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FORM 10-Q
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[x]
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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[ ]
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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NAUTILUS, INC.
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||
(Exact name of Registrant as specified in its charter)
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Washington
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94-3002667
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Item 1.
|
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Item 2.
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Item 4.
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Item 1.
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Item 1A.
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Item 6.
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As of
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||||||
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March 31, 2012
|
|
December 31, 2011
|
||||
ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
20,397
|
|
|
$
|
17,427
|
|
Trade receivables, net of allowances of $11 as of March 31, 2012 and $300 as of December 31, 2011
|
11,901
|
|
|
23,780
|
|
||
Inventories
|
13,450
|
|
|
11,601
|
|
||
Prepaids and other current assets
|
3,460
|
|
|
4,433
|
|
||
Income taxes receivable
|
678
|
|
|
454
|
|
||
Short-term notes receivable
|
322
|
|
|
317
|
|
||
Deferred income tax assets
|
77
|
|
|
75
|
|
||
Total current assets
|
50,285
|
|
|
58,087
|
|
||
Property, plant and equipment, net
|
4,724
|
|
|
4,405
|
|
||
Goodwill
|
2,939
|
|
|
2,873
|
|
||
Other intangible assets, net
|
16,204
|
|
|
16,716
|
|
||
Other assets
|
606
|
|
|
732
|
|
||
Total assets
|
$
|
74,758
|
|
|
$
|
82,813
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
||||
Trade payables
|
$
|
23,461
|
|
|
$
|
28,563
|
|
Accrued liabilities
|
6,744
|
|
|
7,218
|
|
||
Warranty obligations, current portion
|
1,658
|
|
|
1,803
|
|
||
Deferred income tax liabilities
|
1,191
|
|
|
1,064
|
|
||
Total current liabilities
|
33,054
|
|
|
38,648
|
|
||
Long-term notes payable
|
—
|
|
|
5,598
|
|
||
Warranty obligations, non-current
|
214
|
|
|
214
|
|
||
Income taxes payable, non-current
|
3,711
|
|
|
3,658
|
|
||
Deferred income tax liabilities, non-current
|
1,669
|
|
|
1,434
|
|
||
Other long-term liabilities
|
1,310
|
|
|
1,308
|
|
||
Total liabilities
|
39,958
|
|
|
50,860
|
|
||
Commitments and contingencies (Note 11)
|
|
|
|
||||
Stockholders' equity:
|
|
|
|
||||
Common stock - no par value, 75,000 shares authorized, 30,784 and 30,747 shares issued and outstanding as of March 31, 2012 and December 31, 2011, respectively
|
5,506
|
|
|
5,360
|
|
||
Retained earnings
|
22,237
|
|
|
19,715
|
|
||
Accumulated other comprehensive income
|
7,057
|
|
|
6,878
|
|
||
Total stockholders' equity
|
34,800
|
|
|
31,953
|
|
||
Total liabilities and stockholders' equity
|
$
|
74,758
|
|
|
$
|
82,813
|
|
|
Three months ended March 31,
|
||||||
|
2012
|
|
2011
|
||||
Net sales
|
$
|
51,262
|
|
|
$
|
48,301
|
|
Cost of sales
|
27,357
|
|
|
26,214
|
|
||
Gross profit
|
23,905
|
|
|
22,087
|
|
||
Operating expenses:
|
|
|
|
||||
Selling and marketing
|
16,066
|
|
|
14,865
|
|
||
General and administrative
|
4,010
|
|
|
4,692
|
|
||
Research and development
|
1,000
|
|
|
753
|
|
||
Total operating expenses
|
21,076
|
|
|
20,310
|
|
||
Operating income
|
2,829
|
|
|
1,777
|
|
||
Other income (expense):
|
|
|
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||||
Interest income
|
6
|
|
|
1
|
|
||
Interest expense
|
78
|
|
|
(119
|
)
|
||
Other
|
(2
|
)
|
|
29
|
|
||
Total other income (expense)
|
82
|
|
|
(89
|
)
|
||
Income from continuing operations before income taxes
|
2,911
|
|
|
1,688
|
|
||
Income tax expense
|
264
|
|
|
567
|
|
||
Income from continuing operations
|
2,647
|
|
|
1,121
|
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||
Discontinued operation:
|
|
|
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||||
(Loss) income from discontinued operation before income taxes
|
(123
|
)
|
|
545
|
|
||
Income tax expense of discontinued operation
|
2
|
|
|
60
|
|
||
(Loss) income from discontinued operation
|
(125
|
)
|
|
485
|
|
||
Net income
|
$
|
2,522
|
|
|
$
|
1,606
|
|
Income per share from continuing operations:
|
|
|
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Basic
|
$
|
0.09
|
|
|
$
|
0.04
|
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Diluted
|
0.09
|
|
|
0.04
|
|
||
Loss (income) per share from discontinued operation:
|
|
|
|
|
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||
Basic
|
$
|
(0.01
|
)
|
|
$
|
0.01
|
|
Diluted
|
(0.01
|
)
|
|
0.01
|
|
||
Net income per share:
|
|
|
|
|
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||
Basic
|
$
|
0.08
|
|
|
$
|
0.05
|
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Diluted
|
0.08
|
|
|
0.05
|
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||
Weighted average shares outstanding:
|
|
|
|
||||
Basic
|
30,748
|
|
|
30,744
|
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||
Diluted
|
30,839
|
|
|
30,760
|
|
|
Three months ended March 31,
|
||||||
|
2012
|
|
2011
|
||||
Net income
|
$
|
2,522
|
|
|
$
|
1,606
|
|
Other comprehensive income (loss), net of tax:
|
|
|
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Foreign currency translation
|
179
|
|
|
(451
|
)
|
||
Total comprehensive income
|
$
|
2,701
|
|
|
$
|
1,155
|
|
|
Three months ended March 31,
|
||||||
|
2012
|
|
2011
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Income from continuing operations
|
$
|
2,647
|
|
|
$
|
1,121
|
|
(Loss) income from discontinued operation
|
(125
|
)
|
|
485
|
|
||
Net income
|
2,522
|
|
|
1,606
|
|
||
Adjustments to reconcile net income to cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
777
|
|
|
1,080
|
|
||
Bad debt expense
|
89
|
|
|
35
|
|
||
Stock-based compensation expense
|
57
|
|
|
(110
|
)
|
||
Reduction of previously estimated asset disposal loss
|
(29
|
)
|
|
(339
|
)
|
||
Deferred income taxes, net of valuation allowances
|
415
|
|
|
474
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Trade receivables
|
11,798
|
|
|
8,302
|
|
||
Inventories
|
(1,835
|
)
|
|
(529
|
)
|
||
Prepaids and other current assets
|
1,009
|
|
|
1,753
|
|
||
Income taxes
|
(253
|
)
|
|
23
|
|
||
Trade payables
|
(5,129
|
)
|
|
(9,817
|
)
|
||
Accrued liabilities, including warranty obligations
|
(1,268
|
)
|
|
265
|
|
||
Net cash provided by operating activities
|
8,153
|
|
|
2,743
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Proceeds from sale of discontinued operation
|
109
|
|
|
500
|
|
||
Purchases of software and equipment
|
(489
|
)
|
|
(403
|
)
|
||
Net increase in restricted cash
|
—
|
|
|
(7
|
)
|
||
Net cash (used in) provided by investing activities
|
(380
|
)
|
|
90
|
|
||
Cash flows from financing activities:
|
|
|
|
||||
Repayment of long-term borrowings
|
(5,000
|
)
|
|
—
|
|
||
Financing costs
|
—
|
|
|
(36
|
)
|
||
Proceeds from exercise of stock options
|
89
|
|
|
—
|
|
||
Net cash used in financing activities
|
(4,911
|
)
|
|
(36
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
108
|
|
|
(527
|
)
|
||
Net increase in cash and cash equivalents
|
2,970
|
|
|
2,270
|
|
||
Cash and cash equivalents, beginning of year
|
17,427
|
|
|
14,296
|
|
||
Cash and cash equivalents, end of period
|
$
|
20,397
|
|
|
$
|
16,566
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Cash paid for interest
|
$
|
520
|
|
|
$
|
—
|
|
Cash paid (refunded) for income taxes, net
|
41
|
|
|
(20
|
)
|
|
Three months ended March 31,
|
||||||
|
2012
|
|
2011
|
||||
Revenue
|
$
|
—
|
|
|
$
|
101
|
|
Operating (loss) income
|
$
|
(152
|
)
|
|
$
|
206
|
|
Disposal gain
|
29
|
|
|
339
|
|
||
Income tax expense
|
(2
|
)
|
|
(60
|
)
|
||
Total (loss) income from discontinued operation
|
$
|
(125
|
)
|
|
$
|
485
|
|
|
Severance and Benefits
|
|
Facilities
Leases
|
|
Total
Liabilities
|
||||||
Balance as of December 31, 2011
|
$
|
175
|
|
|
$
|
1,929
|
|
|
$
|
2,104
|
|
Accruals
|
—
|
|
|
—
|
|
|
—
|
|
|||
Payments
|
(170
|
)
|
|
(101
|
)
|
|
(271
|
)
|
|||
Balance as of March 31, 2012
|
$
|
5
|
|
|
$
|
1,828
|
|
|
$
|
1,833
|
|
|
As of
|
||||||
|
March 31, 2012
|
|
December 31, 2011
|
||||
Finished goods
|
$
|
11,619
|
|
|
$
|
9,832
|
|
Parts and components
|
1,831
|
|
|
1,769
|
|
||
Total inventories
|
$
|
13,450
|
|
|
$
|
11,601
|
|
|
Estimated
Useful Life
(in years)
|
|
As of
|
||||||
|
|
March 31, 2012
|
|
December 31, 2011
|
|||||
Leasehold improvements
|
5 to 20
|
|
$
|
2,570
|
|
|
$
|
2,557
|
|
Computer equipment
|
3 to 5
|
|
36,885
|
|
|
36,872
|
|
||
Machinery and equipment
|
3 to 5
|
|
4,935
|
|
|
4,759
|
|
||
Furniture and fixtures
|
5
|
|
663
|
|
|
666
|
|
||
Work in progress
1
|
N/A
|
|
1,963
|
|
|
1,937
|
|
||
Total cost
|
|
|
47,016
|
|
|
46,791
|
|
||
Accumulated depreciation
|
|
|
(42,292
|
)
|
|
(42,386
|
)
|
||
Total property, plant and equipment, net
|
|
|
$
|
4,724
|
|
|
$
|
4,405
|
|
|
Estimated
Useful Life
(in years)
|
|
As of
|
||||||
|
|
March 31, 2012
|
|
December 31, 2011
|
|||||
Goodwill
|
N/A
|
|
$
|
2,939
|
|
|
$
|
2,873
|
|
Other intangible assets:
|
|
|
|
|
|
||||
Indefinite-lived trademarks
|
N/A
|
|
$
|
9,052
|
|
|
$
|
9,052
|
|
Patents
|
1 to 16
|
|
18,154
|
|
|
18,154
|
|
||
|
|
|
27,206
|
|
|
27,206
|
|
||
Accumulated amortization - patents
|
|
|
(11,002
|
)
|
|
(10,490
|
)
|
||
|
|
|
$
|
16,204
|
|
|
$
|
16,716
|
|
|
Three months ended March 31,
|
||||
(Number of shares in thousands)
|
2012
|
|
2011
|
||
Basic weighted average shares outstanding
|
30,748
|
|
|
30,744
|
|
Dilutive potential common shares
|
91
|
|
|
16
|
|
Diluted weighted average shares outstanding
|
30,839
|
|
|
30,760
|
|
|
Three months ended March 31,
|
||||
(Number of shares in thousands)
|
2012
|
|
2011
|
||
Stock options
|
987
|
|
|
1,009
|
|
Performance stock units
|
108
|
|
|
146
|
|
Restricted stock units
|
—
|
|
|
—
|
|
|
Total
Shares
|
|
Weighted-
Average
Exercise
Price
|
|
Weighted-
Average
Remaining
Contractual Life
(in years)
|
|
Aggregate
Intrinsic
Value
|
|||||
Options outstanding, January 1, 2012
|
1,034
|
|
|
8.72
|
|
|
3.16
|
|
|
$
|
18
|
|
Granted
|
295
|
|
|
2.75
|
|
|
|
|
|
|||
Forfeited or expired
|
(101
|
)
|
|
8.59
|
|
|
|
|
|
|||
Exercised
|
(37
|
)
|
|
2.37
|
|
|
|
|
|
|||
Options outstanding, March 31, 2012
|
1,191
|
|
|
7.43
|
|
|
4.66
|
|
|
$
|
160
|
|
Vested and expected to vest, as of March 31, 2012
|
1,190
|
|
|
7.44
|
|
|
4.66
|
|
|
$
|
160
|
|
|
|
|
Options Outstanding
|
|
Options Exercisable
|
|||||||||||
Range of Exercise Prices
|
Number
Outstanding
|
|
Weighted
Average
Remaining
Contractual
Life (Years)
|
|
Weighted-
Average
Exercise
Price
|
|
Number of
Options
Exercisable
|
|
Weighted-
Average
Exercise
Price
|
|||||||
$0.95 - $2.72
|
357
|
|
|
7.5
|
|
|
$
|
2.35
|
|
|
49
|
|
|
$
|
1.77
|
|
$2.85 - $2.99
|
284
|
|
|
5.9
|
|
|
2.93
|
|
|
43
|
|
|
2.99
|
|
||
$4.15 - $14.25
|
260
|
|
|
2.6
|
|
|
7.18
|
|
|
251
|
|
|
7.21
|
|
||
$15.12 - $23.15
|
272
|
|
|
1.9
|
|
|
17.83
|
|
|
272
|
|
|
17.83
|
|
||
$23.64 - $26.77
|
18
|
|
|
1.2
|
|
|
25.51
|
|
|
18
|
|
|
25.51
|
|
||
$0.95 - $26.77
|
1,191
|
|
|
4.7
|
|
|
7.43
|
|
|
633
|
|
|
11.59
|
|
|
Restricted
Stock Units
|
|
Weighted Average
Grant Date Fair
Value per Share
|
|||
Restricted stock units outstanding, January 1, 2012
|
375
|
|
|
$
|
2.60
|
|
Forfeited
|
(59
|
)
|
|
2.97
|
|
|
Restricted stock units outstanding, March 31, 2012
|
316
|
|
|
2.53
|
|
|
Restricted
Stock Units
|
|
Weighted Average
Grant Date Fair
Value per Share
|
|||
Performance stock units outstanding, January 1, 2012
|
73
|
|
|
$
|
2.32
|
|
Granted
|
70
|
|
|
2.85
|
|
|
Performance stock units outstanding, March 31, 2012
|
143
|
|
|
2.58
|
|
|
Three months ended March 31,
|
||||||
|
2012
|
|
2011
|
||||
Net sales:
|
|
|
|
||||
Direct
|
$
|
33,734
|
|
|
$
|
30,254
|
|
Retail
|
16,639
|
|
|
16,963
|
|
||
Unallocated royalty income
|
889
|
|
|
1,084
|
|
||
Consolidated net sales
|
$
|
51,262
|
|
|
$
|
48,301
|
|
Contribution:
|
|
|
|
||||
Direct
|
$
|
3,028
|
|
|
$
|
2,200
|
|
Retail
|
2,267
|
|
|
2,229
|
|
||
Unallocated royalty income
|
889
|
|
|
1,084
|
|
||
Consolidated contribution
|
$
|
6,184
|
|
|
$
|
5,513
|
|
Reconciliation of consolidated contribution to income from continuing operations:
|
|
|
|
||||
Consolidated contribution
|
$
|
6,184
|
|
|
$
|
5,513
|
|
Less expenses not directly related to segments:
|
|
|
|
||||
General and administrative
|
(3,302
|
)
|
|
(3,736
|
)
|
||
Research and development
|
(53
|
)
|
|
—
|
|
||
Other income (expense), net
|
82
|
|
|
(89
|
)
|
||
Income tax expense
|
(264
|
)
|
|
(567
|
)
|
||
Income from continuing operations
|
$
|
2,647
|
|
|
$
|
1,121
|
|
|
Three months ended March 31,
|
|
Change
|
|||||||||||
|
2012
|
|
2011
|
|
$
|
|
%
|
|||||||
Net sales
|
$
|
51,262
|
|
|
$
|
48,301
|
|
|
$
|
2,961
|
|
|
6.1
|
%
|
Cost of sales
|
27,357
|
|
|
26,214
|
|
|
1,143
|
|
|
4.4
|
%
|
|||
Gross profit
|
23,905
|
|
|
22,087
|
|
|
1,818
|
|
|
8.2
|
%
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|||||||
Selling and marketing
|
16,066
|
|
|
14,865
|
|
|
1,201
|
|
|
8.1
|
%
|
|||
General and administrative
|
4,010
|
|
|
4,692
|
|
|
(682
|
)
|
|
(14.5
|
)%
|
|||
Research and development
|
1,000
|
|
|
753
|
|
|
247
|
|
|
32.8
|
%
|
|||
Total operating expenses
|
21,076
|
|
|
20,310
|
|
|
766
|
|
|
3.8
|
%
|
|||
Operating income
|
2,829
|
|
|
1,777
|
|
|
1,052
|
|
|
59.2
|
%
|
|||
Other income (expense):
|
|
|
|
|
|
|
|
|||||||
Interest income
|
6
|
|
|
1
|
|
|
5
|
|
|
n.m.
|
|
|||
Interest expense
|
78
|
|
|
(119
|
)
|
|
197
|
|
|
n.m.
|
|
|||
Other
|
(2
|
)
|
|
29
|
|
|
(31
|
)
|
|
n.m.
|
|
|||
Total other income (expense)
|
82
|
|
|
(89
|
)
|
|
171
|
|
|
n.m.
|
|
|||
Income from before income taxes
|
2,911
|
|
|
1,688
|
|
|
1,223
|
|
|
72.5
|
%
|
|||
Income tax expense
|
264
|
|
|
567
|
|
|
(303
|
)
|
|
(53.4
|
)%
|
|||
Income from continuing operations
|
2,647
|
|
|
1,121
|
|
|
1,526
|
|
|
136.1
|
%
|
|||
(Loss) income from discontinued operation, net of tax
|
(125
|
)
|
|
485
|
|
|
(610
|
)
|
|
n.m.
|
|
|||
Net income
|
$
|
2,522
|
|
|
$
|
1,606
|
|
|
$
|
916
|
|
|
57.0
|
%
|
|
|
|
|
|
n.m. = not meaningful
|
|
|
Three months ended March 31,
|
|
Change
|
|||||||||||
|
2012
|
|
2011
|
|
$
|
|
%
|
|||||||
Net sales:
|
|
|
|
|
|
|
|
|||||||
Direct
|
$
|
33,734
|
|
|
$
|
30,254
|
|
|
$
|
3,480
|
|
|
11.5
|
%
|
Retail
|
16,639
|
|
|
16,963
|
|
|
(324
|
)
|
|
(1.9
|
)%
|
|||
Royalty income
|
889
|
|
|
1,084
|
|
|
(195
|
)
|
|
(18.0
|
)%
|
|||
|
$
|
51,262
|
|
|
$
|
48,301
|
|
|
$
|
2,961
|
|
|
6.1
|
%
|
Gross profit:
|
|
|
|
|
|
|
|
|||||||
Direct
|
$
|
19,064
|
|
|
$
|
17,034
|
|
|
$
|
2,030
|
|
|
11.9
|
%
|
Retail
|
3,952
|
|
|
3,968
|
|
|
(16
|
)
|
|
(0.4
|
)%
|
|||
Royalty income
|
889
|
|
|
1,085
|
|
|
(196
|
)
|
|
(18.1
|
)%
|
|||
|
$
|
23,905
|
|
|
$
|
22,087
|
|
|
$
|
1,818
|
|
|
8.2
|
%
|
Gross margin:
|
|
|
|
|
|
|
|
|||||||
Direct
|
56.5
|
%
|
|
56.3
|
%
|
|
20
|
|
basis points
|
|||||
Retail
|
23.8
|
%
|
|
23.4
|
%
|
|
40
|
|
basis points
|
Exhibit No.
|
|
Description
|
10.1
|
|
Amended and Restated Credit Agreement, dated March 30, 2012, between Bank of the West and Nautilus, Inc. (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, as filed with the Commission on April 5, 2012).
|
|
|
|
10.2*
|
|
Form of Non-Employee Director Nonstatutory Stock Option Agreement.
|
|
|
|
31.1
|
|
Certification of Principal Executive Officer and Acting Principal Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
|
|
|
|
32.1
|
|
Certification of Principal Executive Officer and Acting Principal Financial Officer pursuant to Rule 13a-14(b) of the Securities and Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
101
|
|
The following financial statements from Nautilus, Inc.'s quarterly report on Form 10-Q for the quarter ended March 31, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets (unaudited), (ii) Condensed Consolidated Statements of Operations (unaudited), (iii) Condensed Consolidated Statements of Comprehensive Income (unaudited), (iv) Condensed Consolidated Statements of Cash Flows (unaudited) and (v) Notes to Condensed Consolidated Financial Statements (unaudited), tagged as blocks of text. Information is furnished and not filed, and is not incorporated by reference in any registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.
|
|
N
AUTILUS
, I
NC
.
|
|
|
|
|
Date: May 9, 2012
|
By:
|
/
S
/ Bruce M. Cazenave
|
|
|
Bruce M. Cazenave
|
|
|
Chief Executive Officer and
Acting Principal Financial Officer
|
1.
|
Nature of the Option
. This Option is a nonstatutory stock option and is not intended to qualify for any special tax benefits to the Optionee.
|
2.
|
Exercise Price
. The exercise price is
$XX U.S.
for each Option Share, which price is not less than the Fair Market Value per share of the Common Stock on the date of grant.
|
3.
|
Date Exercisable; Vesting
.
|
3.1
|
This Option has been granted upon Optionee's election or appointment to the Company's Board of Directors. Subject to the restrictions and conditions set forth in the Plan, one-hundred percent (100%) of the Option Shares shall become exercisable at the end of the first twelve (12) month period of Optionee's continuous service as a director of the Company following the Grant Date.
|
3.2
|
In the event Optionee ceases to serve as a director of the Company, this Option shall be exercisable thereafter only to the extent Optionee was entitled to exercise it at the date Optionee is no longer serving as a director of the Company.
|
4.
|
Exercise of Option
. The Option may be exercised in whole or in part by delivery to the Company, from time to time, of written notice, signed by Optionee, specifying the number of Option Shares that Optionee then desires to purchase, together with cash or check payable to the order of the Company, or other form of payment acceptable to the Plan Administrator, for an amount of United States dollars equal to the exercise price of such Option Shares.
|
5.
|
Duration of Option; Suspension or Termination of Option
.
|
5.1
|
Subject to earlier termination in accordance with the Plan, this Option, to the extent not previously exercised, shall terminate upon the earliest of the following dates:
|
(i)
|
Three months after the date on which Optionee is no longer serving as a member of the Company's Board of Directors;
|
(ii)
|
The date seven (7) years from the Grant Date (the “Expiration Date”); or
|
(iii)
|
The date of any transfer of the Option in violation of Section 6.
|
5.2
|
Suspension or Termination of Stock Options and SARs
. This Option shall be subject to suspension or termination by the Plan Administrator as set forth in Section 8(d) of the Plan.
|
6.
|
Non-Transferability of Option
. This Option may not be transferred in any manner otherwise than
|
7.
|
Adjustments Upon Recapitalization, Reorganization, and Certain Other Events
. In the event of a material alteration in the capital structure of the Company on account of a recapitalization, stock split, reverse stock split, stock dividend or otherwise, this Option shall be subject to adjustment by the Plan Administrator in accordance with the Plan. This Option shall become immediately exercisable, without regard to any contingent vesting provision set forth herein, upon the occurrence of any of the following events: (i) the sale, liquidation or other disposition of all or substantially all of the Company's assets; (ii) a merger or consolidation of the Company with one or more corporations as a result of which, immediately following such merger or consolidation, the shareholders of the Company as a group hold less than a majority of the outstanding capital stock of the surviving corporation; or (iii) any person or entity, including any “person” as such term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), becomes the “beneficial owner”, as defined in the Exchange Act, of shares of the Company's Common Stock representing fifty percent (50%) or more of the combined voting power of the voting securities of the Company.
|
8.
|
Disputes
. Any dispute or disagreement that may arise under or as a result of this Agreement, or any question as to the interpretation of this Agreement or the Plan, shall be determined by the Plan Administrator in its absolute discretion, and any such determination shall be final, binding, and conclusive on all affected persons.
|
9.
|
Taxation Upon Exercise of Option.
Optionee understands that upon exercise of this Option, Optionee may recognize income for federal and state income tax purposes in an amount equal to the excess of the then fair market value of the Option Shares over the exercise price. Optionee shall be responsible for all taxes, including but not limited to income, employment, and withholding taxes, arising out of the exercise of the Option Shares.
|
10.
|
Governing Law
. This agreement shall be interpreted and construed in accordance with the laws of the State of Washington.
|
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.
|
I am 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.
|
I have disclosed, based on my 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.
|
May 9, 2012
|
By:
|
/s/ Bruce M. Cazenave
|
Date
|
|
Bruce M. Cazenave
|
|
|
Chief Executive Officer and
Acting Principal Financial Officer
|
May 9, 2012
|
By:
|
/s/ Bruce M. Cazenave
|
Date
|
|
Bruce M. Cazenave
|
|
|
Chief Executive Officer and
Acting Principal Financial Officer
|