Nutrisystem 2010 Annual Report Download - page 62

Download and view the complete annual report

Please find page 62 of the 2010 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

A reconciliation of the beginning and ending amounts of the total unrecognized tax benefit is as follows:
Year Ended December 31,
2010 2009 2008
Balance at beginning of year ......................... $1,375 $1,193 $ 929
Increase related to current year tax positions ............. 1,184 182 287
Reductions related to settlement of tax matters ........... (42) — —
Decrease due to lapse of statute of limitations ............ (39) — (23)
Balance at end of year .............................. $2,478 $1,375 $1,193
12. DISCONTINUED OPERATIONS
In the fourth quarter of 2007, the Company committed to a plan to sell its subsidiary, Slim and Tone, and this
subsidiary has been treated as a discontinued operation. Accordingly, the operating results of this discontinued
operation have been presented separately from continuing operations for all periods presented. The plan to sell
was not completed and operations ceased as of December 31, 2009. Slim and Tone had revenues of $65 and $277
and pre-tax losses of $390 and $276 for the years ended December 31, 2009 and 2008, respectively.
In the first quarter of 2010, the Company committed to a plan to sell the business operations conducted by
NuKitchen, as it was no longer aligned with the business direction of the Company. The Company was
unsuccessful in locating a buyer for the NuKitchen business and, therefore, it closed the business during the three
months ended September 30, 2010. NuKitchen has been treated as a discontinued operation. Accordingly, the
operating results of this discontinued operation have been presented separately from continuing operations for all
periods presented. NuKitchen had revenues of $1,707, $3,113 and $1,560 and pre-tax losses of $808, $6,091
(including impairment charge) and $1,205 for the years ended December 31, 2010, 2009 and 2008, respectively.
13. EQUITY INSTRUMENTS
Equity Incentive Plans
The Company has three equity incentive plans: the 1999 Equity Incentive Plan, the 2000 Equity Incentive Plan
and the 2008 Long-Term Incentive Plan (collectively, the “Equity Incentive Plans”). Under these plans, a variety
of equity instruments can be granted to key employees including incentive and nonqualified stock options to
purchase shares of the Company’s common stock, restricted stock or shares of common stock. The 1999 Equity
Incentive Plan, the 2000 Equity Incentive Plan and the 2008 Long-Term Incentive Plan authorize up to
1,000,000, 5,600,000 and 2,700,000 shares of common stock, respectively, for issuance. At December 31, 2010,
options to purchase 936,811 shares were available for grant under these plans.
Under each of the plans, the Board of Directors determines the term of each award, but no award can be
exercisable more than 10 years from the date the award is granted. To date, all of the awards issued under the
Equity Incentive Plans expire 10 years from the grant date. The Board also determines the vesting provisions and
the exercise price per share, which is the fair market value at date of grant. Awards issued to employees generally
vest over terms ranging from three to five years.
58