Nautilus 2010 Annual Report Download - page 23

Table of Contents
General and Administrative
General and administrative expenses were $19.4 million in 2010 , a decrease of $5.2 million , or 21.3% , compared to 2009 , primarily due to
cost-saving initiatives aimed at reductions in personnel, occupancy cost, insurance expense and outside services costs. In addition, general and
administrative expenses in 2009 were reduced by the resolution of legal matters which were settled for $1.0 million less than the amounts
previously estimated.
Research and Development
Research and development expenses were $2.9 million in 2010 , a decrease of $2.3 million , or 44.4% , compared to 2009 , consisting of $1.6
million in cost savings from the consolidation of product development activities at our corporate headquarters and a $0.7 million decrease in pre-
production royalty fees paid to outside inventors. We expect research and development expenses to increase in 2011.
Restructuring
No restructuring costs were incurred in
2010 . In 2009 restructuring expense of $14.2 million included: an $8.0 million impairment charge for
abandoned leasehold improvements in space we are no longer using at our Vancouver, Washington headquarters facility; $2.8 million in facility
lease termination costs and other lease obligations associated with the reduction of leased space at our headquarters facility and our vacated
manufacturing and distribution facilities in Tulsa, Oklahoma; $1.8 million in charges due to our abandonment of information technology
software; contract termination costs of $0.9 million related to a warehouse distribution service agreement for our U.S. parts; and $0.6 million in
severance costs related to personnel reductions.
Intangible Asset Impairments
No asset impairment losses were incurred in
2010 . In 2009 , we recognized impairment losses of $5.9 million for intangible assets of our retail
business.
Other Income and Expense
Interest Expense
We incurred interest expense of $0.1 million in 2010 in connection our long-
term note payable to a related party. We incurred interest expense of
$0.2 million in 2009 in connection with our prior bank financing agreement. We repaid all amounts outstanding under our prior financing
agreement in December 2009 and have not borrowed under our current financing agreement with Bank of the West.
Other Income
Other income was $0.5 million in 2010 , compared to other expense of $0.2 million in 2009 , primarily due to changes in foreign currency
exchange gains and losses.
Income Tax Expense
Income tax expense was $0.6 million in 2010 , compared to income tax benefit of $10.9 million in 2009 . Income tax expense in 2010 primarily
relates to taxable income generated in Canada. Income tax benefit in 2009 was attributable to the carryback of 2008 U.S. net operating loss to a
prior year, as permitted under a new law enacted in November 2009.
We increased our valuation allowances in 2010 and 2009 to reduce U.S. deferred income tax assets generated during the respective years to the
amounts expected, more likely than not, to be realized. As a result, generally we did not recognize U.S. income tax benefits associated with our
operating losses in 2010 or 2009 .
Discontinued Operations
Loss from our commercial business discontinued operation, net of income taxes, was $13.0 million in 2010
, compared to loss from discontinued
operations of $34.7 million in 2009 , as we disposed of substantially all of the remaining components of our
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