Shutterfly 2008 Annual Report Download - page 58

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Property and equipment includes $5,121,000 and $6,502,000 of equipment and software under capital leases at December 31, 2007 and 2006, respectively. Accumulated
depreciation of assets under capital leases totaled $3,798,000 and $3,820,000 at December 31, 2007 and 2006, respectively.
Depreciation and amortization expense for the years ended December 31, 2007, 2006 and 2005 was $17,384,000, $10,525,000 and $6,246,000, respectively.
The Company has capitalized website development costs incurred in the application development phase and unamortized cost is included in property and equipment and totaled
approximately $3,619,000 and $2,582,000 at December 31, 2007 and 2006, respectively. These amounts included $111,000 and $0 of stock based compensation expense. Amortization
of capitalized costs totaled approximately $1,467,000, $993,000, and $404,000 for the years ended December 31, 2007, 2006 and 2005, respectively.
Intangible Assets
Intangible assets are composed of the following at December 31:
Purchased technology is amortized over a period ranging from 5 to 16 years. Licenses and other is amortized over a period ranging from three to five years.
In August 2007, the Company entered into an agreement with a competitor to acquire the customer list of that competitor without restriction of use. The acquisition amount totaled
$990,000 and was paid in September 2007. The Company recorded this payment as an intangible asset, and is being amortized ratably over its estimated life through August 2010. The
Company recorded amortization expense of $110,000 in 2007.
Intangible asset amortization expense for the years ended December 31, 2007, 2006 and 2005 was $412,000, $222,000 and $276,000 respectively. Amortization of existing
intangible assets is estimated to be as follows (in thousands):
Accrued Liabilities
SHUTTERFLY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Weighted Average
December 31,
Useful Life
2007
2006
In thousands
Purchased technology
12 Years
$
3,350
$
2,030
Less: accumulated amortization
(905)
(634)
2,445
1,396
Customer relationships
3 Years
990
—
Less: accumulated amortization
(110)
---
880
---
Licenses and other
3 Years
186
—
Less: accumulated amortization
(31)
---
155
---
Acquired workforce
1 Year
279
279
Less: accumulated amortization
(279)
(279)
Total
$
3,480
$
1,396
Year Ending:
2008
$
783
2009
783
2010
643
2011
395
2012
251
Thereafter
625
$
3,480
December 31,
2007
2006
In thousands
Accrued marketing expenses
$
4,101
$
1,822
Accrued compensation
3,053
1,201
Accrued purchases
1,414
483
Accrued income and sales taxes
3,682
1,235
Accrued consultant expenses
1,516
884
Accrued production facility expenses
3,283
1,784
Accrued other
1,675
1,399
$
18,724
$
8,808
40