Nutrisystem 2014 Annual Report Download - page 55

5. FIXED ASSETS
Fixed assets consist of the following:
December 31,
2014 2013
Furniture and fixtures ............................................. $ 5,673 $ 5,687
Computer hardware and software .................................... 59,035 56,244
Equipment ...................................................... 2,621 2,622
Leasehold improvements .......................................... 11,357 11,215
78,686 75,768
Accumulated depreciation ......................................... (51,835) (49,739)
$ 26,851 $ 26,029
Depreciation and amortization expense was $7,849, $8,896 and $10,724 in 2014, 2013 and 2012, respectively.
6. CREDIT FACILITY AND INTEREST RATE SWAPS
On November 8, 2012, the Company entered into a $40,000 secured revolving credit facility, as amended, (the
“Credit Facility”) with a lender. The Credit Facility can be drawn upon through November 8, 2015, at which time
all amounts must be repaid. There were no borrowings outstanding at December 31, 2014 and 2013.
The Credit Facility provides for interest at either a base rate or a LIBOR rate, in each case plus an applicable
margin. The base rate will be the highest of (i) the Administrative Agent’s prime rate, (ii) 0.50% percent above
the Federal Funds Rate and (iii) the LIBOR rate for deposits in dollars for a one-month interest period as
determined three business days prior to such date, plus 1.50%. The LIBOR rate is equal to the London Inter-Bank
Offered Rate for the relevant term. The applicable margin is subject to adjustment based on the Company’s
consolidated fixed charge coverage ratio and ranges from 0.25-1.25% per year for base rate loans and from 1.75-
2.75% per year for LIBOR rate loans. The Company will also pay an unused line fee. The unused line fee is
subject to adjustment based on the Company’s consolidated fixed charge coverage ratio and ranges from 0.25-
0.375% per year. The Company incurred no interest expense during 2014 and 2013 and $764 during 2012.
During 2014, 2013 and 2012, the Company incurred $135, $140 and $159 in an unused line fee, respectively,
under the Credit Facility and prior financing arrangements. Interest payments and unused line fees are classified
within interest expense, net in the accompanying consolidated statements of operations.
The Credit Facility contains financial and other covenants including a minimum consolidated fixed charge
coverage ratio, a minimum consolidated tangible net worth and a minimum consolidated liquidity ratio, and
includes limitations on, among other things, capital expenditures, additional indebtedness, acquisitions and
restrictions on paying dividends in certain circumstances. As of December 31, 2014, the Company was in
compliance with all covenants contained in the Credit Facility. Any obligations under the Credit Facility, as well
as certain banking services and hedging obligations, are secured by substantially all of the assets of the Company
and certain subsidiaries.
At December 31, 2014, the Company had $101 of unamortized debt issuance costs associated with the Credit
Facility that are being amortized over the remaining term of the Credit Facility.
The Company has used interest rate swaps, a type of derivative financial instrument, to manage interest costs and
minimize the effects of interest rate fluctuations on cash flows associated with its variable-rate debt. The
Company did not use interest rate derivatives for trading or speculative purposes. While interest rate swaps are
subject to fluctuations in value, these fluctuations are generally offset by the value of the underlying exposures
being hedged. The Company minimized the risk of credit loss by entering into these agreements with financial
institutions that have high credit ratings.
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