Nautilus 2008 Annual Report Download - page 39

Table of Contents
inventory and accounts receivable in the U.S., as adjusted for certain items identified in the Loan Agreement. At March 10, 2009, the Company
had unused availability of approximately $12 million under the credit line.
The Loan Agreement contains a financial covenant, as well as limitations on capital expenditures, mergers and acquisitions, indebtedness, liens,
dispositions, dividends, and investments. The financial covenant is applicable only during a trigger period that would be in effect when excess
availability (based on the value of our collateral assets, in excess of current borrowings) falls below certain pre-established limits. Once
activated, the trigger period would generally last until the Company meets minimum excess borrowing capacity requirements for a 90-day
period. The Loan Agreement also contains customary provisions regarding events of default. Upon an event of default, the lenders would have
the option of accelerating all obligations under the Loan Agreement.
The Company, as of this date, had not triggered the requirement to calculate compliance under the financial covenant provision of the Loan
Agreement, but would have passed the financial covenant in the amended Loan Agreement if the covenant had been applied. However, we
cannot be assured that we will not enter into a trigger period in the future or that we will continue to remain in compliance with the loan
covenants. In the event of default or loan covenant violation, and should Bank of America N.A. elect to not enter into a forbearance agreement or
waiver, the Company’s performance and current economic and financial conditions would make it difficult for us to obtain an alternative source
of financing.
At December 31, 2008 the Company had $6.7 million in standby letters of credit and borrowings of $17.9 million, and the unused borrowing
capacity after applicable reserves was approximately $15 million. At March 10, 2009, the Company had approximately $6.9 million in standby
letters of credit and other guarantees. Refer to Note 9, in Notes to Consolidated Financial Statements, for further information regarding the Loan
Agreement.
Non
-Cancelable Contractual Obligations
Our operating cash flows include the effect of certain non-cancelable, contractual obligations. A summary of our such obligations, as of
December 31, 2008, is as follows:
Due to uncertainty with respect to the timing of future cash flows associated with our unrecognized tax benefits at December 31, 2008, we are
unable to make reasonably reliable estimates of the period of cash settlement with the respective taxing authority. Therefore, approximately $2.7
million in uncertain tax positions have been excluded from the contractual table above. See Note 10 to the Consolidated Financial Statements for
a discussion on income taxes.
35
(In thousands)
Payments due by period
Total
Less than 1
year 1-
3 years
3-
5 years
More than 5
years
Operating lease obligations (1)
$
25,692
$
5,469
$
9,592
$
6,078
$
4,553
Purchase obligations (2)
20,137
20,137
—
—
—
Minimum royalty obligations
662
312
350
—
—
Short
-
term borrowings, excluding interest
17,944
17,944
—
—
—
Total
$
64,435
$
43,862
$
9,942
$
6,078
$
4,553
(1)
Included in the operating lease total is $6.1 million of lease obligations related to facilities that are planned for closure during 2009.
(2) Because the majority of our inventory is sourced from Asia, we have long lead times for inventory purchases and therefore need to secure
factory capacity from our vendors in advance. As the result, all of the $20.1 million in purchase obligations is for inventory purchases.