Vistaprint 2011 Annual Report Download - page 67

Research and Development Expense
Research and development costs are expensed as incurred and included in technology and
development expense. Research and development expense for the years ended June 30, 2011, 2010
and 2009 was $11,128, $8,501 and $7,069, respectively, which consisted of costs related to
enhancing our manufacturing engineering and technology capabilities.
Income Taxes
As part of the process of preparing our consolidated financial statements, we estimate our
income taxes in each of the jurisdictions in which we operate. This process involves estimating our
current tax expense and assessing temporary and permanent differences resulting from differing
treatment of items for tax and financial reporting purposes. We recognize deferred tax assets and
liabilities for the temporary differences using the enacted tax rates and laws that will be in effect when
we expect temporary differences to reverse. We assess the ability to realize our deferred tax assets
based upon the weight of available evidence both positive and negative. To the extent we believe that
it is more likely than not that that some portion or all of the deferred tax assets will not be realized, we
establish a valuation allowance. In the event that actual results differ from our estimates or we adjust
our estimates in the future, we may need to increase or decrease income tax expense, which could
have a material impact on our financial position and results of operations.
We recognize the tax benefit from an uncertain tax position only if it is more likely than not that
the tax position will be sustained upon examination by the taxing authorities, based on the technical
merits of the tax position. The tax benefits recognized in our financial statements from such positions
are measured on the largest benefit that has a greater than 50% likelihood of being realized upon
ultimate resolution. The unrecognized tax benefits will reduce our effective tax rate if recognized.
Interest and, if applicable, penalties related to unrecognized tax benefits are recorded in the provision
for income taxes.
Foreign Currency Translation
Our non-U.S. dollar functional currency subsidiaries translate their assets and liabilities
denominated in their functional currency to U.S. dollars at current rates of exchange in effect at the
balance sheet date, and revenues and expenses are translated at average rates prevailing throughout
the period. The resulting gains and losses from translation are included as a component of other
comprehensive income (loss). Transaction gains and losses and remeasurement of assets and
liabilities denominated in currencies other than an entity’s functional currency are included in other
expense, net and were $2,126, $1,491 and $803 for the years ended June 30, 2011, 2010 and 2009,
respectively.
Shareholders’ Equity
Comprehensive Income (Loss)
Comprehensive income (loss) is defined as the change in equity of a business enterprise
during a period from transactions and other events and circumstances from non-owner sources.
Comprehensive income (loss) is composed of net income, unrealized gains and losses on marketable
securities and derivatives, and cumulative foreign currency translation adjustments, which are
disclosed in the accompanying consolidated statements of shareholders’ equity and comprehensive
income.
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