Vistaprint 2010 Annual Report Download - page 74

allocated to goodwill. Transaction costs and restructuring costs associated with a transaction to
acquire a business are expensed as incurred.
Intangible Assets
The Company pursues patent protection for its intellectual property. The Company has patents
and patent applications pending with European, United States and other patent offices, related to
various systems, processes, techniques, and tools developed by the Company for its business. All
costs related to patent applications are expensed as incurred. The costs of purchasing patents from
unrelated third parties are capitalized and amortized over the estimated useful life of the patent. The
costs of pursuing others who are believed to infringe on the Company’s patents, as well as costs of
defending the Company against patent-infringement claims, are expensed as incurred.
The Company records acquired intangible assets at fair value on the date of acquisition and
amortizes such assets using the straight-line method over the expected useful life of the asset, unless
another amortization method was deemed to be more appropriate. The Company evaluates the
remaining useful life of intangible assets on a periodic basis to determine whether events and
circumstances warrant a revision to the remaining useful life. If the estimate of an intangible asset’s
remaining useful life is changed, the Company amortizes the remaining carrying value of the
intangible asset prospectively over the revised remaining useful life.
Estimated future intangible asset amortization expense for the next five fiscal years based on
balances at June 30, 2010 is $843, $810, $626, $301, and $56, respectively.
Long-Lived Assets
The Company continually evaluates whether events or circumstances have occurred that
indicate that the estimated remaining useful life of its long-lived assets, excluding goodwill, may
warrant revision or that the carrying value of these assets may not be recoverable. The Company
evaluates the realizability of its long-lived assets based on profitability and cash flow expectations for
the related asset. Any write-downs are treated as permanent reductions in the carrying amount of the
assets. For the fiscal years ended June 30, 2010, 2009 and 2008 the Company recorded impairment
charges on capitalized software and website development costs of $64, $32 and $39, respectively.
For the fiscal years ended June 30, 2010 and 2009 the Company recorded impairment charges
on long-lived assets of $450 and $1,331, respectively. Of these amounts, $307 and $589 relate to
equipment purchased for a project to automate a portion of the production workflow in the Windsor,
Ontario facility that is no longer considered viable, and are included in cost of revenue in the
accompanying consolidated statements of income for the fiscal years ended June 30, 2010 and 2009,
respectively. The remaining charges of $143 and $742 have been included in technology and
development expense in the accompanying consolidated statements of income for the fiscal years
ended June 30, 2010 and 2009, respectively.
Goodwill
The difference between the purchase price and the fair value of assets acquired and liabilities
assumed in a business combination is allocated to goodwill. Goodwill is evaluated for impairment on
an annual basis during the fiscal third quarter, or earlier if impairment indicators are present. As of
June 30, 2010, goodwill of $4,168 related to the acquisition of Soft Sight (Item 8 of Part II, “Financial
Statements and Supplementary Data—Note 5—Acquisition of Soft Sight, Inc.”) was included in other
assets on the accompanying balance sheet. The Company’s annual impairment test concluded that
there is no impairment of goodwill, and there have been no indications of impairment that would
require an updated analysis as of June 30, 2010.
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