Shutterfly 2014 Annual Report Download - page 36

The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls
and procedures and effective internal control over financial reporting. Significant resources and
management oversight are required to design, document, test, implement and monitor internal control
over relevant processes and to remediate any deficiencies. As a result, management’s attention may be
diverted from other business concerns, which could harm our business, financial condition and results of
operations. These efforts also involve substantial accounting related costs. In addition, if we are unable to
continue to meet these requirements, we may not be able to remain listed on The NASDAQ Global Select
Market.
Under the Sarbanes-Oxley Act and the rules and regulations of The NASDAQ Stock Market, we are
required to maintain a board of directors with a majority of independent directors. These rules and
regulations may make it more difficult and more expensive for us to maintain directors’ and officers’
liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs
to maintain coverage. If we are unable to maintain adequate directors’ and officers’ insurance, our ability
to recruit and retain qualified directors and officers, especially those directors who may be considered
independent for purposes of NASDAQ rules, will be significantly curtailed.
Risks Related to Our Common Stock
Our stock price may be volatile or may decline regardless of our operating performance.
The market price of our common stock may fluctuate significantly in response to numerous factors,
many of which are beyond our control. In particular, the stock market as a whole recently has experienced
extreme price and volume fluctuations that have affected the market price of many technology companies
in ways that may have been unrelated to those companies’ operating performance. Factors that could cause
our stock price to fluctuate include:
• slow economic growth, and market conditions or trends in our industry or the macro-economy
as a whole;
• price and volume fluctuations in the overall stock market;
• changes in operating performance and stock market valuations of other technology companies
generally, or those in our industry in particular;
• the financial projections we may provide to the public, any changes in these projections or our
failure to meet these projections;
• changes in financial estimates by any securities analysts who follow our company, our failure
to meet these estimates 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 of significant technical innovations, acquisitions,
strategic partnerships, joint ventures or capital commitments;
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