Nautilus 2006 Annual Report Download - page 29

Table of Contents
Net cash used in financing activities was $23.5 million in 2006. The increase is due to stock repurchases of $16.7 million, additional $1.5
million paid on long-term debt assumed by us as the result of the Belko Canada acquisition in 2005, lower net short-term borrowings in
comparison to 2005, and lower proceeds from stock option exercises.
We believe our existing cash and cash equivalents, cash generated from operations, and borrowings available under our credit facilities
will be sufficient to meet our capital requirements in the foreseeable future.
The following table presents our estimated contractual obligations:
OFF-BALANCE SHEET ARRANGEMENTS
As described in Note 1 to the consolidated financial statements located at Item 8 of this Form 10-K, from time to time, we arrange for
leases or other financing sources with third parties to enable certain of our commercial customers to purchase our commercial products. While
most of these financings are without recourse, in certain cases we may offer a guarantee or other recourse provisions. At December 31, 2006
and December 31, 2005, the maximum contingent liability under all recourse provisions was approximately $1.6 million and $4.1 million,
respectively.
In addition, we have an agreement with a financing company to provide second tier financing for our consumers. Refer to Notes 1 and 14
to the consolidated financial statements for further discussion of the accounting treatment for these arrangements and the related disclosures,
respectively.
INFLATION AND PRICE CHANGES
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 have, a material adverse effect on our financial position, results of operations or cash flows. However, increases in
inflation over historical levels or uncertainty in the general economy could decrease discretionary consumer spending for products like ours.
During both 2006 and 2005, we experienced increases in transportation costs due to increases in the price for fuel. As the result, we
implemented a four percent price increase passing some of these cost increases to the end-consumer. To the extent these costs continue to
increase and we are unable to pass these costs to the customer, our gross margins may continue to be negatively impacted.
SEASONALITY
In general, based on historic trends, we expect our sales from fitness equipment products both in the U.S. and internationally to vary
seasonally with sales typically the strongest in the fourth quarter, followed by the first and third quarters, and the weakest in the second quarter.
Our analysis shows that such factors as the broadcast of
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(1)
$
4,417
259
743
836
2,579
Operating lease obligations
30,612
6,023
9,490
7,871
7,228
Purchase obligations(2)
69,622
68,405
1,217
—
—
Total
$
104,651
$
74,687
$
11,450
$
8,707
$
9,807
(1)
Net of imputed interest.
(2) Given that the majority of our inventory is sourced from Asia, we have long lead times for inventory purchases and therefore need to
secure factory capacity from our vendors in advance. As the result, approximately $66.9 million of the $69.6 million in purchase
obligations is for inventory purchases. This inventory is predominately related to sales anticipated in the first half of 2007.