Shutterfly 2007 Annual Report Download - page 79

Table of Contents
service personnel to take certain actions related to our prepaid print plans and clarifying our policies related to our
prepaid print plans for our personnel, and (4) continuing to improve the skills, knowledge and experience available to
us for the preparation and review of our tax provision, additional training of our finance and accounting personnel,
and, with respect to our tax provision, implementing an additional level of review of the workpapers supporting the
calculation of the tax provision and related deferred tax amounts.
Based on our evaluation of these enhanced procedures and increased staffing levels, management determined
that, as of December 31, 2006, we have remediated the material weaknesses in internal control over financial
reporting as disclosed in the S-1.
Limitation on Effectiveness of Controls
It should be noted that any system of controls, however well designed and operated, can provide only
reasonable, and not absolute, assurance that the objectives of the system are met. The design of any control system is
based, in part, upon the benefits of the control system relative to its costs. Control systems can be circumvented by
the individual acts of some persons, by collusion of two or more people, or by management override of the control.
In addition, over time, controls may become inadequate because of changes in conditions, or the degree of
compliance with the policies or procedures may deteriorate. Because of these and other inherent limitations of
control systems, there can be no assurance that any design will succeed in achieving its stated goals under all
potential future conditions, regardless of how remote.
None.
PART III
The information concerning our directors required by this Item is incorporated by reference to the section in our
Proxy Statement entitled “Proposal No. 1 — Election of Directors.”
The information concerning our executive officers required by this Item is incorporated by reference to the
section in our Proxy Statement entitled “Executive Officers.”
The information concerning compliance with Section 16(a) of the Securities Exchange Act of 1934 required by
this Item is incorporated by reference to the section in our Proxy Statement entitled “Section 16(a) Beneficial
Ownership Reporting Compliance.”
We have adopted a written code of ethics for financial employees that applies to our principal executive officer,
principal financial officer, principal accounting officer, controller and other employees of the finance department
designated by the company’s Chief Financial Officer. This code of ethics, titled the “Code of Ethics for Chief
Executive Officer and Senior Financial Department Personnel,” is attached to this annual report as exhibit 14.01.
The information concerning material changes to the procedures by which stockholders may recommend
nominees to the Board of Directors required by this Item is incorporated by reference to information set forth in the
Proxy Statement.
The information concerning the audit committee of the Board of Directors required by this Item is incorporated
by reference to information set forth in the Proxy Statement.
The information required by this Item with respect to executive compensation and the compensation committee
of the Board of Directors is incorporated by reference to information set forth in the Proxy Statement.
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ITEM 9B.
OTHER INFORMATION.
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
ITEM 11.
EXECUTIVE COMPENSATION.