Shutterfly 2015 Annual Report Download - page 58

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generally the vesting period. Changes in these estimates and assumptions can materially affect the determination
of the fair value of stock-based compensation and consequently, the related amount recognized in our
consolidated statements of operations. We have not issued any stock options since the first quarter of 2013.
The cost of restricted stock awards and performance-based restricted stock awards is determined using the
fair value of our common stock on the date of grant. Compensation expense is recognized for restricted stock
awards on a straight-line basis over the vesting period. Compensation expense associated with performance-
based restricted stock awards is recognized on an accelerated attribution model, and ultimately based on whether
or not satisfaction of the performance criteria is probable. If in the future, situations indicate that the performance
criteria are not probable, then no further compensation cost will be recorded, and any previous costs will be
reversed. The cost of restricted stock awards with market conditions is estimated using a Monte-Carlo valuation
model.
Employee stock-based compensation expense is calculated based on awards ultimately expected to vest and
has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary,
in subsequent periods if actual forfeitures differ from those estimates.
Results of Operations
The following table presents the components of our statement of operations as a percentage of net revenues:
Year Ended December 31,
2015 2014 2013
Net revenues ...................................................... 100% 100% 100%
Cost of net revenues ................................................ 50 49 47
Gross profit ................................................... 50 51 53
Operating expenses:
Technology and development ....................................... 15 14 14
Sales and marketing .............................................. 22 23 24
General and administrative ......................................... 11 12 12
Total operating expenses ........................................ 48 49 50
Income from operations ............................................. 2 2 3
Interest expense ................................................... (2) (2) (1)
Interest and other income, net ........................................ — — —
Income/(loss) before income taxes ..................................... — — 2
Benefit from/(provision for) income taxes ............................... — — (1)
Net income/(loss) .................................................. —% —% 1%
56