Nautilus 2003 Annual Report Download - page 49

Table of Contents
Trade Receivables –
The Company maintains an allowance for doubtful accounts receivable based upon our historical experience and the
expected collectibility of all outstanding accounts receivable. Allowance for doubtful accounts receivable activity for the years ended
December 31, 2003, 2002 and 2001 is as follows:
Balance at
Beginning
of Period
Charged to
Costs and
Expenses
Deductions*
Balance at
End of
Period
Allowance for doubtful accounts:
2003
$
3,147
$
388
$
849
$
2,686
2002
2,064
1,369
286
3,147
2001
352
4,478
2,766
2,064
*
Deductions represent amounts written off against the allowance, net of recoveries.
Inventories are stated at the lower of average cost (first-in, first-out) or market or at the lower of standard cost (first-in, first-out) or
market. The Company evaluates the need for inventory valuation adjustments associated with obsolete, slow-moving and nonsalable
inventory by reviewing current transactions and forecasted product demand on a quarterly basis.
Property, Plant and Equipment is stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives
of the assets.
Management reviews the investment in long-lived assets for possible impairment whenever events or circumstances indicate the carrying
amount of an asset may not be recoverable. There have been no such events or circumstances in each of the three years in the period
ended December 31, 2003. If there were an indication of impairment, management would prepare an estimate of future cash flows
(undiscounted and without interest charges) expected to result from the use of the assets and their eventual disposition. If these cash flows
were less than the carrying amount of the assets, an impairment loss would be recognized to write down the assets to their estimated fair
value.
Goodwill and Other Assets consist of license agreements, patents, trademarks and goodwill. Amortization is computed using the straight-
line method over estimated useful lives of three to twenty years. Accumulated amortization was $1,557 and $1,195 at December 31, 2003
and 2002, respectively.
In June 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No.
142, Goodwill and Other Intangible Assets
. The statement requires discontinuing the amortization of goodwill and other intangible assets
with indefinite useful lives. Instead, these assets are to be tested periodically for impairment and written down to their fair market value
as necessary. The Company adopted the provisions of this statement effective September 20, 2001 with respect to the Schwinn Fitness
acquisition, the effect of which is to not amortize the goodwill recorded as part of this acquisition but to annually test it for impairment.
The Company adopted SFAS No. 142 effective January 1, 2002 with respect to the Nautilus and StairMaster trademarks.
Guarantees – From time to time, the Company arranges for commercial leases or other financing sources to enable certain of its
commercial customers to purchase the Company’s equipment. While most of these financings are without recourse, in certain cases the
Company provides a guarantee or other recourse provisions to the independent finance company of all or a portion of the lease payments
in order to facilitate the sale of the commercial equipment. In such situations, the Company ensures that the transaction between the
independent leasing company and the commercial customer represents a
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