Nutrisystem 2010 Annual Report Download - page 39

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Our Board of Directors has authorized stock repurchase programs under which an additional $38.8 million
of our outstanding shares of common stock may be purchased through March 31, 2011. The repurchase programs
may be limited or terminated at any time without prior notice. The repurchased shares have been retired.
The Board of Directors declared quarterly dividends of $0.175 per share, which were paid on March 22,
2010, May 24, 2010, August 19, 2010 and November 22, 2010. Subsequent to December 31, 2010, the Board of
Directors declared a quarterly dividend of $0.175 per share payable on March 17, 2011 to shareholders of record
as of March 7, 2011. Although the Company intends to continue to pay regular quarterly dividends, the
declaration and payment of future dividends are discretionary and will be subject to quarterly determination by
the Board of Directors following its review of the Company’s financial performance.
Seasonality
Typically in the weight loss industry, revenue is strongest in the first calendar quarter and lowest in the
fourth calendar quarter. We believe our business experiences seasonality, driven by the predisposition of dieters
to initiate a diet and the price and availability of certain media.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We have interest-rate risk exposure for changes in interest rates relating to our outstanding borrowings. We
manage our exposure to changing interest rates through the use of a combination of variable-rate debt and fixing
the interest rate of certain variable-rate debt through the use of interest rate swaps. At December 31, 2010, we
had two interest rate swap agreements (the “Swaps”), with notional amounts of $10.0 million each, which mature
on August 3, 2012 and September 28, 2012, respectively. Under the Swaps, we receive interest equivalent to the
three-month LIBOR and pay a fixed rate of interest of 0.75% with settlements occurring quarterly. At
December 31, 2010, we had $30.0 million of debt outstanding at a weighted average interest rate of 1.09%. A 1
percentage point change in the weighted average rate would affect annual interest by approximately $300,000.
We believe that we are not subject to any material risks arising from changes in foreign currency exchange
rates, commodity prices, equity prices or other market changes that affect market risk instruments. Our cash and
cash equivalents at December 31, 2010 of $20.4 million were maintained in bank and money market accounts.
Additionally, we invested $20.8 million in marketable securities, which are classified as available-for-sale
securities and are reported at fair value in the accompanying consolidated balance sheets. As such, a change in
interest rates of 1 percentage point would not have a material impact on our operating results and cash flows.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item is set forth on pages 39 through 62 hereto and is incorporated by
reference herein.
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