Vistaprint 2013 Annual Report Download - page 40

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We are required to test definite lived long-lived assets, which include, among other items, customer
relationships, developed technology, property, and equipment, when indicators of impairment are present. For
purposes of this test, long-lived assets are grouped with other assets and liabilities at the lowest level for which
identifiable cash flows are largely independent of the cash flows of other assets and liabilities. The test for
recoverability compares the undiscounted future cash flows of the long-lived asset group to its carrying value. If the
carrying values of the long-lived asset group exceed the future cash flows, the assets are considered to be
potentially impaired. The next step in the impairment measurement process is to determine the fair value of the
individual net assets within the long-lived asset group. If the aggregate fair values of the individual net assets of the
group are less than the carrying values, an impairment charge is recorded equal to the excess of the aggregate
carrying value of the group over the aggregate fair value. The loss is allocated to each asset within the group based
on their relative carrying values, with no asset reduced below its fair value. The identification and evaluation of a
potential impairment requires judgment and is subject to change if events or circumstances pertaining to our
business change.
Investments in Equity Interests. We record our share of the results of investments in equity interests within
the account loss in equity interests on the consolidated statements of operations. We review our investments for
other-than-temporary impairment whenever events or changes in business circumstances indicate that the carrying
value of the investment may not be fully recoverable. Investments identified as having an indication of impairment
are subject to further analysis to determine if the impairment is other-than-temporary and this analysis requires
estimating the fair value of the investment, which involves considering factors such as comparable valuations of
public companies similar to the entity in which we have an equity investment, current economic and market
conditions, the operating performance of the entities including current earnings trends and forecasted cash flows,
and other entity and industry specific information.
Litigation and Contingencies. We are subject to various loss contingencies arising in the ordinary course of
business. We consider the likelihood of loss or impairment of an asset or the incurrence of a liability, as well as our
ability to reasonably estimate the amount of loss in determining loss contingencies. An estimated loss contingency
is accrued when it is probable that an asset has been impaired or a liability has been incurred and the amount of
loss can be reasonably estimated. We regularly evaluate current information available to us to determine whether
such accruals should be adjusted.
Recently Issued or Adopted Accounting Pronouncements
See Item 8 of Part II, “Financial Statements and Supplementary Data — Note 2 — Summary of Significant
Accounting Policies — Recently Issued or Adopted Accounting Pronouncements."
Results of Operations
The following table presents our operating results for the periods indicated as a percentage of revenue:
Year Ended June 30,
2013 2012 2011
As a percentage of revenue:
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0 % 100.0 % 100.0 %
Cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34.3 % 34.8 % 35.2 %
Technology and development expense . . . . . . . . . . . . . . . . . . . . . . . . . 14.1 % 12.7 % 11.5 %
Marketing and selling expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38.2 % 36.8 % 33.3 %
General and administrative expense . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.4 % 10.3 % 8.6 %
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 % 5.4 % 11.4 %
Other income (expense), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — % 0.2 % (0.3)%
Interest income (expense), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.5)% (0.1)% 0.1 %
Income before income taxes and loss in equity interests . . . . . . . . . . . . 3.5 % 5.5 % 11.2 %
Income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.8 % 1.2 % 1.2 %
Loss in equity interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.2 % — % — %
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5 % 4.3 % 10.0 %
Form 10-K