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FORM
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10-K
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☒
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ANNUAL 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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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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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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Large accelerated filer
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[ ]
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Accelerated Filer
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[x]
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Non-accelerated filer
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[ ]
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Smaller reporting company
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☒
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Emerging growth company
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☐
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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Item 16.
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•
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Enhancing our product lines by designing personalized connected-fitness equipment that meets or exceeds the high expectations of our existing and new customers;
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•
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Continuing our investment in innovation, with a particular focus on expanding the reach of our digital platform, JRNY;
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•
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Creatively marketing our equipment, both directly to consumers and through our Retail customers, while leveraging our well-known brand names;
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•
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Increasing our international Retail sales and distribution; and
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•
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Maximizing available royalty revenues from the licensing of our brands and intellectual property.
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•
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Nautilus® is our corporate umbrella brand and is also used to differentiate certain specialized cardio, treadmills, ellipticals and bike products.
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•
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Our Bowflex® brand represents a highly-regarded line of fitness equipment comprised of both cardio and strength products, including the Max Total®, Max Trainer®, TreadClimber® and LateralX® specialized cardio machines, PowerRod® and Revolution® home gyms and SelectTech® dumbbells and kettlebells.
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•
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Our Octane Fitness® brand is known for its innovation around low-impact cardio products, including the perfection of the traditional elliptical machine, along with the creation of new categories of exercise, including the xRide® recumbent elliptical, the LateralX® elliptical, and the Zero Runner® specialized cardio machine.
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•
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Our Schwinn® brand is known for its popular line of exercise bikes, including the Airdyne® air bike, as well as Schwinn-branded treadmills and ellipticals.
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•
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Our JRNYTM brand is our personalized connected-fitness digital platform featuring artificial intelligence powered, adaptive coaching to create truly personalized home workouts.
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2019
|
|
2018
|
||
Amazon.com
|
|
15.2
|
%
|
|
11.5
|
%
|
Dick's Sporting Goods
|
|
11.7
|
%
|
|
13.8
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%
|
•
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Introduction and market acceptance of new products and sales trends affecting specific existing products;
|
•
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Variations in product selling prices and costs and the mix of products sold;
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•
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Size and timing of Retail customer orders, which, in turn, often depend upon the success of our customers' businesses or specific products;
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•
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Changes in the market conditions for consumer fitness equipment;
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•
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Changes in macroeconomic factors;
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•
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Availability of consumer credit;
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•
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Timing and availability of products coming from our offshore contract manufacturing suppliers;
|
•
|
Seasonality of markets, which vary from quarter-to-quarter and are influenced by outside factors such as overall consumer confidence and the availability and cost of television advertising time;
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•
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Effectiveness of our media and advertising programs;
|
•
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Customer consolidation in our Retail segment, or the bankruptcy of any of our larger Retail customers;
|
•
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Restructuring charges;
|
•
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Goodwill and other intangible asset impairment charges; and
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•
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Legal and contract settlement charges.
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•
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Consolidating research and development, logistics, product sourcing, human resources, information technology and other aspects of the combined operations, where appropriate;
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•
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Coordinating sales, distribution and marketing functions and strategies across new and existing channels of trade;
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•
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Establishing or expanding manufacturing, research and development, sales, distribution and marketing functions in order to accommodate newly-acquired businesses or product lines or rationalizing these functions to take advantage of synergies;
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•
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Minimizing the diversion of management’s attention from ongoing business concerns;
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•
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Potential loss of key employees of the acquired business;
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•
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Coordinating geographically separate operations; and
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•
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Regulatory and legal issues relating to the integration of legacy and newly-acquired businesses.
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•
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Unexpected increases in manufacturing and repair costs;
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•
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Interruptions in shipments if our contract manufacturer is unable to complete production;
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•
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Inability to completely control the quality of finished products;
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•
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Inability to completely control delivery schedules;
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•
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Changes in our contract manufacturer's business models or operations;
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•
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Potential increases in our negotiated product costs as a result of fluctuations in currency exchange rates;
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•
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Impact of the global market and economic conditions on the financial stability of our contract manufacturers and their ability to operate without requesting earlier payment terms or letters of credit;
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•
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Potential lack of adequate capacity to manufacture all or a part of the products we require; and
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•
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Potential unauthorized reproduction or counterfeiting of our products.
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Company
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Location
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|
Primary Function(s)
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|
Owned or
Leased
|
Nautilus
|
|
Washington
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|
Corporate headquarters, customer call center, retail store and R&D facility
|
|
Leased
|
Octane
|
|
Minnesota
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Design, sales, service and R&D facility
|
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Leased
|
Nautilus
|
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Ohio
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Warehouse and distribution facility
|
|
Leased
|
Nautilus
|
|
Oregon
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Warehouse and distribution facility
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Leased
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Nautilus
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China
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Quality assurance and software engineering offices
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Leased
|
Octane
|
|
Netherlands
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Sales and service office
|
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Leased
|
|
|
|
|
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Year Ended December 31,
|
|
|
|
|
|||||||||
|
2019
|
|
2018
|
|
Change
|
|
% Change
|
|||||||
Net sales
|
$
|
309,285
|
|
|
$
|
396,753
|
|
|
$
|
(87,468
|
)
|
|
(22.0
|
)%
|
Cost of sales
|
198,702
|
|
|
215,013
|
|
|
(16,311
|
)
|
|
(7.6
|
)%
|
|||
Gross profit
|
110,583
|
|
|
181,740
|
|
|
(71,157
|
)
|
|
(39.2
|
)%
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|||||||
Selling and marketing
|
94,595
|
|
|
115,920
|
|
|
(21,325
|
)
|
|
(18.4
|
)%
|
|||
General and administrative
|
30,242
|
|
|
28,226
|
|
|
2,016
|
|
|
7.1
|
%
|
|||
Research and development
|
14,282
|
|
|
16,825
|
|
|
(2,543
|
)
|
|
(15.1
|
)%
|
|||
Goodwill and intangible impairment charge
|
72,008
|
|
|
—
|
|
|
72,008
|
|
|
—
|
%
|
|||
Total operating expenses
|
211,127
|
|
|
160,971
|
|
|
50,156
|
|
|
31.2
|
%
|
|||
Operating (loss) income
|
(100,544
|
)
|
|
20,769
|
|
|
(121,313
|
)
|
|
(584.1
|
)%
|
|||
Other income (expense):
|
|
|
|
|
|
|
|
|
||||||
Interest income
|
162
|
|
|
1,044
|
|
|
(882
|
)
|
|
|
||||
Interest expense
|
(980
|
)
|
|
(1,051
|
)
|
|
71
|
|
|
|
||||
Other, net
|
(470
|
)
|
|
239
|
|
|
(709
|
)
|
|
|
||||
Total other (expense) income, net
|
(1,288
|
)
|
|
232
|
|
|
(1,520
|
)
|
|
|
||||
(Loss) income from continuing operations before income taxes
|
(101,832
|
)
|
|
21,001
|
|
|
(122,833
|
)
|
|
|
||||
Income tax (benefit) expense
|
(9,537
|
)
|
|
5,891
|
|
|
(15,428
|
)
|
|
|
||||
(Loss) income from continuing operations
|
(92,295
|
)
|
|
15,110
|
|
|
(107,405
|
)
|
|
|
||||
Loss from discontinued operations, net of income taxes
|
(505
|
)
|
|
(452
|
)
|
|
(53
|
)
|
|
|
||||
Net (loss) income
|
$
|
(92,800
|
)
|
|
$
|
14,658
|
|
|
$
|
(107,458
|
)
|
|
|
Dollars in thousands
|
Year Ended December 31,
|
|
Change
|
||||||||||
|
2019
|
|
2018
|
|
$
|
|
%
|
||||||
Selling and marketing
|
$
|
94,595
|
|
|
$
|
115,920
|
|
|
$
|
(21,325
|
)
|
|
(18.4)%
|
As % of net sales
|
30.6%
|
|
29.2%
|
|
|
|
|
Dollars in thousands
|
Year Ended December 31,
|
|
Change
|
||||||||||
|
2019
|
|
2018
|
|
$
|
|
%
|
||||||
Media advertising
|
$
|
44,916
|
|
|
$
|
65,017
|
|
|
$
|
(20,101
|
)
|
|
(30.9)%
|
Dollars in thousands
|
Year Ended December 31,
|
|
Change
|
||||||||||
|
2019
|
|
2018
|
|
$
|
|
%
|
||||||
General and administrative
|
$
|
30,242
|
|
|
$
|
28,226
|
|
|
$
|
2,016
|
|
|
7.1%
|
As % of net sales
|
9.8%
|
|
7.1%
|
|
|
|
|
Dollars in thousands
|
Year Ended December 31,
|
|
Change
|
||||||||||
|
2019
|
|
2018
|
|
$
|
|
%
|
||||||
Research and development
|
$
|
14,282
|
|
|
$
|
16,825
|
|
|
$
|
(2,543
|
)
|
|
(15.1)%
|
As % of net sales
|
4.6%
|
|
4.2%
|
|
|
|
|
Dollars in thousands
|
Year Ended December 31,
|
|
Change
|
||||||||||
|
2019
|
|
2018
|
|
$
|
|
%
|
||||||
Income tax (benefit) expense
|
$
|
(9,537
|
)
|
|
$
|
5,891
|
|
|
$
|
(15,428
|
)
|
|
(261.9)%
|
Effective tax rate
|
9.4%
|
|
28.1%
|
|
|
|
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
|
|
|
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
11,070
|
|
|
$
|
38,125
|
|
Available-for-sale securities
|
—
|
|
|
25,392
|
|
||
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
|
|
|
—
|
|
||
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
|
|
||
Total liabilities
|
129,883
|
|
|
150,348
|
|
||
Commitments and contingencies (Note 24)
|
|
|
|
|
|
||
Shareholders' equity:
|
|
|
|
||||
Common stock - no par value, 75,000 shares authorized, 29,781 and 29,545 shares issued and outstanding
|
1,261
|
|
|
215
|
|
||
Retained earnings
|
90,272
|
|
|
183,290
|
|
||
Accumulated other comprehensive loss
|
(937
|
)
|
|
(909
|
)
|
||
Total shareholders' equity
|
90,596
|
|
|
182,596
|
|
||
Total liabilities and shareholders' equity
|
$
|
220,479
|
|
|
$
|
332,944
|
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
|
|
|
||||
Net sales
|
$
|
309,285
|
|
|
$
|
396,753
|
|
Cost of sales
|
198,702
|
|
|
215,013
|
|
||
Gross profit
|
110,583
|
|
|
181,740
|
|
||
Operating expenses:
|
|
|
|
||||
Selling and marketing
|
94,595
|
|
|
115,920
|
|
||
General and administrative
|
30,242
|
|
|
28,226
|
|
||
Research and development
|
14,282
|
|
|
16,825
|
|
||
Goodwill and intangible impairment charge
|
72,008
|
|
|
—
|
|
||
Total operating expenses
|
211,127
|
|
|
160,971
|
|
||
Operating (loss) income
|
(100,544
|
)
|
|
20,769
|
|
||
Other income (expense):
|
|
|
|
||||
Interest income
|
162
|
|
|
1,044
|
|
||
Interest expense
|
(980
|
)
|
|
(1,051
|
)
|
||
Other, net
|
(470
|
)
|
|
239
|
|
||
Total other (expense) income, net
|
(1,288
|
)
|
|
232
|
|
||
(Loss) income from continuing operations before income taxes
|
(101,832
|
)
|
|
21,001
|
|
||
Income tax (benefit) expense
|
(9,537
|
)
|
|
5,891
|
|
||
(Loss) income from continuing operations
|
(92,295
|
)
|
|
15,110
|
|
||
Discontinued operations:
|
|
|
|
||||
Loss from discontinued operations before income taxes
|
(206
|
)
|
|
(206
|
)
|
||
Income tax expense of discontinued operations
|
299
|
|
|
246
|
|
||
Loss from discontinued operations
|
(505
|
)
|
|
(452
|
)
|
||
Net (loss) income
|
$
|
(92,800
|
)
|
|
$
|
14,658
|
|
|
|
|
|
||||
Basic (loss) income per share from continuing operations
|
$
|
(3.11
|
)
|
|
$
|
0.50
|
|
Basic loss per share from discontinued operations
|
(0.02
|
)
|
|
(0.02
|
)
|
||
Basic net (loss) income per share(1)
|
$
|
(3.13
|
)
|
|
$
|
0.49
|
|
|
|
|
|
||||
Diluted (loss) income per share from continuing operations
|
$
|
(3.11
|
)
|
|
$
|
0.50
|
|
Diluted loss per share from discontinued operations
|
(0.02
|
)
|
|
(0.01
|
)
|
||
Diluted net (loss) income per share(1)
|
$
|
(3.13
|
)
|
|
$
|
0.48
|
|
Shares used in per share calculations:
|
|
|
|
||||
Basic
|
29,684
|
|
|
30,099
|
|
||
Diluted
|
29,684
|
|
|
30,355
|
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
|
|
|
||||
Net (loss) income
|
$
|
(92,800
|
)
|
|
$
|
14,658
|
|
Other comprehensive income (loss):
|
|
|
|
||||
Unrealized gain on marketable securities, net of income tax expense of $6 and $13
|
6
|
|
|
58
|
|
||
(Loss) gain on derivative securities, effective portion, net of income tax benefit of $139 and $17
|
(223
|
)
|
|
7
|
|
||
Foreign currency translation adjustment, net of income tax benefit of $27 and $2
|
189
|
|
|
(715
|
)
|
||
Other comprehensive loss
|
(28
|
)
|
|
(650
|
)
|
||
Comprehensive (loss) income
|
$
|
(92,828
|
)
|
|
$
|
14,008
|
|
|
|
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
|
|
—
|
|
|
—
|
|
|
14,658
|
|
|
—
|
|
|
14,658
|
|
||||
Unrealized loss on marketable securities, net of income tax expense of $13
|
|
—
|
|
|
—
|
|
|
—
|
|
|
58
|
|
|
58
|
|
||||
Gain on derivative securities, effective portion, net of income tax benefit of $17
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
7
|
|
||||
Foreign currency translation adjustment, net of income tax benefit of $2
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(715
|
)
|
|
(715
|
)
|
||||
Stock-based compensation expense
|
|
—
|
|
|
1,981
|
|
|
—
|
|
|
—
|
|
|
1,981
|
|
||||
Common stock issued under equity
compensation plan, net of shares withheld for tax payments |
|
192
|
|
|
(30
|
)
|
|
—
|
|
|
—
|
|
|
(30
|
)
|
||||
Common stock issued under employee stock purchase plan
|
|
38
|
|
|
444
|
|
|
—
|
|
|
—
|
|
|
444
|
|
||||
Repurchased shares
|
|
(990
|
)
|
|
(2,180
|
)
|
|
(10,816
|
)
|
|
—
|
|
|
(12,996
|
)
|
||||
Balances at December 31, 2018
|
|
29,545
|
|
|
215
|
|
|
183,290
|
|
|
(909
|
)
|
|
182,596
|
|
||||
Net loss
|
|
—
|
|
|
—
|
|
|
(92,800
|
)
|
|
—
|
|
|
(92,800
|
)
|
||||
Unrealized gain on marketable securities, net of income tax expense of $6
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
6
|
|
||||
Loss on derivative securities, effective portion, net of income tax benefit of $139
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(223
|
)
|
|
(223
|
)
|
||||
Foreign currency translation adjustment,
net of income tax benefit of $27
|
|
—
|
|
|
—
|
|
|
—
|
|
|
189
|
|
|
189
|
|
||||
Stock-based compensation expense
|
|
—
|
|
|
837
|
|
|
(218
|
)
|
|
—
|
|
|
619
|
|
||||
Common stock issued under equity
compensation plan, net of shares withheld
for tax payments
|
|
135
|
|
|
(32
|
)
|
|
—
|
|
|
—
|
|
|
(32
|
)
|
||||
Common stock issued under employee stock purchase plan
|
|
101
|
|
|
241
|
|
|
—
|
|
|
—
|
|
|
241
|
|
||||
Balances at December 31, 2019
|
|
29,781
|
|
|
$
|
1,261
|
|
|
$
|
90,272
|
|
|
$
|
(937
|
)
|
|
$
|
90,596
|
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
|
|
|
||||
Cash flows from operating activities:
|
|
|
|
||||
(Loss) income from continuing operations
|
$
|
(92,295
|
)
|
|
$
|
15,110
|
|
Loss from discontinued operations
|
(505
|
)
|
|
(452
|
)
|
||
Net (loss) income
|
(92,800
|
)
|
|
14,658
|
|
||
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
10,811
|
|
|
8,942
|
|
||
Bad debt expense
|
19
|
|
|
27
|
|
||
Inventory lower-of-cost-or-market/NRV adjustments
|
770
|
|
|
558
|
|
||
Stock-based compensation expense
|
619
|
|
|
1,981
|
|
||
Loss on asset disposals
|
1,191
|
|
|
32
|
|
||
Goodwill and intangible impairment charge
|
72,008
|
|
|
—
|
|
||
Deferred income taxes, net of valuation allowances
|
(10,613
|
)
|
|
3,229
|
|
||
Other
|
(90
|
)
|
|
133
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Trade receivables
|
(8,790
|
)
|
|
(3,030
|
)
|
||
Inventories
|
13,237
|
|
|
(15,634
|
)
|
||
Prepaids and other current assets
|
3,012
|
|
|
(495
|
)
|
||
Income taxes receivable
|
5,181
|
|
|
(5,636
|
)
|
||
Trade payables
|
(13,451
|
)
|
|
19,312
|
|
||
Accrued liabilities, including warranty obligations
|
(3,677
|
)
|
|
(2,826
|
)
|
||
Net cash (used in) provided by operating activities
|
(22,573
|
)
|
|
21,251
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Acquisition of business, net of cash acquired
|
—
|
|
|
(2,750
|
)
|
||
Purchases of property, plant and equipment and intangible assets
|
(8,952
|
)
|
|
(10,380
|
)
|
||
Purchases of available-for-sale-securities
|
—
|
|
|
(29,522
|
)
|
||
Proceeds from maturities of available-for-sale securities
|
25,271
|
|
|
61,365
|
|
||
Purchases of other investments in non-controlled affiliates
|
(3,500
|
)
|
|
—
|
|
||
Net cash provided by investing activities
|
12,819
|
|
|
18,713
|
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from long-term debt
|
32,968
|
|
|
—
|
|
||
Payments on long-term debt
|
(50,667
|
)
|
|
(16,000
|
)
|
||
Proceeds from employee stock purchases
|
241
|
|
|
444
|
|
||
Proceeds from exercise of stock options
|
75
|
|
|
366
|
|
||
Tax payments related to stock award issuances
|
(107
|
)
|
|
(396
|
)
|
||
Payments for stock repurchases
|
—
|
|
|
(12,996
|
)
|
||
Net cash used in financing activities
|
(17,490
|
)
|
|
(28,582
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
189
|
|
|
(1,150
|
)
|
||
(Decrease) increase in cash and cash equivalents
|
(27,055
|
)
|
|
10,232
|
|
||
Cash and cash equivalents:
|
|
|
|
||||
Beginning of year
|
38,125
|
|
|
27,893
|
|
||
End of year
|
$
|
11,070
|
|
|
$
|
38,125
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Cash (received) paid for income taxes, net
|
$
|
(4,186
|
)
|
|
$
|
8,885
|
|
Cash paid for interest
|
1,197
|
|
|
1,044
|
|
||
Supplemental disclosure of non-cash investing activities:
|
|
|
|
||||
Capital expenditures incurred but not yet paid
|
$
|
420
|
|
|
$
|
1,220
|
|
|
2019
|
|
2018
|
||||
Balance, January 1
|
$
|
4,419
|
|
|
$
|
6,920
|
|
Charges to reserve
|
18,311
|
|
|
15,058
|
|
||
Reductions for sales discounts and returns
|
(18,345
|
)
|
|
(17,559
|
)
|
||
Balance, December 31
|
$
|
4,385
|
|
|
$
|
4,419
|
|
|
Valuation at
December 6, 2018
|
||
Inventories
|
$
|
8
|
|
Intangible assets
|
1,140
|
|
|
Identifiable assets acquired
|
1,148
|
|
|
Goodwill
|
1,602
|
|
|
Total assets acquired
|
$
|
2,750
|
|
|
|
Estimated fair value
|
|
Weighted-average amortization period (years)
|
||
Trademark - RunSocial
|
|
$
|
250
|
|
|
5
|
Patents
|
|
410
|
|
|
7
|
|
Developed technology
|
|
480
|
|
|
5
|
|
|
|
$
|
1,140
|
|
|
5.7
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Loss from discontinued operations before income taxes
|
$
|
(206
|
)
|
|
$
|
(206
|
)
|
Income tax expense
|
299
|
|
|
246
|
|
||
Total loss from discontinued operations
|
$
|
(505
|
)
|
|
$
|
(452
|
)
|
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Product sales
|
|
$
|
296,447
|
|
|
$
|
380,489
|
|
Extended warranties and services
|
|
6,691
|
|
|
9,226
|
|
||
Other(1)
|
|
6,147
|
|
|
7,038
|
|
||
Net sales
|
|
$
|
309,285
|
|
|
$
|
396,753
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
United States
|
|
$
|
256,183
|
|
|
$
|
348,712
|
|
Canada
|
|
24,768
|
|
|
20,489
|
|
||
All other
|
|
28,334
|
|
|
27,552
|
|
||
Net sales
|
|
$
|
309,285
|
|
|
$
|
396,753
|
|
|
|
2019
|
|
2018
|
||||
Balance, January 1
|
|
$
|
816
|
|
|
$
|
1,084
|
|
Cash additions
|
|
2,330
|
|
|
1,794
|
|
||
Revenue recognition
|
|
(1,921
|
)
|
|
(2,062
|
)
|
||
Balance, December 31
|
|
$
|
1,225
|
|
|
$
|
816
|
|
•
|
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.
|
|
|
December 31, 2019
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Derivatives
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts
|
|
$
|
—
|
|
|
$
|
295
|
|
|
$
|
—
|
|
|
$
|
295
|
|
Total assets at fair value
|
|
$
|
—
|
|
|
$
|
295
|
|
|
$
|
—
|
|
|
$
|
295
|
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Derivatives
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts
|
|
$
|
—
|
|
|
$
|
9
|
|
|
$
|
—
|
|
|
$
|
9
|
|
Total liabilities at fair value
|
|
$
|
—
|
|
|
$
|
9
|
|
|
$
|
—
|
|
|
$
|
9
|
|
|
|
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
|
|
||||
|
|
—
|
|
|
603
|
|
|
—
|
|
|
603
|
|
||||
Total assets at fair value
|
|
$
|
7,646
|
|
|
$
|
25,995
|
|
|
$
|
—
|
|
|
$
|
33,641
|
|
|
|
Balance Sheet Classification
|
|
As of December 31,
|
||||||
|
|
|
2019
|
|
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
|
|
$
|
295
|
|
|
$
|
240
|
|
|
|
Accrued liabilities
|
|
9
|
|
|
—
|
|
||
|
|
|
|
$
|
286
|
|
|
$
|
240
|
|
|
|
Statement of Operations Classification
|
|
Year Ended December 31,
|
||||||
|
|
|
2019
|
|
2018
|
|||||
Derivative instruments designated as cash flow hedges:
|
|
|
|
|
|
|
||||
Loss (gain) recognized in other comprehensive income before reclassifications
|
|
---
|
|
$
|
(128
|
)
|
|
$
|
165
|
|
Gain reclassified from accumulated other comprehensive income to earnings for the effective portion
|
|
Interest expense
|
|
125
|
|
|
219
|
|
||
Income tax expense
|
|
Income tax (benefit) expense
|
|
(30
|
)
|
|
(61
|
)
|
||
|
|
|
|
|
|
|
||||
Derivative instruments not designated as cash flow hedges:
|
|
|
|
|
|
|
||||
Loss recognized in earnings
|
|
Other, net
|
|
$
|
458
|
|
|
$
|
(743
|
)
|
Income tax (expense) benefit
|
|
Income tax (benefit) expense
|
|
(43
|
)
|
|
185
|
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Trade receivables
|
$
|
54,645
|
|
|
$
|
45,946
|
|
Allowance for doubtful accounts
|
(45
|
)
|
|
(99
|
)
|
||
Trade receivables, net of allowance
|
$
|
54,600
|
|
|
$
|
45,847
|
|
|
2019
|
|
2018
|
||||
Balance, January 1
|
$
|
99
|
|
|
$
|
119
|
|
Charges to bad debt expense
|
19
|
|
|
27
|
|
||
Write-offs, net
|
(73
|
)
|
|
(47
|
)
|
||
Balance, December 31
|
$
|
45
|
|
|
$
|
99
|
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Finished goods
|
$
|
49,853
|
|
|
$
|
63,257
|
|
Parts and components
|
4,915
|
|
|
5,208
|
|
||
Total inventories
|
$
|
54,768
|
|
|
$
|
68,465
|
|
|
Estimated
Useful Life
(in years)
|
|
As of December 31,
|
||||||||
|
|
2019
|
|
2018
|
|||||||
Automobiles
|
5
|
|
$
|
23
|
|
|
$
|
23
|
|
||
Leasehold improvements
|
4
|
to
|
20
|
|
3,830
|
|
|
3,782
|
|
||
Computer software and equipment
|
2
|
to
|
7
|
|
26,816
|
|
|
23,776
|
|
||
Machinery and equipment
|
3
|
to
|
5
|
|
18,551
|
|
|
16,756
|
|
||
Furniture and fixtures
|
5
|
to
|
20
|
|
2,808
|
|
|
2,827
|
|
||
Work in progress (1)
|
N/A
|
|
2,747
|
|
|
1,590
|
|
||||
Total cost
|
|
|
|
|
54,775
|
|
|
48,754
|
|
||
Accumulated depreciation
|
|
|
|
|
(32,020
|
)
|
|
(26,538
|
)
|
||
Total property, plant and equipment, net
|
|
|
|
|
$
|
22,755
|
|
|
$
|
22,216
|
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Depreciation expense
|
$
|
7,314
|
|
|
$
|
5,778
|
|
|
Year Ended
|
||
|
December 31, 2019
|
||
Operating lease expense
|
$
|
4,518
|
|
|
As of
|
||
|
December 31, 2019
|
||
Year ending:
|
|
||
2020
|
$
|
4,682
|
|
2021
|
4,711
|
|
|
2022
|
4,566
|
|
|
2023
|
3,812
|
|
|
2024
|
3,899
|
|
|
Thereafter
|
4,167
|
|
|
Total undiscounted lease payments
|
25,837
|
|
|
Less imputed interest
|
(3,135
|
)
|
|
Total lease liabilities
|
$
|
22,702
|
|
|
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
|
|
|
Direct
|
|
Retail
|
|
Total
|
||||||
Balance, January 1, 2018
|
$
|
2,335
|
|
|
$
|
59,695
|
|
|
$
|
62,030
|
|
Currency exchange rate adjustment
|
(185
|
)
|
|
5
|
|
|
(180
|
)
|
|||
Business acquisition (Note 2)
|
1,602
|
|
|
—
|
|
|
1,602
|
|
|||
Balance, December 31, 2018
|
3,752
|
|
|
59,700
|
|
|
63,452
|
|
|||
Currency exchange rate adjustment
|
55
|
|
|
—
|
|
|
55
|
|
|||
Goodwill impairment
|
(3,807
|
)
|
|
(59,700
|
)
|
|
(63,507
|
)
|
|||
Balance, December 31, 2019
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Estimated
Useful Life
(in years)
|
|
As of December 31,
|
||||||||
|
|
2019
|
|
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
|
|
|
|
|
(13,302
|
)
|
|
(9,805
|
)
|
||
|
|
|
|
|
$
|
43,243
|
|
|
$
|
55,240
|
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Amortization expense
|
$
|
3,497
|
|
|
$
|
3,164
|
|
2020
|
$
|
3,198
|
|
2021
|
3,168
|
|
|
2022
|
3,168
|
|
|
2023
|
3,168
|
|
|
2024
|
3,118
|
|
|
Thereafter
|
12,671
|
|
|
|
$
|
28,491
|
|
|
Measurement Alternative - No Readily Determinable Fair Value
|
||
Other assets
|
$
|
3,500
|
|
|
|
|
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Payroll and related liabilities
|
$
|
2,929
|
|
|
$
|
3,620
|
|
Other
|
4,704
|
|
|
4,750
|
|
||
Total accrued liabilities
|
$
|
7,633
|
|
|
$
|
8,370
|
|
|
2019
|
|
2018
|
||||
Balance, January 1
|
$
|
5,575
|
|
|
$
|
6,117
|
|
Accruals
|
5,103
|
|
|
3,884
|
|
||
Payments
|
(4,961
|
)
|
|
(4,426
|
)
|
||
Balance, December 31
|
$
|
5,717
|
|
|
$
|
5,575
|
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
U.S.
|
$
|
(102,004
|
)
|
|
$
|
19,109
|
|
Non-U.S.
|
172
|
|
|
1,892
|
|
||
(Loss) income from continuing operations before income taxes
|
$
|
(101,832
|
)
|
|
$
|
21,001
|
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Current:
|
|
|
|
||||
U.S. federal
|
$
|
164
|
|
|
$
|
1,750
|
|
U.S. state
|
419
|
|
|
477
|
|
||
Non-U.S.
|
453
|
|
|
435
|
|
||
Total current
|
1,036
|
|
|
2,662
|
|
||
Deferred:
|
|
|
|
||||
U.S. federal
|
(9,431
|
)
|
|
2,235
|
|
||
U.S. state
|
(540
|
)
|
|
1,059
|
|
||
Non-U.S.
|
(602
|
)
|
|
(65
|
)
|
||
Total deferred
|
(10,573
|
)
|
|
3,229
|
|
||
Income tax (benefit) expense
|
$
|
(9,537
|
)
|
|
$
|
5,891
|
|
|
Year Ended December 31,
|
||||
|
2019
|
|
2018
|
||
U.S. statutory income tax rate
|
21.0
|
%
|
|
21.0
|
%
|
State tax, net of U.S. federal tax benefit
|
3.8
|
|
|
5.7
|
|
Non-U.S. income taxes
|
—
|
|
|
0.1
|
|
Nondeductible operating expenses
|
(0.4
|
)
|
|
3.1
|
|
Research and development credit
|
0.5
|
|
|
(3.1
|
)
|
Change in deferred tax measurement rate
|
(0.1
|
)
|
|
0.1
|
|
Change in uncertain tax positions
|
0.1
|
|
|
0.8
|
|
Excess tax benefits from stock plans
|
(0.2
|
)
|
|
(0.7
|
)
|
Change in valuation allowance
|
(1.5
|
)
|
|
1.8
|
|
Impairment of intangibles
|
(13.6
|
)
|
|
—
|
|
Other
|
(0.2
|
)
|
|
(0.7
|
)
|
Effective income tax rate
|
9.4
|
%
|
|
28.1
|
%
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Deferred income tax assets:
|
|
|
|
||||
Accrued liabilities
|
$
|
2,152
|
|
|
$
|
2,453
|
|
Allowance for doubtful accounts
|
10
|
|
|
23
|
|
||
Inventory valuation
|
509
|
|
|
424
|
|
||
Capitalized indirect inventory costs
|
299
|
|
|
442
|
|
||
Stock-based compensation expense
|
548
|
|
|
811
|
|
||
Deferred rent
|
478
|
|
|
520
|
|
||
Net operating loss carryforward
|
7,580
|
|
|
1,137
|
|
||
Basis difference on long-lived assets
|
1,228
|
|
|
608
|
|
||
Credit carryforward
|
1,221
|
|
|
747
|
|
||
Other
|
426
|
|
|
219
|
|
||
Gross deferred income tax assets
|
14,451
|
|
|
7,384
|
|
||
Valuation allowance
|
(2,743
|
)
|
|
(1,247
|
)
|
||
Deferred income tax assets, net of valuation allowance
|
11,708
|
|
|
6,137
|
|
||
Deferred income tax liabilities:
|
|
|
|
||||
Prepaid advertising
|
(320
|
)
|
|
(674
|
)
|
||
Other prepaids
|
(858
|
)
|
|
(762
|
)
|
||
Basis difference of long-lived assets
|
(11,628
|
)
|
|
(16,474
|
)
|
||
Other
|
(55
|
)
|
|
(4
|
)
|
||
Deferred income tax liabilities
|
(12,861
|
)
|
|
(17,914
|
)
|
||
Net deferred income tax liabilities
|
$
|
(1,153
|
)
|
|
$
|
(11,777
|
)
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Deferred income tax assets, non-current (recorded in "other assets")
|
630
|
|
|
111
|
|
||
Deferred income tax liabilities, non-current
|
(1,783
|
)
|
|
(11,888
|
)
|
||
Net deferred income tax liabilities
|
$
|
(1,153
|
)
|
|
$
|
(11,777
|
)
|
|
|
Amount
|
|
Expires in
|
||
Net operating loss carryforwards
|
|
|
|
|
||
U.S. federal
|
|
$
|
25.0
|
|
|
Indefinite
|
U.S. state
|
|
$
|
39.3
|
|
|
2020 - 2039
|
China
|
|
$
|
0.1
|
|
|
2022
|
Income tax credit carryforwards
|
|
|
|
|
||
U.S. federal
|
|
$
|
0.5
|
|
|
2039
|
U.S. state
|
|
$
|
1.0
|
|
|
2020 - 2034
|
|
2019
|
|
2018
|
||||
Balance, January 1
|
$
|
2,330
|
|
|
$
|
2,194
|
|
Additions for tax positions taken in prior years
|
44
|
|
|
41
|
|
||
Reductions for tax positions taken in prior years
|
(81
|
)
|
|
(4
|
)
|
||
Additions for tax positions related to the current year
|
87
|
|
|
116
|
|
||
Lapses of statutes of limitations
|
(42
|
)
|
|
(12
|
)
|
||
Other
|
—
|
|
|
(5
|
)
|
||
Balance, December 31
|
$
|
2,338
|
|
|
$
|
2,330
|
|
|
|
Unrealized (Loss) Gain on Available-for-Sale Securities
|
|
Gain (Loss) on Derivative Securities
|
|
Foreign Currency Translation Adjustments
|
|
Accumulated Other Comprehensive (Loss) Income
|
||||||||
Balance, December 31, 2017
|
|
$
|
(64
|
)
|
|
$
|
216
|
|
|
$
|
(411
|
)
|
|
$
|
(259
|
)
|
Current period other comprehensive income (loss) before reclassifications
|
|
58
|
|
|
165
|
|
|
(715
|
)
|
|
(492
|
)
|
||||
Reclassification of amounts to earnings
|
|
—
|
|
|
(158
|
)
|
|
—
|
|
|
(158
|
)
|
||||
Net other comprehensive income (loss) during period
|
|
58
|
|
|
7
|
|
|
(715
|
)
|
|
(650
|
)
|
||||
Balance, December 31, 2018
|
|
(6
|
)
|
|
223
|
|
|
(1,126
|
)
|
|
(909
|
)
|
||||
Current period other comprehensive income (loss) before reclassifications
|
|
18
|
|
|
(128
|
)
|
|
189
|
|
|
79
|
|
||||
Reclassification of amounts to earnings
|
|
(12
|
)
|
|
(95
|
)
|
|
—
|
|
|
(107
|
)
|
||||
Net other comprehensive income (loss) during period
|
|
6
|
|
|
(223
|
)
|
|
189
|
|
|
(28
|
)
|
||||
Balance, December 31, 2019
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(937
|
)
|
|
$
|
(937
|
)
|
|
Options Outstanding
|
|
Weighted-
Average
Exercise
Price
|
|||
Outstanding at December 31, 2018
|
166
|
|
|
$
|
6.97
|
|
Granted
|
682
|
|
|
1.79
|
|
|
Forfeited, canceled or expired
|
(81
|
)
|
|
7.44
|
|
|
Exercised
|
(27
|
)
|
|
2.76
|
|
|
Outstanding at December 31, 2019
|
740
|
|
|
$
|
2.30
|
|
|
Options Outstanding
|
|
Options Exercisable
|
|
Options Vested and Expected to Vest
|
||||||
Number (in thousands)
|
740
|
|
|
58
|
|
|
740
|
|
|||
Weighted-average exercise price
|
$
|
2.30
|
|
|
$
|
8.30
|
|
|
$
|
2.30
|
|
Aggregate intrinsic value (in thousands)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Weighted average remaining contractual term (in years)
|
7.1
|
|
|
1.4
|
|
|
7.1
|
|
|
RSAs Outstanding
|
|
Weighted-
Average
Grant Date Fair Value per Share
|
|||
Outstanding at December 31, 2018
|
50
|
|
|
$
|
15.18
|
|
Granted
|
55
|
|
|
5.32
|
|
|
Vested
|
(20
|
)
|
|
14.65
|
|
|
Outstanding at December 31, 2019
|
85
|
|
|
$
|
8.90
|
|
|
RSUs Outstanding
|
|
Weighted-
Average
Grant Date Fair Value per Share
|
|||
Outstanding at December 31, 2018
|
368
|
|
|
$
|
13.98
|
|
Granted
|
1,113
|
|
|
1.80
|
|
|
Forfeited, canceled or expired
|
(123
|
)
|
|
13.35
|
|
|
Vested
|
(48
|
)
|
|
18.69
|
|
|
Outstanding at December 31, 2019
|
1,310
|
|
|
$
|
3.52
|
|
|
PSUs Outstanding
|
|
Weighted-
Average
Grant Date Fair Value per Share
|
|||
Outstanding at December 31, 2018
|
221
|
|
|
$
|
14.73
|
|
Granted and additional goal shares awarded
|
—
|
|
|
—
|
|
|
Forfeited, canceled or expired
|
(106
|
)
|
|
14.90
|
|
|
Vested
|
—
|
|
|
—
|
|
|
Outstanding at December 31, 2019
|
115
|
|
|
$
|
14.57
|
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Stock options
|
$
|
61
|
|
|
$
|
6
|
|
RSAs
|
289
|
|
|
292
|
|
||
RSUs
|
609
|
|
|
1,527
|
|
||
PSUs
|
(410
|
)
|
|
52
|
|
||
ESPP
|
70
|
|
|
104
|
|
||
|
$
|
619
|
|
|
$
|
1,981
|
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Total intrinsic value of stock options exercised
|
$
|
84
|
|
|
$
|
1,451
|
|
Fair value of RSUs vested
|
354
|
|
|
655
|
|
||
Fair value of PSUs vested
|
—
|
|
|
614
|
|
|
Shares Available for Issuance
|
|
Weighted-
Average Purchase Price |
|
Weighted-Average Discount per Share
|
|||||
Balance at December 31, 2018
|
394
|
|
|
|
|
|
||||
Employee shares purchased
|
(101
|
)
|
|
$
|
2.39
|
|
|
$
|
0.26
|
|
Balance at December 31, 2019
|
293
|
|
|
|
|
|
|
Year Ended December 31,
|
||
|
2019
|
|
2018
|
Dividend yield
|
—%
|
|
—%
|
Risk-free interest rate
|
2.3%
|
|
1.7%
|
Expected life (years)
|
N/A
|
|
N/A
|
Expected volatility
|
64%
|
|
40%
|
Year Ended
|
|
Number of Shares
|
|
Repurchased Amount
|
|
Average Price per Share
|
December 31, 2018
|
|
990,229
|
|
$12,995,791
|
|
$13.12
|
|
|
990,229
|
|
$12,995,791
|
|
$13.12
|
|
Year Ended December 31,
|
||||
|
2019
|
|
2018
|
||
Shares used for basic per share calculations
|
29,684
|
|
|
30,099
|
|
Dilutive effect of outstanding options, RSUs, and PSUs
|
—
|
|
|
256
|
|
Shares used for diluted per share calculations
|
29,684
|
|
|
30,355
|
|
|
Year ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
401(k) matching contributions
|
$
|
976
|
|
|
$
|
1,105
|
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Net Sales:
|
|
|
|
||||
Direct
|
$
|
119,651
|
|
|
$
|
184,925
|
|
Retail
|
186,584
|
|
|
208,092
|
|
||
Unallocated royalty
|
3,050
|
|
|
3,736
|
|
||
Consolidated net sales
|
$
|
309,285
|
|
|
$
|
396,753
|
|
Contribution:
|
|
|
|
||||
Direct
|
$
|
(24,569
|
)
|
|
$
|
6,865
|
|
Retail
|
16,043
|
|
|
31,516
|
|
||
Unallocated royalty
|
3,050
|
|
|
3,733
|
|
||
Consolidated contribution
|
$
|
(5,476
|
)
|
|
$
|
42,114
|
|
|
|
|
|
||||
Reconciliation of consolidated contribution to (loss) income from continuing operations:
|
|
|
|
||||
Consolidated contribution
|
$
|
(5,476
|
)
|
|
$
|
42,114
|
|
Amounts not directly related to segments:
|
|
|
|
||||
Operating expenses
|
(95,068
|
)
|
|
(21,345
|
)
|
||
Other expense, net
|
(1,288
|
)
|
|
232
|
|
||
Income tax (benefit) expense
|
(9,537
|
)
|
|
5,891
|
|
||
(Loss) income from continuing operations
|
$
|
(92,295
|
)
|
|
$
|
15,110
|
|
|
|
|
|
||||
Depreciation and amortization expense:
|
|
|
|
||||
Direct
|
$
|
2,919
|
|
|
$
|
1,537
|
|
Retail
|
5,657
|
|
|
5,098
|
|
||
Unallocated corporate
|
2,235
|
|
|
2,307
|
|
||
Total depreciation and amortization expense
|
$
|
10,811
|
|
|
$
|
8,942
|
|
|
|
|
|
||||
|
As of December 31,
|
||||||
Assets:
|
2019
|
|
2018
|
||||
Direct
|
$
|
47,377
|
|
|
$
|
50,907
|
|
Retail
|
148,965
|
|
|
204,921
|
|
||
Unallocated corporate
|
24,137
|
|
|
77,116
|
|
||
Total assets
|
$
|
220,479
|
|
|
$
|
332,944
|
|
|
|
Year Ended December 31,
|
||||
|
|
2019
|
|
2018
|
||
Amazon.com
|
|
15.2
|
%
|
|
11.5
|
%
|
Dick's Sporting Goods
|
|
11.7
|
%
|
|
13.8
|
%
|
|
Quarter Ended
|
|
|
||||||||||||||||
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
|
Total
|
||||||||||
2019
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
84,400
|
|
|
$
|
59,004
|
|
|
$
|
61,708
|
|
|
$
|
104,173
|
|
|
$
|
309,285
|
|
Gross profit
|
35,842
|
|
|
17,517
|
|
|
19,067
|
|
|
38,157
|
|
|
110,583
|
|
|||||
Operating (loss) income(1)
|
(10,167
|
)
|
|
(85,414
|
)
|
|
(8,253
|
)
|
|
3,290
|
|
|
(100,544
|
)
|
|||||
(Loss) income from continuing operations(2)
|
(8,484
|
)
|
|
(78,744
|
)
|
|
(8,730
|
)
|
|
3,663
|
|
|
(92,295
|
)
|
|||||
Loss from discontinued operations
|
(91
|
)
|
|
(124
|
)
|
|
(114
|
)
|
|
(176
|
)
|
|
(505
|
)
|
|||||
Net (loss) income
|
(8,575
|
)
|
|
(78,868
|
)
|
|
(8,844
|
)
|
|
3,487
|
|
|
(92,800
|
)
|
|||||
Net (loss) income per share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
(0.29
|
)
|
|
$
|
(2.66
|
)
|
|
$
|
(0.30
|
)
|
|
$
|
0.12
|
|
|
$
|
(3.13
|
)
|
Diluted
|
(0.29
|
)
|
|
(2.66
|
)
|
|
(0.30
|
)
|
|
0.12
|
|
|
(3.13
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
114,813
|
|
|
$
|
75,498
|
|
|
$
|
91,057
|
|
|
$
|
115,385
|
|
|
$
|
396,753
|
|
Gross profit
|
58,871
|
|
|
33,648
|
|
|
38,506
|
|
|
50,715
|
|
|
181,740
|
|
|||||
Operating income
|
10,697
|
|
|
1,202
|
|
|
6,160
|
|
|
2,710
|
|
|
20,769
|
|
|||||
Income from continuing operations
|
8,140
|
|
|
1,007
|
|
|
4,503
|
|
|
1,460
|
|
|
15,110
|
|
|||||
Loss from discontinued operations
|
(81
|
)
|
|
(79
|
)
|
|
(194
|
)
|
|
(98
|
)
|
|
(452
|
)
|
|||||
Net income
|
8,059
|
|
|
928
|
|
|
4,309
|
|
|
1,362
|
|
|
14,658
|
|
|||||
Net income per share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
0.27
|
|
|
$
|
0.03
|
|
|
$
|
0.14
|
|
|
$
|
0.05
|
|
|
$
|
0.49
|
|
Diluted
|
0.26
|
|
|
0.03
|
|
|
0.14
|
|
|
0.05
|
|
|
0.48
|
|
•
|
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
|
•
|
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
|
•
|
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
|
Plan Category
|
Number of securities
to be issued upon exercise
of outstanding options,
warrants and rights(1),(2)
(a)
|
|
Weighted average
exercise price of
outstanding options,
warrants and rights(3)
(b)
|
|
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a))
(c)
|
||||
Equity compensation plans approved by security holders
|
855
|
|
|
$
|
2.30
|
|
|
1,058
|
|
Equity compensation plans not approved by security holders
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
855
|
|
|
$
|
2.30
|
|
|
1,058
|
|
|
|
Page
|
Reports of Independent Registered Public Accounting Firms
|
|
|
Consolidated Balance Sheets as of December 31, 2019 and 2018
|
|
|
Consolidated Statements of Operations for the years ended December 31, 2019 and 2018
|
|
|
Consolidated Statements of Comprehensive (Loss) Income for the years ended December 31, 2019 and 2018
|
|
|
Consolidated Statements of Shareholders' Equity for the years ended December 31, 2019 and 2018
|
|
|
Consolidated Statements of Cash Flows for the years ended December 31, 2019 and 2018
|
|
|
Notes to Consolidated Financial Statements
|
|
Exhibit No.
|
|
Description
|
|
|
|
|
Amended and Restated Articles of Incorporation - Incorporated by reference to Exhibit A to Schedule 14A, as filed with the Commission on April 22, 2008.
|
|
|
|
|
|
Amended and Restated Bylaws - Incorporated by reference to Exhibit 3.1 of our Current Report on Form 8-K, as filed with the Commission on April 5, 2005.
|
|
|
|
|
|
Amendment to Amended and Restated Bylaws of the Company - Incorporated by reference to Exhibit 3.1 of our Current Report on Form 8-K, as filed with the Commission on January 31, 2007.
|
|
|
|
|
|
|
Description of Securities Registered Under Section 12 of the Exchange Act.
|
|
|
|
|
Trademark License Agreement, dated September 20, 2001, by and between Pacific Direct, LLC and Nautilus, Inc. - Incorporated by reference to Exhibit 2.1 of our Quarterly Report on Form 10-Q for the three months ended September 30, 2001, as filed with the Commission on November 14, 2001.
|
|
|
|
|
|
License Agreement dated as of December 29, 2009 between Nautilus, Inc. and Fit Dragon International, Inc. - Incorporated by reference to Exhibit 10.24 of our Form 10-K for the fiscal year ended December 31, 2009 as filed with the Commission on March 8, 2010.
|
|
|
|
|
|
Technology Transfer and License Agreement dated as of December 29, 2009 between Nautilus, Inc. and Fit Dragon International, Inc. - Incorporated by reference to Exhibit 10.26 of our Form 10-K for the fiscal year ended December 31, 2009 as filed with the Commission on March 8, 2010.
|
|
|
|
|
|
Severance and Employment Agreement, dated September 21, 2007, between the Company and Wayne M. Bolio - Incorporated by reference to Exhibit 10.33 of our Form 10-K for the fiscal year ended December 31, 2010 as filed with the Commission on March 8, 2011.
|
|
|
|
|
|
Severance and Employment Agreement, dated March 30, 2011, between the Company and William B. McMahon - Incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K as filed with the Commission on March 31, 2011.
|
|
|
|
|
|
Office Lease Agreement dated as of July 25, 2011, by and between Nautilus, Inc. and Columbia Tech Center, L.L.C. - Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K as filed with the Commission on July 29, 2011.
|
|
|
|
|
|
Form of Non-Employee Director Nonstatutory Stock Option Agreement - Incorporated by reference to Exhibit 10.2 of our Form 10-Q for the three months ended March 31, 2012 as filed with the Commission on May 9, 2012.
|
|
|
|
|
|
Form of Non-Employee Director Restricted Stock Unit Award Agreement - Incorporated by reference to Exhibit 10.2 of our Form 10-Q for the three months ended June 30, 2013 as filed with the Commission on August 8, 2013.
|
|
|
|
|
|
Offer Letter, dated July 26, 2013, between the Company and Jeffery Collins - Incorporated by reference to Exhibit 10.3 of our Form 10-Q for the three months ended March 31, 2014 as filed with the Commission on May 8, 2014.
|
|
|
|
|
|
First Lease Modification Agreement, dated as of June 19, 2014, to the Office Lease by and between Nautilus, Inc. and Columbia Tech Center, L.L.C. dated July 25, 2011 - Incorporated by reference to Exhibit 10.1 of our Form 10-Q for the three months ended June 30, 2014 as filed with the Commission on August 7, 2014.
|
|
|
|
|
|
Nautilus, Inc. 2015 Long-Term Incentive Plan - Incorporated by reference to Exhibit 10.1 of our Form 8-K dated April 28, 2015 as filed with the Commission on May 4, 2015.
|
|
|
|
|
|
Nautilus, Inc. Employee Stock Purchase Plan - Incorporated by reference to Exhibit 10.2 of our Form 8-K dated April 28, 2015 as filed with the Commission on May 4, 2015.
|
|
|
|
|
|
Employment Agreement dated May 1, 2018, by and between Nautilus, Inc. and Jay E. McGregor - Incorporated by reference to Exhibit 10.1 of our Form 10-Q for the quarter ended March 31, 2019 as filed with the Commission on May 8, 2019.
|
|
|
|
|
|
Employment Agreement dated January 1, 2018 by and between Nautilus, Inc. and Christopher K. Quatrochi - Incorporated by reference to Exhibit 10.2 of our Form 10-Q for the quarter ended March 31, 2019 as filed with the Commission on May 8, 2019.
|
|
|
|
|
|
Employment Agreement dated July 8, 2019, by and between Nautilus, Inc. and James Barr IV - Incorporated by reference to Exhibit 10.1 of our Form 10-Q for the quarter ended June 30, 2019 as filed with the Commission on August 8, 2019.
|
|
|
|
|
Exhibit No.
|
|
Description
|
|
|
Employment Agreement dated December 10, 2019, by and between Nautilus, Inc. and Aina Konold - Incorporated by reference to Exhibit 10.1 of our Form 10-K for the year ended December 31, 2019 as filed with the Commission on December 11, 2019.
|
|
|
|
|
Subsidiaries of the Company.
|
|
|
|
|
|
Consent of Independent Registered Public Accounting Firm.
|
|
|
|
|
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
|
|
|
|
|
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
|
|
|
|
|
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) of the Securities 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
|
|
|
|
*
|
Indicates management contract, compensatory agreement or arrangement, in which our directors or executive officers may participate.
|
|
|
NAUTILUS, INC.
|
|
|
|
(Registrant)
|
|
|
|
|
|
February 26, 2020
|
|
By:
|
/s/ James Barr IV
|
Date
|
|
|
James Barr IV
|
|
|
|
Chief Executive Officer
(Principal Executive Officer) |
|
|
NAUTILUS, INC.
|
|
|
|
(Registrant)
|
|
|
|
|
|
February 26, 2020
|
|
By:
|
/s/ Aina E. Konold
|
Date
|
|
|
Aina E. Konold
|
|
|
|
Chief Financial Officer
(Principal Financial and Accounting Officer) |
Signature
|
|
Title
|
/s/ James Barr IV
|
|
Chief Executive Officer
(Principal Executive Officer) |
James Barr IV
|
|
|
|
|
|
/s/ Aina E. Konold
|
|
Chief Financial Officer
(Principal Financial and Accounting Officer) |
Aina E. Konold
|
|
|
|
|
|
/s/ M. Carl Johnson, III
|
|
Chairman
|
M. Carl Johnson, III
|
|
|
|
|
|
/s/ Ronald P. Badie
|
|
Director
|
Ronald P. Badie
|
|
|
|
|
|
/s/ Richard A. Horn
|
|
Director
|
Richard A. Horn
|
|
|
|
|
|
/s/ Anne G. Saunders
|
|
Director
|
Anne G. Saunders
|
|
|
|
|
|
/s/ Marvin G. Siegert
|
|
Director
|
Marvin G. Siegert
|
|
|
|
/s/ KPMG LLP
|
|
Portland, Oregon
|
February 26, 2020
|
1.
|
I have reviewed this Annual Report on Form 10-K 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.
|
February 26, 2020
|
|
By:
|
/s/ James Barr IV
|
Date
|
|
|
James Barr IV
|
|
|
|
Chief Executive Officer
(Principal Executive Officer) |
1.
|
I have reviewed this Annual Report on Form 10-K 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.
|
February 26, 2020
|
|
By:
|
/s/ Aina E. Konold
|
Date
|
|
|
Aina E. Konold
|
|
|
|
Chief Financial Officer
(Principal Financial and Accounting Officer) |
February 26, 2020
|
|
By:
|
/s/ James Barr IV
|
Date
|
|
|
James Barr IV
|
|
|
|
Chief Executive Officer
(Principal Executive Officer) |
February 26, 2020
|
|
By:
|
/s/ Aina E. Konold
|
Date
|
|
|
Aina E. Konold
|
|
|
|
Chief Financial Officer
(Principal Financial and Accounting Officer) |