Vistaprint 2013 Annual Report Download - page 62

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Debt Issuance Costs
Expenses associated with the issuance of debt instruments are capitalized and are amortized over the
terms of the respective financing arrangement using the effective interest method, or on a straight-line basis
through the maturity date for our credit facility. During the year ended June 30, 2013 and 2012, we capitalized debt
issuance costs related to our credit facility arrangements of $1,887 and $1,819, respectively. Amortization of these
costs is included in interest income (expense), net in the consolidated statements of operations and amounted to
$556 and $206, for the years ended June 30, 2013 and 2012. Debt issuance costs recognized in the consolidated
balance sheets were $2,936 and $1,613 as of June 30, 2013 and 2012, respectively.
Investments in Equity Interests
We record our share of the results of investments in equity interests and any related amortization, within
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.
Derivative Financial Instruments
We record all derivatives on the consolidated balance sheet at fair value. The accounting for changes in the
fair value of derivatives depends on the intended use of the derivative, whether we have elected to designate a derivative
as being a hedging relationship and whether the hedging relationship has satisfied the criteria necessary to apply
hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of
an asset, liability or firm commitment attributable to a particular risk are considered fair value hedges. Derivatives
designated and qualifying as hedges of the exposure to variability in expected future cash flows, or other types of
forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of
the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of
the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the
hedged forecasted transaction in a cash flow hedge. We execute these instruments with financial institutions that hold
an investment grade credit rating. We may enter into derivative contracts that are intended to economically hedge
certain of our risks, even though we may elect not to apply hedge accounting. We do not currently hold or issue
derivative financial instruments for trading or speculative purposes and do not have any derivatives that are not
designated as hedges for accounting purposes. In accordance with the fair value measurement guidance, our
accounting policy is to measure the credit risk of our derivative financial instruments that are subject to master netting
agreements on a net basis by counterparty portfolio.
Shareholders’ Equity
Comprehensive Income
Comprehensive income is defined as the change in equity of a business enterprise during a period from
transactions and other events and circumstances from non-owner sources. Comprehensive income (loss) is
composed of net income, unrealized gains and losses on marketable securities and derivatives, and cumulative
foreign currency translation adjustments, which are disclosed in the accompanying consolidated statements of
comprehensive income.
Treasury Shares
Treasury shares are accounted for using the cost method and are included as a component of
shareholders' equity. We reissue treasury shares as part of our share-based compensation programs and upon
issuance we determine the cost using the average cost method. Effective January 28, 2013, 5,869,662 of our
ordinary shares issued and held in our treasury account were canceled and have become authorized but unissued
ordinary shares, as authorized by our shareholders on November 8, 2012. These canceled shares represent the
remaining balance as of November 8, 2012 of the ordinary shares that were held in treasury at the date of the
Form 10-K