Nautilus 2002 Annual Report Download - page 62

14. RELATED-PARTY TRANSACTIONS
The Company incurred royalty expense under an agreement with a stockholder of the Company of $9,089 in 2002, $6,786 in 2001, and $4,837
in 2000, of which $1,997 and $1,885 was payable at December 31, 2002 and 2001, respectively. In addition to the royalty agreement, the
stockholder has separately negotiated an agreement dated June 18, 1992, when the Company was privately held, between the stockholder, the
Company's Chief Executive Officer ("CEO"), and a former director of the Company. That separate agreement stipulates that annual royalties
above $90 would be paid 60% to the stockholder, 20% to the CEO and 20% to the former director.
15. LITIGATION
In the normal course of business, the Company is a party to various other legal claims, actions and complaints. Although it is not possible to
predict with certainty whether the Company will ultimately be successful in any of these legal matters, or what the impact might be, the
Company believes that disposition of these matters will not have a material adverse effect on the Company's financial position, results of
operations or cash flows.
In December 2002, the Company filed suit against Icon Health and Fitness, Inc. in the Federal District Court, Western District of Washington
alleging infringement by Icon of the Company's Bowflex patents. The Company seeks injunctive relief, unquantified treble damages and its fees
and costs.
16. EMPLOYEE BENEFIT PLAN
The Company adopted a 401(k) profit sharing plan (the "Plan") in 1999 covering all employees over the age of 18. The Plan was amended in
2000 to allow for immediate eligibility in the Plan. Each participant in the Plan may contribute up to 30% of eligible compensation during any
calendar year, subject to certain limitations. The Plan provides for Company matching contributions of up to 50% of the first 6% of eligible
contributions made by all participants excluding Nautilus Human Performance Systems, Inc. ("Nautilus HPS") employees. For Nautilus HPS
employees, the Company matches 35% of employee contributions up to the first 4% of eligible contributions. All participants must have
completed one year of service before becoming eligible for Company matching contributions. In addition, the Company may make
discretionary contributions. Employees are 25% vested in the matching and discretionary contributions per year for the first four years of
service. Expense for the plan was $356, $225, and $135 for the years ended December 31, 2002, 2001 and 2000, respectively.
17. SUBSEQUENT EVENTS
On January 29, 2003, the Company announced that its Board of Directors declared an annual dividend. The Board of Directors declared a
$0.40 per share annual dividend payable quarterly. The initial quarterly dividend of $0.10 per share was paid March 10, 2003, to shareholders
of record at the close of business on February 20, 2003.
On January 29, 2003, the Company also announced that its Board of Directors authorized management to repurchase up to $50,000 of the
Company's common stock in open-market transactions from February 10, 2003 through June 30, 2003, with the terms of the purchases to be
determined by management based on market conditions.
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2003. EDGAR Online, Inc.