REDWOOD CITY, CALIFORNIA (September 26, 2001) — In a move to expand its technological advantage over other online photo-finishers and to provide its customers with a broader array of services, Shutterfly today announced it has integrated an Indigo printer into its a state-of-the art digital imaging infrastructure. The equipment develops custom photo cards in-house and expands the company’s capability to build innovative new product offerings for consumers. This added infrastructure increases Shutterfly’s highly automated workflow and makes Shutterfly the only company in the online photo industry to be a full service, end-to-end solution. Today’s announcement comes on the heels of Shutterfly’s recent financial news that it has posted positive operating margins since June and expects to reach profitability ahead of schedule.

“Shutterfly made a significant investment early on to build our technology in house,” said Andy Wood, Shutterfly CEO. “Our infrastructure gives us a significant cost advantage over competitors, allows us to create and deliver innovative new products our users want, and enables us to control the quality of our offerings. We listen closely to our customers and they want more of Shutterfly’s personalized products and services that help them stay connected to the people who matter most. Now that we have this capability and equipment, we will be able to directly offer our customers and partners an even greater variety of the products they want.”

A dedicated team at Shutterfly is currently evaluating additional products and services made possible by pairing Indigo’s high-performance digital color printing press with the company’s sophisticated in-house technology.

“Shutterfly’s cards have always been recognized for their quality, but now our customers can experience the highest quality photo card available on the market today,” said Jeannine Smith, Shutterfly Chief Engineering Officer. “We have been working around the clock to integrate our proprietary technology, such as VivdPics™, to ensure that we consistently deliver to our customers cards with the best sharpness, clarity and consistency of color.”

Shutterfly’s card offering allows consumers to transform their favorite images, graphics or illustrations easily into customized cards by following the site’s simple directions. After selecting an image to be used for the cover, users can enhance the card with an occasion or simple border and get an immediate preview of the exact look of the front of the card. Next, users choose their favorite fonts and colors, create their own greeting and draft a personalized message before previewing the look of the inside of the card. Finally, users decide whether Shutterfly sends the cards back to them or directly to the recipients on their mailing list. For more information on Shutterfly’s custom cards, please visit www.shutterfly.com.

Making this significant enhancement to its existing infrastructure is further proof of Shutterfly’s continued commitment to making it as easy as possible for consumers to access the benefits of digital photography, especially as more people take advantage of this technology. Shutterfly expects to announce additional news as a consequence of this investment in the near future.

About Shutterfly
Shutterfly is the leading online photo service that makes it simple, convenient and fun for people to take and share pictures. Shutterfly enables film and digital photographers to easily enhance, personalize, store and share pictures online or through high-quality prints. Shutterfly users can digitally enhance photo images, and can further transform their pictures with special effects and borders. Shutterfly offers its users features to create photo cards, invitations, calendars and Snapbooks™, all of which can be mailed to friends and family worldwide. Shutterfly is consistently recognized for its photo quality and features, and most recently was named “Best Online Photo Service” by PC Magazine, earning its coveted “Editors’ Choice” award for the second straight year. Shutterfly is based in Redwood City, CA. For more information, visit www.shutterfly.com.

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Shutterfly, Shutterfly.com and Snapbook are trademarks of Shutterfly, Inc.