Nautilus 2015 Annual Report Download - page 42
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Please find page 42 of the 2015 Nautilus annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.that circumstances did not more likely than not indicate an impairment had occurred. For further information regarding goodwill, see Note 8, Goodwill .
Other Intangible Assets
Definite-lived intangible assets, primarily acquired trade names, customer relationships, patents and patent rights, are stated at cost, net of accumulated
amortization. We recognize amortization expense for our definite-lived intangible assets on a straight-line basis over the estimated useful lives.
Indefinite-lived intangible assets consist of acquired trademarks, specifically trade names. Indefinite-lived intangible assets are stated at cost and are not amortized;
instead, they are tested for impairment at least annually. We review our acquired trademarks for impairment in the fourth quarter of each year and when events or
changes in circumstances indicate that the assets may be impaired. The fair value of trademarks is estimated using the relief from royalty method to estimate the
value of the cost savings and a discounted cash flows method to estimate the value of future income. The sum of these two values for each trademark is the fair
value of the trademark. If the carrying amount of trademarks exceeds the estimated fair value, we calculate impairment as the excess of carrying amount over the
estimate of fair value. We tested our acquired trademarks for impairment in the fourth quarters of 2015 , 2014 and 2013 and determined that no impairment was
indicated. For further information regarding other intangible assets, see Note 9, Other Intangible Assets .
Other intangible assets acquired from Octane as of December 31, 2015 have been recorded at provisional fair values. For additional information, see Note 2,
Business Acquisition .
Impairment of Long-Lived Assets
Long-lived assets, including property, plant and equipment and definite-lived intangible assets, are evaluated for impairment when events or circumstances indicate
the carrying value may be impaired. When such an event or condition occurs, we estimate the future undiscounted cash flows to be derived from the use and
eventual disposition of the asset to determine whether a potential impairment exists. If the carrying value exceeds estimated future undiscounted cash flows, we
record impairment expense to reduce the carrying value of the asset to its estimated fair value. No impairment charges were recorded in 2015 , 2014 or 2013 .
Revenue Recognition
Direct and Retail product sales and shipping revenues are recorded when products are shipped and title passes to customers. In most instances, Retail sales to
customers are made pursuant to a sales contract that provides for transfer of both title and risk of loss to the customer upon our delivery to the carrier. For Direct
sales, revenue is generally recognized when products are shipped. Revenue is recognized net of applicable sales incentives, such as promotional discounts, rebates
and return allowances. We estimate the revenue impact of incentive programs based on the planned duration of the program and historical experience.
Many Direct business customers finance their purchases through a third-party credit provider, for which we pay a commission or financing fee to the credit
provider. Revenue for such transactions is recognized based on the sales price charged to the customer and the related commission or financing fee is included in
selling and marketing expense.
Sales Discounts and Returns Allowance
Product sales and shipping revenues are reported net of promotional discounts and return allowances. We estimate the revenue impact of retail sales incentive
programs based on the planned duration of the program and historical experience. If the amount of sales incentives is reasonably estimable, the impact of such
incentives is recorded at the later of the time the customer is notified of the sales incentive or the time of the sale. We estimate our liability for product returns
based on historical experience and record the expected obligation as a reduction of revenue. If actual return costs differ from previous estimates, the amount of the
liability and corresponding revenue are adjusted in the period in which such costs occur. Activity in our sales discounts and returns allowance was as follows (in
thousands):
2015
2014
2013
Balance, January 1 $ 4,296
$ 4,106
$ 4,990
Charges to reserve 16,700
15,285
13,345
Reductions for sales discounts and returns (15,569)
(15,095)
(14,229)
Business acquisition (Note 2) 250
—
—
Balance, December 31 $ 5,677
$ 4,296
$ 4,106
Taxes Collected from Customers and Remitted to Governmental Authorities
Taxes collected from customers and remitted to governmental authorities are recorded on a net basis and excluded from net sales.
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