Shutterfly 2013 Annual Report Download - page 15

Available Information
Our Internet website is located at http://www.shutterflyinc.com. The information on our website is not
a part of this annual report on Form 10-K. 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 Section 13(a) or 15(d) of the Securities Exchange Act of 1934,
as soon as reasonably practicable after we electronically file such material with, or furnish it to, the
Securities and Exchange Commission. Our SEC reports can be accessed through the investor relations
section of our Internet website.
The public may also read and copy any materials we file with the Securities and Exchange Commission
at the Securities and Exchange Commission’s Public Reference Room at 100 F Street, NE, Washington,
DC 20549. The public may obtain information on the operation of the Public Reference Room by calling
the Securities and Exchange Commission at 1-800-SEC-0330. The Securities and Exchange Commission
also maintains an Internet website that contains reports, proxy and information statements and other
information regarding issuers that file electronically with the Securities and Exchange Commission. The
Securities and Exchange Commission’s Internet website is located at http://www.sec.gov.
ITEM 1A. RISK FACTORS
Our net revenues, operating results and cash requirements are affected by the seasonal nature of our business.
Our business is highly seasonal, with a high proportion of our net revenues, net income and operating
cash flows generated during the fourth quarter. For example, we generated more than 50% of our net
revenues in the fourth quarter during each of the last three years, and the net income that we generated
during the fourth quarter was necessary for us to achieve profitability on an annual basis. In addition, we
incur significant additional expenses in the period leading up to the fourth quarter holiday season
including expenses related to the hiring and training of temporary workers to meet our seasonal needs,
additional inventory and equipment purchases and increased advertising. If we are unable to accurately
forecast and respond to consumer demand for our products during the fourth quarter, our financial results,
reputation and brands will suffer and the market price of our common stock would likely decline.
We also base our operating expense budgets on expected net revenue trends. A portion of our
expenses, such as office, production facility, and various equipment leases and personnel costs, are largely
fixed and are based on our expectations of our peak levels of operations. We may be unable to adjust
spending quickly enough to offset any unexpected revenue shortfall. Accordingly, any shortfall in net
revenues may cause significant variation in operating results in any quarter.
If we are unable to meet our production requirements, our net revenues and results of operations would be harmed.
We believe that we must continue to grow our current production capability to meet our projected net
revenue targets. Our capital expenditures were approximately 10%, 9% and 7% of total net revenues for
the years ended December 31, 2013, 2012 and 2011, respectively. We anticipate that total capital
expenditures for the year ended December 31, 2014 will range from 9.5% to 10.5% of 2014 net revenues.
Operational difficulties, such as a significant interruption in the operations of our Fort Mill, South
Carolina, Phoenix, Arizona or Elmsford, New York production facilities, could delay production or
shipment of our products. Our inability to meet our production requirements could lead to customer
dissatisfaction and damage our reputation and brands, which would result in reduced net revenues.
Moreover, if the costs of meeting production requirements, including capital expenditures, were to exceed
our expectations, our results of operations would be harmed.
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