Shutterfly 2014 Annual Report Download - page 93

Download and view the complete annual report

Please find page 93 of the 2014 Shutterfly annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 130

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130

leases which will be amortized over an estimated useful life of five years. The tangible assets and liabilities
acquired totaled approximately $8.2 million and $7.8 million, respectively. Included within assets and
liabilities is a net deferred tax liability of approximately $0.3 million representing the difference between
the assigned values of the assets acquired and the tax basis of those assets, with the offset recorded as
additional goodwill. The remaining excess purchase price of approximately $21.1 million was allocated to
goodwill primarily representing the assembled workforce and synergies from MyPublisher’s market
position. The results of operations for the acquired business have been included in the consolidated
statement of operations for the period subsequent to the Company’s acquisition of MyPublisher.
MyPublisher’s results of operations for periods prior to this acquisition were not material to the
consolidated statement of operations and, accordingly, pro forma financial information has not been
presented.
ThisLife.com, Inc.
On December 28, 2012, the Company acquired ThisLife.com, Inc. (‘‘ThisLife’’) for a total aggregate
cash purchase price of $22.5 million . ThisLife provides cloud-based services for protecting, organizing,
storing and sharing photos and videos which will strengthen the Company’s photo storage and sharing
capabilities as well as enable the creation of products across the web and mobile efficiently. The acquisition
was accounted for as a non-taxable purchase transaction and, accordingly, the purchase price has been
allocated to the acquired tangible assets, liabilities assumed, and identifiable intangible assets acquired
based on their estimated fair values on the acquisition date. The excess of the purchase price over the
aggregate fair values was recorded as goodwill. In addition, restricted stock awards were granted to certain
ThisLife employees contingent upon their continued employment for a period of three years and will be
recorded as stock-based compensation over the vesting period. Also, performance-based restricted stock
units (‘‘PBRSU’’) were granted to certain ThisLife employees contingent on achieving certain performance
milestones and continued employment for a period of three years. These awards will be recorded as stock-
based compensation over the vesting period.
Of the total purchase price, $14.6 million was allocated to developed technology and is being
amortized over an estimated useful life of five years and $0.2 million was allocated to the active user base
which will be amortized over an estimated useful life of two years. The assets and liabilities acquired
totaled approximately $1.0 million and $1.2 million, respectively. The remaining excess purchase price of
approximately $7.9 million was allocated to goodwill primarily representing the assembled workforce and
synergies from the accelerated time to market. In addition, $4.3 million was recorded as a deferred tax
liability representing the difference between the assigned values of the assets acquired and the tax basis of
those assets, with the offset recorded as additional goodwill. The results of operations for the acquired
business have been included in the consolidated statement of operations for the period subsequent to the
Company’s acquisition of ThisLife. ThisLife’s results of operations for periods prior to this acquisition
were not material to the consolidated statement of operations and, accordingly, pro forma financial
information has not been presented.
Penguin Digital, Inc.
On September 14, 2012, the Company acquired Penguin Digital, Inc. (‘‘Penguin Digital’’) for a total
aggregate cash purchase price of $7.1 million. Penguin Digital is a mobile application development
company that has an iPhone application that allows users to access their photos from iPhones or their
Facebook or Instagram accounts and create customized products and gifts from their mobile devices. The
acquisition was accounted for as a non-taxable purchase transaction and, accordingly, the purchase price
has been allocated to the acquired tangible assets, liabilities assumed, and identifiable intangible assets
acquired based on their estimated fair values on the acquisition date. The excess of the purchase price over
92