Vistaprint 2007 Annual Report Download - page 78

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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)
time of the grant. The fair value of restricted share grants is recognized using the straight-line
recognition method. Weighted-average assumptions used for grants in 2007, 2006 and 2005 are as
follows:
Year Ended June 30,
2007 2006 2005
Risk-free interest rate .............................................. 4.71% 4.36% 3.78%
Expected dividend yield ............................................ 0% 0% 0%
Expected life (years)............................................... 4.25 years 4.25 years 4.5 years
Expected volatility ................................................. 59% 60% 0%
Weighted average fair value of options granted ...................... $ 13.88 $ 8.81 $ 1.69
On April 26, 2007, the Company entered into a Transition Agreement (the “Transition Agreement)
with a departing employee. Pursuant to the terms of the Transition Agreement, the employee agreed to
remain employed through May 1, 2007. On May 1, 2007 share options granted to this employee, which
would have become vested on or before May 1, 2008, for an aggregate of 48,443 common shares,
immediately became vested and exercisable in accordance with the terms of the Transition Agreement.
For the year ended June 30, 2007, the Company recorded a share based compensation charge of
$1,406 related to the modification of the vesting of the options which was recognized on the date of
termination. On May 1, 2007, all remaining vesting of the share options granted to this employee, for
an aggregate of 47,951 common shares ceased, and therefore were forfeited upon termination.
On January 23, 2006, the Company entered into a Transition Agreement (the “Transition
Agreement”) with the Company’s then current Chief Financial Officer (“former CFO”). Pursuant to the
terms of the Transition Agreement, the former CFO agreed to remain employed through at least
June 30, 2006. Under the terms of the Transition Agreement, after June 30, 2006, either he or the
Company could terminate employment with or without cause and without prior notice. In accordance
with the terms of the Transition Agreement, on July 3, 2006, the former CFO resigned. He continued to
provide consulting services to the Company through January 1, 2007. Share options granted to the
former CFO in February 2004 for an aggregate of 300,000 common shares of the Company continued
to vest through January 1, 2007 in accordance with the vesting schedules set forth in such options. On
January 1, 2007, the unvested portion of such share options became immediately exercisable in full.
For the year ended June 30, 2006, the Company recorded a share-based compensation charge of
$3,237 related to the modification of the vesting of the options which was recognized over the service
period. Upon the former CFO’s resignation, all remaining vesting of the share option granted to him in
May 2005 for 350,000 common shares ceased, and therefore were forfeited upon the termination of his
employment.
Patents
The Company pursues patent protection for its intellectual property. As of June 30, 2007, the
Company held thirteen issued United States patents; two issued European patents registered as
national patents in various European Union countries; and one issued French patent. The Company
has multiple additional patent applications pending with United States, European, and other patent
offices related to various systems, processes, techniques, and tools developed by the Company for its
business. All costs related to patent applications are expensed as incurred. The costs of purchasing
patents from unrelated third parties are capitalized and amortized over the remaining life of the patent.
The costs of pursuing others who are believed to infringe on the Company’s patents, as well as costs
of defending the Company against patent-infringement claims, are expensed as incurred.
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