Nautilus 2008 Annual Report Download - page 58

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Table of Contents
The Company performed its annual goodwill impairment test during the fourth quarter of 2008. In determining the estimated future cash flows,
current and future levels of income were considered as well as business trends and market conditions. Due to reduced growth expectations
resulting from weakening economic conditions, the analysis indicated the potential for impairment, of goodwill associated with the Company’s
retail segment. Our analysis further indicted that the goodwill assigned to the Company’s direct business segment was not impaired.
The Company performed the second step of its goodwill testing and determined that an impairment of goodwill existed. Accordingly, an
impairment charge of $29.8 million was recognized in the fourth quarter of 2008 related to the Company’s retail goodwill.
The Company’s goodwill for the two years ended December 31, 2008 was as follows:
7. OTHER INTANGIBLE ASSETS
In 2008, the Company incurred an impairment loss of $1.1 million, recorded in general and administrative expenses, associated with its
Stairmaster trade name due to revised revenue projections in light of challenging economic conditions. Stairmaster products are sold through the
Company’s commercial segment.
In 2007, the Company settled litigation with ICON Health & Fitness, Inc, thereby providing us with rights to use a variety of fitness equipment
patents and technologies. The settlement was valued at $18.3 million and reported as patents in the above table. This intangible asset value is
being amortized over the useful life of the technologies granted through this settlement. In 2007, the Company revised its strategy for these
technologies and recorded an impairment charge of $3.0 million which is included in restructuring expenses.
Amortization expense for our intangible assets totaled $2.7 million, $2.7 million and $1.1 million, for the years ended December 31, 2008, 2007
and 2006, respectively. Amortization expense on our finite-
lived intangibles, at December 31, 2008, is expected to be approximately $2.5 million
each year from 2009 through 2013, and with the remaining $5.5 million being amortized through 2020.
54
Direct
Retail
Commercial
Total
Balance as of January 1, 2007
$
2,519
$
29,755
$
—
$
32,274
Currency exchange differences
469
—
—
469
Balance as of December 31, 2007
2,988
29,755
—
32,743
Impairment loss
—
(
29,755
)
—
(
29,755
)
Currency exchange differences
(590
)
—
—
(
590
)
Balance as of December 31, 2008
$
2,398
$
—
$
—
$
2,398
(In thousands)
Estimated
Useful Life
(in years)
December 31,
2008
2007
Other intangible assets:
Indefinite life trademarks
N/A
$
16,419
$
17,519
Patents
1 to 16
23,209
23,007
Non
-
compete agreements
3
—
1,957
Total cost
39,628
42,483
Accumulated amortization:
Patents
(5,225
)
(2,826
)
Non
-
compete agreements
—
(
1,740
)
Total accumulated amortization
(5,225
)
(4,566
)
$
34,403
$
37,917