Nutrisystem 2015 Annual Report Download - page 55

Depreciation and amortization expense was $9,158, $7,849 and $8,896 in 2015, 2014 and 2013, respectively.
6. INTANGIBLE ASSETS
On December 17, 2015, the Company acquired the SBD brand for a cash payment of $15,000. The acquisition
was financed with existing cash.
The Company will begin developing South Beach Diet meal programs, products, and services as a distinct brand
with the intent to launch in both the direct-to-consumer and retail channels in 2017. The acquisition will provide
consumers with additional quality choices and enable the Company to capture an even more significant share of
the commercial weight loss market as it further leverages its expertise in product development, marketing,
ecommerce, supply chain logistics and retail.
The preliminary allocation of the purchase price is to the SBD trade name and is expected to be amortized on a
straight-line basis over a period of 15 years. The approximate fair value of the trade name is based on preliminary
estimates and assumptions. The fair value measurement method used to measure the assets acquired utilizes a
number of significant unobservable inputs or Level 3 assumptions. These assumptions include, among others,
projections of the acquired businesses future operating results, the implied fair value of assets using an income
approach by preparing a discounted cash flow analysis and other subjective assumptions. These preliminary
estimates and assumptions could change during the purchase price measurement period as the Company finalizes
the valuation of the asset acquired.
No amortization expense was recorded for 2015. Estimated amortization expense for identifiable intangible
assets for the next five years is expected to be as follows:
2016 ...................................................................... $1,000
2017 ...................................................................... 1,000
2018 ...................................................................... 1,000
2019 ...................................................................... 1,000
2020 ...................................................................... 1,000
The acquisition was accounted for under the acquisition method of accounting. During 2015, SBD did not
contribute to the operations of the Company as the product offering will be developed over the next year. The
Company incurred $2,498 in transaction costs associated with the acquisition of SBD, which have been charged
to expense in 2015.
Additionally, the Company had $84 of domain names acquired in previous years with indefinite lives that are not
being amortized.
7. CREDIT FACILITY
On November 6, 2015, the Company entered into an Amended and Restated Credit Agreement that provides for a
$50,000 unsecured revolving credit facility (the “Credit Facility”) with a lender. The Credit Facility can be drawn
upon through November 6, 2020, at which time all amounts must be repaid. There were no borrowings
outstanding at December 31, 2015. The Credit Facility amended and restated the previous credit agreement dated
as of November 8, 2012, which matured on November 6, 2015. There were no borrowings outstanding at
December 31, 2014 under the previous credit agreement.
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% 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
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