533
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Stock options
|
7
|
|
|
—
|
|
|
17
|
|
|
—
|
|
Restricted stock units
|
1
|
|
|
—
|
|
|
29
|
|
|
—
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Stock options
|
94
|
|
|
5
|
|
|
104
|
|
|
11
|
|
Restricted stock units
|
305
|
|
|
—
|
|
|
227
|
|
|
2
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net sales:
|
|
|
|
|
|
|
|
||||||||
Direct
|
$
|
20,834
|
|
|
$
|
34,824
|
|
|
$
|
67,548
|
|
|
$
|
106,025
|
|
Retail
|
37,453
|
|
|
39,185
|
|
|
74,274
|
|
|
82,178
|
|
||||
Royalty
|
717
|
|
|
1,489
|
|
|
1,582
|
|
|
2,108
|
|
||||
Consolidated net sales
|
$
|
59,004
|
|
|
$
|
75,498
|
|
|
$
|
143,404
|
|
|
$
|
190,311
|
|
Contribution:
|
|
|
|
|
|
|
|
||||||||
Direct
|
$
|
(6,334
|
)
|
|
$
|
739
|
|
|
$
|
(10,876
|
)
|
|
$
|
12,030
|
|
Retail
|
(247
|
)
|
|
3,568
|
|
|
(969
|
)
|
|
7,489
|
|
||||
Royalty
|
717
|
|
|
1,488
|
|
|
1,582
|
|
|
2,105
|
|
||||
Consolidated contribution
|
$
|
(5,864
|
)
|
|
$
|
5,795
|
|
|
$
|
(10,263
|
)
|
|
$
|
21,624
|
|
|
|
|
|
|
|
|
|
||||||||
Reconciliation of consolidated contribution to (loss) income from continuing operations:
|
|
|
|
|
|
|
|
||||||||
Consolidated contribution
|
$
|
(5,864
|
)
|
|
$
|
5,795
|
|
|
$
|
(10,263
|
)
|
|
$
|
21,624
|
|
Amounts not directly related to segments:
|
|
|
|
|
|
|
|
||||||||
Operating expenses
|
(79,550
|
)
|
|
(4,593
|
)
|
|
(85,318
|
)
|
|
(9,725
|
)
|
||||
Other expense, net
|
(55
|
)
|
|
57
|
|
|
(488
|
)
|
|
23
|
|
||||
Income tax benefit (expense)
|
6,725
|
|
|
(252
|
)
|
|
8,841
|
|
|
(2,775
|
)
|
||||
(Loss) income from continuing operations
|
$
|
(78,744
|
)
|
|
$
|
1,007
|
|
|
$
|
(87,228
|
)
|
|
$
|
9,147
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Amazon.com
|
20.9
|
%
|
|
12.3
|
%
|
|
12.1
|
%
|
|
*
|
|
Dick's Sporting Goods
|
*
|
|
11.0
|
%
|
|
*
|
|
10.6
|
%
|
|
Three Months Ended June 30,
|
|
Change
|
|||||||||||
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
Net sales
|
$
|
59,004
|
|
|
$
|
75,498
|
|
|
$
|
(16,494
|
)
|
|
(21.8
|
)%
|
Cost of sales
|
41,487
|
|
|
41,850
|
|
|
(363
|
)
|
|
(0.9
|
)%
|
|||
Gross profit
|
17,517
|
|
|
33,648
|
|
|
(16,131
|
)
|
|
(47.9
|
)%
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|||||||
Selling and marketing
|
17,631
|
|
|
22,084
|
|
|
(4,453
|
)
|
|
(20.2
|
)%
|
|||
General and administrative
|
9,443
|
|
|
6,327
|
|
|
3,116
|
|
|
49.2
|
%
|
|||
Research and development
|
3,849
|
|
|
4,035
|
|
|
(186
|
)
|
|
(4.6
|
)%
|
|||
Goodwill and intangible impairment charge
|
72,008
|
|
|
—
|
|
|
72,008
|
|
|
—
|
%
|
|||
Total operating expenses
|
102,931
|
|
|
32,446
|
|
|
70,485
|
|
|
217.2
|
%
|
|||
Operating (loss) income
|
(85,414
|
)
|
|
1,202
|
|
|
(86,616
|
)
|
|
(7,206.0
|
)%
|
|||
Other income (expense):
|
|
|
|
|
|
|
|
|||||||
Interest income
|
(3
|
)
|
|
294
|
|
|
(297
|
)
|
|
|
||||
Interest expense
|
(223
|
)
|
|
(268
|
)
|
|
45
|
|
|
|
||||
Other, net
|
171
|
|
|
31
|
|
|
140
|
|
|
|
||||
Total other (expense) income, net
|
(55
|
)
|
|
57
|
|
|
(112
|
)
|
|
|
||||
(Loss) income from continuing operations before income taxes
|
(85,469
|
)
|
|
1,259
|
|
|
(86,728
|
)
|
|
|
||||
Income tax (benefit) expense
|
(6,725
|
)
|
|
252
|
|
|
(6,977
|
)
|
|
|
||||
(Loss) income from continuing operations
|
(78,744
|
)
|
|
1,007
|
|
|
(79,751
|
)
|
|
|
||||
Loss from discontinued operations, net of taxes
|
(124
|
)
|
|
(79
|
)
|
|
(45
|
)
|
|
|
||||
Net (loss) income
|
$
|
(78,868
|
)
|
|
$
|
928
|
|
|
$
|
(79,796
|
)
|
|
|
|
Six Months Ended June 30,
|
|
Change
|
|||||||||||
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
Net sales
|
$
|
143,404
|
|
|
$
|
190,311
|
|
|
$
|
(46,907
|
)
|
|
(24.6
|
)%
|
Cost of sales
|
90,045
|
|
|
97,792
|
|
|
(7,747
|
)
|
|
(7.9
|
)%
|
|||
Gross profit
|
53,359
|
|
|
92,519
|
|
|
(39,160
|
)
|
|
(42.3
|
)%
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|||||||
Selling and marketing
|
51,674
|
|
|
58,847
|
|
|
(7,173
|
)
|
|
(12.2
|
)%
|
|||
General and administrative
|
17,098
|
|
|
13,237
|
|
|
3,861
|
|
|
29.2
|
%
|
|||
Research and development
|
8,160
|
|
|
8,536
|
|
|
(376
|
)
|
|
(4.4
|
)%
|
|||
Goodwill and intangible impairment charge
|
72,008
|
|
|
—
|
|
|
72,008
|
|
|
—
|
%
|
|||
Total operating expenses
|
148,940
|
|
|
80,620
|
|
|
68,320
|
|
|
84.7
|
%
|
|||
Operating (loss) income
|
(95,581
|
)
|
|
11,899
|
|
|
(107,480
|
)
|
|
(903.3
|
)%
|
|||
Other (expense) income:
|
|
|
|
|
|
|
|
|||||||
Interest income
|
162
|
|
|
566
|
|
|
(404
|
)
|
|
|
||||
Interest expense
|
(428
|
)
|
|
(561
|
)
|
|
133
|
|
|
|
||||
Other, net
|
(222
|
)
|
|
18
|
|
|
(240
|
)
|
|
|
||||
Total other (expense) income, net
|
(488
|
)
|
|
23
|
|
|
(511
|
)
|
|
|
||||
(Loss) income from continuing operations before income taxes
|
(96,069
|
)
|
|
11,922
|
|
|
(107,991
|
)
|
|
|
||||
Income tax (benefit) expense
|
(8,841
|
)
|
|
2,775
|
|
|
(11,616
|
)
|
|
|
||||
(Loss) income from continuing operations
|
(87,228
|
)
|
|
9,147
|
|
|
(96,375
|
)
|
|
|
||||
Loss from discontinued operations, net of taxes
|
(215
|
)
|
|
(160
|
)
|
|
(55
|
)
|
|
|
||||
Net (loss) income
|
$
|
(87,443
|
)
|
|
$
|
8,987
|
|
|
$
|
(96,430
|
)
|
|
|
|
Three Months Ended June 30,
|
|
Change
|
|||||||||||
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
Net sales:
|
|
|
|
|
|
|
|
|||||||
Direct
|
$
|
20,834
|
|
|
$
|
34,824
|
|
|
$
|
(13,990
|
)
|
|
(40.2
|
)%
|
Retail
|
37,453
|
|
|
39,185
|
|
|
(1,732
|
)
|
|
(4.4
|
)%
|
|||
Royalty
|
717
|
|
|
1,489
|
|
|
(772
|
)
|
|
(51.8
|
)%
|
|||
|
$
|
59,004
|
|
|
$
|
75,498
|
|
|
$
|
(16,494
|
)
|
|
(21.8
|
)%
|
Cost of sales:
|
|
|
|
|
|
|
|
|||||||
Direct
|
$
|
11,807
|
|
|
$
|
14,073
|
|
|
$
|
(2,266
|
)
|
|
(16.1
|
)%
|
Retail
|
29,680
|
|
|
27,776
|
|
|
1,904
|
|
|
6.9
|
%
|
|||
Royalty
|
—
|
|
|
1
|
|
|
(1
|
)
|
|
—
|
%
|
|||
|
$
|
41,487
|
|
|
$
|
41,850
|
|
|
$
|
(363
|
)
|
|
(0.9
|
)%
|
Gross profit:
|
|
|
|
|
|
|
|
|||||||
Direct
|
$
|
9,027
|
|
|
$
|
20,751
|
|
|
$
|
(11,724
|
)
|
|
(56.5
|
)%
|
Retail
|
7,773
|
|
|
11,409
|
|
|
(3,636
|
)
|
|
(31.9
|
)%
|
|||
Royalty
|
717
|
|
|
1,488
|
|
|
(771
|
)
|
|
(51.8
|
)%
|
|||
|
$
|
17,517
|
|
|
$
|
33,648
|
|
|
$
|
(16,131
|
)
|
|
(47.9
|
)%
|
Gross margin:
|
|
|
|
|
|
|
|
|||||||
Direct
|
43.3
|
%
|
|
59.6
|
%
|
|
(1,630
|
)
|
basis points
|
|||||
Retail
|
20.8
|
%
|
|
29.1
|
%
|
|
(830
|
)
|
basis points
|
|
Six Months Ended June 30,
|
|
Change
|
|||||||||||
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
Net sales:
|
|
|
|
|
|
|
|
|||||||
Direct
|
$
|
67,548
|
|
|
$
|
106,025
|
|
|
$
|
(38,477
|
)
|
|
(36.3
|
)%
|
Retail
|
74,274
|
|
|
82,178
|
|
|
(7,904
|
)
|
|
(9.6
|
)%
|
|||
Royalty
|
1,582
|
|
|
2,108
|
|
|
(526
|
)
|
|
(25.0
|
)%
|
|||
|
$
|
143,404
|
|
|
$
|
190,311
|
|
|
$
|
(46,907
|
)
|
|
(24.6
|
)%
|
Cost of sales:
|
|
|
|
|
|
|
|
|||||||
Direct
|
$
|
32,125
|
|
|
$
|
40,429
|
|
|
$
|
(8,304
|
)
|
|
(20.5
|
)%
|
Retail
|
57,920
|
|
|
57,360
|
|
|
560
|
|
|
1.0
|
%
|
|||
Royalty
|
—
|
|
|
3
|
|
|
(3
|
)
|
|
(100.0
|
)%
|
|||
|
$
|
90,045
|
|
|
$
|
97,792
|
|
|
$
|
(7,747
|
)
|
|
(7.9
|
)%
|
Gross profit:
|
|
|
|
|
|
|
|
|||||||
Direct
|
$
|
35,423
|
|
|
$
|
65,596
|
|
|
$
|
(30,173
|
)
|
|
(46.0
|
)%
|
Retail
|
16,354
|
|
|
24,818
|
|
|
(8,464
|
)
|
|
(34.1
|
)%
|
|||
Royalty
|
1,582
|
|
|
2,105
|
|
|
(523
|
)
|
|
(24.8
|
)%
|
|||
|
$
|
53,359
|
|
|
$
|
92,519
|
|
|
$
|
(39,160
|
)
|
|
(42.3
|
)%
|
Gross margin:
|
|
|
|
|
|
|
|
|||||||
Direct
|
52.4
|
%
|
|
61.9
|
%
|
|
(950
|
)
|
basis points
|
|||||
Retail
|
22.0
|
%
|
|
30.2
|
%
|
|
(820
|
)
|
basis points
|
|
Three Months Ended June 30,
|
|
Change
|
|||||||||||
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
Direct net sales:
|
|
|
|
|
|
|
|
|||||||
Cardio products(1)
|
$
|
16,083
|
|
|
$
|
29,464
|
|
|
$
|
(13,381
|
)
|
|
(45.4
|
)%
|
Strength products(2)
|
4,751
|
|
|
5,360
|
|
|
(609
|
)
|
|
(11.4
|
)%
|
|||
|
20,834
|
|
|
34,824
|
|
|
(13,990
|
)
|
|
(40.2
|
)%
|
|||
Retail net sales:
|
|
|
|
|
|
|
|
|||||||
Cardio products(1)
|
26,045
|
|
|
30,412
|
|
|
(4,367
|
)
|
|
(14.4
|
)%
|
|||
Strength products(2)
|
11,408
|
|
|
8,773
|
|
|
2,635
|
|
|
30.0
|
%
|
|||
|
37,453
|
|
|
39,185
|
|
|
(1,732
|
)
|
|
(4.4
|
)%
|
|||
|
|
|
|
|
|
|
|
|||||||
Royalty
|
717
|
|
|
1,489
|
|
|
(772
|
)
|
|
(51.8
|
)%
|
|||
|
$
|
59,004
|
|
|
$
|
75,498
|
|
|
$
|
(16,494
|
)
|
|
(21.8
|
)%
|
|
Six Months Ended June 30,
|
|
Change
|
|||||||||||
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
Direct net sales:
|
|
|
|
|
|
|
|
|||||||
Cardio products(1)
|
$
|
55,690
|
|
|
$
|
93,673
|
|
|
$
|
(37,983
|
)
|
|
(40.5
|
)%
|
Strength products(2)
|
11,858
|
|
|
12,352
|
|
|
(494
|
)
|
|
(4.0
|
)%
|
|||
|
67,548
|
|
|
106,025
|
|
|
(38,477
|
)
|
|
(36.3
|
)%
|
|||
Retail net sales:
|
|
|
|
|
|
|
|
|||||||
Cardio products(1)
|
56,741
|
|
|
66,622
|
|
|
(9,881
|
)
|
|
(14.8
|
)%
|
|||
Strength products(2)
|
17,533
|
|
|
15,556
|
|
|
1,977
|
|
|
12.7
|
%
|
|||
|
74,274
|
|
|
82,178
|
|
|
(7,904
|
)
|
|
(9.6
|
)%
|
|||
|
|
|
|
|
|
|
|
|||||||
Royalty
|
1,582
|
|
|
2,108
|
|
|
(526
|
)
|
|
(25.0
|
)%
|
|||
|
$
|
143,404
|
|
|
$
|
190,311
|
|
|
$
|
(46,907
|
)
|
|
(24.6
|
)%
|
|
|
|
|
|
|
|
|
|||||||
(1) Cardio products include: Max Trainer®, TreadClimber®, HVT™, LateralX®, Zero Runner®, treadmills, exercise bikes and ellipticals.
|
||||||||||||||
(2) Strength products include: home gyms, selectorized dumbbells, kettlebell weights and accessories.
|
Dollars in thousands
|
Three Months Ended June 30,
|
|
Change
|
||||
|
2019
|
|
2018
|
|
$
|
|
%
|
Selling and marketing
|
$17,631
|
|
$22,084
|
|
$(4,453)
|
|
(20.2)%
|
As % of net sales
|
29.9%
|
|
29.3%
|
|
|
|
|
Dollars in thousands
|
Six Months Ended June 30,
|
|
Change
|
||||
|
2019
|
|
2018
|
|
$
|
|
%
|
Selling and marketing
|
$51,674
|
|
$58,847
|
|
$(7,173)
|
|
(12.2)%
|
As % of net sales
|
36.0%
|
|
30.9%
|
|
|
|
|
Dollars in thousands
|
Three Months Ended June 30,
|
|
Change
|
||||
|
2019
|
|
2018
|
|
$
|
|
%
|
Media advertising
|
$6,553
|
|
$12,082
|
|
$(5,529)
|
|
(45.8)%
|
Dollars in thousands
|
Six Months Ended June 30,
|
|
Change
|
||||
|
2019
|
|
2018
|
|
$
|
|
%
|
Media advertising
|
$26,255
|
|
$33,368
|
|
$(7,113)
|
|
(21.3)%
|
Dollars in thousands
|
Three Months Ended June 30,
|
|
Change
|
||||
|
2019
|
|
2018
|
|
$
|
|
%
|
General and administrative
|
$9,443
|
|
$6,327
|
|
$3,116
|
|
49.2%
|
As % of net sales
|
16.0%
|
|
8.4%
|
|
|
|
|
Dollars in thousands
|
Six Months Ended June 30,
|
|
Change
|
||||
|
2019
|
|
2018
|
|
$
|
|
%
|
General and administrative
|
$17,098
|
|
$13,237
|
|
$3,861
|
|
29.2%
|
As % of net sales
|
11.9%
|
|
7.0%
|
|
|
|
|
Dollars in thousands
|
Three Months Ended June 30,
|
|
Change
|
||||
|
2019
|
|
2018
|
|
$
|
|
%
|
Research and development
|
$3,849
|
|
$4,035
|
|
$(186)
|
|
(4.6)%
|
As % of net sales
|
6.5%
|
|
5.3%
|
|
|
|
|
Dollars in thousands
|
Six Months Ended June 30,
|
|
Change
|
||||
|
2019
|
|
2018
|
|
$
|
|
%
|
Research and development
|
$8,160
|
|
$8,536
|
|
$(376)
|
|
(4.4)%
|
As % of net sales
|
5.7%
|
|
4.5%
|
|
|
|
|
Dollars in thousands
|
Three Months Ended June 30,
|
|
Change
|
||||
|
2019
|
|
2018
|
|
$
|
|
%
|
Income tax (benefit) expense
|
$(6,725)
|
|
$252
|
|
$(6,977)
|
|
*
|
Effective tax rate
|
7.9%
|
|
20.0%
|
|
|
|
|
Dollars in thousands
|
Six Months Ended June 30,
|
|
Change
|
||||
|
2019
|
|
2018
|
|
$
|
|
%
|
Income tax (benefit) expense
|
$(8,841)
|
|
$2,775
|
|
$(11,616)
|
|
*
|
Effective tax rate
|
9.2%
|
|
23.3%
|
|
|
|
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 1.
|
Legal Proceedings
|
Exhibit No.
|
|
Description
|
|
|
|
10.1*
|
|
Employment Agreement dated July 8, 2019, by and between Nautilus, Inc. and James Barr IV
|
|
|
|
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
|
|
|
|
|
|
Certification of Corporate Controller pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
|
|
|
|
|
|
Certification of Chief Executive Officer and Corporate Controller 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.INS
|
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
NAUTILUS, INC.
|
|
|
|
(Registrant)
|
|
|
|
|
|
August 8, 2019
|
|
By:
|
/S/ M. Carl Johnson, III
|
Date
|
|
|
M. Carl Johnson, III
|
|
|
|
Principal Executive Officer
|
|
|
NAUTILUS, INC.
|
|
|
|
(Registrant)
|
|
|
|
|
|
August 8, 2019
|
|
By:
|
/S/ Sarah A. Jones
|
Date
|
|
|
Sarah A. Jones
|
|
|
|
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 8, 2019
|
|
By:
|
/s/ M. Carl Johnson, III
|
Date
|
|
|
M. Carl Johnson, III
|
|
|
|
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 8, 2019
|
|
By:
|
/s/ Sarah A. Jones
|
Date
|
|
|
Sarah A. Jones
|
|
|
|
Principal Financial and Accounting Officer
|
August 8, 2019
|
|
By:
|
/s/ M. Carl Johnson, III
|
Date
|
|
|
M. Carl Johnson, III
|
|
|
|
Principal Executive Officer
|
August 8, 2019
|
|
By:
|
/s/ Sarah A. Jones
|
Date
|
|
|
Sarah A. Jones
|
|
|
|
Principal Financial and Accounting Officer
|