Nautilus 2002 Annual Report Download - page 45

TRADE RECEIVABLES - The Company maintains an allowance for doubtful accounts receivable based upon our historical experience and
the expected collectibility of all outstanding accounts receivable. Allowance for doubtful accounts receivable activity for the years ended
December 31, 2002, 2001 and 2000 is as follows:
Balance at Charged to Balance
at
Beginning Costs and End of
of Period Expenses Deductions* Period
Allowance for doubtful accounts:
2002 $ 2,064 $ 1,369 $ 286 $
3,147
2001 352 4,478 2,766
2,064
2000 305 425 378
352
* Deductions represent amounts written off against the allowance, net of recoveries.
INVENTORIES are stated at the lower of average cost (first-in, first-out) or market or at the lower of standard cost (first-in, first-out) or
market. The Company evaluates the need for inventory valuation adjustments associated with obsolete, slow-moving and nonsalable inventory
by reviewing current transactions and forecasted product demand.
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, 2002. 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.
GOODWILL AND OTHER ASSETS consist of license agreements, patents, trademarks and goodwill. Amortization is computed using the
straight-line method over estimated useful lives of three to twenty years. Accumulated amortization was $1,195 and $834 at December 31, 2002
and 2001, respectively.
In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("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 with respect to 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. The Company adopted SFAS
No. 142 effective January 1, 2002 with respect to the Nautilus and StairMaster trademarks.
REVENUE RECOGNITION - Revenue from product sales is recognized in accordance with Staff Accounting Bulletin ("SAB") No. 101,
REVENUE RECOGNITION IN FINANCIAL STATEMENTS. 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.
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