Nautilus 2008 Annual Report Download - page 70

Table of Contents
benefit associated with a favorable legal settlement with ICON Health and Fitness, Inc.; $26.8 million in restructuring charges, including a $19.4
million charge for terminating the Land America asset purchase agreement, severance costs of $3.2 million; and $3.0 million related to our
discontinued use of intellectual property acquired from ICON Health and Fitness, Inc.
Net sales in the U.S. represented approximately 78%, 79%, and 83% of consolidated net sales for the years ended December 31, 2008, 2007, and
2006, respectively. The geographic distribution of the Company’s international net sales is mostly concentrated in Switzerland, and to a lesser
extent the United Kingdom, Germany and Canada. Sales outside the U.S. represented approximately 22%, 21% and 17% of consolidated net
sales for the years ended December 31, 2008, 2007 and 2006, respectively. Long-lived assets attributable to operations in the U.S., which are
primarily comprised of property, plant and equipment, goodwill and intangible assets, had carrying values totaling $66.7 million, $108.4 million
and $104.4 million at December 31, 2008, 2007 and 2006, respectively. Long-lived assets outside the U.S. had carrying values of approximately
$3.0 million, $4.5 million and $4.5 million at December 31, 2008, 2007 and 2006, respectively.
15. COMMITMENTS AND CONTINGENCIES
Operating Leases
We lease property and equipment under non-cancellable operating leases which, in the aggregate, obligate us through 2016. Many of our leases
contain renewal options and provide for rent escalations and payment of real estate taxes, maintenance, insurance and certain other operating
expenses of the properties. Rent expense under all operating leases totaled $5.9 million, $6.0 million, and $7.0 million for the years ended
December 31, 2008, 2007, and 2006, respectively.
At December 31, 2008, future minimum lease payments under non-cancellable operating leases are as follows:
Guarantees, Commitments and Off-Balance Sheet Arrangements
At December 31, 2008 and 2007, the Company had approximately $6.7 million and $2.9 million, respectively, in standby letters of credit with
vendors which reduce the balance available under the Loan Agreement. The standby letters of credit have expiration dates through December 31,
2009.
The Company has long lead times for inventory purchases and, therefore, must secure factory capacity from its vendors in advance. At
December 31, 2008, the Company had approximately $20.1 million in non-cancellable market-based purchase obligations, all of which were for
inventory purchases expected to be received in 2009.
At times, we become involved in third-party lease and financing arrangements which assist our customers in obtaining funds to purchase our
products. While most of these financings are without recourse, in certain cases we may offer a guarantee or other recourse provisions. Our
financing partner reviews consumer credit information in evaluating the risk of default prior to extending credit to our customers. We rely on the
quality of our partner’s review and our own risk assessment in determining whether to proceed with a recourse transaction. At December 31,
2008 and 2007, the maximum contingent liability under all recourse provisions was approximately $1.6 million and $1.3 million, respectively.
Refer to Note 1 to the consolidated financial statements for further discussion of this arrangement.
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(In thousands)
2009
$
5,469
2010
4,961
2011
4,631
2012
3,293
2013
2,785
Thereafter
4,553
Minimum lease payments
$
25,692