Nautilus 2011 Annual Report Download - page 51

Table of Contents
for the years ended December 31, 2011 and 2010 , respectively.
(15) COMMITMENTS AND CONTINGENCIES
Operating Leases
The Company leases property and equipment under non-cancelable operating leases which, in the aggregate, extend through 2019. Many of
these leases contain renewal options and provide for rent escalations and payment of real estate taxes, maintenance, insurance and certain other
operating expenses of the properties. Rent expense under all operating leases was $3.3 million and $3.9 million in 2011 and 2010 , respectively.
As of December 31, 2011 , future minimum lease payments under non-cancelable operating leases, reduced for sublease income, are as follows
(in thousands):
Guarantees, Commitments and Off-Balance Sheet Arrangements
As of December 31, 2011 and 2010 , the Company had approximately $3.0 million and $3.2 million , respectively, in standby letters of credit
with certain vendors with expiration dates through November 2012.
The Company has long lead times for inventory purchases and, therefore, must secure factory capacity from its vendors in advance. As of
December 31, 2011 , the Company had approximately $10.6 million in non-cancelable market-based purchase obligations, all of which were for
inventory purchases expected to be received in 2012.
In the ordinary course of business, the Company enters into agreements that require it to indemnify counterparties against third-party claims.
These may include: agreements with vendors and suppliers, under which the Company may indemnify them against claims arising from use of
their products or services; agreements with customers, under which the Company may indemnify them against claims arising from their use or
sale of the Company's products; real estate and equipment leases, under which the Company may indemnify lessors against third-party claims
relating to the use of their property; agreements with licensees or licensors, under which the Company may indemnify the licensee or licensor
against claims arising from their use of the Company's intellectual property or the Company's use of their intellectual property; and agreements
with parties to debt arrangements, under which the Company may indemnify them against claims relating to their participation in the
transactions.
The nature and terms of these indemnification obligations vary from contract to contract, and generally a maximum obligation is not stated
within the agreements. The Company holds insurance policies that mitigate potential losses arising from certain types of indemnification
obligations. Management does not deem these obligations to be significant to the Company's financial position, results of operations or cash
flows and, therefore, no related liabilities were recorded as of December 31, 2011 .
Guarantees, Commitments and Contingencies of Discontinued Operation
Prior to its divestiture, the Company's discontinued Commercial business would, from time-to-time, use third-party lease and financing
arrangements to assist customers in purchasing products. While these arrangements generally were without recourse to Nautilus, in certain cases
the Company offered a guarantee or other recourse provisions. The maximum contingent liability under all such recourse provisions was
approximately $0.8 million as of December 31, 2011 .
The Company retained certain warranty obligations in connection with its discontinued Commercial operation and remains contingently liable
for certain product warranty obligations which were assumed by buyers of its Commercial business product lines to the extent a buyer fails to
fulfill its assumed obligations. Uncertainties exist with respect to these warranty obligations, as units previously sold to customers approach end-
of-life and settlements are reached with certain customers in connection with the Company's exit from its discontinued Commercial operation.
As of December 31, 2011 , the Company's warranty
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2012
$
2,836
2013
3,275
2014
2,996
2015
2,776
2016
2,813
Thereafter
3,533
Total minimum non-cancelable lease payments, net
$
18,229