Vistaprint 2011 Annual Report Download - page 48

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Form 10-K
U.S. dollar. We have provided this non-GAAP financial measure because we believe it provides meaningful information
regarding our results on a consistent and comparable basis for the periods presented. Management uses this non-
GAAP financial measure, in addition to GAAP financial measures, to evaluate our operating results. This non-GAAP
financial measure should be considered supplemental to and not a substitute for our reported financial results prepared
in accordance with GAAP.
(2) Includes referral fee revenue from membership discount programs of $0, $5.2 million and $20.1 million for the fiscal
years ended June 30, 2011, 2010 and 2009.
Cost of revenue
Cost of revenue includes materials used to manufacture our products, payroll and related
expenses for production personnel, depreciation of assets used in the production process and in
support of digital marketing service offerings, shipping, handling and processing costs, third-party
production costs, and other related costs of products sold by us. Production costs related to free
products are included in cost of revenues as incurred.
The increase in cost of revenue from fiscal 2010 to fiscal 2011 was primarily attributable to the
increased volume of product shipments during the current year period. The decrease in the cost of
revenue as a percentage of total revenue from fiscal 2010 to 2011 was primarily attributable to
favorable shifts in product mix including an increase in sales of digital services, improved pricing in
relation to shipping costs, and productivity improvements at our manufacturing locations. These
improvements were partially offset by lower overhead absorption resulting from the opening of our
new production facility in Deer Park, Australia in June 2010.
The increase in cost of revenue from fiscal 2009 to fiscal 2010 was primarily attributable to the
production costs associated with increased volume of shipments of products during this period. The
decrease in cost of revenue as a percentage of revenue from fiscal 2009 to fiscal 2010 was primarily
attributable to improved pricing agreements in relation to purchases of materials and shipping costs,
productivity improvements at our manufacturing locations, and shifts in product mix including an
increase in sales of digital services. These improvements were partially offset by a decrease in
referral revenue and a strengthening of the Canadian dollar, which negatively impacted the raw
material and labor costs of our Canadian production operations.
In thousands
2011 2010 2009 2011 vs. 2010 2010 vs. 2009
Year Ended June 30,
Technology and development
expense . . . . . . . . . . . . . . . . . $ 93,626 $ 78,387 $ 60,921 19% 29%
% of revenue ................ 11.5% 11.7% 11.8%
Marketing and selling
expense . . . . . . . . . . . . . . . . . $ 271,838 $ 216,574 $ 159,143 26% 36%
% of revenue ................ 33.3% 32.3% 30.9%
General and administrative
expense . . . . . . . . . . . . . . . . . $ 70,659 $ 58,031 $ 42,236 22% 37%
% of revenue ................ 8.6% 8.7% 8.2%
Technology and development expense
Technology and development expense consists primarily of payroll and related expenses for our
employees engaged in software and manufacturing engineering, information technology operations,
content development, amortization of capitalized software and website development costs, hosting of
our websites, asset depreciation, patent amortization, legal settlements in connection with patent-
related claims, and other technology infrastructure-related costs. Depreciation expense for information
technology equipment that directly supports the delivery of our digital marketing services products is
included in cost of revenue.
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