Nutrisystem 2008 Annual Report Download - page 61

12. DISCONTINUED OPERATION
In the fourth quarter of 2007, the Company committed to a plan to sell its subsidiary, Slim and Tone. In
accordance with SFAS No. 144, this subsidiary has been treated as a discontinued operation. Accordingly, the
operating results of this discontinued operation have been presented separately from continuing operations for all
periods presented. Slim and Tone had revenues of $277, $723 and $2,259 and pre-tax losses of $276, $100 and
$874 for the years ended December 31, 2008, 2007 and 2006, respectively. Additionally, in 2007, an impairment
of $1,156 pre-tax was included in the loss from discontinued operations.
13. EQUITY INSTRUMENTS
Equity Incentive Plans
The Company has three equity incentive plans: the 1999 Equity Incentive Plan, the 2000 Equity Incentive Plan
and the 2008 Long-Term Incentive Plan (collectively, the “Equity Incentive Plans”). Under these plans, a variety
of equity instruments can be granted to key employees including incentive and nonqualified stock options to
purchase shares of the Company’s common stock, restricted stock or shares of common stock. The 1999 Equity
Incentive Plan, the 2000 Equity Incentive Plan and the 2008 Long-Term Incentive Plan authorize up to
1,000,000, 5,600,000 and 2,700,000 shares of common stock, respectively, for issuance. At December 31, 2008,
options to purchase 1,938,158 shares were available for grant under these plans.
Under each of the plans, the Board of Directors determines the term of each award, but no award can be
exercisable more than 10 years from the date the award is granted. To date, all of the awards issued under the
Equity Incentive Plans expire 10 years from the grant date. The Board also determines the vesting provisions and
the exercise price per share, which is the fair market value at date of grant. Awards issued to employees generally
vest over terms ranging from three to five years.
The following table summarizes the options granted, exercised and cancelled in 2006, 2007 and 2008:
Number of
Shares
Weighted-
Average
Exercise
Price Per
Share
Weighted-
Average
Remaining
Contractual
Life (years)
Aggregate
Intrinsic
Value
Outstanding, January 1, 2006 ............................ 2,732,837 $ 3.55
Exercised ............................................ (1,324,174) 2.74
Forfeited ............................................ (43,335) 15.25
Outstanding, December 31, 2006 ......................... 1,365,328 3.97
Exercised ............................................ (412,076) 4.69
Forfeited ............................................ (29,168) 21.23
Outstanding, December 31, 2007 ......................... 924,084 3.10
Exercised ............................................ (659,518) 1.55
Forfeited ............................................ (11,500) 23.38
Outstanding, December 31, 2008 ......................... 253,066 $ 6.24 5.53 $2,395
Exercisable at December 31, 2008 ........................ 253,066 $ 6.24 5.53 $2,395
Expected to vest at December 31, 2008 .................... 253,066 $ 6.24 5.53 $2,395
The Company adopted SFAS No. 123R, effective January 1, 2006. Prior to January 1, 2006, the Company
applied the intrinsic value method of accounting for all stock-based employee compensation in accordance with
APB Opinion No. 25, and related interpretations. The Company elected to use the modified prospective method
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