Vistaprint 2012 Annual Report Download - page 81

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believes that it is more likely than not that all other net deferred tax assets will be realized. We will continue to
assess the realization of the deferred tax assets based on operating results.
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 years, 6 months term and,
therefore, the related tax liability has been included in deferred tax liabilities in the consolidated balance sheet.
As of June 30, 2012, we had U.S. federal and state net operating loss carryforwards of approximately $983
that expire on various dates up to and through the year 2031. We had foreign net operating loss carryforwards of
approximately $18,266 that expire on various dates up to and through 2031. The benefits of these carryforwards are
dependent upon the generation of taxable income in the jurisdictions where they arose. In addition, we had
approximately $4,110 of federal and state R&D tax credit carryforwards as a result of excess tax deductions related
to share-based compensation. We will realize the benefit of these excess tax deductions through increases to
shareholders' equity in the periods in which these carryforwards are utilized to reduce tax payments.
As of June 30, 2012, our Bermuda-based subsidiary, Vistaprint Limited, had undistributed earnings of
$5,825 which may be distributed to our parent company, Vistaprint N.V. We have determined these earnings are not
subject to income or withholding taxes upon repatriation. Undistributed earnings of our remaining subsidiaries are
considered to be indefinitely reinvested. Upon repatriation of those earnings, in the form of dividends or otherwise,
we would be subject to withholding taxes payable. Determination of the amount of unrecognized tax liability
associated with withholding taxes is not practicable due to the complexities associated with this hypothetical
calculation.
A reconciliation of the gross beginning and ending amount of unrecognized tax benefits is as follows:
Balance at June 30, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,331
Additions based on tax positions related to the current tax year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 410
Additions based on tax positions related to prior tax years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 411
Reductions due to audit settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (656)
Balance at June 30, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,496
Additions based on tax positions related to the current tax year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,148
Reductions based on tax positions related to prior tax years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (27)
Reductions due to audit settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (297)
Balance at June 30, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,320
For the years ended June 30, 2012 and 2011, the amount of unrecognized tax benefits that, if recognized,
would affect the effective tax rate is $2,766 and $2,153, respectively. We recognize interest and, if applicable,
penalties related to unrecognized tax benefits in income tax expense. The accrued interest and penalties
recognized as of June 30, 2012 and 2011 were $320 and $278, respectively.
The increase in the amount of unrecognized tax benefits for the year is primarily related to the intra-entity
transfer of the Webs Intellectual Property during the period. The related tax expense has been deferred and will be
recognized consistent with the tax expense for the underlying transaction. It is reasonably possible that a further
change in the unrecognized tax benefits may occur within the next twelve months related to the settlement of one or
more audits. We estimate the impact on the unrecognized tax benefits to be in the range of $300 to $400. We
believe we have appropriately provided for all tax uncertainties.
Form 10-K