Nautilus 2013 Annual Report Download - page 58

(15) COMMITMENTS AND CONTINGENCIES
Operating Leases
We lease 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 as follows (in thousands):
As of December 31, 2013 , future minimum lease payments under non-
cancelable operating leases, reduced for sublease income, were as follows
(in thousands):
Guarantees, Commitments and Off-Balance Sheet Arrangements
As of December 31, 2013 , we had approximately $0.5 million
in standby letters of credit with certain vendors with expiration dates through
2014.
We have long lead times for inventory purchases and, therefore, must secure factory capacity from our vendors in advance. As of
December 31,
2013 , we had approximately $8.8 million in non-cancelable market-
based purchase obligations, primarily for inventory purchases expected to be
received within the next twelve months. Purchase obligations can vary from quarter-to-
quarter and versus the same period in prior years due to a
number of factors, including the amount of products that are shipped directly to Retail customer warehouses versus through Nautilus
warehouses.
In the ordinary course of business, we enter into agreements that require us to indemnify counterparties against third-
party claims. These may
include: agreements with vendors and suppliers, under which we may indemnify them against claims arising from use of their products or
services; agreements with customers, under which we may indemnify them against claims arising from their use or sale of our products; real
estate and equipment leases, under which we may indemnify lessors against third-
party claims relating to the use of their property; agreements
with licensees or licensors, under which we may indemnify the licensee or licensor against claims arising from their use of our intellectual
property or our use of their intellectual property; and agreements with parties to debt arrangements, under which we 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. We hold insurance policies that mitigate potential losses arising from certain types of indemnification obligations.
Management does not deem these obligations to be significant to our financial position, results of operations or cash flows and, therefore, no
related liabilities were recorded as of December 31, 2013 .
Legal Matters
From time to time, we may be involved in various claims, lawsuits and other proceedings. These legal and tax proceedings involve uncertainty as
to the eventual outcomes and losses which may be realized when one or more future events occur or fail to occur.
Litigation and jury verdicts are, to some degree, inherently unpredictable, and although we have determined that a loss is not probable in
connection with any current legal proceeding, it is reasonably possible that a loss may be incurred in connection with proceedings to which we
are a party. Assessment of whether incurrence of a loss is probable, or a reasonable possibility, in connection with a particular proceeding, and
estimation of the loss, or a range of loss, involves complex judgments and numerous uncertainties. Management is unable to estimate a range of
reasonably possible losses related to litigation in its early stages, especially when the damages sought are indeterminate, or the legal and factual
basis for the relevant claims have not been developed with specificity, as such zero liability is recorded as of December 31, 2013.
51
Year Ended December 31,
2013 2012 2011
Rent expense
$
3,473
$
3,218
$
3,252
2014
$
3,343
2015
3,257
2016
3,196
2017
2,160
2018
996
Thereafter
664
$
13,616