Vistaprint 2014 Annual Report Download - page 83

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Significant components of our deferred income tax assets and liabilities consist of the following at June 30,
2014 and 2013:
Year Ended June 30,
2014 2013
Deferred tax assets:
Net operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,066 $ 6,905
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 373 485
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,112 2,587
Share-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,712 11,897
Credit and other carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146 638
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,369 —
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,778 22,512
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,890) (4,032)
Total deferred tax assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,888 18,480
Deferred tax liabilities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (35,639) (10,965)
IP installment obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (16,557) (19,750)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,237) (248)
Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (53,433) (30,963)
Net deferred tax liabilities $ (23,545) $ (12,483)
The current portion of the net deferred taxes at June 30, 2014 and 2013 consisted of an asset of $717 and
$648, respectively, included in prepaid expenses and other current assets and a liability of $2,178 and $1,466,
respectively, which is included in current liabilities in the accompanying consolidated balance sheet.
In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some
portion or all of the deferred tax assets will not be realized. No valuation allowance has been recorded against the
$14,712 deferred tax asset associated with share-based compensation charges at June 30, 2014. However, in the
future, if the underlying awards expire, are released or exercised with an intrinsic value less than the fair value of
the awards on the date of grant, some or all of the benefit may not be realizable. The increase in the valuation
allowance from the prior year relates to losses incurred in certain jurisdictions for which management has
determined that it is more likely than not that these losses will not be utilized in the foreseeable future. Based on the
weight of available evidence at June 30, 2014, management believes that it is more likely than not that all other net
deferred tax assets will be realized in the foreseeable future. We will continue to assess the realization of the
deferred tax assets based on operating results.
The deferred tax liabilities increased significantly in 2014 as a result of intangible assets from the recently
acquired companies, Pixartprinting and People & Print Group. The deferred tax liabilities increased by $20,640 and
$6,436 from Pixartprinting and People & Print Group, respectively.
As of June 30, 2014, we had gross U.S. federal and state net operating losses of approximately $1,010
that expire on various dates up to and through the year 2034. We had gross non-U.S. net operating loss and other
carryforwards of approximately $94,492, a significant amount of which expire in 2021, with the remaining amounts
expiring on various dates up to and through 2031. The benefits of these carryforwards are dependent upon the
generation of taxable income in the jurisdictions where they arose.
On October 1, 2013, we made changes to our corporate entity operating structure, including transferring
our intellectual property among certain of our subsidiaries, primarily to align our corporate entities with our evolving
operations and business model. The transfer of assets occurred between wholly owned legal entities within the
Vistaprint group that are based in different tax jurisdictions. The impact of the transfer is recognized for income tax
purposes only and not in our consolidated financial statements. As the impact of the transfer was the result of an
intra-entity transaction, any resulting gain or loss and immediate tax impact on the transfer is eliminated and not
recognized in the consolidated financial statements under U.S. GAAP. The transferor entity recognized a gain on
the transfer of assets that was not subject to income tax in its local jurisdiction. However, the recipient entity will
Form 10-K