Nutrisystem 2009 Annual Report Download - page 38

Following is a summary of our contractual obligations. We have no other commercial commitments.
Payments Due by Period (in millions)
Contractual obligations Total
Less Than
1 Year
1-3
Years
4-5
Years
More Than
5 Years
Fulfillment and food purchase obligations .................. $176.9 $45.1 $86.7 $44.6 $ 0.5
Operating leases ...................................... 36.7 2.1 5.2 6.1 23.3
$213.6 $47.2 $91.9 $50.7 $23.8
The Company has entered into supply agreements with various food vendors. The majority of these
agreements provide for annual pricing, annual purchase obligations, as well as exclusivity in the production of
certain products, with terms of five years or less. One agreement also provides for certain rebates to us if certain
volume thresholds are exceeded. Additionally, the Company has entered into an agreement with our outside
fulfillment provider which contains minimum space requirements. The Company anticipates it will meet all
annual purchase obligations.
In October 2007, the Company executed a credit agreement with a group of lenders that provides for a $200
million unsecured revolving credit facility. No amounts were outstanding under this credit facility at
December 31, 2009, but the Company is subject to 0.15% per annum unused fee payable quarterly.
In addition, we have no off-balance sheet financing arrangements.
Liquidity, Capital Resources and Other Financial Data
The capital and credit markets have become more volatile as a result of the recent global economic
conditions. This has caused a general tightening in the credit markets, lower levels of liquidity and increased
financing costs. Despite these factors, we believe that available capital resources are sufficient to fund our
working capital requirements, capital expenditures, income tax obligations, dividends and share repurchases for
the foreseeable future.
At December 31, 2009, we had net working capital of $103.3 million, an increase of $24.9 million from the
$78.4 million net working capital balance at December 31, 2008. Cash and cash equivalents at December 31,
2009 were $32.2 million, a decrease of $6.1 million from the balance of $38.3 million at December 31, 2008. In
addition, we had $30.3 million invested in marketable securities at December 31, 2009. We did not have any
investments in marketable securities at December 31, 2008. Our principal source of liquidity during this period
was cash flow from operations.
We have a $200.0 million unsecured revolving credit facility with a group of lenders which is committed
until October 2, 2012 with an expansion feature, subject to certain conditions, to increase the facility to $300.0
million. During 2008, we drew down and repaid $35.0 million under this facility. As of December 31, 2009, no
amounts were outstanding. We currently have no off-balance sheet financing arrangements.
In the year ended December 31, 2009, we generated cash flows of $57.5 million from operations, a decrease
of $34.8 million from 2008. The decrease in cash flow from operations is primarily attributable to lower net
income and non-cash working capital changes, which offset increases in deprecation and amortization and share
based expense.
In the year ended December 31, 2009, net cash used in investing activities was $38.6 million, primarily due
to investments in marketable securities of $30.3 million and spending on capital expenditures of $8.4 million. We
are continuing to invest in our ecommerce platform and web initiatives which will allow us to enhance our sales
efforts and be more efficient in testing and in offering new promotional programs.
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