Vistaprint 2009 Annual Report Download - page 57

purchasing from us an attractive alternative for individual consumers. We intend to add new products
and services targeted at the consumer market and we believe that the economies of scale provided by
our large print order volumes and integrated design and production facilities will enable us to profitably
grow our consumer business.
Recent Developments
On August 31, 2009 we effected the Change of Domicile, pursuant to which we effectively moved
the place of incorporation of the publicly traded parent entity of the Vistaprint group of companies from
Bermuda to the Netherlands. Pursuant to the Change of Domicile, the common shareholders of
Vistaprint Limited became ordinary shareholders of Vistaprint N.V. and Vistaprint Limited became a
wholly-owned subsidiary of Vistaprint N.V, and Vistaprint N.V. assumed Vistaprint Limited’s existing
obligations in connection with awards granted under Vistaprint Limited’s incentive plans and other
similar employee awards.
On July 1, 2009, Robert Keane, our chief executive officer, relocated to a new office in Paris,
France, which will operate under the French headquarters regime (quartiers généraux) tax regime.
We do not expect that the Change of Domicile or the establishment of our office in Paris will have
a material impact on how we conduct our day-to-day operations, consolidated effective tax rate or our
financial position, results of operations or cash flows.
Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared in accordance with accounting principles
generally accepted in the United States. To apply these principles, we must make estimates that affect
our reported amounts of assets, liabilities, revenues and expenses, and related disclosure of
contingent assets and liabilities. In many instances, we reasonably could have used different
accounting estimates and, in other instances, changes in the accounting estimates are reasonably
likely to occur from period to period. Accordingly, actual results could differ significantly from our
estimates. To the extent that there are material differences between these estimates and actual
results, our financial condition or results of operations will be affected. To date there have been no
material differences in actual results as compared to our estimates. Changes in estimates are reflected
in our financial results in the period of change. We base our estimates on historical experience and
other assumptions that we believe to be reasonable under the circumstances at the time they are
made, and we evaluate these estimates on an ongoing basis. We refer to accounting estimates of this
type as critical accounting policies and estimates, which are discussed further below.
Revenue Recognition. We generate revenue primarily from the sale and shipping of customized
manufactured products, as well as from electronic services, including creative design services, website
design and hosting, email marketing services and order referral fees. We recognize revenue arising
from sales of products and services when it is realized or realizable and earned. We consider revenue
realized or realizable and earned when there is persuasive evidence of an arrangement, a product has
been shipped or service rendered with no significant post-delivery obligation on our part, the sales
price is fixed or determinable and collection is reasonably assured. Shipping, handling and processing
costs billed to customers are included in revenue and the related costs are included in cost of revenue.
Revenue is recognized net of discounts we offer to our customers as part of advertising campaigns. A
reserve for sales returns and allowances is recorded based on historical experience or specific
identification of an event necessitating a reserve.
Inventories. Our inventories consist primarily of raw materials, and are stated at the lower of
first-in, first-out cost or market value. Raw materials consist primarily of various types of paper stock,
printing plates, T-shirts, hats, pens, rubber stamp casings, packaging supplies and similar items used
Form 10-K
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