Shutterfly 2010 Annual Report Download - page 13

If we are unable to meet our production requirements, our net revenues and results of operations would be harmed.
We believe that we must continue to grow our current production capability to meet our projected net revenue targets. We anticipate that
total 2010 capital expenditures will range between 7% to 9% of 2010 net revenues. During 2007, we opened a new manufacturing and
production facility in Charlotte, North Carolina. In January 2009 we closed our Hayward, California production facility. In April 2009, we
opened a new manufacturing and production facility in Phoenix, Arizona. Operational difficulties, such as a significant interruption in the
operation of any of our plants could delay production or shipment of our products. Our inability to meet our production requirements could lead
to customer dissatisfaction and damage our reputation and brand, which would result in reduced net revenues. Moreover, if the costs of meeting
production requirements, including capital expenditures, were to exceed our expectations, our results of operations would be harmed.
In addition, we face significant production risks at peak holiday seasons, including the risks of obtaining sufficient qualified seasonal
production personnel. A majority of our workforce during the fourth quarter of 2009 was seasonal, temporary personnel. We have had
difficulties in the past finding a sufficient number of qualified seasonal employees, and our failure to obtain qualified seasonal production
personnel at any of our production facilities could harm our operations.
Our quarterly financial results may fluctuate, which may lead to volatility in our stock price.
Our future revenues and operating results may vary significantly from quarter-to-
quarter due to a number of factors, many of which are
difficult for us to predict and control. Factors that could cause our quarterly operating results to fluctuate include:
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general economic conditions, including recession and slow economic growth in the U.S. and worldwide and higher inflation, as well as
those economic conditions specific to the Internet and e
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commerce industries;
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demand for our products and services, including seasonal demand;
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our pricing and marketing strategies and those of our competitors;
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our ability to attract visitors to our website and convert those visitors into customers;
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our ability to retain customers and encourage repeat purchases;
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our ability to sustain our profit margins, and our ability to diversify our product offerings, promote our new products and services and
sell to consumers photo
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based products such as photo books, calendars and cards;
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the costs of customer acquisition;
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our ability to manage our production and fulfillment operations;
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the costs to produce our prints and photo
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based products and merchandise and to provide our services;
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the costs of expanding or enhancing our technology or website;
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