Vistaprint 2006 Annual Report Download - page 68

Table of Contents VISTAPRINT LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Years Ended June 30, 2006, 2005 and 2004
(in thousands, except share and per share data)
Research and development costs are expensed as incurred. Research and development expenses for the years ended June 30, 2006,
2005 and 2004 were $6,335, $4,070 and $2,522, respectively. Costs of information technology operations are expensed in the period in which
they are incurred.
Long−Lived Assets and Intangible Assets
In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long−Lived Assets, the Company continually evaluates
whether events or circumstances have occurred that indicate that the estimated remaining useful life of its long−lived assets, including intangible
assets, may warrant revision or that the carrying value of these assets may be impaired. The Company evaluates the realizability of its long−lived
assets based on profitability and cash flow expectations for the related asset. Any write−downs are treated as permanent reductions in the
carrying amount of the assets. Based on this evaluation, the Company believes that, as of each of the balance sheet dates presented, none of the
Company’s long−lived assets, including intangible assets, were impaired.
Comprehensive Income (Loss)
SFAS No. 130, Reporting Comprehensive Income, establishes standards for reporting and displaying comprehensive income and
comprehensive loss and its components in the consolidated financial statements. 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 (loss), unrealized gains and losses on marketable securities and cumulative foreign currency translation
adjustments, which are disclosed in the accompanying consolidated statements of redeemable convertible preferred shares and shareholders’
equity (deficit).
The components of accumulated other comprehensive income were as follows (in thousands):
June 30,
2006 2005
Unrealized loss on marketable securities $(52) $—
Cumulative translation adjustments 717 258
Accumulated other comprehensive income $665 $258
Income Taxes
VistaPrint Limited is a Bermuda based company. Bermuda currently does not impose any tax computed on profits or income, which results
in a zero tax liability for the Company on any profits recorded in Bermuda. VistaPrint Limited has operating subsidiaries in the Netherlands,
Canada, Jamaica and the United States. VistaPrint Limited has entered into service agreements, which are also referred to as transfer pricing
agreements, with each of its operating subsidiaries. These agreements effectively result in VistaPrint Limited paying each of these subsidiaries for
its costs plus a fixed mark−up. The Jamaican subsidiary’s tax rate is zero because it is located in a tax free zone. The Netherlands, Canadian and
United States subsidiaries are each located in jurisdictions that tax profits and, accordingly, regardless of the Company’s consolidated results of
operations, each of these subsidiaries will pay taxes in its respective jurisdiction.
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