Shutterfly 2011 Annual Report Download

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SHUTTERFLY INC
FORM 10-K
(Annual Report)
Filed 02/07/11 for the Period Ending 12/31/10
Address 2800 BRIDGE PARKWAY
REDWOOD CITY, CA 94065
Telephone 650-610-5200
CIK 0001125920
Symbol SFLY
SIC Code 7384 - Photofinishing Laboratories
Industry Photography
Sector Consumer Cyclical
Fiscal Year 12/31
http://www.edgar-online.com
© Copyright 2011, EDGAR Online, Inc. All Rights Reserved.
Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

Table of contents

  • Page 1
    ...-K (Annual Report) Filed 02/07/11 for the Period Ending 12/31/10 Address Telephone CIK Symbol SIC Code Industry Sector Fiscal Year 2800 BRIDGE PARKWAY REDWOOD CITY, CA 94065 650-610-5200 0001125920 SFLY 7384 - Photofinishing Laboratories Photography Consumer Cyclical 12/31 http://www.edgar-online...

  • Page 2
    ...) 2800 Bridge Parkway Redwood City, California (Address of Principal Executive Offices) Registrant's telephone number, including area code (650) 610-5200 Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Common Stock, $0.0001 Par Value Per Share Name of Each Exchange on...

  • Page 3

  • Page 4
    ..., the last business day of our most recently completed second fiscal quarter, the aggregate market value of our Common Stock held by non-affiliates based on the closing price or our Common Stock on June 30, 2010 as reported on the NASDAQ Global Market was $652,024,414. Indicate the number of shares...

  • Page 5
    ... about Market Risk Financial Statements and Supplementary Data Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Controls and Procedures Other Information PART III Directors, Executive Officers and Corporate Governance Executive Compensation Security Ownership...

  • Page 6
    ... "SFLY." Our principal corporate offices are located in Redwood City, California. We are an Internet-based social expression and personal publishing service that enables consumers to share, print and preserve their memories by leveraging our technology, manufacturing, web-design and merchandising...

  • Page 7
    ...new parents, brides, teachers, and coaches. In 2010 we partnered with the American Youth Soccer Organization ("AYSO") to create Share Sites available to support over 50,000 soccer teams across the country. We also offer the ability to upload, store, and share a limited number of video clips for free...

  • Page 8
    ...service. This form of A-B testing enables us to continuously optimize products, pricing, promotions, and user interaction with our website. Website system. We have designed our website system to be highly available, secure and cost-effective. We can scale to increasing numbers of customers by adding...

  • Page 9
    ... other strategies, offer their customers heavily discounted in-store products and services that compete directly with our offerings; Drug stores such as Walgreens, CVS/pharmacy and others that offer in-store pick-up from their photo website internet orders; Regional photography companies such as...

  • Page 10
    ... of personal data, and to report to consumers when their personal data might be disclosed to direct marketers. The federal Credit Card Accountability Responsibility and Disclosure Act of 2009 (the "CARD Act"), which was signed into law May 22, 2009, includes new provisions governing the use of gift...

  • Page 11

  • Page 12
    ... website is located at http://www.shutterfly.com. The information on our website is not a part of this annual report. We make available free of charge on our website our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed...

  • Page 13
    ... in the operations of either our Charlotte, North Carolina or Phoenix, Arizona production facilities 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...

  • Page 14
    ... product offerings, promote our new products and services and sell to consumers photo-based products such as photo books, calendars and cards; the costs of customer acquisition; our ability to manage our production and fulfillment operations; the costs to produce our prints and photo-based products...

  • Page 15
    ... have difficulty managing our growth and expanding our operations successfully. We have website operations, offices and customer support centers in Redwood City, California, and production facilities in Charlotte, North Carolina and Phoenix, Arizona. Our growth has placed, and will continue to place...

  • Page 16
    ... other strategies, offer their customers heavily discounted in-store products and services that compete directly with our offerings; Drug stores such as Walgreens, CVS/pharmacy and others that offer in-store pick-up from their photo website internet orders; Regional photography companies such as...

  • Page 17
    ... and other links that direct customers to our website. We also use e-mail and direct mail to offer free products and services to attract customers, and we offer substantial pricing discounts to encourage repeat purchases. Our methods of attracting customers, including acquiring customer lists from...

  • Page 18
    ...if the costs of attracting customers using these methods significantly increase, or if we are unable to develop new cost-effective means to obtain customers, our ability to attract new customers would be harmed, traffic to our website would be reduced and our business and results of operations would...

  • Page 19
    ...successfully promote the Shutterfly brand, we may fail to substantially increase our net revenues. Customer awareness and the perceived value of our brand will depend largely on the success of our marketing efforts and our ability to provide a consistent, high-quality customer experience. To promote...

  • Page 20
    ... facility where our computer and communications hardware is located fails or if any of our production facilities fails, our business and results of operations would be harmed. Our ability to successfully receive and fulfill orders and to provide high-quality customer service depends in part on the...

  • Page 21
    ...the European Community, Mexico, Japan, China, Australia and New Zealand. Our competitors may adopt names similar to ours, thereby impeding our ability to build brand identity and possibly leading to customer confusion. In addition, there could be potential trade name or trademark infringement claims...

  • Page 22
    ..., customs, tariffs, user privacy, data protection, pricing, content, copyrights, distribution, electronic contracts and other communications, consumer protection, the provision of online payment services, broadband residential Internet access and the characteristics and quality of products and...

  • Page 23
    ... public networks. Our failure to prevent security breaches could damage our reputation and brand and substantially harm our business and results of operations. For example, a majority of our sales are billed to our customers' credit card accounts directly, orders are shipped to a customer's address...

  • Page 24
    ... printing at home. Furthermore, we may have to incur significantly higher and more sustained advertising and promotional expenditures or reduce the prices of our products and services in order to attract additional online consumers to our website and convert them into purchasing customers. Specific...

  • Page 25
    ... board members. As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, the Sarbanes-Oxley Act of 2002 and the rules and regulations of The NASDAQ Stock Market. Additional or new regulatory requirements may be adopted in the future. The requirements...

  • Page 26
    ... or failure of those analysts to initiate or maintain coverage of our stock; ratings downgrades by any securities analysts who follow our company; the public's response to our press releases or other public announcements, including our filings with the SEC; announcements by us or our competitors...

  • Page 27
    ...their best interests. ITEM 1B. UNRESOLVED STAFF COMMENTS. Not applicable. ITEM 2. PROPERTIES. In 2010, we renewed the lease for our corporate headquarters in Redwood City, California in two buildings totaling approximately 100,000 square feet. This lease will expire in 2017, and we have an option to...

  • Page 28
    ...to retain earnings to finance the growth and development of our business and, therefore, we do not anticipate paying any cash dividends in the foreseeable future. The following table sets forth the high and low sales price per share for Shutterfly's common stock for the periods indicated: Year Ended...

  • Page 29
    ...Technology and development Sales and marketing General and administrative Total operating expenses Income from operations Interest expense Interest and other income, net Income before income taxes Provision for income taxes Net income Net income per share: Basic Diluted Weighted average shares Basic...

  • Page 30
    ...an average order value of $32.88 per order. Our high-quality products and services and the compelling online experience we create for our customers, combined with our focus on continuous innovation, have allowed us to establish a premium brand. We realize the benefits of a premium brand through high...

  • Page 31
    ..., and large format sizes. Also included in print revenues are photocards, which are personalized silver halide photo prints with designed content, used for greeting card occasions ranging from holidays to birthday cards and thank you notes. Commercial print services In order to use available print...

  • Page 32
    ... depreciation of the computer and network hardware used to run our website and store the customer data, as well as amortization of purchased software. Technology and development expense also includes co-location, power and bandwidth costs. Sales and marketing expense consists of costs incurred...

  • Page 33
    ... Contents For gift card sales and flash deal promotions through group buying websites, we recognize revenue when redeemed items are shipped. Revenues from sales of prepaid orders on our website are deferred until shipment of fulfilled orders or until the prepaid period expires. Our share of revenue...

  • Page 34
    ... interest and/or penalties related to all tax positions in income tax expense. To the extent that accrued interest and penalties do not ultimately become payable, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision in the period that such determination...

  • Page 35
    ... time an employee will retain vested stock options before exercising them, the estimated volatility of our common stock price and the number of options that will be forfeited prior to vesting. The fair value is then amortized on a straight-line basis over the requisite service periods of the awards...

  • Page 36
    ... for internal use, compared to $5.4 million, which included $1.6 million of stock based compensation capitalized, in 2009. We expect this trend to continue in 2011, further increasing capitalized website and software development costs as a percentage of our total capital expenditures. Our sales and...

  • Page 37
    ...of our total net revenues. Excluding commercial print revenues, net revenue increases were also the result of year-over-year increases in each of our key metrics: customers, orders and average order value, as noted below: Year Ended December 31, 2008 Change % Change (in thousands, except AOV amounts...

  • Page 38
    32

  • Page 39
    ... website infrastructure support teams increased by $2.2 million. In 2009, we capitalized $5.4 million in eligible costs, which includes $1.6 million of stock based compensation, associated with software developed or obtained for internal use, compared to $4.8 million capitalized in 2008. Our sales...

  • Page 40
    ... to meet possible increased demand for our products. If we require additional capital resources to grow our business internally or to acquire complementary technologies and businesses at any time in the future, we may seek to sell additional debt or equity. The sale of additional equity could...

  • Page 41
    ...help enable us to respond more quickly and efficiently to customer demand. An increasing component of these expenditures includes costs associated with capitalized software and website development, as we continue to support our innovative engineering and product development strategies. This range of...

  • Page 42

  • Page 43
    ... for our manufacturing and production operations at our California and North Carolina facilities, and $4.5 million of capitalized software and website development. An additional $52.3 million was used to purchase auction rate securities, offset by $3.0 million in proceeds from the sale of the...

  • Page 44
    ... statements as reported. Contractual Obligations We lease office space in Redwood City, California and a production facility in Charlotte, North Carolina and Phoenix, Arizona under noncancelable operating leases that expire in 2017, 2014, and 2016, respectively. We have co-location agreements with...

  • Page 45
    ... inflationary pressures, for example, if the cost of our materials or the cost of shipping our products to customers were to incur substantial increases as a result of the rapid rise in the cost of oil, we may not be able to fully offset such higher costs through price increases. Our inability or...

  • Page 46
    ...AND SUPPLEMENTARY DATA. SHUTTERFLY, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm Consolidated ... Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Schedule II - Valuation and Qualifying Accounts 39 40 41 42 43 ...

  • Page 47
    ... the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial...

  • Page 48
    Table of Contents SHUTTERFLY, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except per share amounts) December 31, 2010 2009 ASSETS Current assets: Cash and cash equivalents Short-term investments Accounts receivable, net Inventories Deferred tax asset, current portion Prepaid expenses and other ...

  • Page 49
    ... and development Sales and marketing General and administrative Total operating expenses Income from operations Interest expense Interest and other income, net Income before income taxes Provision for income taxes Net income Net income per share: Basic Diluted Weighted average shares: Basic...

  • Page 50
    ... loss Balance, beginning of year Change in unrealized loss in investments, net of tax Balance, end of year Total stockholders' equity Number of shares Common stock Balance, beginning of year Issuance of common stock upon exercise of options and vesting of restricted stock units Balance, end of year...

  • Page 51
    ...858 3,672 Net income Unrealized gain on investments, net of tax Unrealized loss arising during period Less: reclassification adjustment for gain realized in net income Total comprehensive income $ $ $ $ The accompanying notes are an integral part of these consolidated financial statements. 44

  • Page 52
    ... sale of auction rate securities Net cash provided by (used in) investing activities Cash flows from financing activities: Principal payments of capital lease obligations Proceeds from issuance of common stock upon exercise of stock options Shares withheld for payment of employee's withholding tax...

  • Page 53
    .... The Company provides customers a full range of products and services to organize and archive digital images; share pictures; order prints and create an assortment of personalized items such as photo books, greeting cards and stationery and calendars. The Company is headquartered in Redwood City...

  • Page 54
    ... from sales to customers located in the United States who make payments through credit cards, sales of the Company's products in retail stores, sales of commercial print services, and revenue generated from online advertisements posted on the Company's website. Credit card receivables settle...

  • Page 55
    47

  • Page 56
    ... For gift card sales and flash deal promotions through group buying websites, the Company recognizes revenue when redeemed items are shipped. Revenues from sales of prepaid orders on its website are deferred until shipment of fulfilled orders or until the prepaid period expires. The Company's share...

  • Page 57

  • Page 58
    ... and 2008 are net of tax benefit of $0, $0 and $3,148,000 respectively. Segment Reporting The Company operates in one industry segment - digital photofinishing services. The Company operates in one geographic area, the United States of America. The Company reports as a single operating segment with...

  • Page 59
    ... at par value. On July 1, 2010, that transaction was executed and the Company received proceeds of $26.3 million, which were immediately invested in Treasury securities. As of December 31, 2010, the Company only held Level 1 financial assets which were all invested in money market funds, primarily...

  • Page 60
    ...Total capitalized software and website development costs, ...Useful Life December 31, 2010 2009 In thousands 9,878 $ 8,578 (5,228) (3,734) 4,650 4,844 1,935 (1,065) 870 416 (264) 152 $ 5,672 $ 1,015 (777) 238 256 (200) 56 5,138 Purchased technology Less: accumulated amortization 7 Years $ Customer...

  • Page 61
    ... continued employment. TinyPictures developed applications that enabled users to share images and videos to others across mobile networks and social networking platforms. The acquisition was accounted for as a non-taxable purchase transaction and, accordingly, the purchase price has been allocated...

  • Page 62
    ...aggregate cash purchase price of $10.1 million, including $0.1 million in fees; and $4.0 million in restricted stock. Nexo had developed and launched an internet-based platform, whereby groups can create customized, content-rich personal and group websites. The acquisition was accounted for as a non...

  • Page 63
    ...day the Company filed a complaint in the United States District of Delaware. The new complaint asserts the same claims of infringement against Kodak. In addition to the above cases, from time to time, the Company may be involved in various legal proceedings arising in the ordinary course of business...

  • Page 64

  • Page 65
    ...other types of awards to employees, officers, directors, consultants, independent contractors and advisors of the Company or any parent or subsidiary of the Company, provided such consultants, independent contractors and advisors render bona-fide services not in connection with the offer and sale of...

  • Page 66
    ... of Stock Options The Company estimated the fair value of each option award on the date of grant using the Black-Scholes option-pricing model and the assumptions noted in the following table. Expected volatility is based on the historical and implied volatility of a peer group of publicly traded...

  • Page 67
    ...with the Company's acquisition of TinyPictures in the amount of $1.5 million. The Tax Reform Act of 1986 limits the use of net operating loss and tax credit carryforwards in the case of an "ownership change" of a corporation or separate return loss year limitations. Any ownership changes, as defined...

  • Page 68
    57

  • Page 69
    ...2009 1,766 $ 551 (138) 2,179 $ 2008 756 455 555 1,766 Although timing of the resolution or closure on audits is highly uncertain, the Company does not believe it is reasonably possible that the unrecognized tax benefits would materially change in the next twelve months. The amount of unrecognized...

  • Page 70
    Table of Contents Schedule II Valuation and Qualifying Accounts Additions Charged to Charged to Costs and Other Expenses Accounts In thousands - 23 168 - - - Balance at Beginning of Period Allowance for Doubtful Accounts Receivable Year ended December 31, 2008 Year ended December 31, 2009 Year ...

  • Page 71
    ... designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial officers, as appropriate to allow timely...

  • Page 72
    Table of Contents Limitation on Effectiveness of Controls Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon ...

  • Page 73
    ... officer, controller and other employees of the finance department designated by the Company's Chief Financial Officer. This code of ethics, titled the "Code of Conduct and Ethics for Chief Executive Officer and Senior Financial Department Personnel," can be found on our website at www.shutterfly...

  • Page 74
    ...and Qualifying Accounts schedule is incorporated by reference to Part II, Item 8 of this annual report. 3. Exhibits . We have filed, or incorporated into this report by reference, the exhibits listed on the accompanying Index to Exhibits immediately following the signature page of this Form 10-K. 63

  • Page 75
    ...SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SHUTTERFLY, INC. (Registrant) Dated: February 7, 2011 By: /s/ Mark J. Rubash Mark...

  • Page 76
    ...and among the Registrant and certain investors of Registrant. Form of Indemnity Agreement. 1999 Stock Plan and forms of stock option agreement and a stock option exercise agreement.* Offer letter dated January 5, 2005 for Jeffrey T. Housenbold.* Offer letter dated March 25, 2005 for Douglas J. Galen...

  • Page 77
    ... Offer Letter dated December 17, 2007 for Peter Navin.* Amendment to Offer Letter dated December 26, 2008 for Peter Navin.* 2006 Equity Incentive Plan, as amended, and forms of stock option agreement, stock option exercise agreement, restricted stock agreement, restricted stock unit agreement, stock...

  • Page 78
    ... Option or upon settlement of the SAR. In the event that Participant tenders or the Company withholds Shares to pay either the Exercise Price of an Award or the withholding taxes due upon the exercise of an Award, (i) the full number of Shares exercised (including such number of Shares used to pay...

  • Page 79
    ... and regulations relating to this Plan or any Award; select persons to receive Awards; determine the form and terms of Awards; determine the number of Shares or other consideration subject to Awards; construe and interpret this Plan, any Award Agreement and any other agreement or document executed...

  • Page 80
    ...any, as may be required by or desirable to the Company to comply with applicable securities laws, together with payment in full of the Exercise Price for the number of Shares being purchased. 5.6 Termination . Notwithstanding the exercise periods set forth in the Stock Option Agreement, the exercise...

  • Page 81
    ... Limitations on ISOs . The aggregate Fair Market Value (determined as of the date of grant) of Shares with respect to which ISOs are exercisable for the first time by a Participant during any calendar year (under this Plan or under any other incentive stock option plan of the Company or any Parent...

  • Page 82
    ...) that meets applicable legal requirements. 7.3 Purchase Price . The Purchase Price for a Restricted Stock Award will be determined by the Committee and, may be less than Fair Market Value (but not less than the par value of the Shares when required by law) on the date the Restricted Stock Award is...

  • Page 83
    8.3 Form of Payment to Participant . The Stock Bonus Award will be paid to the Participant currently. Payment may be made in the form of cash, whole Shares, or a combination thereof, based on the Fair Market Value of the Shares earned under a Stock Bonus Award on the date of payment. 8.4 Termination...

  • Page 84
    ... the date of surrender equal to the aggregate exercise price of the Shares as to which said Award will be exercised or settled; (c) by waiver of compensation due or accrued to the Participant for services rendered to the Company or a Parent or Subsidiary of the Company; (d) by consideration received...

  • Page 85
    ... . When, under applicable tax laws, a Participant incurs tax liability in connection with the exercise or vesting of any Award that is subject to tax withholding and the Participant is obligated to pay the Company the amount required to be withheld, the Committee may in its sole discretion allow the...

  • Page 86
    ... with all applicable federal and state securities laws, rules and regulations of any governmental body, and the requirements of any stock exchange or automated quotation system upon which the Shares may then be listed or quoted, as they are in effect on the date of grant of the Award and also...

  • Page 87
    ... in the Company's securities by employees, officers and/or directors of the Company. 27. DEFINITIONS . As used in this Plan, the following terms will have the following meanings: " Award " means any award under the Plan, including any Option, Restricted Stock, Stock Bonus, Stock Appreciation Right...

  • Page 88
    ... upon exercise of the Option. " Fair Market Value " means, as of any date, the value of a share of the Company's Common Stock determined as follows: (a) if such Common Stock is publicly traded and is then listed on a national securities exchange, its closing price on the date of determination on the...

  • Page 89
    ... officer or director of the Company or any other person whose transactions in the Company's Common Stock are subject to Section 16 of the Exchange Act. " Option " means an award of an option to purchase Shares pursuant to Section 5. " Option Agreement " means, with respect to each Option, the signed...

  • Page 90
    ...corporations in such chain. " Termination " or " Terminated " means, for purposes of this Plan with respect to a Participant, that the Participant has for any reason ceased to provide services as an employee, officer, director, consultant, independent contractor or advisor to the Company or a Parent...

  • Page 91
    ... meanings in this Notice. Grant Number Date of Grant Vesting Commencement Date Exercise Price per Share Total Number of Shares Total Exercise Price Type of Option _____ Non-Qualified Stock Option _____ Incentive Stock Option Expiration Date Post-Termination Exercise Period: Termination for Cause...

  • Page 92
    ...this Notice, the Stock Option Award Agreement or the Plan changes the at-will nature of that relationship. Participant acknowledges that the vesting of shares pursuant to this Notice is earned only by Participant's continuing service as an employee, director or consultant of the Company. PARTICIPANT...

  • Page 93
    ... by the Company for Cause, the Option shall expire on such date of Participant's Termination Date. 3. Grant of Option . The Participant named in the Notice of Grant has been granted an Option for the number of Shares set forth in the Notice of Grant at the exercise price per Share set forth in...

  • Page 94
    ... Market Value of the Exercised Shares on the date of exercise over their aggregate Exercise Price. If the Participant is an Employee or a former Employee, the Company will be required to withhold from his or her compensation or collect from Participant and pay to the applicable taxing authorities...

  • Page 95
    ... ISO Shares by payment in cash or out of the current earnings paid to the Participant. (d) Possible Effect of Section 409A of the Code . Section 409A of the Code applies to arrangements that provide for the deferral of compensation. Generally, a stock option granted with an exercise price per share...

  • Page 96
    ... purchaser named below (the " Purchaser "). Capitalized terms not defined herein shall have the meanings ascribed to them in the Company's 2006 Equity Incentive Plan (the " Plan "). Purchaser: Social Security Number: Address: Total Number of Shares: Exercise Price Per Share: Type of Stock Option...

  • Page 97
    ...public market, and owned free and clear of all liens, claims, encumbrances or security interests, valued at the current fair market value of $_____ per share; 4 through a "same day sale" commitment from the Purchaser or Authorized Transferee and an NASD Dealer meeting the requirements of the Company...

  • Page 98
    ... when such Shares are registered under the Securities Act or qualified under applicable state securities laws or unless, in the opinion of counsel to the Company, exemptions from such registration and qualification requirements are available. Purchaser understands that only the Company may file...

  • Page 99
    ...any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price. If Purchaser is or was an employee of the Company, the Company may be required to withhold from Purchaser's compensation or collect from Purchaser and pay to the applicable taxing authorities an amount equal...

  • Page 100
    ...mean "sections" to this Exercise Agreement. 15. ENTIRE AGREEMENT . The Plan, the Stock Option.... This Exercise Agreement may be executed in any number of counterparts, each of which when so executed and...forgoing, if the value of this Exercise Agreement based upon the substantial benefit of the bargain ...

  • Page 101
    ... Agreement as of the Effective Date, indicated above. SHUTTERFLY, INC. By: (Signature) PURCHASER (Please print name) (Please print name) (Please print title) Address: Address: Fax No.: Phone No.: Fax No. Phone No.: Signature page to Shutterfly, Inc. Stock Option Exercise Agreement No. ___

  • Page 102
    ... Stock of Shutterfly, Inc. (the "Company") under the Company's 2006 Equity Incentive Plan (the "Plan") on the following terms: 1. 2. 3. 4. 5. 6. 7. 8. Name of Grantee: Total Number of Restricted Shares Awarded: Fair Market Value per Restricted Share: Total Fair Market Value of Award: Purchase Price...

  • Page 103
    ...'s name a stock certificate representing the Shares to be purchased by Participant against payment of the purchase price therefor by Participant by (a) check made payable to the Company, (b) cancellation of indebtedness of the Company to Participant, (c) Participant's personal services that...

  • Page 104
    ...to receive all dividends declared on and to vote the Shares and to all other rights of a stockholder with respect thereto. 3.4 Non-Transferability of Unvested Shares . In addition to any other limitation on transfer created by applicable securities laws or any other agreement between the Company and...

  • Page 105
    ... transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records. 4.3 Refusal to Transfer . The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in...

  • Page 106
    ... may be filed by the Participant with the Internal Revenue Service, within 30 days of the purchase of the Shares, electing pursuant to Section 83(b) of the Code to be taxed currently on any difference between the purchase price of the Shares and their Fair Market Value on the date of purchase...

  • Page 107
    ... Inc. hereby acknowledges receipt of (check as applicable): 3 3 A check in the amount of $_____ The cancellation of indebtedness in the amount of $_____ given by _____ as consideration for Certificate No. -_____ for _____ shares of Common Stock of Shutterfly, Inc. Dated: SHUTTERFLY, INC. By: Its:

  • Page 108
    ..., holds the original of the aforementioned certificate issued in the undersigned's name.To facilitate any transfer of Shares to the Company pursuant to the Restricted Shares Agreement, Participant has executed the attached Assignment Separate from Certificate. Dated: Signature Please Print Name , 20

  • Page 109
    ..., assigns and transfers unto shares of the Common Stock $0.001, par value per share, of Shutterfly, Inc. , a Delaware corporation (the " Company "), standing in the undersigned's name on the books of the Company represented by Certificate No(s). _____ [ COMPLETE AT THE TIME OF PURCHASE ] delivered...

  • Page 110
    ...PLAN NOTICE OF STOCK BONUS AWARD GRANT NUMBER: _____ The terms defined in the Company's 2006 Equity Incentive Plan (the "Plan") shall have the same meanings in this Notice of Stock Bonus Award ("Notice of Grant"). Name: Address: You (" Participant ") have been granted an award of Shares, subject to...

  • Page 111
    ... from the date of settlement. 7. Compliance with Laws and Regulations . The issuance of Shares will be subject to and conditioned upon compliance by the Company and Participant with all applicable state and federal laws and regulations and with all applicable requirements of any stock exchange or...

  • Page 112
    ...of the Company, or a Parent or Subsidiary of the Company, to terminate Purchaser ' s employment, for any reason, with or without cause. By your signature and the signature of the Company's representative on the Notice of Grant, Participant and the Company agree that this Stock Bonus Award is granted...

  • Page 113
    ... INCENTIVE PLAN NOTICE OF STOCK APPRECIATION RIGHT AWARD GRANT NUMBER: _____ The terms defined in the Company's 2006 Equity Incentive Plan (the "Plan") shall have the same meanings in this Notice of Stock Appreciation Right Award ("Notice of Grant"). Name: Address: You (" Participant ") have been...

  • Page 114
    ... from the date of settlement. 8. Compliance with Laws and Regulations . The issuance of Shares will be subject to and conditioned upon compliance by the Company and Participant with all applicable state and federal laws and regulations and with all applicable requirements of any stock exchange or...

  • Page 115
    .... 11. No Rights as Employee, Director or Consultant . Nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company, or a Parent or Subsidiary of the Company, to terminate Purchaser ' s employment, for any reason, with or without cause. By your signature and the...

  • Page 116
    ... PLAN NOTICE OF RESTRICTED STOCK UNIT AWARD (U.S. FORM) GRANT NUMBER: _____ The terms defined in Shutterfly, Inc.'s 2006 Equity Incentive Plan (the "Plan") shall have the same meanings in this Notice of Restricted Stock Unit Award ("Notice of Grant"). Name: Address: You (" Participant ") have been...

  • Page 117
    ... any one-time sale authorization form required by the Designated Brokerage Firm. Such Shares shall be sold on the first trading day immediately following the day on which such Tax Withholding Obligation arises (e.g., a vesting date) with a market order at the opening of such trading day by the...

  • Page 118
    ... conditioned upon compliance by the Company and Participant with all applicable state and federal laws and regulations and with all applicable requirements of any stock exchange or automated quotation system on which the Company's Common Stock may be listed or quoted at the time of such issuance or...

  • Page 119
    ... CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (Nos. 333-171632, 333-164268, 333-156659, 333-148487, 333-137676) of Shutterfly, Inc. of our report dated February 7, 2011 relating to the financial...

  • Page 120
    Exhibit 31.01 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Jeffrey T. Housenbold, certify that: 1. I have reviewed this annual report on Form 10-K of Shutterfly, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement...

  • Page 121
    Exhibit 31.02 CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Mark J. Rubash, certify that: 1. I have reviewed this annual report on Form 10-K of Shutterfly, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a ...

  • Page 122
    ... Officer of Shutterfly, Inc. (the "Company"), pursuant to 18 U.S.C. §1350, hereby certifies that: (i) the Annual Report on Form 10-K for the period ended December 31, 2010 of the Company (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange...

  • Page 123
    ... Financial Officer of Shutterfly, Inc. (the "Company"), pursuant to 18 U.S.C. §1350, hereby certifies: (i) the Annual Report on Form 10-K for the period ended December 31, 2010 of the Company (the "Report") fully complies with the requirements of Section 13(a) and 15(d) of the Securities Exchange...