Vistaprint 2008 Annual Report Download - page 76

VISTAPRINT LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Years Ended June 30, 2008, 2007 and 2006
(in thousands, except share and per share data)
transaction gains and losses and re-measurement of foreign currency denominated assets and
liabilities are included in other income (expense), net. Foreign currency transaction gains (losses)
included in other income (expense), net for the years ended June 30, 2008, 2007 and 2006 were $427,
$(45) and $(494), respectively.
Net Income Per Share
The Company calculates net income per share in accordance with Statement of Financial
Accounting Standards (“SFAS”) No. 128, Earnings Per Share, as clarified by EITF Issue No. 03-6,
Participating Securities and the Two Class Method under FASB Statement No. 128, Earnings per
Share (“EITF 03-6”). EITF 03-6 clarified the use of the “two-class” method of calculating earnings per
share as originally prescribed in SFAS No. 128. EITF 03-6 provides guidance on how to determine
whether a security should be considered a “participating security” for purposes of computing earnings
or loss per share and how earnings should be allocated to a participating security when using the
two-class method for computing basic earnings per share. The Company has determined that its
redeemable convertible preferred shares represented a participating security. As of September 29,
2005, all of the outstanding redeemable convertible preferred shares were deemed to have converted
into common shares in connection with the Company’s initial public offering. Accordingly, the Company
calculated basic net income per share for the year ended June 30, 2006 using the two-class method
for the first 91 days of the year since both classes of stock were outstanding during the period.
Basic net income per share is computed by dividing the net income attributable to common
shareholders by the weighted-average number of common shares outstanding for the fiscal period.
For June 30, 2006, diluted net income per share is computed using the more dilutive of (a) the
two-class method or (b) the if-converted method. Under the two-class method, the Company allocated
net income first to preferred shareholders based on dividend rights under the Company’s bye-laws and
then to preferred and common shareholders, pro rata, based on ownership interests. Diluted net
income per share for all years presented gives effect to all potentially dilutive securities, including share
options using the treasury stock method. Common share equivalents of 864,968, 1,103,614 and
109,630 were excluded from the determination of potentially dilutive shares for the years ended
June 30, 2008, 2007 and 2006, respectively, due to their anti-dilutive effect.
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