Nautilus 2010 Annual Report Download - page 25

Table of Contents
The following table presents comparative cash flows related to trade receivables and inventories for the years ended December 31, 2010 and
2009 (in thousands):
Cash provided by investing activities of $11.6 million in 2010 included $7.3 million in proceeds from the sale of portions of our discontinued
commercial business and $4.6 million from a decrease in the amount of restricted cash collateralizing our outstanding letters of credit. Cash
provided by investing activities of $4.7 million in 2009 included $7.4 million in proceeds from the sale of portions of our discontinued
commercial business and $4.0 million in refunds of escrow deposits, partially offset by a $4.9 million net increase in the amount of restricted
cash collateralizing our outstanding letters of credit and $2.0 million used for purchases of equipment.
Cash provided by financing activities of $4.7 million in 2010 consisted of $5.0 million in long-term borrowings from a related party, partially
offset by $0.3 million paid for financing costs related to our new bank agreement and long-term borrowings. Cash used in financing activities of
$18.0 million in 2009 consisted of repayments of borrowings under our former bank agreement, which was fully repaid in December 2009.
Financing Arrangements
On December 29, 2009, we entered into a Letter of Credit Agreement (the "Letter of Credit Agreement") with Bank of America ("BofA"). The
Letter of Credit Agreement provided up to $6.0 million in standby letters of credit, and was scheduled to expire on December 31, 2010
("Expiration Date"). On December 13, 2010, the Letter of Credit Agreement was modified to reduce the credit limit to $0.6 million and extend
the expiration date to June 30, 2011. During this extended period, BofA will issue no new letters of credit. Existing 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. As of December 31,
2010, we had $0.3 million in standby letters of credit issued under the Letter of Credit Agreement.
On March 8, 2010, we entered into a Loan and Security Agreement (the “Loan Agreement”) with Bank of the West, providing for a $15.0
million maximum revolving secured credit line. The amount available for borrowings in any given quarter is dependent upon the amount of
qualified accounts receivable and inventory as of the end of the preceding quarter. The Loan Agreement is available for working capital, standby
letters of credit and general corporate purposes through August 2012, assuming we satisfy certain terms and conditions at the time borrowings
are requested. The interest rate on any future borrowings under the Loan Agreement will be based on the bank's prime rate or LIBOR and our
financial condition at the time we elect to borrow. The Loan Agreement includes a fee for the unused portion of the credit facility, which will
vary depending on our borrowing base availability.
The Loan Agreement is collateralized by substantially all of our assets and contains customary covenants, including minimum current ratio,
minimum liquidity, minimum EBITDA (defined as "earnings before interest, taxes, depreciation and amortization") and limitations on capital
expenditures, mergers and acquisitions, indebtedness, liens, dispositions, dividends and investments. The Loan Agreement also contains
customary events of default. Upon an event of default, the lender would have the option of accelerating all obligations under the Loan
Agreement. Standby letters of credit under the Loan Agreement are treated as a reduction of our available borrowing base and are subject to
covenant testing. If standby letters of credit are secured by a cash collateral account held by Bank of the West in an amount not less than 105%
of the amount of the outstanding letters of credit and there are no outstanding borrowings under the Loan Agreement, then covenant testing is not
applicable.
23
Year Ended December 31,
2010 2009 Change
Trade receivables:
Collections
$
188,290
$
287,362
$
(99,072
)
Sales on account
(181,043
)
(263,904
)
82,861
Net cash provided
$
7,247
$
23,458
$
(16,211
)
Inventories:
Shipments
$
81,980
$
111,722
$
(29,742
)
Purchases
(75,637
)
(100,719
)
25,082
Net cash provided
$
6,343
$
11,003
$
(4,660
)