Nautilus 2000 Annual Report Download - page 24

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Liquidity and Capital Resources
Historically, we have financed our growth primarily from cash generated by our operating activities. During 2000, our operating activities
generated $52.8million in net cash, which contributed to an aggregate $77.2million in cash and cash equivalents on hand as of December31,
2000 compared to $35.7million in cash and cash equivalents at December31, 1999. Through a stock repurchase program, we bought back
$3.3million in common stock on the open market. Our capital expenditures in 2000 totaled $8.8million, including $1.1million for land in Las
Vegas, Nevada and $4.2million for land and a building in Vancouver, Washington. These activities resulted in a $41.5million, or 116%
increase in our cash and cash equivalents during 2000.
We anticipate our working capital requirements will increase as a result of growing our Nautilus commercial and retail fitness operations. We
also expect to increase our cash expenditures on spot commercials and infomercials as we continue to expand the direct marketing campaigns
for our Bowflex products and Nautilus Sleep Systems. In January2001, the Board of Directors authorized management to repurchase up to
$20million of the Company's common stock in open-market transactions from January25, 2001 through April30, 2001, with the terms of the
purchases to be determined by management based on market condition.
We maintain a $10million line of credit with Bank of America (increased from $5.0million on April1, 2000). The line of credit is secured by
our general assets and contains certain financial covenants. As of the date of these financial statements, we are in compliance with all material
covenants applicable to the line of credit and there is no outstanding balance under the line.
We believe our existing cash balances, combined with our line of credit, will be sufficient to meet our capital requirements for at least the next
twelve months.
Inflation and Price Increases
Although we cannot accurately anticipate the effect of inflation on our operations, we do not believe that inflation has had or is likely in the
foreseeable future to materially adversely affect our results of operations, cash flows or our financial position. However, increases in inflation
over historical levels or uncertainty in the general economy could decrease discretionary consumer spending for products like ours. We have
not raised the prices on any of our products since 1997. Consequently, none of our revenue growth is attributable to price increases.
Recent Accounting Pronouncement
In June1998, the FASB issued Statement of Financial Accounting Standards No.133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS133"). SFAS133 establishes accounting and reporting standards for all derivative instruments. SFAS133, as amended, is
effective for fiscal years beginning after June15, 2000. We do not currently have any derivative instruments and, accordingly, do not expect the
adoption of SFAS133 to have an impact on our financial position, results of operations, or cash flows.
In the fourth quarter of 2000, we adopted Emerging Issues Task Force Consensus 00-10, "Accounting for Shipping and Handling Costs"
("EITF 00-10"). As a result of this adoption, we now account for revenue generated by shipping products to customers as net sales. Previously,
these amounts were included in cost of sales along with the related costs incurred to ship the products. Net sales and cost of sales for prior
periods have been restated to reflect EITF Consensus 00-10.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
To date, we have invested cash with banks and in highly liquid debt instruments purchased with maturity dates of three months or less. Our
bank deposits may exceed federally insured limits and there is risk of loss of the entire principal with any debt instrument. To reduce risk of
loss, we limit our exposure to any one debt issuer and require certain minimum ratings for debt instruments that we purchase.
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2002. EDGAR Online, Inc.