Nutrisystem 2010 Annual Report Download - page 53

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In 2010, 2009 and 2008, common stock equivalents representing 167,158, 527,891 and 604,545 shares of
common stock, respectively, were excluded from weighted average shares outstanding for diluted income per
common share purposes because the effect would be anti-dilutive.
Share-Based Payment Awards
The cost of all share-based awards to employees, including grants of employee stock options, restricted stock and
restricted stock units, is recognized in the financial statements based on the fair value of the awards at grant date.
The fair value of stock option awards is determined using the Black-Scholes valuation model on the date of grant.
The fair value of restricted stock and restricted stock unit awards is equal to the market price of the Company’s
common stock on the date of grant.
The fair value of share-based awards is recognized on a straight-line basis over the requisite service period, net of
estimated forfeitures. The Company relies primarily upon historical experience to estimate expected forfeitures
and recognizes compensation expense on a straight-line basis from the date of grant. The Company issues new
shares upon exercise of stock options or vesting of restricted stock or restricted stock units.
Cash Flow Information
The Company made payments for income taxes of $16,660, $11,449 and $36,784 in 2010, 2009, and 2008,
respectively. Interest payments in 2010, 2009 and 2008 were $283, $304 and $352, respectively. During 2010,
the Company had non-cash capital additions of $3,991 through a tenant improvement allowance and $1,664 of
unpaid invoices in accounts payable and accrued expenses.
Use of Estimates
The preparation of financial statements in accordance with U.S. generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
at the date of the financial statements and the reported amounts of revenue and operating expenses during the
reporting period. Actual results could differ from these estimates.
3. CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES
At December 31, 2010, cash, cash equivalents and marketable securities of continuing operations consisted of the
following:
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair
Value
Cash .................................................. $15,283 $— $— $15,283
Money market account .................................... 5,093 — — 5,093
U.S. government bond fund ................................ 20,877 — 34 20,843
$41,253 $— $ 34 $41,219
At December 31, 2009, cash, cash equivalents and marketable securities of continuing operations consisted of the
following:
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair
Value
Cash .................................................. $32,198 $— $— $32,198
U.S. government bond fund ................................ 30,344 — 20 30,324
$62,542 $— $ 20 $62,522
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