NutriSystem, Inc. Reports First Quarter 2009 Results; Announces Quarterly Dividend of $0.175 Per Share

Reports First Quarter 2009 Revenues of $163 Million and Adjusted EBITDA of $19
Million
HORSHAM, Pa.--(Business Wire)--
NutriSystem, Inc. (NASDAQ: NTRI), a leading provider of weight management
products and services, today reported financial results for the first quarter of
2009. Highlights for the first quarter ended March 31, 2009 include:

* Revenues of $162.7 million as compared to $216.5 million for Q1 2008;
* Operating income from continuing operations of $14.7 million as compared to
$23.5 million for Q1 2008;
* Net income of $8.8 million as compared to $14.1 million for Q1 2008;
* Adjusted EBITDA of $19.4 million compared to $26.7 million for Q1 2008.
Adjusted EBITDA is defined as income from continuing operations excluding
non-cash employee compensation, other expense, equity loss, interest, income
taxes and depreciation and amortization;
* Adjusted net income of $0.31 per diluted share before $0.01 impact of the new
FASB Staff Position EITF No. 03-6-1 regarding participating securities and
before the $0.01 impact of the Zero Water equity loss, resulting in $0.29
reported EPS. This compares to Q1 2008 adjusted net income of $0.44 per diluted
share before $0.01 impact of the new FASB Staff Position EITF No. 03-6-1 and
before the $0.02 impact of the Zero Water equity loss, resulting in $0.41
reported EPS; and
* Cash and cash equivalents of $73.7 million at March 31, 2009 and no debt
outstanding as compared to $38.3 million at December 31, 2008 and no debt
outstanding.

"The first quarter of 2009 saw the lowest US consumer confidence on record, and
with it, continued challenges in overall consumer spending. Despite pressure on
the revenue line, cash generation was strong, gross margins improved and we
initiated our G&A reduction plan. Reactivation revenue was similar to a year ago
and we foresee continued stability this year," stated Chairman and CEO Joe
Redling. "We plan to continue on this path of reducing costs and improving
operating efficiency so we can navigate through this recessionary period and be
better positioned for the economic recovery."

For the first quarter of 2009, the Company generated $45.7 million in net cash
from operations and ended the quarter with $73.7 million in cash and cash
equivalents, no funded debt and $200 million available under its credit
agreement. This compares to $43.1 million in net cash from operations for the
quarter ended March 31, 2008.

The Board of Directors declared the Company`s quarterly dividend of $0.175 per
share, payable May 18, 2009, to shareholders of record as of May 8, 2009. While
the Company intends to continue to pay regular quarterly dividends, the
declaration and payment of future dividends are discretionary and will be
subject to determination by the Board of Directors each quarter following its
review of the Company`s financial performance.

"We see the dividend as an excellent way to return value to our shareholders
especially in light of our strong cash generation," said David Clark, Chief
Financial Officer. "Our focus for 2009 continues to be supporting new customer
and reactivation revenue, improving gross margin, managing marketing efficiency
to the mid-twenty percent range of revenues, and reducing overall G&A versus a
year ago."

Conference Call and Webcast

Management will host a webcast to discuss first quarter 2009 financial results
today at 4:30 PM Eastern time. The webcast will include remarks from Chairman
and Chief Executive Officer Joe Redling and Chief Financial Officer David Clark.

The webcast will be available live under the Investor Relations section of
NutriSystem's website, www.nutrisystem.com. Please click on Investor Relations
at the bottom of the home page and then click on the microphone icon on the
Investor Relations home page. Interested parties unable to access the conference
call via the webcast may dial 1-866-831-9862 (outside US/Canada 706-758-5226),
the conference ID is 95447010. A replay of the conference call will be available
on the Company website following the event.

About NutriSystem, Inc.

NutriSystem (NASDAQ: NTRI), a leading provider of weight management products and
services, offers weight-loss programs based on nutritious, portion-controlled,
lower Glycemic Index prepared meals. These programs have no membership fees and
provide free online and telephone counseling.

Forward-Looking Statement Disclaimer

This press release may contain forward-looking statements that are made pursuant
to the safe-harbor provisions of the Private Securities Litigation Reform Act of
1995. Statements regarding NutriSystem`s expectations, intentions and plans
regarding continued stability in reactivation revenue during 2009, continuing to
reduce costs and improve operating efficiency, continuing to pay regular
quarterly dividends and other statements that are not statements of historical
fact constitute forward-looking statements. These forward-looking statements
involve a number of risks and uncertainties, which are described in NutriSystem,
Inc.'s Annual Report on Form 10-K and its other filings with the Securities and
Exchange Commission. The actual results may differ materially from any
forward-looking statements due to such risks and uncertainties. NutriSystem,
Inc. undertakes no obligation to revise or update any forward-looking statements
in order to reflect events or circumstances that may arise after the date of
this release.

NUTRISYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share amounts)

Three Months Ended
March 31,
2009 2008

REVENUE $ 162,690 $ 216,468
COSTS AND EXPENSES:
Cost of revenue 76,274 103,352
Marketing 47,198 67,331
General and administrative 21,846 20,526
Depreciation and amortization 2,664 1,761
Total costs and expenses 147,982 192,970
Operating income from continuing operations 14,708 23,498
OTHER EXPENSE (91 ) (40 )
EQUITY LOSS (390 ) (1,207 )
INTEREST (EXPENSE) INCOME, net (48 ) 174
Income from continuing operations before income taxes 14,179 22,425
INCOME TAXES 5,332 8,304
Income from continuing operations 8,847 14,121
DISCONTINUED OPERATION:
Loss on discontinued operation, net of income tax benefit (5 ) (24 )
Net income $ 8,842 $ 14,097
BASIC INCOME PER COMMON SHARE:
Income from continuing operations $ 0.29 $ 0.42
Net loss from discontinued operation - -
Net income $ 0.29 $ 0.42
DILUTED INCOME PER COMMON SHARE:
Income from continuing operations $ 0.29 $ 0.41
Net loss from discontinued operation - -
Net income $ 0.29 $ 0.41

WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 29,316 33,038
Diluted 29,530 33,570

NUTRISYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)

March 31, December 31,
2009 2008
ASSETS
CURRENT
ASSETS:
Cash and $ 73,718 $ 38,309
cash
equivalent
s
Receivable 15,739 17,200
s
Inventorie 35,262 50,986
s
Prepaid - 3,714
income
taxes
Deferred 1,957 1,651
income
taxes
Other 8,383 8,611
current
assets
Current 306 325
assets of
discontinu
ed
operation
Total 135,365 120,796
current
assets
FIXED 24,186 24,312
ASSETS,
net
EQUITY 3,610 4,000
INVESTMENT
GOODWILL 2,717 2,717
IDENTIFIAB 2,385 2,590
LE
INTANGIBLE
ASSETS,
net
OTHER 5,389 5,056
ASSETS
$ 173,652 $ 159,471
LIABILITIE
S AND
STOCKHOLDE
RS` EQUITY
CURRENT
LIABILITIE
S:
Accounts $ 41,040 $ 31,448
payable
Accrued 1,316 2,150
payroll
and
related
benefits
Deferred 4,203 4,964
revenue
Income 2,090 -
taxes
payable
Other 4,975 3,743
accrued
expenses
and
current
liabilitie
s
Current 28 43
liabilitie
s of
discontinu
ed
operation
Total 53,652 42,348
current
liabilitie
s
NON 1,379 1,298
-CURRENT
LIABILITIE
S
Total 55,031 43,646
liabilitie
s
COMMITMENT
S AND
CONTINGENC
IES
STOCKHOLDE
RS`
EQUITY:
Preferred - -
stock,
$.001 par
value
(5,000,000
shares
authorized
, no
shares
issued and
outstandin
g)
Common 29 29
stock,
$.001 par
value
(100,000,0
00 shares
authorized
; shares
issued -
30,560,609
at March
31, 2009
and
30,784,920
at
December
31, 2008)
Additional - -
paid-in
capital
Retained 118,645 115,771
earnings
Accumulate (53 ) 25
d other
comprehens
ive (loss)
income
Total 118,621 115,825
stockholde
rs` equity
$ 173,652 $ 159,471

NUTRISYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

Three Months Ended
March 31,
2009 2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 8,842 $ 14,097
Adjustments to reconcile net income to net cash provided by operating activities-
Loss on discontinued operation 5 24
Depreciation and amortization 2,664 1,761
Share-based expense 2,041 1,524
Deferred income tax benefit (685 ) (923 )
Equity loss 390 1,207
Changes in operating assets and liabilities
Accrued interest income - 19
Receivables 1,450 (3,264 )
Inventories 15,698 12,139
Other assets 272 1,698
Accounts payable 9,618 7,119
Accrued payroll and related benefits (834 ) 48
Deferred revenue (759 ) -
Income taxes 5,793 6,250
Other accrued expenses and liabilities 1,212 1,396
Net cash provided by operating activities of continuing operations 45,707 43,095
Net cash used in operating activities of discontinued operations (20 ) (32 )
Net cash provided by operating activities 45,687 43,063
CASH FLOWS FROM INVESTING ACTIVITIES:
Sales of marketable securities - 1,750
Capital additions (2,345 ) (2,253 )
Net cash used in investing activities (2,345 ) (503 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under credit facility - 35,000
Repayments of borrowings under credit facility - (35,000 )
Exercise of stock options 38 201
Tax benefit from equity compensation awards, net (662 ) 783
Repurchase and retirement of common stock (1,939 ) (41,209 )
Payment of dividends (5,331 ) -
Net cash used in financing activities (7,894 ) (40,225 )
Effect of exchange rate changes on cash and cash equivalents (58 ) (46 )
NET INCREASE IN CASH AND CASH EQUIVALENTS 35,390 2,289
CASH AND CASH EQUIVALENTS, beginning of period 38,631 41,190
CASH AND CASH EQUIVALENTS, end of period 74,021 43,479
LESS CASH AND CASH EQUIVALENTS OF DISCONTINUED OPERATION, end of period 303 511
CASH AND CASH EQUIVALENTS OF CONTINUING OPERATIONS, end of period $ 73,718 $ 42,968

NUTRISYSTEM, INC. AND SUBSIDIARIES
ADJUSTED EBITDA RECONCILIATION TO GAAP RESULTS
(in thousands)

Three Months Ended March 31,
2009 2008

Adjusted EBITDA $ 19,413 $ 26,674
Non-cash employee compensation expense (2,041 ) (1,415 )
Other expense (91 ) (40 )
Equity loss (390 ) (1,207 )
Interest (expense) income, net (48 ) 174
Income taxes (5,332 ) (8,304 )
Depreciation and amortization (2,664 ) (1,761 )
Income from continuing operations $ 8,847 $ 14,121

Adjusted EBITDA is defined as income from continuing operations excluding
non-cash employee compensation, other expense, equity loss, interest, income
taxes and depreciation and amortization. We believe Adjusted EBITDA is a useful
performance metric for management and investors because it is more indicative of
the ongoing operations of the company.

Adjusted EBITDA excludes certain non-cash and non-operating items to facilitate
comparisons and provide a meaningful measurement that is focused on the
performance of the ongoing operations of the Company.

NutriSystem, Inc.
Cindy Warner
Investor Relations
Tel: 215-346-8136
Email: IR@nutrisystem.com

Copyright Business Wire 2009