Nutrisystem 2015 Annual Report Download - page 52

In 2015, 2014 and 2013, common stock equivalents representing 229, 377 and 786 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 or the minimum performance requirements have not yet been
met.
Share-Based Payment Awards
The cost of all share-based awards to employees and non-employees, including grants of 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 performance-based 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, granting of restricted stock or vesting of restricted stock units.
Cash Flow Information
The Company made payments for income taxes of $13,508, $7,118 and $2,842 in 2015, 2014, and 2013,
respectively. Interest payments in 2015, 2014 and 2013 were $182, $168 and $116, respectively. During 2015,
2014 and 2013, the Company had non-cash capital additions of $670, $483 and $42, respectively, of unpaid
invoices in accounts payable and other accrued expenses and current liabilities.
Recently Issued Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update
(“ASU”) No. 2014-09, “Revenue from Contracts with Customers,” (“ASU 2014-09”). ASU 2014-09 outlines a
new, single comprehensive model for entities to use in accounting for revenue arising from contracts with
customers and supersedes most current revenue recognition guidance, including industry-specific guidance. This
new revenue recognition model provides a five-step analysis in determining when and how revenue is
recognized. The new model will require an entity to recognize revenue when it transfers promised goods or
services to customers in an amount that reflects what it expects in exchange for the goods or services. It also
requires more detailed disclosures to enable users of financial statements to understand the nature, amount,
timing and uncertainty of revenue and cash flows arising from contracts with customers. This guidance is
effective for annual periods beginning on or after December 15, 2017, including interim reporting periods within
that reporting period and should be applied retrospectively to each prior reporting period presented or
retrospectively with the cumulative effect of initially applying the ASU recognized at the date of initial
application. The Company is currently assessing the impact that adopting this new accounting standard will have
on the consolidated financial statements and footnote disclosures.
In April 2015, the FASB issued ASU No. 2015-05, “Customer’s Accounting for Fees Paid in a Cloud Computing
Arrangement,” to provide guidance to customers about whether a cloud computing arrangement includes a
software license. If a cloud computing arrangement includes a software license, then the customer should account
for the software license element of the arrangement consistent with the acquisition of other software licenses. If a
cloud computing arrangement does not include a software license, the customer should account for the
arrangement as a service contract. The new standard is effective for annual periods beginning after December 15,
2015, and interim periods within those annual periods. Early adoption is permitted. The Company is currently
assessing the impact that adopting this new accounting standard will have on its consolidated financial statements
and footnote disclosures.
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