Nutrisystem 2007 Annual Report Download - page 59

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In 2007, the Company issued 412,076 shares of common stock upon the exercise of common stock options and
received proceeds of $1,931 and the restrictions on 15,860 shares of common shares issued to employees lapsed.
Also, in 2007, the Company issued 4,910 shares of common stock as compensation to board members, certain
consultants and spokespersons per their contracts. Costs recognized for these stock grants were $283.
In August 2006, the Company announced that its Board of Directors authorized the repurchase of up to $50,000
of its outstanding shares of common stock. In February 2007, a repurchase program of up to $200,000 of
outstanding shares of common stock was authorized and in October 2007, an additional $100,000 was
authorized. The stock repurchase programs from 2007 have an expiration date of March 31, 2009, and also may
be limited or terminated at any time without prior notice. The timing and actual number of shares repurchased
depends on a variety of factors including price, corporate and regulatory requirements, alternative investment
opportunities and other market conditions. In 2007, the Company purchased and retired 2,799,031 shares of
common stock for an aggregate cost of $121,777. In 2006, the Company purchased and retired 896,700 shares of
common stock for an aggregate cost of $45,368. The cost of the purchased shares was reflected in the
accompanying statement of stockholders’ equity as a reduction of common stock (equal to par value of purchased
shares), additional paid-in capital (“APIC”) (equal to balance in APIC) with the excess recorded as a reduction in
retained earnings. As of December 31, 2007, the Company was authorized to purchase an additional $182,855
under the existing repurchase programs.
Preferred Stock
The Company has authorized 5,000,000 shares of preferred stock issuable in series upon resolution of the Board
of Directors. Unless otherwise required by law, the Board of Directors can, without stockholder approval, issue
preferred stock in the future with voting and conversion rights that could adversely affect the voting power of the
common stock. The issuance of preferred stock may have the effect of delaying, averting or preventing a change
in control of the Company.
9. INCOME TAXES
The provision for income taxes from continuing operations consist of the following:
Year Ended December 31,
2007 2006 2005
Current:
Federal ....................................................... $56,815 $42,174 $ —
State ......................................................... 5,838 5,565 —
Foreign ....................................................... 105 — —
62,758 47,739 —
Deferred:
Federal ....................................................... (1,976) 2,835 11,819
State ......................................................... 89 520 1,952
(1,887) 3,355 13,771
Change in valuation allowance ........................................ — (125) (204)
$60,871 $50,969 $13,567
The income tax benefit attributable to discontinued operation consists of the following:
Year Ended December 31,
2007 2006 2005
Discontinued operation ............................................... $(461) $(326) $(432)
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