Vistaprint 2011 Annual Report Download - page 66

Form 10-K
We record acquired intangible assets at fair value on the date of acquisition and amortize such
assets using the straight-line method over the expected useful life of the asset, unless another amortization
method was deemed to be more appropriate. We evaluate the remaining useful life of intangible assets on
a periodic basis to determine whether events and circumstances warrant a revision to the remaining useful
life. If the estimate of an intangible asset’s remaining useful life is changed, we amortize the remaining
carrying value of the intangible asset prospectively over the revised remaining useful life.
Estimated future intangible asset amortization expense for the next five fiscal years based on
balances at June 30, 2011 is $910, $694, $340, $92, and $46, respectively.
Long-Lived Assets
We continually evaluate whether events or circumstances have occurred that indicate that the
estimated remaining useful life of our long-lived assets, excluding goodwill, may warrant revision or
that the carrying value of these assets may not be recoverable. We evaluate the realizability of our
long-lived assets based on profitability and cash flow expectations for the related asset. Any write-
downs are treated as permanent reductions in the carrying amount of the assets.
For the fiscal years ended June 30, 2011, 2010 and 2009 we recorded impairment charges on
long-lived assets of $252, $514 and $1,363, respectively.
Goodwill
Goodwill is evaluated for impairment on an annual basis during the fiscal third quarter, or earlier
if impairment indicators are present. Our annual impairment test concluded that there was no
impairment of goodwill, and there have been no indications of impairment that would require an updated
analysis as of June 30, 2011. Goodwill is included in other assets on the accompanying balance sheet.
Revenue Recognition
We generate revenue primarily from the sale and shipping of customized manufactured products,
as well as providing digital services, website design and hosting, email marketing services and order
referral fees. We recognize revenue arising from sales of products and services when it is realized or
realizable and earned. We consider revenue realized or realizable and earned when it has persuasive
evidence of an arrangement, the product has been shipped or service rendered with no significant post-
delivery obligations on our part, the net sales price is fixed or determinable and collectability is
reasonably assured. For subscription services we recognize revenue for the fees charged to customers
ratably over the term of the service arrangement. Revenue is recognized net of discounts we offer to
our customers as part of advertising campaigns. A reserve for sales returns and allowances is recorded
based on historical experience or specific identification of an event necessitating a reserve.
Shipping, handling and processing costs billed to customers are included in revenue and the
related costs are included in cost of revenue. Sales and purchases in jurisdictions which are subject
to indirect taxes, such as value added tax (“VAT”), are recorded net of tax collected and paid as we
act as an agent for the government.
Advertising Expense
Advertising costs are expensed as incurred and included in marketing and selling expense.
Advertising expense for the years ended June 30, 2011, 2010 and 2009 was $177,101, $135,675 and
$95,378, respectively, which consisted of external costs related to customer acquisition and retention
marketing campaigns.
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