Nautilus 2009 Annual Report Download - page 32

Table of Contents
Net cash used in financing activities was $18.0 million in 2009, compared to $69.1 million in the prior year. Cash used in financing activities
included $17.9 million to repay all of our bank borrowings in 2009, compared to a $61.2 million reduction in bank borrowings in 2008. The
2008 reduction in bank borrowings primarily was funded with proceeds received from the sale of our former fitness apparel business. In 2008,
we paid $5.3 million for the repurchase of Nautilus common stock and paid approximately $2.0 million in debt issuance costs associated with a
former financing agreement.
Financing Arrangement
During 2009 and 2008, we had a Loan and Security Agreement (the “Loan Agreement”) with Bank of America N.A., which provided a
revolving secured credit line to fund our letters of credit and for working capital needs and other general business purposes. On December 29,
2009, pursuant to the sale of certain assets of our Stairmaster and Schwinn Fitness commercial product lines, we satisfied all outstanding
obligations under the Loan Agreement and it was terminated.
On December 29, 2009, we entered into a Credit Agreement (the “Letter of Credit Agreement”) with Bank of America, N.A, (“BofA”). The
Letter of Credit Agreement provides us with up to $6.0 million in standby letters of credit, and expires on December 31, 2010 (Expiration Date).
During this period, BofA will issue standby letters of credit with a maximum maturity not to exceed more than 365 days beyond the Expiration
Date. Letters of credit are secured by a cash collateral account held by BofA in an amount not less than 105% of the amount of the outstanding
letters of credit, plus $0.3 million.
As of December 31, 2009, we had $4.3 million in standby letters of credit. The balance in our cash collateral account, reported as restricted cash
in our consolidated balance sheet, was $4.9 million as of December 31, 2009.
On March 8, 2010, we entered into the New Loan Agreement with Bank of the West, providing for a $15.0 million revolving secured credit line.
The New Loan Agreement is available for working capital, standby letters of credit and general corporate purposes through September 2012,
assuming we satisfy certain terms and conditions at the time borrowings are requested.
The interest rate on any future borrowings under the New Loan Agreement will be based on the bank’s prime rate or LIBOR, based on our
financial condition at the time we elect to borrow. The New Loan Agreement includes a fee for the unused portion of the credit facility, which
fee will vary depending on our borrowing base availability.
Borrowings under the New Loan Agreement are collateralized by a lien on substantially all of our assets. The New Loan Agreement contains
customary covenants, including, but not limited to, covenants relating to minimum current ratio, minimum liquidity, minimum EBITDA and
limitations on capital expenditures, mergers and acquisitions, indebtedness, liens, dispositions, dividends, and investments. The New Loan
Agreement also contains customary events of default.
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