Nautilus 2001 Annual Report Download - page 35

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commence a regulatory enforcement action that interrupts our direct marketing efforts or results in a product recall.
RECENT ACCOUNTING PRONOUNCEMENTS
On January 1, 2001, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities," as amended, which establishes accounting and reporting standards for derivative instruments and hedging
activities requiring that all derivatives be recognized in the balance sheet and measured at fair value. The adoption of SFAS No. 133 did not
have a material effect on the Company's financial position, results of operations or cash flows.
The Company adopted SFAS No. 141, "Business Combinations," effective July 1, 2001. SFAS No. 141 requires all business combinations
initiated after June 30, 2001 to be accounted for using the purchase method of accounting.
In June 2001, the Financial Accounting Standards Board issued SFAS No. 142, "Goodwill and Other Intangible Assets." The statement requires
discontinuing the amortization of goodwill and other intangible assets with indefinite useful lives. Instead, these assets are to be tested
periodically for impairment and written down to their fair market value as necessary. The Company adopted the provisions of this statement
effective September 20, 2001 as a result of the Schwinn Fitness acquisition, the effect of which is to not amortize the goodwill recorded as part
of this acquisition but to annually test it for impairment.
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," addresses accounting and reporting for the impairment or
disposal of long-lived assets. SFAS No. 144 supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of." SFAS No. 144 establishes a single accounting model for long-lived assets to be disposed of by sale and
expands on the guidance provided by SFAS No. 121 with respect to cash flow estimations. SFAS No. 144 becomes effective for the Company's
fiscal year beginning January 1, 2002. The Company is evaluating SFAS No. 144 and has not yet determined the impact of adoption on its
financial position or results of operations.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We have primarily invested cash with banks and in liquid debt instruments purchased with maturity dates of less than one year. Our bank
deposits may exceed federally insured limits and there is risk of loss of the entire principal with any debt instrument. To reduce risk of loss, we
limit our exposure to any one debt issuer and require certain minimum ratings for debt instruments that we purchase.
FOREIGN EXCHANGE RISK
The Company is exposed to foreign exchange risk to the extent of fluctuations in the Euro, the Swiss Franc, German Mark and the British
Pound. Based on the relative size of the Company's foreign operations, management believes that its exposure to foreign exchange risk is not
material and that any possible near-term changes in the related exchange rates would not have a material impact on the Company's financial
position, results of operations or cash flows.
33
2002. EDGAR Online, Inc.