Vistaprint 2013 Annual Report Download - page 70

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6. Property, Plant and Equipment, Net
Property, plant and equipment, net consists of the following:
June 30,
Estimated useful lives 2013 2012
Land improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 years $ 2,188 $ 1,280
Building and building improvements . . . . . . . . . . . . . . . 10 - 30 years 133,822 114,357
Machinery and production equipment . . . . . . . . . . . . . . 4 - 10 years 189,061 172,628
Computer software and equipment . . . . . . . . . . . . . . . . 3 - 5 years 91,766 76,640
Furniture, fixtures and office equipment . . . . . . . . . . . . 5 - 7 years 19,832 13,111
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . Shorter of lease term or
expected life of the asset 15,624 12,036
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . 34,331 33,071
486,624 423,123
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . (232,893) (188,500)
253,731 234,623
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,291 26,605
Property, plant, and equipment, net. . . . . . . . . . . . . . . . $ 280,022 $ 261,228
Depreciation expense totaled $50,602, $46,572 and $43,410 for the years ended June 30, 2013, 2012 and
2011, respectively.
7. Business Combinations
Acquisition of Albumprinter Holding B.V.
On October 31, 2011, we acquired 100% of the outstanding shares of Albumprinter Holding B.V., a leading
provider of photo books and other photo products to consumers in Europe. At the closing, we paid €60,000
($85,019 based on the exchange rate as of the date of acquisition) in cash for Albumprinter’s shares, which we
funded using cash on hand and borrowings under our credit facility, and we agreed to pay up to an additional
€5,000 ($7,085 based on the exchange rate as of the date of acquisition) in cash on or after December 31, 2012
based upon the acquired business achieving revenue and earnings targets for calendar year 2012. The estimated
fair value of the earn-out payment of $583 was included as a component of the purchase price based on an
evaluation of the likelihood of achievement of the contractual conditions and weighted probability assumptions of
these outcomes. The contractual conditions of the earn-out payment were ultimately not achieved, so we did not
pay any earn-out amount. As such the change in estimate was recorded as a benefit in our consolidated statement
of operations during the year ended June 30, 2013. In connection with the acquisition, we incurred transaction costs
related to investment banking, legal, financial, and other professional services of approximately $1,700 in the year
ended June 30, 2012, which were recorded in general and administrative expenses.
The amount paid at closing was subject to a post-closing adjustment based on Albumprinter’s working
capital and net debt as of the closing date. These adjustments resulted in a reduction of purchase price of €3,165
($4,485 based on the exchange rate as of the date of acquisition), and the proceeds have been received.
Our consolidated financial statements include the accounts of Albumprinter from October 31, 2011, the date
of acquisition. Albumprinter’s revenue included in our consolidated revenues for the year ended June 30, 2012 is
$40,386. Albumprinter's net income included in our consolidated net income for the year ended June 30, 2012 is
$165.
Purchase Price Allocation
The excess of the purchase price paid over the fair value of Albumprinter’s net assets is recorded as
goodwill, which is primarily attributable to revenue synergies expected from cross-selling opportunities and the
Form 10-K