Vistaprint 2008 Annual Report Download - page 73

VISTAPRINT LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Years Ended June 30, 2008, 2007 and 2006
(in thousands, except share and per share data)
Amortization expense in connection with the development of software for internal use in the years
ended June 30, 2008, 2007 and 2006 was $4,118, $2,698 and $2,038, respectively, resulting in
accumulated amortization of $7,041 and $4,501 at June 30, 2008 and 2007, respectively.
The Company performs a periodic review of the recoverability of capitalized software costs in
accordance with the Financial Accounting Standards Board’s Statement of Financial Accounting
Standards (“SFAS”) No. 144, Accounting for the Impairment of Long-Lived Assets. The Company
recorded impairment charges of $39, $67 and $117 for the years ended June 30, 2008, 2007 and
2006, respectively. The amortization of capitalized software costs and any impairment charges is
included in technology and development expense in the accompanying consolidated statements of
income.
Revenue Recognition
Customer orders are received via the Company’s websites and are primarily paid for using credit
cards, and also through direct bank debit, wire transfers and other payment methods. The Company
recognizes revenue arising from sales of products when it is realized or realizable and earned. The
Company considers revenue realized or realizable and earned when it has persuasive evidence of an
arrangement, the product has been shipped and title and risk of loss transfers to the customer, the net
sales price is fixed or determinable and collectibility is reasonably assured. The Company offers
discounts to its customers through various advertising campaigns which often contain sales offers that
include discounts on the Company’s list prices. These discounts are recognized as a reduction of
revenue in the Company’s consolidated statement of income at the time revenue is recognized. The
Company also generates revenue from order referral fees, revenue share and other fees received from
merchants for customer click-throughs, distribution of third-party promotional materials and orders that
are placed on the merchants’ websites. Revenue generated from order referrals is recognized in the
period that the click-through impression is delivered, provided that there is persuasive evidence of an
arrangement, the fee is fixed or determinable, no significant obligations remain and collection is
reasonably assured.
A reserve for sales returns and allowances is recorded based on historical experience or specific
identification of an event necessitating a reserve.
Shipping, handling and processing costs billed to customers are included in revenue and the
related costs are included in cost of revenue.
Sales and purchases in countries which are subject to Value Added Tax (VAT) are recorded net
of VAT collected and paid as the Company acts as an agent for the government.
Cost of Revenue
Cost of revenue consists of materials used to generate printed products, payroll and related
expenses for printing personnel, supplies, depreciation of equipment used in the printing process,
shipping charges, website hosting costs and other miscellaneous related costs of products sold by the
Company (see Note 3).
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Form 10-K