Nutrisystem 2010 Annual Report Download - page 23

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business. We may also be subject to claims that our products contain contaminants, are improperly labeled,
include inadequate instructions as to use or inadequate warnings covering interactions with other substances.
Product liability litigation, even if not meritorious, is very expensive and could also entail adverse publicity for
us and reduce our revenue. In addition, the products we distribute, or certain components of those products, may
be subject to product recalls or other deficiencies. Any negative publicity associated with these actions would
adversely affect our brand and may result in decreased product sales and, as a result, lower revenues and profits.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
We currently lease two locations in Horsham, Pennsylvania and one in Fort Washington, Pennsylvania.
These three locations total approximately 258,280 square feet of office space. One lease in Horsham expires in
the first quarter of 2011 and the second expires in 2018. The lease for our Fort Washington location expires in
2022. We have additional fulfillment capacity in Chambersburg, Pennsylvania and Sparks, Nevada through an
outsourced provider. We have no lease obligations to any of our outsourced fulfillment providers; however, we
are subject to minimum space commitments which we may reduce over a specified period of time. Management
believes the outsourced fulfillment capacity is adequate to meet our needs for the foreseeable future.
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