Nutrisystem 2003 Annual Report Download - page 22

20
Contractual Obligations and Commercial Commitments
Following is a summary of contractual obligations of the Company. The Company has no other commercial
commitments.
Payments Due by Period
Less Than 1 - 3 4  5 After 5
Contractual obligations Total 1 Year Years Years Years
Operating leases $3,895 $614 $1,301 $1,351 $629
Contract with former executive
246 246   
Total $4,141 $860 $1,301 $1,351 $629
Liquidity, Capital Resources and Other Financial Data
At December 31, 2003, the Company had net working capital of $5,664, an increase of $1,219 from the $4,445
net working capital balance at December 31, 2002. Cash and cash equivalents at December 31, 2003 were $2,684. The
Companys principal source of liquidity during this period is from a private placement of common stock completed in
September 2003. The Company currently has no bank debt or term or revolving credit facilities to fund operations or
investment opportunities. The Company currently has no off-balance sheet arrangements.
In the year ended December 31, 2003, the Company generated a negative cash flow of $1,920 from operations,
primarily attributable to net income adjusted for non-cash items, including a deferred tax benefit. Including a $3,397
adjustment relating to the deferred tax benefit, net income adjusted for non-cash items was a negative $1,833 in 2003.
Net changes in operating assets and liabilities reduced cash flow from operations by $87 in 2003.
In the year ended December 31, 2003, net cash used in investing activities was $621, which primarily consisted
of net capital expenditures ($528) incurred to increase web site capacity, fulfillment operations, leasehold improvements
related to the relocation of home office and an investment ($93) made in a start up company formed to provide diet and
fitness programs in center locations and capital .
In the year ended December 31, 2003, net cash provided by financing activities was $2,220, representing
proceeds from a private placement in exchange for 2,300,000 shares of common stock ($2,300), proceeds from the
exercise of stock options ($25) offset by the purchase of common stock in privately negotiated transactions ($105).
The Board of Directors has authorized the repurchase of up to 5,000,000 shares of the Companys common
stock. Through December 31, 2003, the Company had repurchased a total of 2,760,291 shares under the repurchase
program.
During the year ended December 31, 2003, the Company issued 43,518 shares of common stock to warrant
holders upon exercise of warrants and issued 41,000 shares to various parties in compensation for services provided.
Over the first nine months of 2001, the Company eliminated virtually all marketing agreements requiring future
minimum fixed fees. As of December 31, 2003, the Companys principal commitments consisted of obligations under
operating leases and severance payments to a former executive of the Company (see note 6 to Consolidated Financial
Statements). Although the Company has no material commitments for capital expenditures, it anticipates continuing
requirements for capital expenditures consistent with anticipated growth in operations, infrastructure and personnel
approximately consistent with prior periods.
In pursuing its business strategy, the Company may require additional cash for operating and investing
activities. The Company expects future cash requirements, if any, to be funded from operating cash flow and financing
activities, which may include additional private offerings of equity securities or debt financing. Based on the Companys
ability to generate earnings in 2001 and 2002, the variable nature of a portion of the Companys expenditures, the cash