Nautilus 2009 Annual Report Download - page 41

Table of Contents
NAUTILUS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SIGNIFICANT ACCOUNTING POLICIES
Organization and Business – Nautilus is a leading designer, developer and marketer of fitness products sold under such well-known brand
names as Nautilus , Bowflex , Schwinn Fitness and Universal . As used herein, the term “Nautilus” or “Company”
refers to Nautilus, Inc.
and subsidiaries, unless the context indicates otherwise. The Company’s goal is to develop and market fitness equipment and related products to
help people enjoy healthier lives. Nautilus was founded in 1986 and incorporated in the state of Washington in 1993. The Company’s
headquarters are located in Vancouver, Washington.
We market our products through two business segments: Direct and Retail, each representing a distinct marketing distribution channel. Our
direct business offers products directly to consumers through direct advertising, catalogs and the Internet. Our retail business offers our products
through a network of independent retail companies located in the United States and Canada, as well as Internet-based merchants. Our
commercial business, formerly an operating segment and reported as a discontinued operation beginning in 2009, offered products to health
clubs, schools, hospitals and other organizations.
On April 18, 2008, the Company completed the sale of its former fitness apparel business, DashAmerica, Inc. d/b/a Pearl Izumi (“Pearl Izumi”).
Accordingly, results of operations associated with the fitness apparel business have been presented in the consolidated financial statements as
discontinued operations for all periods presented.
On September 25, 2009 the Company committed to a plan for the complete divestiture of its commercial business. Accordingly, results of
operations and certain assets associated with the commercial business have been presented in the consolidated financial statements as
discontinued operations for all periods presented.
Basis of presentation
– The accompanying consolidated financial statements have been prepared in accordance with accounting principles
generally accepted in the United States of America (“U.S. GAAP”) and relate to Nautilus, Inc. and its subsidiaries, all of which are wholly-
owned, directly or indirectly. Intercompany transactions and balances have been eliminated in consolidation.
Year-end – The Company’s fiscal year ends on December 31.
Reclassifications
– The Company has reclassified certain 2008 amounts related to the cash flows of its fitness apparel division discontinued
operation, as permitted by accounting guidance, which previously were reported separately, to conform to the current period presentation. Net
cash flows were not impacted by this reclassification.
The results of the commercial business, including related costs previously included in restructuring expense, have been reclassified as
discontinued operations in the Company’s financial statements for all periods presented.
Accrued warranty obligations, previously included in accrued liabilities, have been reclassified as a separate component of current liabilities in
the Company’s consolidated balance sheets.
Use of estimates – The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses and the disclosure of contingent assets and liabilities in
the financial statements. Actual results could differ from those estimates.
Concentrations of risk – Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash
held in bank accounts that exceed federally insured limits and trade receivables.
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