Vistaprint 2012 Annual Report Download - page 80

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The following is a reconciliation of the standard U.S. statutory tax rate and our effective tax rate:
Year Ended June 30,
2012 2011 2010
U.S. federal statutory income tax rate . . . . . . . . . . . . . . . . . . . . . . . . . 35.0 % 34.0 % 34.0 %
State taxes, net of federal effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 % 1.1 % 1.0 %
Tax rate differential on non-U.S. earnings . . . . . . . . . . . . . . . . . . . . . . (21.3)% (25.1)% (26.0)%
Compensation related items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 % 0.2 % 0.4 %
Increase in valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.6 % 0.8 % 1.3 %
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.5)% (1.1)% (1.0)%
Effective income tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.2 % 9.9 % 9.7 %
Significant components of our deferred income tax assets and liabilities consist of the following at June 30,
2012 and 2011:
Year Ended June 30,
2012 2011
Deferred tax assets:
Net operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,129 $ 1,795
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,281 1,160
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,853 1,551
Share-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,450 6,886
Corporate minimum tax credit carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . 854 488
R&D credit carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 697 629
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,264 12,509
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,505) (1,646)
Total deferred tax assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,759 10,863
Deferred tax liabilities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13,709) (6,484)
IP installment obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (22,405) —
Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (36,114) (6,484)
Net deferred tax (liabilities) assets $ (19,355) $ 4,379
The current portion of the net deferred taxes at June 30, 2012 consisted of an asset of $344 included in prepaid
expenses and other current assets and a liability of $1,668 which is included in current liabilities in the
accompanying consolidated balance sheet. The current portion of the net deferred taxes at June 30, 2011 was an
asset of $1,651 which is included in prepaid expenses and other current assets in the accompanying consolidated
balance sheets.
In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some
portion or all of the deferred tax assets will not be realized. No valuation allowance has been recorded against the
$8,450 deferred tax asset associated with share-based compensation charges at June 30, 2012. However, in the
future, if the underlying awards expire, are released or exercised with an intrinsic value less than the fair value of
the awards on the date of grant, some or all of the benefit may not be realizable. The increase in the valuation
allowance from the prior year relates to current year losses incurred in certain jurisdictions and certain acquired tax
carryforwards for which management has determined that it is more likely than not that these carryforwards will not
be utilized in the foreseeable future. Based on the weight of available evidence at June 30, 2012, management