Nutrisystem 2007 Annual Report Download - page 55

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Cash Flow Information
The Company made payments for income taxes of $48,742, $32,000 and $307 and minimal interest payments in
2007, 2006 and 2005, respectively.
Recently Issued Accounting Pronouncements
In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 157, “Fair Value
Measurements,” which defines fair value, establishes a framework for measuring fair value under generally
accepted accounting principles, and expands disclosures about fair value measurements. SFAS No. 157 applies to
other accounting pronouncements that require or permit fair value measurements. The new guidance is effective
for fiscal years beginning after November 15, 2007. The adoption of SFAS No. 157 is not expected to have a
material impact on the Company’s consolidated financial position and results of operations.
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial
Liabilities.” SFAS No. 159 permits entities to choose to measure many financial assets and financial liabilities at
fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in
earnings. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The adoption of SFAS
No. 159 is not expected to have a material impact on the Company’s consolidated financial position and results
of operations.
In December 2007, the FASB issued SFAS No. 141R, “Business Combinations” and SFAS No. 160,
“Noncontrolling Interests in Consolidated Financial Statements – an amendment to ARB No. 51.” SFAS Nos.
141R and 160 require most identifiable assets, liabilities, noncontrolling interests, and goodwill acquired in a
business combination to be recorded at “full fair value” and require noncontrolling interests (previously referred
to as minority interests) to be reported as a component of equity, which changes the accounting for transactions
with noncontrolling interest holders. Both statements are effective for periods beginning on or after
December 15, 2008, and early adoption is prohibited. Accordingly, SFAS No. 141R will be applied by the
Company to business combinations occurring on or after January 1, 2009. SFAS No. 160 will be applied
prospectively to all noncontrolling interests, including any that arose before the effective date. The adoption of
SFAS No. 160 is not expected to have any impact on the Company’s consolidated financial position and results
of operations.
Use of Estimates
The preparation of financial statements in accordance with U.S. generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
at the date of the financial statements and the reported amounts of revenue and operating expenses during the
reporting period. Actual results could differ from these estimates.
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