Vistaprint 2009 Annual Report Download - page 80

VISTAPRINT LIMITED
(predecessor to Vistaprint N.V.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Years Ended June 30, 2009, 2008 and 2007
(in thousands, except share and per share data)
Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation and amortization.
Additions and improvements that substantially extend the useful life of a particular asset are capitalized
while repairs and maintenance costs are charged to expense as incurred. Depreciation of plant and
equipment has been provided using the straight-line method over the estimated useful lives of the
assets.
Software and Web Site Development Costs
The Company capitalizes eligible costs associated with software developed or obtained for
internal use in accordance with American Institute of Certified Public Accountants (“AICPA”) Statement
of Position 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal
Use, and Emerging Issues Task Force (“EITF”) 00-2, Accounting for Web Site Development Costs.
Costs associated with the development of software for internal-use are capitalized if the software is
expected to have a useful life beyond one year and amortized over the software’s estimated useful life,
which is approximately two years. Costs associated with preliminary stage software development,
repair, maintenance or the development of website content are expensed as incurred. Amortization
expense in connection with the development of software for internal use in the years ended June 30,
2009, 2008 and 2007 was $5,762, $4,118 and $2,698, respectively, resulting in accumulated
amortization of $12,835 and $7,041 at June 30, 2009 and 2008, respectively.
Long-Lived Assets and Intangible Assets
The Company pursues patent protection for its intellectual property. The Company has patents
and patent applications pending with European, United States 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 estimated useful 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.
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.
For the fiscal years ended June 30, 2009, 2008 and 2007 the Company recorded impairment
charges on capitalized software and website development costs of $32, $39 and $67, respectively.
In fiscal year 2007, the Company recorded an impairment charge of $876 relating to a project
undertaken in its Windsor, Ontario facility to automate a portion of the production workflow which was
no longer considered viable. The impairment charge was determined to be the total cost of the project
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