Vistaprint 2009 Annual Report Download - page 84

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)
volatility of the Company. For years prior to fiscal 2009, expected volatilities were based upon historical
volatilities of guideline companies since the Company did not have sufficient history as a publicly
traded company. The expected life of options granted represents the period of time that options
granted are expected to be outstanding. For option awards in fiscal year 2009, the Company used its
historical experience to estimate the expected life of options granted. For years prior to fiscal 2009,
expected lives used by guideline companies were used to estimate the expected life of options
granted. The Company uses historical data to estimate employee terminations and resulting forfeiture
rates within the option pricing model. The risk-free interest rate for periods within the contractual life of
the option is based on the U.S. Treasury yield curve in effect at the time of the grant. The fair value of
restricted share grants is based upon the closing trading value of the Company’s shares on the date of
grant and recognized using the straight-line recognition method. Weighted-average assumptions used
for option grants in 2009, 2008 and 2007 are as follows:
Year Ended June 30,
2009 2008 2007
Risk-free interest rate ................................................. 1.48% 3.75% 4.71%
Expected dividend yield ............................................... 0% 0% 0%
Expected life (years) .................................................. 3.94 4.25 4.25
Expected volatility..................................................... 58% 52% 59%
Weighted average fair value of options granted .......................... $14.06 $15.82 $13.88
On April 26, 2007, the Company entered into a Transition Agreement (the “Transition Agreement)
with a departing employee. Pursuant to the terms of the Transition Agreement, the employee agreed to
remain employed through May 1, 2007. On May 1, 2007 share options granted to this employee, which
would have become vested on or before May 1, 2008, for an aggregate of 48,443 common shares,
immediately became vested and exercisable in accordance with the terms of the Transition Agreement.
For the year ended June 30, 2007, the Company recorded a share based compensation charge of
$1,406 related to the modification of the vesting of the options which was recognized on the date of
termination. On May 1, 2007, all remaining vesting of the share options granted to this employee, for
an aggregate of 47,951 common shares ceased, and therefore were forfeited upon termination.
Sabbatical Leave
On July 1, 2007, the Company adopted, the EITF 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, which resulted in additional accrued expenses
and a reduction to beginning retained earnings of $799.
Concentrations of Credit Risk
The Company monitors the creditworthiness of its customers to which it grants credit terms in the
normal course of business. An individual customer accounted for 21% and 28% of the Company’s total
accounts receivable at June 30, 2009 and 2008, respectively.
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