Vistaprint 2008 Annual Report Download - page 74

VISTAPRINT LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Years Ended June 30, 2008, 2007 and 2006
(in thousands, except share and per share data)
Marketing and Selling Expense
Marketing and selling expense consists of advertising expenses, salaries and overhead related to
sales, marketing and customer design sales and service activities, credit card processing fees and
miscellaneous related costs.
All advertising costs are expensed as incurred. Advertising production costs are expensed as the
costs to produce the advertising are incurred. Advertising communication costs are expensed at the
time of communication. Advertising expenses for the years ended June 30, 2008, 2007 and 2006 were
$73,699, $47,147 and $26,687, respectively.
Technology and Development Expense
Technology and development expense consists primarily of payroll and related expenses for
software and engineering development, information technology operations, website hosting,
amortization of capitalized software and website development costs, equipment depreciation, patent
amortization and miscellaneous infrastructure-related costs. Technology and development expense
also includes the amortization of purchase costs related to content images used in the Company’s
graphic design process.
Research and development costs are expensed as incurred. Research and development
expenses for the years ended June 30, 2008, 2007 and 2006 were $6,144, $3,426 and $1,519,
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.
In March 2007, the Company recorded an impairment charge of $1,013 relating to a project
undertaken in its Windsor, Ontario facility to automate a portion of the production workflow which was
no longer considered viable. In June 2007, upon final settlement with the vendor, the Company
reduced the impairment loss by $137. The impairment charge was determined to be the total cost of
the project upon final settlement, less the fair value of equipment to be re-deployed or resold to a third
party, and is included in cost of revenue in the accompanying consolidated statements of income for
the year ended June 30, 2007.
Comprehensive Income
SFAS No. 130, Reporting Comprehensive Income, establishes standards for reporting and
displaying comprehensive income and comprehensive loss and its components in the consolidated
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