Shutterfly 2013 Annual Report Download - page 61

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professional fees of $0.7 million which are largely due to transaction costs related to our acquisition of Tiny
Prints incurred in 2011, and gains on disposition of assets of $0.6 million in 2012.
Year Ended December 31,
2012 2011 Change
(in thousands)
Interest expense .................................. $ (597) $ (64) $ (533)
Interest and other income, net ........................ 42 35 7
Interest expense increased in 2012 compared to 2011 primarily due to origination and ongoing
commitment fees from our five-year syndicated credit facility that became effective in November 2011.
Year Ended December 31,
2012 2011
(in thousands)
Income tax provision ......................................... $ (17,160) $ (1,314)
Effective tax rate ........................................... 43% 9%
The provision for income taxes was $17.2 million for 2012, compared to a provision of $1.3 million for
2011. Our effective tax rate was 43% in 2012 and 9% in 2011. This increase in our effective tax rate was
primarily the result of fewer disqualifying dispositions of incentive stock option awards in the current year,
a delay in the extension of the federal research credit, and a valuation allowance on certain California
deferred tax assets.
Year Ended December 31,
2012 2011 $ Change % Change
(in thousands)
Income before income taxes ............... $ 40,158 $ 15,362 $ 24,796 161%
Net income ........................... 22,998 14,048 8,950 64%
Percentage of net revenues ................ 4% 3% ——
Net income increased by $9.0 million for 2012 compared to 2011. As a percentage of net revenues, net
income increased to 4% in 2012 from 3% in 2011.
Liquidity and Capital Resources
At December 31, 2013, we had $499.1 million of cash. To supplement our overall liquidity position,
during the year ended December 31, 2013 we issued $300.0 million of 0.25% convertible senior notes due
May 15, 2018. Further, since November 2011, we have had access to a five-year senior secured syndicated
credit facility to provide up to $125.0 million in additional capital resources. In December 2013, we
exercised the expansion feature in this facility which increased the maximum principal amount that can be
borrowed, on a revolving basis, to $200.0 million. As of December 31, 2013, no amounts have been drawn
against this facility.
59