Nutrisystem 2009 Annual Report Download - page 65

Download and view the complete annual report

Please find page 65 of the 2009 Nutrisystem 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.

Page out of 80

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80

The Company recorded compensation expense of $8,844, $6,950 and $2,515 in the accompanying consolidated
statements of operations for 2009, 2008 and 2007, respectively, in connection with the issuance of the restricted
shares and restricted stock units. As of December 31, 2009, there was $19,994 of total unrecognized
compensation expense related to unvested share-based compensation arrangements, which is expected to be
recognized over a weighted-average period of 1.4 years.
During 2009, the Company granted 5,500 restricted stock units. The fair value is equal to the market price of the
Company’s common stock on the date of grant. Expense for restricted stock is amortized ratably over the vesting
period. The weighted-average grant date fair value for these restricted stock units was $14.84. All remain
outstanding and unvested as of December 31, 2009.
Certain of the Company’s share-based payment arrangements were held by non-employee consultants. These
stock options were accounted for as liability awards. The fair value of these awards was estimated using the
Black-Scholes option pricing model and was remeasured at each financial statement date until the award settled
or expired. During 2008 and 2007, the Company reduced expense by $109 and $292, respectively, based on the
remeasurement of these options. Stock options to acquire 8,000 shares of common stock were exercised during
2008 resulting in the reclassification of $103 to equity. As of December 31, 2009 and 2008, no options to
non-employee consultants were outstanding.
13. EMPLOYEE BENEFIT PLAN
The Company maintains a qualified tax deferred defined contribution retirement plan (the “Plan”). Under the
provisions of the Plan, substantially all employees meeting minimum age and service requirements are entitled to
contribute on a before and after-tax basis a certain percentage of their compensation. The Company matched
100% of employees’ first 3% contribution and 50% of the employees’ next 2% contribution for 2008 and 2007.
Effective June 1, 2009, the Company elected to suspend its matching contribution. Employees vest immediately
in their contributions and the Company’s contribution. The Company’s contributions in 2009, 2008 and 2007
were $452, $1,055 and $986, respectively.
Effective April 1, 2010, the Company plans to reinstate their matching contribution of 100% of employees’ first
3% contribution and 50% of the employees’ next 2% contribution.
14. RETURNS RESERVE
Following is an analysis for the returns reserve:
Year Ended December 31,
2009 2008 2007
Balance at beginning of year ............................. $ 2,074 $ 2,860 $ 2,550
Provision for estimated returns ........................... 30,200 47,578 57,163
Actual returns ......................................... (30,424) (48,364) (56,853)
Balance at end of year .................................. $ 1,850 $ 2,074 $ 2,860
61