Shutterfly 2011 Annual Report Download - page 44

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The following is a reconciliation of adjusted EBITDA and free cash flow to the most comparable GAAP measure for the years ended
December 31, 2010, 2009 and 2008 (in thousands):
Free cash flow has limitations due to the fact that it does not represent the residual cash flow for discretionary expenditures. For example,
free cash flow does not incorporate payments made on capital lease obligations or cash requirements to comply with debt covenants. Therefore,
we believe that it is important to view free cash flow as a compliment to our consolidated financial 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 non-
cancelable operating leases that expire in 2017, 2014, and 2016, respectively. We have co-location agreements with third-
party hosting facilities
that expire in 2013. We also have various non-
cancellable operating leases for certain production equipment. Specifically, in 2010, we entered
into multiple non-
cancellable operating leases for new digital presses with terms that expire in five years. We anticipate leasing additional office
space, production facilities and hosting facilities in future periods as the need arises, consistent with our historical business model.
The following are contractual obligations at December 31, 2010, associated with lease obligations and other arrangements:
The table above excludes the impact of approximately $3.0 million related to unrecognized tax benefits as of December 31, 2010. We
cannot make reliable estimates of the future cash flows by period related to this obligation.
Other than the obligations, liabilities and commitments described above, we have no significant unconditional purchase obligations or
similar instruments. We are not a guarantor of any other entities’ debt or other financial obligations.
Table of Contents
Reconciliation of Net Income to Non
-
GAAP Adjusted EBITDA
Year Ended December 31,
2010
2009
2008
Net income
$
17,127
$
5,853
$
3,660
Add back:
Interest expense
42
157
273
Interest and other income, net
(482
)
(814
)
(2,898
)
Tax provision
8,088
3,514
1,571
Depreciation and amortization
25,972
27,194
26,038
Stock-based compensation expense
16,366
14,273
9,750
Non
-
GAAP Adjusted EBITDA
$
67,113
$
50,177
$
38,394
Reconciliation of Cash Flow from Operating Activities to Non
-
GAAP Adjusted
EBITDA and Free Cash Flow
Year Ended December 31,
2010
2009
2008
Net cash provided operating activities
$
76,161
$
53,890
$
47,040
Add back:
Interest expense
42
157
273
Interest and other income, net
(482
)
(814
)
(2,898
)
Tax provision
8,088
3,514
1,571
Changes in operating assets and liabilities
(15,014
)
(7,435
)
(7,978
)
Other adjustments
(1,682
)
865
386
Non
-
GAAP Adjusted EBITDA
$
67,113
$
50,177
$
38,394
Less:
Purchases of property and equipment, including accrued amounts
(14,961
)
(13,764
)
(18,220
)
Capitalized technology and development costs
(7,405
)
(3,891
)
(4,527
)
Free cash flow
$
44,747
$
32,522
$
15,647
Total
Less Than
1 Year
1
-
3 Years
3
-
5 Years
More Than
5 Years
(In thousands)
Contractual Obligations
Operating lease obligations
$
32,546
$
5,820
$
19,069
$
6,902
$
755
Purchase obligations
16,127
7,954
8,173
—
—
Total contractual obligations
$
48,673
$
13,774
$
27,242
$
6,902
$
755
37