Vistaprint 2009 Annual Report Download - page 82

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)
marketable securities and cumulative foreign currency translation adjustments, which are disclosed in
the accompanying consolidated statements of shareholders’ equity and comprehensive income.
The components of accumulated other comprehensive income were as follows:
June 30,
2009 2008
Cumulative translation adjustments ............................................. $3,762 $8,144
Unrealized loss on marketable securities ........................................ (40) (52)
Accumulated other comprehensive income .................................. $3,722 $8,092
Income Taxes
Vistaprint Limited is a Bermuda based company. Bermuda currently does not impose any tax
computed on profits or income, which results in no tax liability for the Company on any profits recorded
in Bermuda. Vistaprint Limited has operating subsidiaries in the Netherlands, Canada, France,
Jamaica, Spain, Switzerland, Tunisia and the United States. Vistaprint Limited has entered into service
agreements, which are also referred to as transfer pricing agreements, with each of its operating
subsidiaries. These agreements effectively result in Vistaprint Limited paying each of these
subsidiaries for its costs plus a fixed mark-up. The Jamaican subsidiary’s tax rate is zero because it is
located in a tax free zone. Our Dutch, Canadian, Spanish and United States subsidiaries are each
located in jurisdictions that tax profits and, accordingly, regardless of the Company’s consolidated
results of operations, each of these subsidiaries will pay taxes in its respective jurisdiction.
The Company provides for income taxes under the liability method prescribed by SFAS No. 109,
Accounting for Income Taxes. Under this method, income taxes are provided for amounts currently
payable and for deferred tax assets and liabilities, which are determined based on the differences
between the financial statement carrying amounts and the tax bases of existing assets and liabilities.
Deferred income taxes are measured using enacted tax rates in effect for the year in which the
differences are expected to reverse. Valuation allowances are established when necessary to reduce
deferred tax assets to the amounts expected to be realized.
The Company recognizes, presents and discloses in its financial statements uncertain tax positions
taken, or it expects to take on a tax return, in accordance with the provisions of Financial Accounting
Standards Board (“FASB”) Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”).
The unrecognized tax benefits will reduce the effective tax rate when recognized. Interest and penalties
related to unrecognized tax benefits are recorded in the provision for income taxes.
Foreign Currency Translation
The Company’s Dutch, Spanish, French and Tunisian subsidiaries have the euro as their
functional currency, the Swiss subsidiary has the Swiss franc as its functional currency and all other
consolidated entities have the U.S. dollar as their functional currency. The Company’s Dutch, Swiss,
Spanish, French and Tunisian subsidiaries translate their assets and liabilities denominated in their
functional currency at current rates of exchange in effect at the balance sheet date. The resulting gains
and losses from translation are included as a component of other comprehensive income. Transaction
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