Tecumseh Products 2014 Annual Report Download - page 30

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Adequacy of Liquidity Sources
In the near term, and in particular over the next twelve months, we expect that our liquidity sources, described above, will be
sufficient to meet our liquidity requirements, including debt service, capital expenditures, working capital requirements and
warranty claims, and, when needed, cash to fund operating losses and any additional restructuring activities we may implement.
However, we also anticipate challenges with respect to generating positive cash flows from operations, most significantly due
to challenges driven by possible volume declines, ability to generate savings from our restructuring activities, as well as
currency exchange and commodity pricing volatility.
In addition, our business exposes us to potential litigation, such as product liability lawsuits or other lawsuits related to anti-
competitive practices and securities law or other types of business disputes. These claims can be expensive to defend and an
unfavorable outcome from any such litigation could adversely affect our cash flows and liquidity.
As of December 31, 2014, we had $42.7 million of cash and cash equivalents, and $49.2 million in debt and capital lease
obligations, of which $19.8 million was long-term in nature. The short-term debt primarily consists of current maturities of
long-term debt as well as committed and uncommitted revolving lines of credit, which we intend to maintain for the
foreseeable future. We believe our cash on hand and availability under our borrowing facilities is sufficient to meet our debt
service requirements. We do not expect any material differences between cash availability and cash outflows.
We expect capital expenditures will average $15.0 million to $20.0 million annually, although the timing of expenditures may
result in higher investment in some years and lower amounts in others. For 2015, we expect our capital expenditures to be in
this range as we continue to re-engineer our products and invest in our information technology infra-structure to be more
efficient. These 2015 expenditures may be adjusted based on achieving expected results described in the “Outlook” section.
OFF-BALANCE SHEET ARRANGEMENTS
Other than operating leases, we do not have any off-balance sheet financing. We do not believe we have any off-balance sheet
arrangements that have, or are reasonably likely to have, a material effect on us. However, a portion of accounts receivable at
our Brazilian subsidiary is sold with limited recourse at a discount, which creates a contingent liability for the business.
Discounted receivables sold with limited recourse were $3.7 million and $12.1 million at December 31, 2014 and 2013,
respectively. We maintain a reserve for anticipated losses against these sold receivables, and losses have not historically
resulted in the recording of a liability greater than the reserved amount. Under our factoring program in Europe, we may
discount receivables with recourse; however, at December 31, 2014 there were no receivables sold with recourse.
CONTRACTUAL OBLIGATIONS
Our payments by period as of December 31, 2014 for our contractual obligations are as follows:
Payments due by Period
(in millions) Total 2015 2016/2017 2018/2019 After 2019
Debt $ 48.1 $ 28.9 $ 8.0 $ 0.4 $ 10.8
Capital Lease Obligations $ 1.1 $ 0.5 $ 0.6 $ — $ —
Purchase Obligations $ 19.2 $ 19.2 $ — $ — $ —
Operating Leases (1) $ 10.4 $ 3.9 $ 2.8 $ 2.4 $ 1.3
Pension and Postretirement Obligations $ 114.1 $ 10.7 $ 21.9 $ 24.1 $ 57.4
(1) Operating lease obligations do not include payments to landlords covering real estate taxes and common area maintenance. Rent received from a sublease
contract on our previous corporate office and a lease contract on a part of our Paris, Tennessee facility, which houses a non-core business that we sold
during 2014, is also not included.
We have not included, in the table above, other long-term liabilities net of current portion in the amount of $20.9 million which
include product warranty and self-insured risk, deferred tax and environmental liabilities, because they do not have a definite
payout by year.
As of December 31, 2014, we had $6.4 million in outstanding domestic letters of credit and $16.2 million in outstanding
foreign letters of credit issued in the normal course of business, as required by some vendor contracts.
CRITICAL ACCOUNTING ESTIMATES
In preparing our consolidated financial statements in accordance with U.S. GAAP and pursuant to the rules and regulations of
the Securities and Exchange Commission ("SEC"), we make assumptions, judgments and estimates that affect the reported