Nautilus 2009 Annual Report Download - page 19

Table of Contents
Our plan to divest the remaining portions of our commercial business may not be successful and may involve substantial additional
charges.
In September 2009, management committed to a plan for the complete divestiture of our commercial business. In December 2009, we completed
the sale of certain assets of our StairMaster and Schwinn Fitness product lines and, in February 2010, we completed an agreement for the
sale of certain assets of our Nautilus commercial equipment product line. We may be unable to successfully divest the remaining portions of
our commercial business on favorable terms, or at all. The amount of estimated loss recorded in connection with the planned sale of the
commercial business may be adjusted in future periods, depending on changes that may occur in the underlying facts and circumstances, and
these adjustments may be material. Additionally, we may incur material costs, fees, expenses and charges relating to our planned divestiture of
the commercial business, including employee termination severance payments and costs related to the termination of lease agreements and other
contractual obligations. Our results of operations and liquidity may be negatively impacted by such charges or by a failure to successfully
complete the planned divestiture within a reasonable time period. We currently expect to incur additional costs related to our planned divestiture,
including employee termination severance payments of approximately $1.6 million and termination charges for leases and other commercial
contract obligations of approximately $1.8 million, which are not reflected in our 2009 operating results in accordance with generally accepted
accounting principles. The estimated amounts of additional costs may be adjusted in future periods, depending on changes that may occur in the
underlying facts and circumstances, and the amount of adjustment may be material.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
Following is a summary of our principal properties as of December 31, 2009:
In general, our properties are well maintained, adequate and suitable for their purposes, and we believe these properties will meet our operational
needs for the foreseeable future. If we require additional warehouse or office space, we believe we will be able to obtain such space on
commercially reasonable terms.
15
Reportable Segment Location Primary Function(s)
Owned or
Leased
Unallocated
Washington
World headquarters and call center
Leased
Unallocated
Oregon
Warehouse and distribution
Leased
Unallocated
China
Quality assurance and supplier relationships
Leased
Direct
Canada
Warehouse, distribution and showroom
Leased
*
Colorado
Testing and engineering
Leased
*
Virginia
Three properties for manufacturing, warehousing and support services
Owned
*
Oklahoma
Manufacturing
Leased
*
Switzerland
Administrative
Leased
*
Germany
Administrative, showroom and warehouse
Leased
*
United Kingdom
Administrative, showroom and warehouse
Leased
*
These facilities are related to our commercial business which is classified as a discontinued operation, and are scheduled for sale or closure
in 2010. In each case, we are seeking to either sell the property or terminate the underlying lease or sub
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lease the property.
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