Nutrisystem 2011 Annual Report Download - page 42

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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, 2011, 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. In January
2012, we entered into a third $10.0 million notional value interest rate swap for the amended and restated credit
agreement. At December 31, 2011, we had $30.0 million of debt outstanding at a weighted average interest rate
of 1.26%. 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, 2011 of $47.6 million were maintained in bank and money market accounts.
Additionally, we invested $10.0 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 42 through 66 hereto and is incorporated by
reference herein.
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