Shutterfly 2014 Annual Report Download - page 38

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Our stock repurchase program could affect the price of our common stock and increase volatility and may be
suspended or terminated at any time, which may result in a decrease in the trading price of our common stock.
Through December 31, 2014, we have repurchased $94.8 million in stock under our total authorized
amount of $106.0 million. And in February of 2015, our board of directors approved an increase to the
share repurchase program of up to $300 million in addition to amounts remaining. The timing and actual
number of shares repurchased will depend on a variety of factors including the timing of open trading
windows, price, corporate and regulatory requirements, an assessment by management and our board of
directors of cash availability and other market conditions. The program may be suspended or discontinued
at any time without prior notice. Repurchases pursuant to our stock repurchase program could affect the
price of our common stock and increase its volatility. The existence of our stock repurchase program could
also cause the price of our common stock to be higher than it would be in the absence of such a program
and could potentially reduce the market liquidity for our common stock. Additionally, repurchases under
our stock repurchase program will diminish our cash reserves, which could impact our ability to further
develop our technology, access and/or retrofit additional facilities and service our indebtedness. There can
be no assurance that any stock repurchases will enhance stockholder value because the market price of our
common stock may decline below the levels at which we repurchased such shares. Any failure to
repurchase shares after we have announced our intention to do so may negatively impact our reputation
and investor confidence in us and may negatively impact our stock price. Although our stock repurchase
program is intended to enhance long-term stockholder value, short-term stock price fluctuations could
reduce the program’s effectiveness.
We do not intend to pay dividends on our common stock for the foreseeable future.
We have never declared or paid cash dividends on our common stock. In addition, we must comply
with the covenants in our credit facilities if we want to pay cash dividends. We currently intend to retain
our future earnings, if any, to finance the further development and expansion of our business and do not
intend to pay cash dividends in the foreseeable future. Any future determination to pay dividends will be at
the discretion of our board of directors and will depend upon our financial condition, results of operations,
capital requirements, restrictions contained in current or future financing instruments and such other
factors as our board of directors deems relevant.
Risks Related to Our 0.25% Senior Convertible Senior Notes Due in 2018 (the ‘‘Notes’’)
Although the notes are referred to as convertible senior notes, they are effectively subordinated to any of our secured
debt and any liabilities of our subsidiaries.
The notes will rank senior in right of payment to any of our indebtedness that is expressly subordinated
in right of payment to the notes; equal in right of payment to any of our liabilities that are not so
subordinated; effectively junior in right of payment to any of our secured indebtedness to the extent of the
value of the assets securing such indebtedness; and structurally junior to all indebtedness and other
liabilities (including trade payables) of our subsidiaries. In the event of our bankruptcy, liquidation,
reorganization or other winding up, our assets that secure debt ranking senior in right of payment to the
notes will be available to pay obligations on the notes only after the secured debt has been repaid in full
from these assets, and the assets of our subsidiaries will be available to pay obligations on the notes only
after all claims senior to the notes (including any amounts drawn under our credit facility) have been
repaid in full. There may not be sufficient assets remaining to pay amounts due on any or all of the notes
then outstanding. The indenture governing the notes does not prohibit us from incurring additional senior
debt or secured debt, nor does it prohibit any of our subsidiaries from incurring additional liabilities.
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