Nautilus 2001 Annual Report Download - page 46

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SHORT-TERM INVESTMENTS
Debt securities with original maturities greater than three months and remaining maturities less than one year are classified as short-term
investments. Short-term investments in debt securities are classified as held-to-maturity and valued at amortized cost with gains and losses
recognized upon the sale of the security.
INVENTORIES
Inventories are stated at the lower of average cost or market.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the
assets.
Management reviews the investment in long-lived assets for possible impairment whenever events or circumstances indicate the carrying
amount of an asset may not be recoverable. There have been no such events or circumstances in each of the three years in the period ended
December 31, 2001. If there were an indication of impairment, management would prepare an estimate of future cash flows (undiscounted and
without interest charges) expected to result from the use of the asset and its eventual disposition. If these cash flows were less than the carrying
amount of the assets, an impairment loss would be recognized to write down the assets to their estimated fair value.
OTHER ASSETS
Other assets consist of license agreements, patents and trademarks and goodwill. Amortization is computed using the straight-line method over
estimated useful lives of three to twenty years. Accumulated amortization was $510,374 and $833,565 at December 31, 2000 and 2001,
respectively.
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 far market value as necessary. The Company adopted the provisions of this statement
effective September 20, 2001 as a result of the Schwinn acquisition, the effect of which is to not amortize the goodwill recorded as part of this
acquisition but to annually test it for impairment.
REVENUE RECOGNITION
For all of the Company's products, except Nautilus commercial equipment, revenue from product sales is recognized at the time of shipment.
Revenue is recognized upon installation for the Nautilus commercial equipment if the Company is responsible for installation.
WARRANTY COSTS
The Company's warranty policy provides for coverage for defects in material and workmanship. Warranty periods on the Company's products
range from two years to limited lifetime on the Bowflex lines of fitness products and twenty years on sleep systems. The Nautilus commercial
line of fitness products includes a lifetime warranty on the structural frame, welded moving parts and weight stacks, a 120-day warranty on
upholstery and padded items, and a one-year warranty on all other parts. The Nautilus and Schwinn Fitness commercial and retail line of fitness
products includes lifetime warranty on the frame and
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2002. EDGAR Online, Inc.