Vistaprint 2008 Annual Report Download - page 79

VISTAPRINT LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Years Ended June 30, 2008, 2007 and 2006
(in thousands, except share and per share data)
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, 2008, the
Company held seventeen issued United States patents and three patents in other countries. 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.
Sabbatical Leave
On July 1, 2007, the Company adopted, the Emerging Issues Task Force Issue No. 06-02,
Accounting for Sabbatical Leave and Other Similar Benefits Pursuant to FASB Statement No. 43,
Accounting for Compensated Absences (“EITF 06-02”). EITF 06-02 requires that compensation
expense associated with a sabbatical leave, or other similar benefit arrangement, be accrued over the
requisite service period during which an employee earns the benefit. The Company adopted EITF
06-02 through a cumulative effect of a change in accounting principle adjustment to our beginning
retained earnings. The adoption of EITF 06-02 resulted in additional accrued expenses and a reduction
to retained earnings of $799.
New Accounting Pronouncements
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS 157”),
which defines fair value, establishes a framework for measuring fair value in generally accepted
accounting principles, and expands disclosures about fair value measurements. SFAS 157 applies
under other accounting pronouncements that require or permit fair value measurements. SFAS 157 is
effective for financial statements issued for fiscal years beginning after November 15, 2007, and
interim periods within those fiscal years. The Company does not believe that the adoption of this
standard will have a material impact on its consolidated financial statements.
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Form 10-K