Shutterfly 2015 Annual Report Download - page 111

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The Company’s Board of Directors includes Michael Zeisser who was appointed to XO Group Inc.’s (“XO
Group”) Board of Directors in July 2013. During the year ended December 31, 2015, the Company conducted
business with XO Group which consisted of various marketing campaigns. The Company paid XO Group
approximately $1.8 million, $1.4 million, and $0.8 million during the years ended December 31, 2015, 2014 and
2013, respectively. The Company had a payable balance of approximately $0.2 million as of December 31, 2015
and 2014 with XO Group.
Management believes that these transactions are at arms length and on similar terms as would have been
obtained from unaffiliated third parties.
Note 15 — Restructuring
During the first quarter of 2015, the Company decided to discontinue the Treat brand as well as close the
manufacturing operations in Elmsford, New York as part of the Company’s strategic initiatives. The assets
related to the Treat brand were written off in the first quarter of 2015 upon discontinuation of the Treat brand. In
the third quarter of 2015, the Company stopped production at the Elmsford, New York manufacturing facility
and ceased-use of the manufacturing space. As a result of exiting the facility prior to the lease termination date,
the Company recorded a liability of $2.1 million the net present value of future rent payments, adjusted for
potential sublease income. The Company will continue to incur employee severance and benefit expenses due to
a reduction to headcount as a result of the restructuring activities. These restructuring costs will impact cost of
net revenues and operating expenses through the first quarter of 2016.
The following table summarizes the restructuring costs recognized during the year ended December 31,
2015:
Year Ended
December 31, 2015
(in thousands)
Employee severance and benefits ................................................. $ 1,043
Other associated costs .......................................................... 2,494
Total ........................................................................ $ 3,537
The following table summarizes the restructuring activity during the year ended December 31, 2015:
Employee Severance
and Benefits
Other Associated
Costs Total
Accrued liability as of January 1, 2015 ............ $ — $ — $ —
Charges .................................. 1,043 2,494 3,537
Payments ................................. (577) — (577)
Other adjustments .......................... — (435) (435)
Accrued liability as of December 31, 2015 ......... $ 466 $ 2,059 $ 2,525
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