Nutrisystem 2006 Annual Report Download - page 55

a
cquisition 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 in January 2006 and
$
150 o
n
December 31, 2007.
I
n the second quarter of 2005, the Compan
y
entered into a capital lease a
g
reement for telephone s
y
stems
.
T
he lease is a five
y
ear lease that expires in the end of 2009 and contains a bar
g
ain purchase option. The presen
t
v
alue of the lease payments is
$
183 based on an annual interest rate of 6%. The lease requires a payment of
$
4
per mont
h
.
8
.
CO
MMITMENT
S
AND
CO
NTIN
G
EN
C
IE
S
Th
e Company
l
eases
i
ts ware
h
ouse, corporate
h
ea
d
quarters an
d
certa
i
n equ
i
pment. T
h
ese
l
eases genera
lly
h
ave initial terms of one to six
y
ears and have renewal options for additional periods. Certain of the leases als
o
conta
i
n esca
l
at
i
on c
l
auses
b
ase
d
upon
i
ncreases
i
n costs re
l
ate
d
to t
h
e propert
i
es. Lease o
bli
gat
i
ons, w
i
t
hi
n
i
t
i
a
l
or
remaining terms of one year or more years, consist of the following at December 31, 200
6
:
2
00
7
.
.............................................................
$
2
,
27
3
2008
..............................................................
2
,7
40
2009
..............................................................
2,71
7
2
0
1
0
.
............................................................
.
1
,
42
5
2011
.
.............................................................
339
$
9
,
494
T
otal rent expense for 2006, 2005 and 2004 was $1,378, $912 and $663, respectivel
y
.
Th
e Compan
yi
s
i
nvo
l
ve
di
n var
i
ous c
l
a
i
ms an
d
rout
i
ne
li
t
ig
at
i
on matters. In t
h
eop
i
n
i
on o
f
mana
g
ement
,
a
fter consultation with le
g
al counsel, the outcome of such matters will not have a material adverse effect on the
C
ompany’s conso
lid
ate
dfi
nanc
i
a
l
pos
i
t
i
on, resu
l
ts o
f
operat
i
ons or cas
hfl
ows
i
n
f
uture years
.
T
he Company has entered into supply agreements with two food vendors. These agreements provide fo
r
a
nnua
l
pr
i
c
i
ng, annua
l
purc
h
ase comm
i
tments, as we
ll
as exc
l
us
i
v
i
ty
i
nt
h
e pro
d
uct
i
on o
f
certa
i
n pro
d
ucts, w
i
t
h
terms of three
y
ears. One a
g
reement also provides rebates if certain volume thresholds are exceeded. One
a
greement provides a fixed purchase commitment which requires the Company to make purchases of
$
42,21
6
t
h
roug
h
Marc
h
2009. T
h
e Company ant
i
c
i
pates
i
tw
ill
meet a
ll
annua
l
purc
h
ases comm
i
tments t
h
roug
h
2009.
9
. COMMON STOC
K
Common
S
tock
I
n 2004, the Company issued 982,1
5
9 shares of common stock upon the exercise of stock options and
received proceeds of
$
587 and 108,500 shares of common stock as compensation to certain consultants an
d
spokespersons per their contract. The Compan
y
also issued
5
31,180 shares of common stock upon exercise o
f
common stock warrants and received proceeds of
$
385
.
I
n 200
5
, the Compan
y
completed a secondar
y
public offerin
g
of 2,476,62
5
shares of common stock and
received net proceeds of
$
25,399. In addition, the Company issued 2,786,070 shares of common stock in 200
5
u
pon the exercise of stock options and received proceeds of $4,135. Also in 2005, the Compan
y
issued 36,500
shares of common stock as com
p
ensation to board members, certain consultants and s
p
okes
p
ersons
p
er their
contract. Costs recognized for these stock grants were
$
107.
I
n 2006, the Company issued 1,324,174 shares of common stock upon the exercise of common stock option
s
a
nd received proceeds of
$
3,632 and the restrictions on 8,523 shares of common shares issued to employees
49