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SHUTTERFLY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In November 2008, the Emerging Issues Task Force issued EITF No. 08-7, “ Accounting for Defensive Intangible Assets ” (EITF 08-
7) that
clarifies accounting for defensive intangible assets subsequent to initial measurement. EITF 08-
7 applies to acquired intangible assets which an
entity has no intention of actively using, or intends to discontinue use of, the intangible asset but holds it (locks up) to prevent others from
obtaining access to it (i.e., a defensive intangible asset). Under EITF 08-
7, the Task Force reached a consensus that an acquired defensive asset
should be accounted for as a separate unit of accounting (i.e., an asset separate from other assets of the acquirer); and the useful life assigned to
an acquired defensive asset should be based on the period during which the asset would diminish in value. EITF 08-
7 is effective for defensive
intangible assets acquired in fiscal years beginning on or after December 15, 2008. The Company does not expect the issuance of EITF 08-
7 to
have a material effect on its financial position or results of operations.
Note 3 – Fair Value Measurement
The components of the Company’
s cash equivalents and investments, including the unrealized gains (losses) associated with each are as
follows:
December 31, 2008
December 31, 2007
Cost
Gross
Unrealized
Gains/
(Losses)
Fair Value
Cost
Gross
Unrealized
Gains/
(Losses)
Fair Value
In thousands
In thousands
Cash Equivalents
Money Market Funds
80,410
—
80,410
22,363
—
22,363
Commercial Paper
—
—
—
84,284
(20
)
84,264
Total Cash Equivalents
80,410
—
80,410
106,647
(20
)
106,627
US Government Agency Securities
—
—
—
3,000
2
3,002
Auction Rate Securities
52,250
(9,013)
43,237
—
—
—
Rights from UBS
—
9,013
9,013
—
—
—
Total Cash Equivalents and
Investments
$
132,660
$
—
$
132,660
$
109,647
$
(18
)
$
109,629
81