Vistaprint 2007 Annual Report Download - page 52

Download and view the complete annual report

Please find page 52 of the 2007 Vistaprint annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 156

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156

permitted under the modified-prospective-transition guidelines of Statement 123(R), results for prior
periods have not been restated. No share-based employee compensation cost was recognized in the
Consolidated Statement of Operations for the fiscal year ended June 30, 2005.
Determining the amount of share-based compensation to be recorded requires us to develop
estimates to be used in calculating the grant-date fair value of share options. We calculate the grant-
date fair values of option awards using the Black-Scholes valuation model. The use of the valuation
model requires us to make estimates and assumptions including, among other things, estimates
regarding the length of time an employee will retain vested share options before exercising them, the
estimated volatility of our common share price and the number of options that will be forfeited prior to
vesting. Changes in these estimates and assumptions can materially affect the determination of the fair
value of share-based compensation and consequently, the related amount recognized on our
consolidated statements of operations. At June 30, 2007, there was $36.3 million of total unrecognized
compensation cost related to non-vested, share-based compensation arrangements. The cost is
expected to be recognized over a weighted average period of 3.3 years.
Recent Accounting Pronouncements
In June 2006, the FASB issued FASB Interpretation, or FIN, No. 48, Accounting for Uncertainty in
Income Taxes—An Interpretation of SFAS No. 109 (“FIN 48”), which clarifies when tax benefits should
be recorded in financial statements, requires certain disclosures of uncertain tax matters and provides
guidance on how any tax reserves should be classified in a balance sheet. FIN 48 is effective for fiscal
years beginning after December 15, 2006. Accordingly, we will be required to adopt FIN 48 in the first
quarter of fiscal 2008, which ends on September 30, 2007. We do not believe that the adoption of this
interpretation will have a material impact on our consolidated financial statements.
In September 2006, the SEC staff issued Staff Accounting Bulletin No. 108, Considering the
Effects of Prior Year Misstatements When Quantifying Misstatements in Current Year Financial
Statements (“SAB 108”), which provides guidance on quantifying and evaluating the materiality of
unrecorded prior year misstatements. The SEC staff indicates that an entity should quantify the impact
of correcting all misstatements, including both the carryover and reversing effects of prior year
misstatements, on the current year financial statements. Companies may choose to restate their
financial statements for any material misstatements arising from the application of SAB 108 or
recognize a cumulative effect adjustment within the current year opening balance in retained earnings,
with disclosure of such items. SAB 108 is effective for fiscal years ending after November 15, 2006.
We have determined that the adoption of SAB 108 did not have a material impact on our consolidated
financial statements.
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS 157”),
which defines fair value, establishes a framework for measuring fair value in generally accepted
accounting principles, and expands disclosures about fair value measurements. SFAS No. 157 applies
under other accounting pronouncements that require or permit fair value measurements.
SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15,
2007, and interim periods within those fiscal years. We are currently evaluating the impact, if any, the
adoption of SFAS No. 157 will have on our consolidated financial statements.
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and
Financial Liabilities—Including an Amendment of FASB Statement No. 115 (“SFAS No. 159”).
SFAS No. 159 allows for the choice to measure certain financial instruments and certain other items at
fair value. This allows a company to mitigate volatility in reported earnings caused by measuring related
assets and liabilities differently without having to apply complex hedge accounting provisions.
48