Nautilus 2006 Annual Report Download - page 46

Table of Contents
5. INTANGIBLE AND OTHER ASSETS, net
Intangible assets and other assets consisted of the following at December 31:
In 2006, the Company purchased approximately $8.5 million in intangible assets whose lives range between 10 years and perpetuity. The
amortization expense, which is included in cost of sales and general and administrative expense, for the next five full succeeding years, is
estimated at $2.3 million, $2.0 million, $1.5 million, $1.1 million, and $1.1 million.
During 2006, the Company determined that the life of the Schwinn trademark was indefinite and therefore discontinued its amortization.
Prior to 2006 the acquisition value of the trademark was amortized over a period of twenty years. The Company believes the indefinite life is
appropriate as the Schwinn product line continues to be profitable and is expected to grow. The Company also evaluated the carrying value of
the trademark for impairment and determined that no impairment existed at December 31, 2006.
6. ACCRUED LIABILITIES
Accrued liabilities in excess of five percent of total current liabilities consisted of accrued warranty expense of $9.8 million and $10.2
million at December 31, 2006 and 2005, respectively, and accrued payroll of $8.5 million at December 31, 2005.
7. LINE OF CREDIT AND LONG-TERM DEBT
In November 2005, the Company entered into an unsecured credit agreement with two domestic lending institutions. In August 2006, the
Company amended its credit agreement. The agreement, as amended, provides for a revolving credit facility for a maximum commitment of
$65 million, includes revolving loans, letters of credit and swing loans, and expires on November 17, 2010. Under this credit facility,
borrowings had interest based at either the Prime Rate, Federal Funds Effective Rate or Eurodollar rates plus the applicable margin for either
Base Rate Loans or Eurodollar Loans based upon the Company’s consolidated leverage ratio. The credit facility has a default rate of two
percent in excess of the rate otherwise applicable and provides for a facility fee
44
(In Thousands)
Estimated
Useful Life
(in years) 2006 2005
Intangible assets:
Indefinite life trademarks
N/A
$
37,523
$
30,465
Definite life trademarks
20
—
6,800
Patents
1 to 17
7,697
1,597
Customer base
8
3,400
3,400
Developed technology
4
2,500
2,500
Non
-
compete agreements
3
1,647
1,647
Total intangible assets
52,767
46,409
Accumulated amortization:
Trademarks
—
(
2,097
)
Patents
(730
)
(262
)
Customer base
(631
)
(206
)
Developed technology
(927
)
(302
)
Non
-
compete agreements
(916
)
(366
)
Total accumulated amortization
(3,204
)
(3,233
)
Intangible assets, net
49,563
43,176
Other assets
6,923
1,195
Intangible and other assets, net
$
56,486
$
44,371