Nutrisystem 2014 Annual Report Download - page 51

holidays, on a straight-line basis over the lease term. Lease allowances utilized for space improvement are
recorded as leasehold improvement assets and amortized over the shorter of the economic useful life of the asset
or the lease term. Tenant lease incentive allowances received are recorded as deferred rent and amortized as
reductions to rent expense over the lease term. Included in the accompanying consolidated balance sheets is
$2,611 of a tenant improvement allowance at December 31, 2014, of which $345 is included in other accrued
expenses and current liabilities and $2,266 in non-current liabilities. At December 31, 2013, the tenant
improvement allowance was $2,956, of which $345 was included in other accrued expenses and current liabilities
and $2,611 in non-current liabilities.
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and liabilities and the respective tax bases
and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the
consolidated statements of operations in the period that includes the enactment date. In assessing the ability to
realize deferred tax assets, the Company considers whether it is more likely than not that some portion or all of
the deferred tax assets will not be realized.
A tax benefit from an uncertain tax position may be recognized only if it is “more likely than not” that the
position is sustainable, based on its technical merits. The tax benefit of a qualifying position is the largest amount
of tax benefit that is greater than 50% likely of being realized upon settlement with a taxing authority having full
knowledge of all relevant information. The liability for unrecognized tax benefits is classified as noncurrent
unless the liability is expected to be settled in cash within 12 months of the reporting date. The Company records
accrued interest and penalties related to unrecognized tax benefits as part of interest expense, net.
Segment Information
The Company is managed and operated as one business. The entire business is managed by a single management
team that reports to the chief executive officer. Revenue consists primarily of food sales.
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