Nutrisystem 2007 Annual Report Download - page 40

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In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and
Financial Liabilities.” SFAS No. 159 permits entities to choose to measure many financial assets and financial
liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are
reported in earnings. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The
adoption of SFAS No. 159 is not expected to have a material impact on the Company’s consolidated financial
position and results of operations.
In December 2007, the FASB issued SFAS No. 141R, “Business Combinations” and SFAS No. 160,
“Noncontrolling Interests in Consolidated Financial Statements – an amendment to ARB No. 51.” SFAS Nos.
141R and 160 require most identifiable assets, liabilities, noncontrolling interests, and goodwill acquired in a
business combination to be recorded at “full fair value” and require noncontrolling interests (previously referred
to as minority interests) to be reported as a component of equity, which changes the accounting for transactions
with noncontrolling interest holders. Both statements are effective for periods beginning on or after
December 15, 2008, and early adoption is prohibited. Accordingly, SFAS No. 141R will be applied by the
Company to business combinations occurring on or after January 1, 2009. SFAS No. 160 will be applied
prospectively to all noncontrolling interests, including any that arose before the effective date. The adoption of
SFAS No. 160 is not expected to have any impact on the Company’s consolidated financial position and results
of operations.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We believe that we are not subject to any material risks arising from changes in interest rates, foreign
currency exchange rates, commodity prices, equity prices or other market changes that affect market risk
instruments. We do not have any variable interest debt outstanding at December 31, 2007, our cash and cash
equivalents at that date of $40.7 million were maintained in bank accounts and our marketable securities at that
date of $1.8 million had interest rate reset dates of three months or less. As such, a change in interest rates of 1
percentage point would not have a material impact on our operating results and cash flows. We have recently
expanded internationally into Canada but believe we have low exposure to changes in foreign exchange rates at
this point and have not yet hedged our operating exposure to foreign currency fluctuations.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item is set forth on pages 38 through 59 hereto and is incorporated by
reference herein.
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