Vistaprint 2010 Annual Report Download - page 71

Form 10-K
have a material impact on how Vistaprint conducts its day-to-day operations, its financial position,
consolidated effective tax rate, results of operations or cash flows.
2. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of Vistaprint N.V., its wholly owned
subsidiaries, and those entities in which we have a variable interest and are the primary beneficiary.
Intercompany balances and transactions have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting
principles requires management to make estimates and assumptions that affect the amounts reported
in the consolidated financial statements and accompanying notes. Actual results could differ from
those estimates. On an ongoing basis, the Company evaluates its estimates, including those related
to the accounts receivable and sales returns allowance, useful lives of property and equipment,
intangibles and internally-developed software, valuation of acquired intangibles and goodwill, share-
based compensation, income taxes and litigation and contingencies, among others. The Company
bases its estimates on historical experience and on various other assumptions that are believed to be
reasonable at the time they are made, the results of which form the basis for making judgments about
the carrying values of assets and liabilities. By their nature, estimates are subject to an inherent
degree of uncertainty. Actual results could differ from those estimates.
Cash, Cash Equivalents and Marketable Securities
The Company considers all highly liquid investments purchased with an original maturity of
three months or less to be the equivalent of cash for the purpose of balance sheet and statement of
cash flows presentation. Cash equivalents consist of money market funds. Cash and cash equivalents
restricted under terms of the Company’s facility leases and other financing arrangements were $2,005
and $2,315 as of June 30, 2010 and 2009, respectively, and are included in other assets in the
accompanying consolidated balance sheets.
Marketable securities, when held, consist primarily of investment-grade corporate bonds, U.S.
government agency issues, and certificates of deposit. The Company’s marketable securities are
classified as “available-for-sale securities” and carried at fair value, with the unrealized gains and
losses reported as a separate component of accumulated other comprehensive (loss) income. The
cost of securities sold is based on the specific identification method. Interest and dividends on
securities classified as available-for-sale are included in interest income.
At June 30, 2010 and 2009, the Company held one auction rate security as a result of failed
auctions in fiscal year 2009 and 2010. The Company has the intent and the ability to hold the asset
until the anticipated recovery period which it believes will be more than twelve months. As such,
during fiscal year 2010 and 2009 the asset which had a fair value of $660 and $760, net of an
unrealized loss of $40, has been classified as long-term and included in other assets on the
accompanying consolidated balance sheets. All other marketable securities as of June 30, 2010 had
an original maturity of less than one year.
The Company reviews its investments for other-than-temporary impairment whenever the fair
value of an investment is less than amortized cost and evidence indicates that an investment’s
carrying amount is not recoverable within a reasonable period of time. There were no
other-than-temporary impairments during the years ended June 30, 2010, 2009, and 2008.
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