Nautilus 2011 Annual Report Download - page 24

Table of Contents
available to meet our expected cash needs for at least the next twelve months, based on cash currently on hand and anticipated cash flows from
operations.
Cash provided by operating activities of $4.6 million in 2011 consisted primarily of income from continuing operations, partially offset by loss
from discontinued operation, as adjusted for non-cash items. Cash provided by a $4.0 million increase in trade payables was more than offset by
a $4.6 million increase in trade receivables and a $1.3 million increase in inventories.
Cash used in operating activities of $10.7 million in 2010 consisted primarily of losses from continuing and discontinued operations of $22.8
million and reductions in trade payables and accrued liabilities of $12.6 million and $6.3 million, respectively, partially offset by $12.4 million
from income tax refunds, net of payments, $7.2 million from the reduction of trade receivables and $6.3 million from the reduction of
inventories. Significant reductions in trade receivables, trade payables and accrued liabilities in 2010 largely resulted from winding down our
discontinued Commercial business.
The following table presents comparative cash flows related to trade receivables and inventories for the years ended December 31, 2011 and
2010 (in thousands):
Cash used in investing activities of $0.9 million in 2011 included $2.5 million used to purchase computer software and production tooling,
partially offset by $1.3 million in proceeds from the sale of portions of our discontinued Commercial business and $0.4 million from a decrease
in the amount of restricted cash collateralizing our outstanding letters of credit.
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 used in financing activities in 2011
was less than $0.1 million for payment of bank financing costs. Cash provided by financing activities in
2010 of $4.7 million consisted of $5.0 million in long-term borrowings, partially offset by $0.3 million paid for financing costs related to our
new bank agreement and long-term borrowings.
Financing Arrangements
We have a Loan and Security Agreement (the “Loan Agreement”)
with Bank of the West, which provides a revolving secured credit line of up to
$15.0 million. The amount available for borrowings varies based upon the total amount of eligible accounts receivable and inventory as of the
end of the preceding month. The Loan Agreement is available for working capital, standby letters of credit and general corporate purposes
through August 31, 2012, assuming we satisfy certain terms and conditions at the time borrowings are requested. The interest rate on future
borrowings, if any, under the Loan Agreement will be based on the bank's Base Rate plus 150 to 225 basis points or LIBOR plus 225 to 325
basis points and our financial condition at the time we elect to borrow (our borrowing rate was 3.01% as of December 31, 2011). 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 (as defined in the Loan Agreement) 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 bank 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
19
Year Ended December 31,
2011 2010
Change
Trade receivables:
Collections
$
175,832
$
188,290
$
(12,458
)
Sales on account
(180,412
)
(181,043
)
631
Net cash (used)/provided by trade receivables
$
(4,580
)
$
7,247
$
(11,827
)
Inventories:
Shipments
$
78,139
$
81,980
$
(3,841
)
Purchases
(79,426
)
(75,637
)
(3,789
)
Net cash (used)/provided by inventories
$
(1,287
)
$
6,343
$
(7,630
)