Nutrisystem 2008 Annual Report Download - page 63

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SFAS No. 123R and are subject to EITF Issue No. 00-19, “Accounting for Derivative Financial Instruments
Indexed to, and Potentially Settled in, a Company’s Own Stock,” which requires the stock options held by certain
non-employee consultants be accounted for as liability awards. The fair value of these awards was estimated
using the Black-Scholes option pricing model and is remeasured at each financial statement date until the award
is settled or expires. During 2008 and 2007, the Company reduced expense by $109 and $292, respectively,
based on the remeasurement of these options and during 2006 recorded additional expense of $2,042 based on
the remeasurement of these options. Stock options to acquire 8,000 shares of common stock were exercised
during 2008 resulting in the reclassification of $103 to equity. As of December 31, 2008, no options to
non-employee consultants were outstanding.
14. EMPLOYEE BENEFIT PLAN
The Company maintains a qualified tax deferred defined contribution retirement plan (the “Plan”). Under the
provisions of the Plan, substantially all employees meeting minimum age and service requirements are entitled to
contribute on a before and after-tax basis a certain percentage of their compensation. The Company matches
100% of an employee’s first 3% contribution and 50% of an employee’s next 2% contribution for 2008, 2007 and
2006 of the employee’s annual salary. Employees vest immediately in their contributions and the Company’s
contribution. The Company’s contributions in 2008, 2007 and 2006 were $1,082, $986 and $683, respectively.
15. RETURNS RESERVE
Following is an analysis for the returns reserve:
Year Ended December 31,
2008 2007 2006
Balance at beginning of year ............................. $ 2,860 $ 2,550 $ 1,537
Provision for estimated returns ........................... 47,578 57,163 39,575
Actual returns ......................................... (48,364) (56,853) (38,562)
Balance at end of year .................................. $ 2,074 $ 2,860 $ 2,550
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