Nutrisystem 2005 Annual Report Download - page 54

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5. FIXED ASSETS
Fixed assets consist of the following:
December 31
2005 2004
Furniture and fixtures ............................................... $ 943 $ 225
Equipment ........................................................ 5,550 1,632
Leasehold improvements ............................................ 1,366 594
7,859 2,451
Accumulated depreciation ........................................... (1,857) (1,254)
$ 6,002 $ 1,197
Depreciation expense was $719, $259 and $223 in 2005, 2004 and 2003, respectively.
6. IDENTIFIABLE INTANGIBLE ASSETS
The Company recorded the following identifiable intangible assets in connection with the acquisition of
Slim and Tone.
Weighted Average
Amortization Period
December 31,
2005
December 31,
2004
Amortizable intangible assets
Customer relationships ............................. 10.0 years $ 580 $ 580
Procedures manuals ................................ 1.5years 120 120
Covenant not to compete ............................ 2.0years 4 4
Total amortizable intangible assets ........................ 704 704
Less accumulated amortization ........................... (273) (9)
Net amortizable intangible assets ......................... 431 695
Non-amortizable intangible assets
Trade name/ trademark ............................. 920 920
$1,351 $1,615
The identifiable intangible assets are amortized over the above noted periods on a straight line basis other
than customer relationships, which is amortized based on the estimated timing of the value obtained (under
which the majority of the amortization expense will be recognized in the first two years of service). Amortization
expense for 2005 and 2004 (for the period from the acquisition date through December 31, 2005) was $264 and
$9, respectively. Estimated amortization expense for the amortizable intangible assets for the next five years is
$166 in 2006, $96 in 2007, $65 in 2008, $44 in 2009 and $28 in 2010.
7. NOTE PAYABLE AND CAPITAL LEASE OBLIGATION
In connection with the acquisition of Slim and Tone, the Company issued a $450 note payable to the seller.
The seller note bears no interest and, as such, has been recorded net of a discount of $43 computed at a 5.2%
interest rate. Amortization of the note discount was $23 in 2005 and $1 from the acquisition date through
December 31, 2004. Under the terms of the note agreement, the Company made a payment of $150 on
December 31, 2005 and will make a payment of $150 on December 31, 2006 and 2007. The seller is now an
employee of the Company.
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