Nautilus 2002 Annual Report Download - page 47

the contracted work has been performed. Research and development expense was $4,485, $2,229, and $1,186 for 2002, 2001 and 2000,
respectively.
ADVERTISING - The Company expenses advertising costs as incurred except for commercial advertising production costs, which are
expensed at the time the first commercial is shown on television. Advertising expense was $88,305, $63,582, and $47,265 for 2002, 2001 and
2000, respectively.
INCOME TAXES - Deferred income tax assets and liabilities are computed annually for differences between the financial statement and tax
bases of assets and liabilities. This results in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to
periods in which the differences are expected to affect taxable income. A valuation allowance is established when necessary to reduce deferred
tax assets to the amount more likely than not to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the
change during the period in deferred tax assets and liabilities.
FOREIGN CURRENCY TRANSLATIONS - The accounts of our foreign operations are measured using the local currency as the functional
currency. These accounts are translated into U.S. dollars using exchange rates in effect at year-end for assets and liabilities and the weighted
average exchange rate during the period for the results of operations. Translation gains and losses are accumulated as a separate component of
stockholders' equity and comprehensive income.
FOREIGN CURRENCY TRANSACTIONS - Foreign currency transaction gains and losses are a result of the effect of exchange rate changes
on transactions denominated in currencies other than the functional currency, including U.S. dollars. Gains and losses on those foreign currency
transactions are included in determining net income or loss for the period in which exchange rates change. Foreign currency transaction gains
and (losses) were $210, $(54), and zero for the years ended December 31, 2002, 2001 and 2000, respectively.
STOCK-BASED COMPENSATION - The Company continues to measure compensation expense for its stock-based employee compensation
plans using the method prescribed by Accounting Principles Board ("APB") Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO
EMPLOYEES. The Company provides pro forma disclosures of net income and earnings per share as if the method prescribed by SFAS No.
123, ACCOUNTING FOR STOCK-BASED COMPENSATION, had been applied in measuring compensation expense.
If compensation cost on stock options granted under these plans had been determined based on the fair value of the options consistent with that
described in SFAS No. 123, the Company's net income and earnings per share would have been reduced to the pro forma amounts indicated
below for the years ended December 31, 2002, 2001 and 2000.
2002 2001 2000
Net income, as reported $ 97,887 $ 66,583 $
41,626
Net income, pro forma $ 94,746 $ 64,340 $
40,501
Basic earnings per share, as reported $ 2.84 $ 1.89 $
1.18
Basic earnings per share, pro forma $ 2.75 $ 1.83 $
1.15
Diluted earnings per share, as reported $ 2.79 $ 1.85 $
1.16
Diluted earnings per share, pro forma $ 2.70 $ 1.79 $
1.13
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2003. EDGAR Online, Inc.