Vistaprint 2013 Annual Report Download - page 79

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Significant components of our deferred income tax assets and liabilities consist of the following at June 30,
2013 and 2012:
Year Ended June 30,
2013 2012
Deferred tax assets:
Net operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,905 $ 6,129
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 485 1,281
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,587 1,853
Share-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,897 8,450
Corporate minimum tax credit carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . 638 854
R&D credit carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 697
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,512 19,264
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,032) (2,505)
Total deferred tax assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,480 16,759
Deferred tax liabilities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10,965) (13,709)
IP installment obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (19,750) (22,405)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (248) —
Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (30,963) (36,114)
Net deferred tax liabilities $ (12,483) $ (19,355)
The current portion of the net deferred taxes at June 30, 2013 and 2012 consisted of an asset of $648 and
$344, respectively, included in prepaid expenses and other current assets and a liability of $1,466 and $1,668,
respectively, which is included in current liabilities in the accompanying consolidated balance sheet.
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
$11,897 deferred tax asset associated with share-based compensation charges at June 30, 2013. 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 for which management
has determined that it is more likely than not that these losses will not be utilized in the foreseeable future. Based
on the weight of available evidence at June 30, 2013, management believes that it is more likely than not that all
other net deferred tax assets will be realized in the foreseeable future. We will continue to assess the realization of
the deferred tax assets based on operating results.
As of June 30, 2013, we had U.S. federal and state net operating loss and capital loss carryforwards of
approximately $1,203 that expire on various dates up to and through the year 2033. We had non-U.S. net operating
loss carryforwards of approximately $26,465 that expire on various dates up to and through 2030. The benefits of
these carryforwards are dependent upon the generation of taxable income in the jurisdictions where they arose.
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. The
transfer of assets occurred between two wholly owned legal entities within the Vistaprint group that are based in
different tax jurisdictions, creating a taxable gain reportable in the transferor entity's jurisdiction. The gain is
recognized for income tax purposes only and not in our financial statements. As the gain was the result of an intra-
entity transaction, it was eliminated in consolidation for purposes of our consolidated financial statements.
In accordance with GAAP, no gain or immediate tax impact should be recognized in the consolidated
financial statements as a result of an intra-entity asset transfer. We recognize tax expense specifically associated
with an intra-entity transfer of intangible property over a period equal to the expected economic lives of the
underlying assets transferred. In the transfer of Webs' Intellectual Property, the weighted average amortization
period of 13 years was determined based on the estimated economic lives of the intellectual property transferred.