Vistaprint 2014 Annual Report Download - page 43

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during fiscal 2014 by a decline in share-based compensation expense of $2.1 million as the restricted share awards
granted as part of our fiscal 2012 Webs acquisition were fully vested as of December 31, 2013. Also during fiscal
2014, we had higher net capitalization of software costs of $1.0 million due to an increase in current costs that
qualified for capitalization during the fiscal year.
The growth in our technology and development expenses of $35.7 million for fiscal 2013 as compared to
fiscal 2012, was primarily due to increased payroll and facility-related costs of $30.0 million as a result of a planned
increase in headcount in our technology development and information technology support organizations. At
June 30, 2013, we employed 786 employees in these organizations compared to 657 employees at June 30, 2012.
Share-based compensation expense attributable to technology and development personnel in fiscal 2013 increased
by $4.0 million as compared to fiscal 2012 partially due to a full period of expense associated with restricted shares
granted as part of the Webs acquisition. In addition, other technology and development expenses increased $6.1
million as compared to the prior comparative period due to increased employee travel and training costs,
recruitment costs, and increased depreciation, hosting services, and other costs related to continued investment in
our website infrastructure. These expense increases were partially offset by decreased expense related to
capitalized software costs of $5.7 million, due in part to our change in the estimated useful life of our capitalized
software and website development costs from 2 to 3 years of $2.7 million as discussed in Note 2 of the
accompanying consolidated financial statements, as well as an increase in net capitalization of qualifying costs
during the fiscal year. Fiscal 2013 included $1.3 million of additional amortization of acquired developed technology
assets from the acquisitions of Albumprinter and Webs as compared to fiscal 2012.
Marketing and selling expense
Marketing and selling expense consists primarily of advertising and promotional costs; payroll and related
expenses for our employees engaged in marketing, sales, customer support and public relations activities;
amortization of certain acquired intangible assets, including customer relationships and trade names; and third-party
payment processing fees.
The decrease in our marketing and selling expenses of $5.8 million for fiscal 2014 as compared to fiscal
2013 was primarily due to decreased advertising costs of $19.5 million as we executed more strategically focused
marketing spend during the year, particularly in Europe. Additionally, share-based compensation expense
decreased during fiscal 2014 by $1.3 million as the restricted share awards granted as part of our fiscal 2012 Webs
acquisition were fully vested at December 31, 2013. This reduction in expense was partially offset by increased
payroll and facility-related costs of $6.9 million as we continued to expand our marketing organization and our
customer service, sales and design support centers. At June 30, 2014, we employed 2,038 employees in these
organizations compared to 1,672 employees at June 30, 2013. In addition, other marketing and selling expenses
increased by $6.1 million, inclusive of $1.3 million of restructuring related expenses, as well as increased outside
service costs, payment processing fees, and other marketing costs. Fiscal 2014 also includes $2.0 million of
additional amortization expense for the customer and trademark related intangible assets acquired with the People
& Print Group and Pixartprinting businesses.
The growth in our marketing and selling expenses of $70.6 million for fiscal 2013 as compared to fiscal
2012 was driven primarily by increases of $34.4 million in advertising costs and commissions related to new
customer acquisition and promotions targeted at our existing customer base, an integral component of our long-
term growth strategy in fiscal 2013. We continued to expand our marketing organization and our customer service,
sales and design support centers, and at June 30, 2013, we employed 1,672 employees in these organizations
compared to 1,515 employees at June 30, 2012, resulting in increased payroll and facility-related costs in fiscal
2013, when compared to fiscal 2012, of $24.8 million. For fiscal 2013, share-based compensation costs attributable
to marketing and selling personnel increased $3.7 million as compared to fiscal 2012 due primarily to a change in
the functional classification of a portion of the share-based compensation expense to selling and marketing expense
in fiscal 2013 as a result of a change in role by certain employees, as well as a full period of expense associated
with restricted shares granted as part of the Webs acquisition. Other marketing and selling expenses also increased
by $4.4 million due to increased depreciation costs, payment processing fees, and professional fees. Furthermore,
fiscal 2013 includes increased amortization expense of $3.3 million as compared to fiscal 2012 from acquired
customer and brand name intangible assets related to the acquisitions of Albumprinter and Webs partly due to an
acceleration of $1.4 million associated with a change in the expected usage of an asset, in addition to a full annual
period of expense in fiscal 2013 related to the Albumprinter and Webs acquisitions.
Form 10-K