Vistaprint 2012 Annual Report Download - page 67

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Advertising Expense
Advertising costs are expensed as incurred and included in marketing and selling expense. Advertising
expense for the years ended June 30, 2012, 2011 and 2010 was $250,105, $177,101 and $135,675, respectively,
which consisted of external costs related to customer acquisition and retention marketing campaigns.
Research and Development Expense
Research and development costs are expensed as incurred and included in technology and development
expense. Research and development expense for the years ended June 30, 2012, 2011 and 2010 was $19,707,
$11,128 and $8,501, respectively, which consisted of costs related to enhancing our manufacturing engineering and
technology capabilities.
Income Taxes
As part of the process of preparing our consolidated financial statements, we estimate our income taxes in
each of the jurisdictions in which we operate. This process involves estimating our current tax expense and
assessing temporary and permanent differences resulting from differing treatment of items for tax and financial
reporting purposes. We recognize deferred tax assets and liabilities for the temporary differences using the enacted
tax rates and laws that will be in effect when we expect temporary differences to reverse. We assess the ability to
realize our deferred tax assets based upon the weight of available evidence both positive and negative. To the
extent we believe that it is more likely than not that that some portion or all of the deferred tax assets will not be
realized, we establish a valuation allowance. In the event that actual results differ from our estimates or we adjust
our estimates in the future, we may need to increase or decrease income tax expense, which could have a material
impact on our financial position and results of operations.
We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax
position will be sustained upon examination by the taxing authorities, based on the technical merits of the tax
position. The tax benefits recognized in our financial statements from such positions are measured on the largest
benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. The unrecognized tax
benefits will reduce our effective tax rate if recognized. Interest and, if applicable, penalties related to unrecognized
tax benefits are recorded in the provision for income taxes.
Foreign Currency Translation
Our non-U.S. dollar functional currency subsidiaries translate their assets and liabilities denominated in
their functional currency to U.S. dollars at current rates of exchange in effect at the balance sheet date, and
revenues and expenses are translated at average rates prevailing throughout the period. The resulting gains and
losses from translation are included as a component of other accumulated comprehensive (loss) income.
Transaction gains and losses and remeasurement of assets and liabilities denominated in currencies other than an
entity’s functional currency are included in other income (expense), net of $2,350, $(2,126) and $(1,491) for the
years ended June 30, 2012, 2011 and 2010, respectively.
Net Income Per Share
Basic net income per share is computed by dividing net income by the weighted-average number of
ordinary shares outstanding for the fiscal period. Diluted net income per share gives effect to all potentially dilutive
securities, including share options, restricted share units (“RSUs”) and restricted share awards ("RSAs"), using the
treasury stock method. Awards with performance or market conditions are included using the treasury stock
method only if the conditions would have been met as of the end of the reporting period.
Form 10-K