Vistaprint 2012 Annual Report Download - page 51

47
On January 2, 2012, one of our subsidiaries purchased Webs’ global sales and distribution rights, customer
lists, marketing intangibles, web-based technologies, software tools, and related technical data and know-how
(collectively “Webs Intellectual Property”) in order to align the Webs business with our global operations. As this was
an intra-entity transfer, the tax cost to be incurred by Webs associated with the gain recognized on the transfer has
been deferred in other assets in the consolidated balance sheet and will be amortized into tax expense over a
weighted average period of approximately 13 years. The subsidiary elected to purchase the Webs’ Intellectual
Property using an installment obligation that results in the tax being paid over a 7.5 year term and, therefore, the
related tax liability has been included in deferred tax liabilities in the consolidated balance sheet.
The increase in the overall effective tax rate during the year ended June 30, 2012 as compared to the prior
year is primarily due to the reduction in our consolidated pre-tax income as a result of planned investments in
support of our long-term growth strategy, tax expense associated with the transfer of the Webs Intellectual Property,
and the expiration of the U.S. federal research and development tax credit on December 31, 2011. Since our
income tax expense is mainly a function of our operating expenses and cost-based transfer pricing methodologies
and not a function of our consolidated pre-tax income, our effective tax rate will typically vary inversely to changes in
our consolidated pre-tax income. We expect this variation will continue in future periods.
The change in the effective tax rate for fiscal 2011 as compared to fiscal 2010 is primarily attributable to
unfavorable changes in the amount and geographic mix of taxable earnings partially offset by the retroactive
renewal of the U.S. federal research and development tax credit as a result of the Tax Relief, Unemployment
Insurance Reauthorization, and Job Creation Act of 2010 enacted in the quarter ended December 31, 2010.
We are currently under income tax audits in various jurisdictions. We believe that our income tax reserves
associated with these matters are adequate as the positions reported on our tax returns will be sustained on their
technical merits. However, final resolution is uncertain and there is a possibility that final resolution could have a
material impact on our financial condition, results of operations or cash flows. See Note 11 in our accompanying
financial statements in this Annual Report on Form 10-K for additional discussion.
Liquidity and Capital Resources
Consolidated Statements of Cash Flows Data:
In thousands
Year Ended June 30,
2012 2011 2010
Cash flows provided by operating activities . . . . . . . . . . . . . . . . . . . . $ 140,641 $ 162,633 $ 153,701
Cash flows used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . (232,268) (34,330) (123,865)
Cash flows (used in) provided by financing activities . . . . . . . . . . . . . (79,167) (58,282) 1,259
At June 30, 2012, we had $62.2 million of cash and cash equivalents and $229.0 million of long-term debt.
Cash and cash equivalents decreased $174.3 million in fiscal 2012. The cash flows during the year ended June 30,
2012 related primarily to the following items:
Cash inflows:
• Net income of $43.9 million;
• Positive adjustments to accrual based net income for non-cash items of $96.6 million primarily related to
depreciation and amortization of $59.4 million and share-based compensation costs of $25.4 million; and
• Proceeds from borrowing of long-term debt of $408.5 million.
Cash outflows:
• Capital expenditures of $46.4 million of which $17.7 million were related to the purchase of land and
facilities, $15.6 million were related to the purchase of manufacturing and automation equipment for our
production facilities, and $13.1 million were related to purchases of other assets, including information
Form 10-K