REDWOOD SHORES, Calif. (June 27th, 2000) — Shutterfly, the leading online photo service (www.shutterfly.com) today announced an agreement with Kodak to offer 35mm and APS (ADVANTIX®) film developing and scanning services to Shutterfly customers. Qualex, Eastman Kodak’s wholly owned photofinishing subsidiary, will provide traditional film development and scanning services for Shutterfly customers. Once the film is developed, the digital pictures are transferred to the Shutterfly site, allowing users to do things with their photos they can only do digitally — Print exactly the pictures they want, enhance and personalize them, and then send them directly to friends and family.

“We spent the last few months listening to our customers requests, and understood that high quality film scanning was essential to them,” said Jayne Spiegelman, CEO and co-founder of Shutterfly. “The combination of Shutterfly’s digital enhancement and printing expertise, along with Kodak’s 35mm-film developing expertise will result in the absolute best film scanning offering on the market.”

With the addition of film scanning to www.shutterfly.com, all photographers have easy access to the real benefits of digital photography. Many of the fun things you can do with your photos digitally, cannot be accomplished in the traditional 35mm-film processing world. Those benefits include:

• Printing only the pictures you want.
• Sharing your photos online in private, secure, Shutterfly albums.
• Enhancing your photos with Shutterfly’s new effects and borders.
• Sending 35mm-quality prints and enlargements to family and friends all around the world with a single click.

Providing customers with superior quality prints and exceptional customer service is Shutterfly’s number one priority. Shutterfly ensures that all color prints are enhanced for color and clarity using its proprietary VividPics® technology. VividPics was developed by the team of imaging scientists at Shutterfly, many of whom have years of digital imaging experience from companies such as Kodak, SGI and Hewlett Packard. Qualex will be using VividPics technology exclusively for Shutterfly customers in order to ensure the highest quality digital images are created from the scanning process.

“Online photography companies represent a new channel and revenue stream for Kodak’s photo processing and scanning services. We are thrilled to be working with Shutterfly’s innovative digital imaging team,” said Willy Shih, president, digital and applied imaging, and senior vice president, Eastman Kodak Company. “This relationship is a winning combination, and consumers are sure to benefit from Shutterfly’s new film-scanning solution”

The adoption of digital photography and online photo developing is exploding. According to Lyra Research Inc., a leading photo industry researcher, the online photo imaging market will grow to a $3.3 billion industry by 2002 — just under 10% of the total world market for photo processing. Of the 80 billion photos taken worldwide in 1999, some 150 million of those images were uploaded onto the Internet due to the proliferation of digital cameras and consumer transition from film to digital photography.

How The Shutterfly Service Works
Shutterfly’s new consumer-friendly film-to-digital service is very easy to use. Here is how it works:

• Click for a film-mailer envelope.Sign up as a Shutterfly customer at www.shutterfly.com and request film-mailer envelopes. Shutterfly will send you the mailers at no charge.
• Drop one roll of film into a Shutterfly film-mailer envelope.Return the mailer with 35mm film, APS (ADVANTIX®) film or a disposable camera enclosed, using the return address label furnished. After your film is developed, your pictures are scanned and sent to your Shutterfly account. Your negatives are mailed back to you.
• View your photos online.Shutterfly will send you an email notifying you when your photos are ready for viewing online.
• Order prints and enlargements.No matter what kind of camera you shot your photos with (digital or film), Shutterfly offers the same low prices, the high quality prints and excellent customer service you expect.
• Enhance and personalize your photos.Shutterfly is the only service offering unique borders and effects, as well as custom messaging on the back of your prints.
• Send prints to friends and family anywhere.It’s easy to send photos to multiple people from one single Shutterfly page, and now photos can be mailed to the people you care about — all over the world. With Shutterfly’s introduction of international shipping as well as international ordering, friends and family have global access to the Shutterfly service.– another exclusive first from Shutterfly.

Pricing and Availability
The Shutterfly film developing and scanning service will be available starting July 7th, 2000, and for an introductory period will be free of charge. Prices for Shutterfly prints are: 49 cents for a 4×6, 99 cents for a 5×7 and $3.99 for an 8×10.

About Shutterfly
Shutterfly is a new kind of photo service that makes it simple, convenient and fun for people to take and give pictures. With only the Internet and digital pictures, Shutterfly users can easily enhance, personalize, store and share photos. Most importantly, they can transform their digital pictures into 35mm-quality prints and have them mailed to anyone. Shutterfly services are available at www.shutterfly.com and through partners including Yahoo!, Adobe and PhotoPoint. The privately held company is headquartered in Redwood Shores, California, and is backed by Jim Clark, Mohr Davidow Ventures, Adobe Ventures and Tom Jermoluk. For more information about the company, visit www.shutterfly.com.

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Shutterfly, Shutterfly.com, the Shutterfly logo and VividPics are trademarks of Shutterfly, Inc.
All other trademarks and product names are the property of their respective owners.