Nautilus 2015 Annual Report Download - page 32
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Please find page 32 of the 2015 Nautilus annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.estimate our potential obligation, and because management does not expect these obligations to have a material adverse effect on our consolidated financial
position, results of operations or cash flows, no liabilities are recorded at December 31, 2015 .
SEASONALITY
We expect our sales from fitness equipment products to vary seasonally. Sales are typically strongest in the first and fourth quarters, followed by the third quarter,
and are generally weakest in the second quarter. We believe that, during the spring and summer months, consumers tend to be involved in outdoor activities,
including outdoor exercise, which impacts sales of indoor fitness equipment. This seasonality can have a significant effect on our inventory levels, working capital
needs and resource utilization.
INFLATION
We do not believe that inflation had a material effect on our business, financial condition or results of operations in 2015 , 2014 or 2013 . Inflation pressures do
exist in countries where our contract manufacturers are based, however we have largely mitigated these increases through cost improvement measures.
NEW ACCOUNTING PRONOUNCEMENTS
See Note 1, Significant Accounting Polices , to our Consolidated Financial Statements in Part II, Item 8 of this report.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
Our exposure to market risk from changes in interest rates relates primarily to our cash equivalents and substantially all our marketable securities. As of
December 31, 2015 , we had cash equivalents of $0.7 million held in a combination of money market funds and corporate bonds, and marketable securities of
$30.0 million , held in a combination of certificates of deposit and corporate bonds. Our cash equivalents mature within three months or less from the date of
purchase. Marketable securities with original maturities of greater than three months and remaining maturities of less than one year are classified as short-term
investments. Investments with maturities beyond one year may be classified as short-term based on their highly liquid nature and because such marketable
securities represent the investment of cash that is available for current operations. We have classified our marketable securities as available-for-sale and, therefore,
we may choose to sell or hold them as changes in the market occur. Because of the short-term nature of the instruments in our portfolio, a decline in interest rates
would reduce our interest income over time, and an increase in interest rates may negatively affect the market price or liquidity of certain securities within the
portfolio, but a change in interest rates would not have a material impact on our results of operations, financial position or cash flows.
Our negotiated credit facilities generally charge interest based on a benchmark rate such as LIBOR. Fluctuations in short-term interest rates may cause interest
payments on term loan principal and drawn amounts on the revolving line to increase or decrease. As of December 31, 2015, the outstanding balances on our credit
facilities totaled $80.0 million .
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