Shutterfly 2010 Annual Report Download - page 81

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SHUTTERFLY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Included in the RSU grants for the twelve months ended December 31, 2009 are 326,000 RSUs that have both performance and service
vesting criteria (“PBRSU”). The performance criteria are tied to the Company’
s quarterly financial performance and the vesting period is three
years. Compensation cost associated with these PBRSUs is recognized on an accelerated attribution model and ultimately based on whether or
not satisfaction of the performance criteria is probable. As of December 31, 2009, the performance criteria for all fiscal quarters were met and
the associated stock based compensation has been recognized.
In connection with the acquisition of TinyPictures, Inc. on September 10, 2009, the Company granted PBRSUs to existing TinyPictures
employees. Vesting of these awards is contingent on achieving certain performance milestones and continued employment. The Company will
begin recognizing stock based compensation in the period in which achievement of each milestone is deemed probable. In 2009, the Company
recognized $313,000 in stock based compensation associated with this performance program.
During the years ended December 31, 2009 and 2008, the fair value of awards vested were $5,733,000 and $699,000, respectively.
Inducement Awards
During the twelve months ended December 31, 2009, the Company granted inducement awards of restricted stock units to an
executive. These inducement grants were approved by the Company’
s Board of Directors and were not issued under a shareholder approved
plan. A total of 200,000 restricted stock units were granted under this nonqualified agreement. These grants vest over a three year period
beginning on the grant date.
At December 31, 2009, the Company had $21,401,000
of total unrecognized compensation expense, net of estimated forfeitures, related to
stock options and stock awards that will be recognized over a weighted-average period of approximately two years.
Note 9 — Income Taxes
The components of the provision for income taxes are as follows (in thousands):
December 31,
2009
2008
2007
Federal:
Current
$
5,440
$
727
$
206
Deferred
(2,162
)
2,640
5,013
3,278
3,367
5,219
State:
Current
977
1,156
216
Deferred
(741)
(2,952)
699
236
(1,796)
915
Total income tax expense (benefit):
Current
6,417
1,883
422
Deferred
(2,903)
(312)
5,712
$
3,514
$
1,571
$
6,134
77