Vistaprint 2007 Annual Report Download - page 71

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VISTAPRINT LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Years Ended June 30, 2007, 2006 and 2005
(in thousands, except share and per share data)
Property, Plant and Equipment
Property, plant and equipment are stated at cost less allowance for depreciation and
amortization. Additions and improvements that substantially extend the useful life of a particular asset
are capitalized while repairs and maintenance costs are charged to expense as incurred. Interest on
borrowings is capitalized during the active construction period of major capital projects. Capitalized
interest is recorded as part of the asset to which it relates and is amortized over the asset’s estimated
useful life. Upon sale or disposition of an asset, the cost and related accumulated depreciation are
removed from the accounts. Depreciation of plant and equipment has been provided using the straight-
line method over the estimated useful lives of the assets as follows:
Building and building improvements ........... 10–30years
Land improvements .......................... 10years
Machinery and print production equipment ..... 4–10years
Computer software and equipment ............ 3years
Furniture, fixtures and office equipment ........ 5 – 7 years
Leasehold improvements ..................... Shorter of lease term or remaining
life of the asset
Software and Web Site Development Costs
The Company capitalizes eligible costs associated with software developed or obtained for
internal use in accordance with American Institute of Certified Public Accountants (“AICPA”) Statement
of Position 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal
Use, and Emerging Issues Task Force (“EITF”) 00-2, Accounting for Web Site Development Costs.
Costs associated with the development of software for internal-use are capitalized if the software is
expected to have a useful life beyond one year and amortized over the software’s useful life, which is
approximately two years. Costs associated with preliminary stage software development, repair,
maintenance or the development of website content are expensed as incurred. Total software
development costs capitalized in the years ended June 30, 2007, 2006 and 2005 were $4,189, $2,656
and $1,908, respectively. Costs associated with the acquisition of content images used in the
Company’s graphic design process that have useful lives greater than one year, such as digital images
and artwork, are capitalized and amortized over their useful lives, which approximate two years.
Amortization expense in connection with the development of software for internal use in the years
ended June 30, 2007, 2006 and 2005 was $2,698, $2,038 and $2,780, respectively, resulting in
accumulated amortization of $4,501 and $4,083 at June 30, 2007 and 2006, respectively.
The Company performs a periodic review of the recoverability of capitalized software costs in
accordance with Financial Accounting Standards Board Statement of Financial Accounting Standards
(“SFAS”) No. 144, Accounting for the Impairment of Long-Lived Assets. The Company recorded
impairment charges of $67, $117 and $115 for the years ended June 30, 2007, 2006 and 2005,
respectively. The amortization of capitalized software costs and any impairment charges is included in
technology and development in the accompanying consolidated statements of operations.
67
Form 10-K