Shutterfly 2010 Annual Report Download - page 76

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SHUTTERFLY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2009, the total future minimum payments under non-cancelable operating and capital leases are as follows:
Purchase obligations consist of non-cancelable marketing agreements, co-
location services and printing equipment rental that expire at
various dates through the year 2013. As of December 31, 2009, the Company’s purchase obligations totaled $16,878,000.
Indemnifications
In the normal course of business, the Company enters into contracts and agreements that contain a variety of representation and warranties
and provide for general indemnifications. The Company’
s exposure under these agreements is unknown because it involves future claims that
may be made against the Company, but have not yet been made. To date, the Company has not paid any claims or been required to defend any
action related to its indemnification obligations. However, the Company may record charges in the future as a result of these indemnification
obligations.
Contingencies
From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of its business activities. The
Company accrues contingent liabilities when it is probable that future expenditures will be made and such expenditures can be reasonably
estimated.
Line of Credit
On June 29, 2009, the Company entered into a line of credit facility (the “Facility”)
with Silicon Valley Bank. The Facility is a $20.0
million 360-day revolving line of credit, and is collateralized by substantially all of the assets of the Company.
The Company will use amounts
borrowed under the Facility, if any, to finance the Company’
s working capital needs and for general corporate purposes, including future
acquisitions. The line of credit also has debt covenants which require the maintenance of certain financial ratios. As of December 31, 2009, we
were in compliance with those covenants. As of December 31, 2009, the Company has not drawn on the line of credit. The Company incurred
$82,000 of Facility origination costs which have been capitalized within prepaid expenses and will be amortized over the twelve month term of
the Facility.
Operating
Leases
Capital
Leases
Year Ending:
In thousands
2010
$
3,676
$
10
2011
2,302
6
2012
2,371
—
2013
2,441
—
2014
2,514
Thereafter
2,078
—
Total minimum lease payments
$
15,382
16
Less: amount representing interest
(1
)
Present value of future minimum lease payments
15
Less: current portion
(9
)
Non
-
current portion of capital lease obligations
$
6
73