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FORM
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8-K
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Washington
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001-31321
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94-3002667
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(State or other jurisdiction of
incorporation)
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(Commission File Number)
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(I.R.S. Employer
Identification No.)
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☐
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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☐
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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☐
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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☐
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, no par value
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NLS
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New York Stock Exchange
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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Emerging growth company
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☐
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
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☐
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Item 2.02
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Results of Operations
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Item 9.01
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Financial Statements and Exhibits
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Nautilus, Inc. press release dated February 24, 2020.
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NAUTILUS, INC.
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(Registrant)
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February 24, 2020
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By:
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/s/ Aina E. Konold
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Date
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Aina E. Konold
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Chief Financial Officer
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(Principal Financial and Accounting Officer)
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Exhibit 99.1
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•
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Net Sales were $104.2 million, down 9.7% compared to $115.4 million. The 4.8% increase in the Retail Segment was offset by a 28.1% decline in the Direct Segment.
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•
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Operating Expenses decreased by 27.4% to $34.9 million compared to $48.0 million, primarily due to reductions in sales and marketing expenses, general and administrative costs, and research and development costs.
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•
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Operating Income increased by 21.4% to $3.3 million compared to $2.7 million.
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•
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Income from Continuing Operations increased to $3.7 million, or $0.12 per diluted share, compared to income from continuing operations of $1.5 million, or $0.05 per diluted share.
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•
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The tax rate for the fourth quarter was minus 25.8% primarily due to a true-up of an income tax benefit in the prior quarter.
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•
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EBITDA from continuing operations increased to $5.9 million compared to $5.0 million.
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•
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Net Sales were $35.9 million, down 28.1% from $49.9 million. Increased sales of Bowflex bikes and Max TotalTM were more than offset by lower Max Trainer® product sales.
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•
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Gross Margin was 49.9%, down from 58.7%, driven by unfavorable product mix and unfavorable overhead absorption related to the decrease in sales.
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•
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Operating Loss was $5.0 million compared to operating loss of $3.8 million. The increased loss primarily reflected lower net sales and lower gross margin rates partially offset by reductions in sales and marketing expenses. The Company optimized fitness-season advertising spend and focused on higher-returning media which resulted in a 42.7% reduction in advertising expense.
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•
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Net Sales were $67.5 million, up 4.8% from $64.4 million. Higher sales were driven primarily by SelectTech weights and Schwinn IC bikes as well as third quarter 2019 shipment delays that were recognized in the fourth quarter of 2019.
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•
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Gross Margin was 28.8%, down from 31.7%, driven primarily by unfavorable sales mix and higher tariffs.
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•
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Operating Income was $12.2 million, up 8.1% from $11.3 million. Lower gross margin dollars were more than offset by more efficient sales and marketing expenses, as well as reduced research and development costs.
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Three Months Ended December 31,
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Twelve Months Ended December 31,
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||||||||||||
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2019
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2018
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2019
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2018
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||||||||
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||||||||
Net sales
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$
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104,173
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$
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115,385
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$
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309,285
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$
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396,753
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Cost of sales
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66,016
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64,670
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198,702
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215,013
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||||
Gross profit
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38,157
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50,715
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110,583
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181,740
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Operating expenses:
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||||||||
Selling and marketing
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25,449
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36,438
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94,595
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115,920
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||||
General and administrative
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6,418
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7,486
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30,242
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28,226
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||||
Research and development
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3,000
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4,081
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14,282
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16,825
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Goodwill and intangible impairment charge
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—
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—
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72,008
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—
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Total operating expenses
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34,867
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48,005
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211,127
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160,971
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Operating income (loss)
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3,290
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2,710
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(100,544
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)
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20,769
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||||
Other (expense) income, net
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(378
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)
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(4
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)
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(1,288
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)
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232
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||||
Income (loss) from continuing operations before income taxes
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2,912
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2,706
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(101,832
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)
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21,001
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Income tax (benefit) expense
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(751
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)
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1,246
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(9,537
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)
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5,891
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Income (loss) from continuing operations
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3,663
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1,460
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(92,295
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)
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15,110
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Loss from discontinued operations, net of income taxes
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(176
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)
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(98
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)
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(505
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)
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(452
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)
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Net income (loss)
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$
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3,487
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$
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1,362
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$
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(92,800
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)
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$
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14,658
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||||||||
Basic income (loss) per share from continuing operations
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$
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0.12
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$
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0.05
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$
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(3.11
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)
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$
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0.50
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Basic loss per share from discontinued operations
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(0.01
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)
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—
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(0.02
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)
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(0.02
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)
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Basic net income (loss) per share(1)
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$
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0.12
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$
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0.05
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$
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(3.13
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)
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$
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0.49
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Diluted income (loss) per share from continuing operations
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$
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0.12
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$
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0.05
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$
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(3.11
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)
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$
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0.50
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Diluted loss per share from discontinued operations
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(0.01
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)
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—
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(0.02
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)
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(0.01
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)
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Diluted net income (loss) per share(1)
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$
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0.12
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$
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0.05
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$
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(3.13
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)
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$
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0.48
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||||||||
Shares used in per share calculations:
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||||||||
Basic
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29,756
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29,708
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29,684
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30,099
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Diluted
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29,756
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29,926
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29,684
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30,355
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(1) May not add due to rounding.
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Three Months Ended December 31,
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Change
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|||||||||||
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2019
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2018
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$
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%
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|||||||
Net sales:
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Direct
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$
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35,906
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$
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49,945
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$
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(14,039
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)
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(28.1
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)%
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Retail
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67,487
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64,424
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3,063
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4.8
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%
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Royalty
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780
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1,016
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(236
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)
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(23.2
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)%
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|||
|
$
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104,173
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$
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115,385
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|
$
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(11,212
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)
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(9.7
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)%
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|||||||
Operating (loss) income:
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|||||||
Direct
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$
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(5,000
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)
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$
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(3,802
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)
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$
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(1,198
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)
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(31.5
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)%
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Retail
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12,240
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11,320
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920
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8.1
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%
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|||
Unallocated corporate
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(3,950
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)
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(4,808
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)
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858
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17.8
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%
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|||
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$
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3,290
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$
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2,710
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$
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580
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21.4
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%
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Twelve Months Ended December 31,
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Change
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|||||||||||
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2019
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2018
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$
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%
|
|||||||
Net sales:
|
|
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|||||||
Direct
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$
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119,651
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$
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184,925
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|
$
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(65,274
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)
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(35.3
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)%
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Retail
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186,584
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|
208,092
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(21,508
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)
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(10.3
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)%
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|||
Royalty
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3,050
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3,736
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(686
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)
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(18.4
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)%
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|||
|
$
|
309,285
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|
|
$
|
396,753
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|
|
$
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(87,468
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)
|
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(22.0
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)%
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|
|
|
|
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|
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|
|||||||
Operating (loss) income:
|
|
|
|
|
|
|
|
|||||||
Direct
|
$
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(24,569
|
)
|
|
$
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6,865
|
|
|
$
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(31,434
|
)
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(457.9
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)%
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Retail
|
16,043
|
|
|
31,516
|
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(15,473
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)
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(49.1
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)%
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|||
Unallocated corporate
|
(92,018
|
)
|
|
(17,612
|
)
|
|
(74,406
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)
|
|
(422.5
|
)%
|
|||
|
$
|
(100,544
|
)
|
|
$
|
20,769
|
|
|
$
|
(121,313
|
)
|
|
(584.1
|
)%
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Assets
|
|
|
|
||||
|
|
|
|
||||
Cash and cash equivalents
|
$
|
11,070
|
|
|
$
|
38,125
|
|
Available-for-sale securities
|
—
|
|
|
25,392
|
|
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Trade receivables, net of allowances of $45 and $99
|
54,600
|
|
|
45,847
|
|
||
Inventories
|
54,768
|
|
|
68,465
|
|
||
Prepaids and other current assets
|
8,283
|
|
|
7,980
|
|
||
Income taxes receivable
|
472
|
|
|
5,653
|
|
||
Total current assets
|
129,193
|
|
|
191,462
|
|
||
Property, plant and equipment, net
|
22,755
|
|
|
22,216
|
|
||
Operating lease right-of-use assets
|
20,778
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|
|
—
|
|
||
Goodwill
|
—
|
|
|
63,452
|
|
||
Other intangible assets, net
|
43,243
|
|
|
55,240
|
|
||
Other assets
|
4,510
|
|
|
574
|
|
||
Total assets
|
$
|
220,479
|
|
|
$
|
332,944
|
|
|
|
|
|
||||
Liabilities and Shareholders' Equity
|
|
|
|
||||
|
|
|
|
||||
Trade payables
|
$
|
74,255
|
|
|
$
|
87,265
|
|
Accrued liabilities
|
7,633
|
|
|
8,370
|
|
||
Operating lease liabilities, current portion
|
3,720
|
|
|
—
|
|
||
Warranty obligations, current portion
|
3,100
|
|
|
3,213
|
|
||
Note payable, current portion, net of unamortized debt issuance costs of $0 and $7
|
—
|
|
|
15,993
|
|
||
Total current liabilities
|
88,708
|
|
|
114,841
|
|
||
Operating lease liabilities, non-current
|
18,982
|
|
|
—
|
|
||
Warranty obligations, non-current
|
2,617
|
|
|
2,362
|
|
||
Income taxes payable, non-current
|
3,676
|
|
|
3,427
|
|
||
Deferred income tax liabilities, non-current
|
1,783
|
|
|
11,888
|
|
||
Other long-term liabilities
|
46
|
|
|
1,837
|
|
||
Debt payable, non-current, net of unamortized debt issuance costs of $230 and $7
|
14,071
|
|
|
15,993
|
|
||
Shareholders' equity
|
90,596
|
|
|
182,596
|
|
||
Total liabilities and shareholders' equity
|
$
|
220,479
|
|
|
$
|
332,944
|
|
|
Three Months Ended December 31,
|
|
Twelve Months Ended December 31,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Income (loss) from continuing operations
|
$
|
3,663
|
|
|
$
|
1,460
|
|
|
$
|
(92,295
|
)
|
|
$
|
15,110
|
|
Interest expense, net
|
259
|
|
|
37
|
|
|
818
|
|
|
7
|
|
||||
Income tax (benefit) expense of continuing operations
|
(751
|
)
|
|
1,246
|
|
|
(9,537
|
)
|
|
5,891
|
|
||||
Depreciation and amortization
|
2,766
|
|
|
2,296
|
|
|
10,811
|
|
|
8,942
|
|
||||
Earnings (loss) before interest, taxes, depreciation and amortization (EBITDA) from continuing operations
|
$
|
5,937
|
|
|
$
|
5,039
|
|
|
$
|
(90,203
|
)
|
|
$
|
29,950
|
|