Nautilus 2008 Annual Report Download - page 55

Table of Contents
entity first recognizes a financial asset or financial liability. Subsequent changes in fair value must be recorded in earnings. This statement
became effective as of January 1, 2008. The Company’s adoption of SFAS No. 159 did not have a material impact on its consolidated results of
operations, financial position, or cash flows.
In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (“SFAS No. 141(R)”), which establishes principles
and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, liabilities assumed and
any non-controlling interest in an acquiree. SFAS No. 141(R) also establishes disclosure requirements to enable the evaluation of the nature and
financial effects of the business combination. SFAS No. 141(R) is effective for fiscal years beginning after December 15, 2008. The Company
does not expect the adoption of this statement to have a material effect on its consolidated financial position, results of operations or cash flows.
(w) Reclassifications – The Company has reclassified certain amounts previously reported as selling and marketing, general and administrative,
and research and development expenses, to a separate operating expense line entitled restructuring.
2. RESTRUCTURING ACTIVITIES
During 2007 and 2008, the Company implemented a number of initiatives to reduce operating costs and reorganize operations by its four
business segments: the direct, retail and commercial businesses, and a corporate function. Our 2008 restructuring initiatives included the
following activities:
In October 2007 the Company entered into a series of agreements under which the Company or its wholly-owned subsidiaries were to acquire or
lease substantially all of the assets of Land America and Treuriver Investments, Ltd. (“Treuriver”). The Company paid Land America and
Treuriver non-refundable deposits of $18.5 million in connection with the purchase agreements. In January 2008, the Company gave written
notice to Land America and Treuriver exercising its rights to terminate the Land America Agreements. In 2007, the Company recorded a $19.4
million charge in general and administrative expenses, as a result of the suspended acquisition of Land America and Treuriver. In the first
quarter of 2008, the Company received $5.0 million previously held in escrow related to the abandoned acquisition. The Company paid $8.0
million in the second quarter of 2008 as final settlement of all claims related to the termination of the Land America agreements.
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We restructured our workforce to better match the requirements of the newly formed organization;
• We closed our Tulsa manufacturing facility and transferred operations to third party manufacturers in Asia and our owned
manufacturing facility in Virginia;
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We reviewed our product lines, eliminating low volume or low profit products;
• We consolidated our U.S. distribution centers and aligned our products by business segment to allow for more efficient product
handling;
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We ceased direct business sales through our Australian subsidiary and closed those operations; and
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We transitioned the activities from our Canadian call center to our call center located in Vancouver, Washington.