Shutterfly 2007 Annual Report Download - page 18

Table of Contents
To resolve some of the remaining legal uncertainty, we expect new laws and regulations to be adopted over time
that will be directly applicable to the Internet and to our activities. Any existing or new legislation applicable to
Shutterfly could expose us to substantial liability, including significant expenses necessary to comply with such laws
and regulations, and could dampen the growth in the use of the Internet in general.
We post on our website our privacy policies and practices concerning the use and disclosure of user data. Any
failure by us to comply with our posted privacy policies, Federal Trade Commission requirements or other privacy-
related laws and regulations could result in proceedings by governmental or regulatory bodies that could potentially
harm our business, results of operations and financial condition. In this regard, there are a large number of legislative
proposals before the United States Congress and various state legislative bodies regarding privacy issues related to
our business. It is not possible to predict whether or when such legislation may be adopted, and certain proposals, if
adopted, could harm our business through a decrease in user registrations and revenues. These decreases could be
caused by, among other possible provisions, the required use of disclaimers or other requirements before users can
utilize our services.
Due to the global nature of the Internet, it is possible that the governments of other states and foreign countries
might attempt to regulate its transmissions or prosecute us for violations of their laws. We might unintentionally
violate such laws, such laws may be modified and new laws may be enacted in the future. Any such developments
could harm our business, operating results and financial condition. We may be subject to legal liability for our online
services. The law relating to the liability of providers of these online services for activities of their users is currently
unsettled both within the United States and abroad. Claims may be threatened against us for aiding and abetting,
defamation, negligence, copyright or trademark infringement, or other theories based on the nature and content of
information to which we provide links or that may be posted online.
Employees
As of December 31, 2006, we had 275 full time employees. Approximately 79 employees were engaged in
engineering, 101 in photo lab operations, 39 in sales and marketing, 16 in customer service and 40 in general and
administrative functions. During the peak holiday season, we obtain contract workers on a temporary basis from
third-party outsourcing firms. For example, during our peak production day in the fourth quarter of 2006, we used
more than 800 of these temporary workers to assist in our production and fulfillment operations during high-demand
periods. None of our employees is represented by a labor union or is covered by a collective bargaining agreement.
We have never experienced any employment-
related work stoppages and consider our employee relations to be good.
Available Information
Our Internet website is located at http://www.shutterfly.com. The information on our website is not a part of this
annual report. We make available free of charge on our website our annual report on Form 10-K,
quarterly reports on
Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to
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• The Communications Decency Act, which gives statutory protection to online service providers who
distribute third
-
party content.
•
The Digital Millennium Copyright Act, which is intended to reduce the liability of online service providers for
listing or linking to third-party websites that include materials that infringe copyrights or other rights of
others.
• The Children’s Online Privacy Protection Act and the Prosecutorial Remedies and Other Tools to End
Exploitation of Children Today Act of 2003, which are intended to restrict the distribution of certain materials
deemed harmful to children and impose additional restrictions on the ability of online services to collect user
information from minors. In addition, the Protection of Children From Sexual Predators Act of 1998 requires
online service providers to report evidence of violations of federal child pornography laws under certain
circumstances.
• Statutes adopted in the State of California require online services to report certain breaches of the security of
personal data, and to report to California consumers when their personal data might be disclosed to direct
marketers.