Nutrisystem 2008 Annual Report Download - page 55

6. IDENTIFIABLE INTANGIBLE ASSETS
The Company recorded the following identifiable intangible assets in connection with the acquisition of
NuKitchen.
Weighted
Average
Period
December 31, 2008
Gross
Accumulated
Amortization Net
Amortizable intangible assets:
Customer lists ........................................... 1.0year $ 500 $250 $ 250
Trademark .............................................. 10.0 years 1,800 90 1,710
Technology ............................................. 5.0years 700 70 630
Total .................................................. $3,000 $410 $2,590
The identifiable intangible assets are amortized over the above noted periods on a straight-line basis.
Amortization expense for 2008 (for the period from the acquisition date through December 31, 2008) was $410.
Estimated amortization expense for identifiable intangible assets for the next five years is as follows:
2009 ........................................................................ $570
2010 ........................................................................ 320
2011 ........................................................................ 320
2012 ........................................................................ 320
2013 ........................................................................ 250
7. EQUITY INVESTMENT
On October 11, 2007, the Company purchased 1,320,650 Series A Preferred Units from Zero Water, at a
purchase price of $10.60 per Series A unit for an aggregate purchase price of $14,258, which includes acquisition
costs of $259. This represents approximately a 27% fully diluted equity interest in Zero Water. This investment
is accounted for under the equity method of accounting. An equity loss of $2,975 and $800 was recorded in 2008
and 2007 (subsequent to the initial investment), respectively, for the Company’s share of Zero Water’s loss and
amortization expense for the difference between the cost and the underlying equity in net assets of Zero Water at
the investment date.
During the fourth quarter of 2008, the Company recorded an impairment charge of $6,483 to reduce the carrying
value of the equity investment to its estimated fair value of $4,000. The impairment charge primarily resulted
from lower-than-expected operating results and projections of future performance coupled with the current non-
strategic business direction of Zero Water and the overall general economic decline which indicated that the full
carrying value of the equity investment was not recoverable. The charge was recorded as equity and impairment
loss in the accompanying consolidated statements of operations.
8. CREDIT FACILITY
On October 2, 2007, the Company executed a credit agreement with a group of lenders that provides for a
$200,000 unsecured revolving credit facility with an expansion feature, subject to certain conditions, to increase
the facility to $300,000 (the “Credit Facility”). During 2008, the Company drew down and repaid on the Credit
Facility in the amount of $35,000. There were no amounts outstanding as of December 31, 2008.
The Credit Facility provides for interest at either a floating rate, which will be a base rate, or a Eurocurrency rate
equal to the London Inter-Bank Offered Rate for the relevant term, plus an applicable margin. The base rate will
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