Shutterfly 2013 Annual Report Download - page 92

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At December 31, 2013, the total future minimum payments under non-cancelable operating and
capital leases are as follows (in thousands):
Operating Capital
Leases Leases
Year Ending:
2014 .................................................... $ 17,863 $ 1,731
2015 .................................................... 16,620 1,582
2016 .................................................... 13,330 1,412
2017 .................................................... 8,177 1,136
2018 .................................................... 3,394 693
Thereafter ................................................ 3,475 —
Total minimum lease payments ................................. $ 62,859 6,554
Less: amount representing interest ............................... (494)
Present value of future minimum lease payments .................... 6,060
Less: current portion ........................................ (1,530)
Non-current portion of capital lease obligations ..................... $ 4,530
Purchase obligations consist of non-cancelable marketing and service agreements and co-location
services that expire at various dates through the year 2020. As of December 31, 2013, the Company’s
purchase obligations totaled $100.6 million.
Build-to-suit Lease
During the year ended December 31, 2012, the Company executed a lease for a new 300,000 square
foot east coast production and customer service facility in Fort Mill, South Carolina. This facility replaces
the Company’s current east coast production facility in Charlotte, North Carolina. In order for the facility
to meet the Company’s operating specifications, both the landlord and the Company made structural
changes as part of the uplift of the building, and as a result, the Company has concluded that it was the
‘‘deemed owner’’ of the building (for accounting purposes only) during the construction period.
Accordingly, at lease inception, the Company recorded an asset of $4.9 million, representing its estimate of
the fair market value of the building, and a corresponding construction financing obligation, recorded as a
component of other non-current liabilities. The Company increased the asset and financing obligations by
$3.1 million and $1.5 million for building uplift costs incurred by the landlord during 2013 and 2012,
respectively.
During the year ended December 31, 2013, the Company executed a lease for a new 217,000 square
foot production facility in Shakopee, Minnesota. This facility will provide additional production capacity,
and is expected to become operational in the second quarter of 2014. Both the landlord and the Company
will incur costs to construct the facility according to the Company’s operating specifications, and as a
result, the Company has concluded that it is the ‘‘deemed owner’’ of the building (for accounting purposes
only) during the construction period. During the year ended December 31, 2013, the landlord incurred
$7.0 million of building construction costs which the Company has recorded as an asset, with a
corresponding construction financing obligation, which is recorded as a component of other non-current
liabilities. The Company will increase the asset and financing obligation as additional building uplift costs
are incurred by the landlord during the construction period.
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