Nautilus 2002 Annual Report Download - page 36

RECENT ACCOUNTING PRONOUNCEMENTS
Effective July 1, 2001, the Company adopted certain provisions of Statement of Financial Accounting Standards ("SFAS") No. 141,
BUSINESS COMBINATIONS, and effective January 1, 2002, the Company adopted the full provisions of SFAS No.
141 and SFAS No. 142, GOODWILL AND OTHER INTANGIBLE ASSETS. SFAS No. 141 requires business combinations initiated after
June 30, 2001 to be accounted for using the purchase method of accounting and broadens the criteria for recording intangible assets apart from
goodwill. SFAS No. 142 requires that purchased goodwill and certain indefinite-lived intangibles no longer be amortized but instead be tested
for impairment at least annually. In connection with the adoption of SFAS No. 142 as of January 1, 2002, the Company evaluated its identified
intangible assets and determined that the Nautilus trademark has an indefinite useful life.
SFAS No. 142 prescribes a two-phase process for testing the impairment of goodwill and indefinite life intangibles. The first phase, required to
be completed by June 30, 2002, tested for impairment. If impairment existed, the second phase, required to be completed by December 31,
2002, measured the impairment. The Company completed its first phase impairment analysis during the second quarter and found no instances
of impairment of its recorded goodwill or indefinite life intangibles. Accordingly, no impairment charge has been recorded as a result of
adopting SFAS No. 142. Beginning in the fourth quarter of 2002, recorded goodwill and indefinite life intangibles were tested as part of an
annual impairment test as prescribed by SFAS No. 142. The Company found no instances of impairment of its recorded goodwill or indefinite
life intangibles. More frequent testing will be performed if material changes in events or circumstances arise.
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 was effective for the Company's fiscal year beginning January 1, 2002. The adoption of SFAS No. 144 has not had a material effect on
the Company's financial position, results of operations, or cash flows.
In July 2002, the Financial Accounting Standards Board ("the FASB") issued SFAS No. 146, ACCOUNTING FOR COSTS ASSOCIATED
WITH EXIT OR DISPOSAL ACTIVITIES. The standard requires companies to recognize costs associated with exit or disposal activities
when they are incurred rather than at the date of a commitment to an exit or disposal plan. Costs covered by the standard include lease
termination costs and certain employee severance costs that are associated with a restructuring, discontinued operation, plant closing, or other
exit or disposal activity. This statement is to be applied prospectively to exit or disposal activities initiated after December 31, 2002.
In November 2002, the FASB issued Interpretation ("FIN") No. 45, GUARANTOR'S ACCOUNTING AND DISCLOSURE
REQUIREMENTS FOR GUARANTEES, INCLUDING INDIRECT GUARANTEES OF INDEBTEDNESS OF OTHERS. FIN No. 45 is an
interpretation of FASB Statements No. 5, 57 and 107 and rescinds FIN No. 35. This Interpretation elaborates on the disclosures to be made by
a guarantor in its interim and annual financial statements about its obligations under certain guarantees that it has issued. The disclosure
requirements in this Interpretation are effective for financial statements of interim or annual periods ending after December 15, 2002. The
Company has adopted the provisions of FIN No. 45 in these financial statements with respect to product warranty disclosures.
In December 2002, the FASB issued SFAS No. 148, ACCOUNTING FOR STOCK-BASED COMPENSATION - TRANSITION AND
DISCLOSURE. SFAS No. 148 amends SFAS No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION to provide alternative
methods of transition for an entity that voluntarily changes to the fair value based method
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