Nautilus 2004 Annual Report Download - page 29

Table of Contents
LIQUIDITY AND CAPITAL RESOURCES
Historically, we have financed our business primarily from cash generated by our operating activities. During 2004, our operating
activities generated $47.0 million in net cash, which contributed to an aggregate $104.6 million balance in cash, cash equivalents and short-
term investments at year end, compared with $43.7 million in net cash generated by our operating activities in 2003. Working capital was
$169.5 million at December 31, 2004 compared to $138.7 million at December 31, 2003, largely due to increased short-term investments as a
result of net income for the period. The $20.1 million increase in trade receivables and $4.0 million decrease in inventory levels can primarily
be attributed to supply chain issues resulting in many shipments occurring later in the fourth quarter of 2004 as compared with 2003. The $23.0
million increase in trade payables is primarily due to the timing of inventory purchases and payments for those purchases. The $4.0 million
decrease in accrued liabilities can primarily be attributed to the completion of the product recall which was accrued at December 31, 2003.
Net cash used in investing activities was $42.6 million in 2004 compared with net cash used in investing activities in 2003 of $40.8
million. The change in cash flow from investing activities is primarily due to $9.0 million for capital expenditures primarily consisting of
building improvements, manufacturing equipment and information systems and related equipment compared to $7.0 million in 2003. Short-
term investments increased by $34.0 million in 2004 compared to $33.7 million in 2003.
Net cash used in financing activities was $6.5 million in 2004 compared to $13.5 million in 2003. The primary difference between the
years related to cash received from the exercise of stock options of $6.6 million in 2004 as compared to $1.0 million in 2003. During 2004, the
Company paid $13.1 million in dividends compared to $13.0 million during 2003.
We maintain a $10 million line of credit with a lending institution. The line of credit is secured by certain assets and contains several
financial covenants. As of the date of this filing, we are in compliance with the covenants applicable to the line of credit, and there is no
outstanding balance under the line. At December 31, 2004 and 2003, the Company had $8.1 million and $5.6 million, respectively in stand by
letters of credit with Asian vendors reducing the available balance of the $10.0 million line of credit.
We believe our existing cash balances, cash generated from operations and borrowings available under our line of credit, will be
sufficient to meet our capital requirements for the foreseeable future.
The Company’s contractual obligations and commercial commitments (as defined in Item 303(a)(5) of Regulation S-K under the
Securities Exchange Act of 1934) as of December 31, 2004 are as follows:
Due to the majority of our inventory being sourced from Asia, the Company has long lead times for inventory purchases and needs to
secure factory capacity from our vendors in advance. As a result, approximately $64.7 million of the $70.7 million in purchase obligations is
for inventory purchases. This inventory is predominately related to anticipated sales in the first half of 2005.
27
(In Thousands)
Payments due by period
Total
Less than 1
year
1-
3 years
3-
5 years
More than 5
years
Long
-
term debt obligations
$
—
$
—
$
—
$
—
$
—
Capital lease obligations
—
—
—
—
—
Operating lease obligations
28,704
3,376
7,487
5,827
12,014
Purchase obligations
70,742
70,671
65
6
—
Other long
-
term liabilities *
200
—
200
—
—
Total
$
99,646
$
74,047
$
7,752
$
5,833
$
12,014
* Certain contractual obligations and commercial commitments are excluded from this table because they require imprecise measurement or
are of a contingent nature (e.g. off
-
balance sheet arrangements described below).