Vistaprint 2015 Annual Report Download - page 68

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Derivatives designated and qualifying as hedges of the exposure to variability in expected future cash flows,
or other types of forecasted transactions, are considered cash flow hedges which could include interest rate swap
contracts and forward currency contracts. In a cash flow hedging relationship, the effective portion of the change in
the fair value of the hedging derivative is initially recorded in accumulated other comprehensive (loss) income, while
any ineffective portion is recognized directly in earnings, as a component of other income (expense). The portion of
gain or loss on the derivative instrument previously recorded in accumulated other comprehensive (loss) income
remains in accumulated other comprehensive (loss) income until the forecasted transaction is recognized in earnings.
Derivatives designated and qualifying as hedges of currency exposure of a net investment in a foreign operation,
are considered net investment hedges which could include cross-currency swap contracts. In hedging the currency
exposure of a net investment in a foreign operation, the effective portion of gains and losses on the hedging instruments
is recognized in accumulated other comprehensive (loss) income as part of currency translation adjustment, while any
ineffective portion is recognized directly in earnings, as a component of other income (expense). The portion of gain
or loss on the derivative instrument previously recorded in accumulated other comprehensive (loss) income remains
in accumulated other comprehensive (loss) income until we reduce our investment in the hedged foreign operation
through a sale or substantial liquidation.
We also enter into derivative contracts that are intended to economically hedge certain of our risks, even
though we may not elect to apply hedge accounting or the instrument may not qualify for hedge accounting. When
hedge accounting is not applied, the changes in the fair value of the derivatives are recorded directly in earnings as
a component of other income (expense), net.
In accordance with the fair value measurement guidance, our accounting policy is to measure the credit risk
of our derivative financial instruments that are subject to master netting agreements on a net basis by counterparty
portfolio. We execute our derivative instruments with financial institutions that we judge to be credit-worthy, defined
as institutions that hold an investment grade credit rating.
Restructuring
Restructuring costs are recorded in connection with initiatives designed to improve efficiency or enhance
competitiveness. Restructuring initiatives require us to make estimates in several areas, including expenses for
severance and other employee separation costs and our ability to generate sublease income to enable us to
terminate lease obligations at the estimated amounts. One-time termination benefits are expensed at the date we
notify the employee, unless the employee must provide future service beyond the statutory minimum retention
period, in which case the benefits are expensed ratably over the future service period. Liabilities for costs
associated with a facility exit or disposal activity are recognized when the liability is incurred, as opposed to when
management commits to an exit plan, and are measured at fair value. Restructuring costs are included as a
component of each related operating expense within our consolidated statement of operations. We recognized
$3,202 and $5,980 in restructuring related expenses for the years ended June 30, 2015 and 2014, respectively.
There were no such charges during the year ended June 30, 2013.
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, unrealized loss on
pension benefit obligation, and cumulative foreign currency translation adjustments, which are included in the
accompanying consolidated statements of comprehensive income.
Treasury Shares
Treasury shares are accounted for using the cost method and are included as a component of
shareholders' equity. We reissue treasury shares as part of our share-based compensation programs, and upon
issuance we determine the cost using the average cost method. Effective January 28, 2013, 5,869,662 of our
ordinary shares issued and held in our treasury account were canceled and have become authorized but unissued
ordinary shares, as authorized by our shareholders on November 8, 2012. These canceled shares represent the
remaining balance as of November 8, 2012 of the ordinary shares that were held in treasury at the date of the