Segment Information

12 Months Ended

Dec. 31, 2015

Segment Reporting [Abstract]

Segment Information

SEGMENT AND ENTERPRISE-WIDE INFORMATION

In accordance with FASB ASC 280, Segment Reporting, Nautilus determined that it has three operating segments as of December 31, 2015 - Direct, Retail and Octane. Based on the aggregation criteria of ASC 280-10, we determined that two of the operating segments (Retail and Octane) can be aggregated due to these segments having similar economic characteristics and meeting the aggregation criteria. As a result, we have two reportable segments - Direct and Retail. This financial reporting structure was effective as of December 31, 2015, the acquisition date of Octane. Since the acquisition occurred on December 31, no amount of net sales, contribution or expenses related to the Octane business were included in our reported Retail segment results for 2015. Retail segment assets, however, do include the identifiable assets acquired from Octane, as further discussed in Note 2, Business Acquisition.

We evaluate performance using several factors, of which the primary financial measures are net sales and reportable segment contribution.Contribution is the measure of profit or loss, defined as net sales less product costs and directly attributable expenses. Directly attributable expenses include selling and marketing expenses, general and administrative expenses, and research and development expenses that are directly related to segment operations. Segment assets are those directly assigned to an operating segment's operations, primarily accounts receivable, inventories, goodwill and other intangible assets. Unallocated assets primarily include cash and cash equivalents, available-for-sale securities, shared information technology infrastructure, distribution centers, corporate headquarters, prepaids and other current assets, deferred income tax assets and other assets. Capital expenditures directly attributable to the Direct and Retail segments were not significant in any period.

The accounting policies of the reportable segments are the same as the policies described in Note 1, Significant Accounting Policies.

Following is summary information by reportable segment (in thousands):

	Year Ended December 31,
	2015			2014			2013
Net Sales:
Direct	$	225,595		$	175,593		$	136,663
Retail	106,195			93,223			76,775
Unallocated royalty income	3,974			5,631			5,365
Consolidated net sales	$	335,764		$	274,447		$	218,803
Contribution:
Direct	$	39,940		$	29,345		$	14,126
Retail	12,850			13,279			11,431
Unallocated royalty income	3,974			5,631			5,365
Consolidated contribution	$	56,764		$	48,255		$	30,922
Reconciliation of consolidated contribution to income from continuing operations:
Consolidated contribution	$	56,764		$	48,255		$	30,922
Amounts not directly related to segments:
Operating expenses	(16,493		)	(18,101		)	(15,198		)
Other income, net	(249		)	70			315
Income tax expense (benefit)	13,219			9,841			(32,085		)
Income from continuing operations	$	26,803		$	20,383		$	48,124
Depreciation and amortization expense:
Direct	$	868		$	1,913		$	1,956
Retail	757			643			642
Unallocated corporate	1,787			1,468			746
Total depreciation and amortization expense	$	3,412		$	4,024		$	3,344
	December 31,
Assets:	2015			2014
Direct	$	35,356		$	25,263
Retail	202,696			37,203
Unallocated corporate	77,860			113,188
Total assets	$	315,912		$	175,654

Net sales by geographic area were as follows:

	Year Ended December 31,
	2015		2014		2013
U.S.	$	295,366	$	231,230	$	181,381
Canada	33,230		35,367		34,166
All other	7,168		7,850		3,256
	$	335,764	$	274,447	$	218,803

There are no material long-lived assets held outside of the U.S.

In 2015, 2014 and 2013, Amazon.com accounted for 11.1%, 11.3% and 11.2%, respectively, of our net sales.