Vistaprint 2011 Annual Report Download - page 45

undiscounted cash flows expected to be generated by the asset. If the carrying amount of the asset
exceeds the estimated future cash flows, an impairment charge is recognized in the amount by which
the carrying value of the asset exceeds its estimated fair value. Cash flow projections are based on
trends of historical performance and our estimate of future performance.
Software and Website Development Costs. We capitalize eligible salaries and payroll-related
costs of employees who devote time to the development of internal-use computer software.
Capitalization begins when the preliminary project stage is complete, management with the relevant
authority authorizes and commits to the funding of the software project, and it is probable that the
project will be completed and the software will be used to perform the function intended. These costs
are amortized on a straight-line basis over the estimated useful life of the software, which is generally
two years. Our judgment is required in determining the point at which various projects enter the
stages at which costs may be capitalized, in assessing the ongoing value and impairment of the
capitalized costs, and in determining the estimated useful lives over which the costs are amortized.
Litigation and Contingencies. We are subject to various loss contingencies arising in the
ordinary course of business. We consider the likelihood of loss or impairment of an asset or the
incurrence of a liability, as well as our ability to reasonably estimate the amount of loss in determining
loss contingencies. An estimated loss contingency is accrued when it is probable that an asset has
been impaired or a liability has been incurred and the amount of loss can be reasonably estimated.
We regularly evaluate current information available to us to determine whether such accruals should
be adjusted.
Recently Issued Accounting Pronouncements
See Item 8 of Part II, “Financial Statements and Supplementary Data — Note 2 — Summary of
Significant Accounting Policies — Recently Adopted Accounting Pronouncements and Recently Issued
Accounting Pronouncements.”
Results of Operations
The following table presents our historical operating results for the periods indicated as a
percentage of revenue:
2011 2010 2009
Year Ended June 30,
As a percentage of revenue:
Revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0% 100.0% 100.0%
Cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.2% 35.8% 37.2%
Technology and development expense . . . . . . . . . . . . . . . . . . . 11.5% 11.7% 11.8%
Marketing and selling expense . . . . . . . . . . . . . . . . . . . . . . . . . 33.3% 32.3% 30.9%
General and administrative expense . . . . . . . . . . . . . . . . . . . . . 8.6% 8.7% 8.2%
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.4% 11.5% 11.9%
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.1% 0.1% 0.4%
Other expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.3% 0.2% 0.1%
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0% 0.2% 0.3%
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.2% 11.2% 11.9%
Income tax provision. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2% 1.1% 1.1%
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.0% 10.1% 10.8%
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