Nutrisystem 2006 Annual Report Download - page 53

I
n June 2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes –
a
n
i
nterpretat
i
on o
f
FASB Statement No. 109” (“FIN 48”). FIN 48 prescr
ib
es a recogn
i
t
i
on t
h
res
h
o
ld
an
d
measurement attribute for financial statement reco
g
nition and measurement of a tax position taken or expected t
o
be taken in a tax return, and also provides guidance on de-recognition, classification, interest and penalties,
a
ccount
i
ng
i
n
i
nter
i
m per
i
o
d
s,
di
sc
l
osure, an
d
trans
i
t
i
on. FIN 48
i
se
ff
ect
i
ve
f
or
fi
sca
l
years
b
eg
i
nn
i
ng a
f
te
r
December 1
5
, 2006. The adoption of FIN 48 is not expected to have a material impact on the Compan
y
’
s
consolidated financial
p
osition and results of o
p
erations.
Use o
f
Est
i
mates
Th
e preparat
i
on o
ffi
nanc
i
a
l
statements
i
n accor
d
ance w
i
t
h
U.S. genera
ll
y accepte
d
account
i
ng pr
i
nc
i
p
l
e
s
requires mana
g
ement to make estimates and assumptions that affect the reported amounts of assets and liabilitie
s
a
t the date of the financial statements and the reported amounts of revenue and operating expenses during the
report
i
ng per
i
o
d
. Actua
l
resu
l
ts cou
ld diff
er
f
rom t
h
ese est
i
mates
.
3. ACQUISITION
O
n December 2, 2004, the Compan
y
acquired Slim and Tone. The purchase price consisted of $1,000 cas
h
payment to the seller at closing, a
$
450 deposit into an escrow account for the benefit of the seller and a seller
note for
$
450 (see Note 7). The acquisition was accounted for under the purchase method of accounting and the
o
peratin
g
results of the acquired business have been included in the consolidated statements of operations an
d
cash flows from the acquisition date through December 31, 2006. Pro forma statement of operations data for
2004
i
s not
i
nc
l
u
d
e
df
or S
li
man
d
Tone as t
h
e operat
i
ons are not mater
i
a
li
nre
l
at
i
on to t
h
e conso
lid
ate
dfi
nanc
i
a
l
s
t
a
t
emen
t
s
.
4
. CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIE
S
T
he followin
g
summarizes cash, cash equivalents and marketable securities
:
C
ost
A
ccrue
d
I
nterest
Fa
i
r
V
alue
Cash and cash equivalent
s
Demand de
p
osits
....................................................
$
13,628 $ — $13,62
8
Money mar
k
et accounts ............................................... 1
5
7— 1
5
7
December 31, 200
6
..................................................
$
13,785
$
—
$
13,78
5
M
a
rk
etab
l
e secu
ri
t
i
es
Auct
i
on-rate secur
i
t
i
e
s
................................................
$
67
,
850
$
619
$
68
,
469
December 31
,
200
6
..................................................
$
67
,
850
$
619
$
68
,
469
C
ash and cash e
q
u
i
valent
s
Deman
dd
epos
i
ts ....................................................
$
3,
621
$
—
$
3
,
621
Mone
y
market accounts ...............................................
281
—
281
December 31, 2005 .................................................. $
3
,902 $ — $ 3,902
M
a
rk
e
t
ab
l
e secu
riti
es
A
uct
i
o
n-r
ate secu
ri
t
i
es
................................................
$
41,800 $ 266 $42,066
December 31, 200
5
..................................................
$
41,800 $ 266 $42,066
A
s of December 31, 2006 and 200
5
, auction rate securities consist of higher education, variable interes
t
b
on
d
s
.
4
7