Shutterfly 2015 Annual Report Download - page 37

• advance notice procedures apply for stockholders to nominate candidates for election as directors or
to bring matters before an annual meeting of stockholders.
These anti-takeover defenses could discourage, delay or prevent a transaction involving a change in control
of our company. These provisions could also discourage proxy contests and make it more difficult for
stockholders to elect directors of their choosing and to cause us to take other corporate actions they desire.
In addition, we are subject to Section 203 of the Delaware General Corporation Law, which, subject to some
exceptions, prohibits “business combinations” between a Delaware corporation and an “interested stockholder,”
which is generally defined as a stockholder who becomes a beneficial owner of 15% or more of a Delaware
corporation’s voting stock, for a three-year period following the date that the stockholder became an interested
stockholder. Section 203 could have the effect of delaying, deferring or preventing a change in control that our
stockholders might consider to be in their best interests.
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.
In February of 2015, our board of directors approved an increase to the share repurchase program of up to
$300.0 million in addition to amounts remaining. Through December 31, 2015, we have repurchased $310.7
million in stock under our total authorized amount of $406.0 million. 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 stock repurchase 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.
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