Nautilus 2015 Annual Report Download - page 30
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Please find page 30 of the 2015 Nautilus annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 2015 , we had $60.8 million of cash and investments, compared to $72.2 million as of December 31, 2014 . The balance sheet as of
December 31, 2015 included unaudited balances for Octane which was acquired on December 31, 2015 . For additional information on the acquisition, see Note 2
of Notes to Consolidated Financial Statements.
Cash provided by operating activities was $41.1 million for 2015 , compared to cash provided by operating activities of $34.4 million for 2014 . We expect our
cash, cash equivalents and available-for-sale securities at December 31, 2015 , along with cash expected to be generated from operations, to be sufficient to fund
our operating and capital requirements for at least twelve months from December 31, 2015 .
The increase in cash flows from operating activities for 2015 , compared to 2014 , was primarily due to improved operating performance and the changes in our
operating assets and liabilities as discussed below.
Trade receivables increased $18.9 million to $45.2 million as of December 31, 2015 , compared to $26.3 million as of December 31, 2014 , due to the acquisition
of Octane and higher revenue within our Retail business.
Inventories increased $17.8 million to $42.7 million as of December 31, 2015 , compared to $24.9 million as of December 31, 2014 , due to the acquisition of
Octane and higher revenue and the addition of new products.
Net deferred income tax decreased by $31.4 million to net income tax liabilities of $9.5 million as of December 31, 2015 , compared to $21.9 million of net income
tax assets as of December 31, 2014 . $19.6 million of net deferred tax liability arose as a result of the acquisition of Octane. The remainder of the decrease is
primarily due to the utilization of net operating loss deferred tax assets in 2015.
Trade payables increased $14.2 million to $61.7 million as of December 31, 2015 , compared to $47.6 million as of December 31, 2014 , primarily due to increased
inventory purchases and media expense to support the growth in net sales coupled with the acquisition of Octane.
Accrued liabilities increased $3.2 million to $13.0 million as of December 31, 2015 compared to $9.9 million as of December 31, 2014 , primarily due to the
acquisition of Octane and increases in accrued payroll, commissions and incentive compensation.
Warranty obligations increased $6.3 million to $8.5 million as of December 31, 2015 compared to $2.2 million as of December 31, 2014 , primarily due to the
acquisition of Octane and increased year-over-year sales in both our business segments.
Cash used in investing activities of $122.8 million for 2015 was primarily related to $114.1 million used for the purchase of Octane and the net purchases of $3.0
million of marketable securities. Additionally, $5.7 million was used for capital expenditures during 2015 , primarily for implementation of new software and
hardware information system upgrades. We anticipate spending $7.0 million to $8.0 million in 2016 for software, equipment and product tooling.
Cash provided by financing activities of $68.9 million for 2015 was primarily related to the proceeds from our new term loan of $80.0 million for the Octane
acquisition, partially offset by the share repurchase program spending of $11.6 million .
Financing Arrangements
On December 31, 2015 we entered into an amendment (the “Amendment”) to our existing Credit Agreement, dated December 5, 2014, with JPMorgan Chase
Bank, N.A. (“Chase Bank”) that provided for an $80.0 million term loan (the “Term Loan”) to finance the acquisition of Octane. The Term Loan and our existing
$20.0 million revolving line of credit with Chase Bank are secured by substantially all of the assets of Nautilus. The Term Loan matures on December 31, 2020.
Under the terms of the Amendment, the maturity date of our existing revolving line of credit was extended to December 31, 2020.
The Credit Agreement, as amended, contains customary covenants, including minimum fixed charge coverage ratio and funded debt to EBITDA ratio, and
limitations on capital expenditures, mergers and acquisitions, indebtedness, liens, dispositions, dividends and investments. The Credit Agreement also contains
customary events of default. Upon an event of default, the lender may terminate its credit line commitment, accelerate all outstanding obligations and exercise its
remedies under the continuing security agreement.
Borrowing availability under the Credit Agreement is subject to our compliance with certain financial and operating covenants at the time borrowings are
requested. Letters of credit under the Credit Agreement are treated as a reduction of the available borrowing amount and are subject to covenant testing.
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