Nautilus 2002 Annual Report Download - page 48

The pro forma amounts may not be indicative of the effects on reported net income for future years due to the effect of options vesting over a
period of years and the granting of stock compensation awards in future years.
The fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model with the following
weighted-average assumptions used for the grants in 2002, 2001 and 2000:
2002 2001 2000
Granted option vesting All as scheduled All as scheduled All as scheduled
Dividend yield None None None
Risk-free interest rate 4.1 % 4.4 % 5.0 %
Expected volatility 67 % 67 % 51 %
Expected option lives 5 years 5 years 5 years
Weighted-average fair value of
options granted per share $ 20.52 $ 11.75 $ 14.59
Refer to Note 9 for further information regarding the Company's stock option plan.
COMPREHENSIVE INCOME is defined as net income as adjusted for changes to equity resulting from events other than net income or
transactions related to an entity's capital structure. Comprehensive income for the years ended December 31, 2002 and 2001 equals net income
plus or minus the effect of foreign currency translation adjustments. The foreign currency translation adjustments are due to the translation of
the financial statements of the foreign subsidiaries acquired as part of the Fitness Division of Schwinn/GT Corp. ("Schwinn Fitness") and
StairMaster. In 2000, the Company had no foreign subsidiaries.
FAIR VALUE OF FINANCIAL INSTRUMENTS - The carrying amount of the Company's cash and cash equivalents, short-term investments,
trade receivables, notes receivable, trade payables, royalty payable to stockholders, and accrued liabilities approximates their estimated fair
values due to the short-term maturities of those financial instruments.
RECENT ACCOUNTING PRONOUNCEMENTS - Effective July 1, 2001, the Company adopted certain provisions of 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
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2003. EDGAR Online, Inc.