Vistaprint 2015 Annual Report Download - page 92

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In the year ended June 30, 2012, one of our subsidiaries purchased certain intellectual property and
intangible assets of Webs, Inc., and we recognize the tax expense associated with the intra-entity transfer of these
assets over a period equal to the expected economic lives of the assets. We elected to fund the transfer of these
assets using an installment obligation payable over a 7.5-year period, and accordingly we recorded a deferred tax
liability for the entire tax liability owed but not yet paid as of the date of the transaction with a corresponding asset in
"Other Assets" to reflect the deferred tax charge to be recognized over the expected remaining lives of the assets.
Significant components of our deferred income tax assets and liabilities consist of the following at June 30,
2015 and 2014:
Year Ended June 30,
2015 2014
Deferred tax assets:
Net operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 31,547 $ 15,066
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 836 373
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,691 5,112
Share-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,580 14,712
Credit and other carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 146
Derivative financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,396 142
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,598 1,227
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,762 36,778
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (16,612) (6,890)
Total deferred tax assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,150 29,888
Deferred tax liabilities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (55,026) (35,639)
IP installment obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13,325) (16,557)
Capital Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,345) (1,162)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (772) (75)
Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (70,468) (53,433)
Net deferred tax liabilities $ (30,318) $ (23,545)
The current portion of the net deferred taxes at June 30, 2015 and 2014 consisted of an asset of $1,559
and $717, respectively, included in prepaid expenses and other current assets and a liability of $1,043 and $2,178,
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. The increase in the valuation allowance from the prior
year relates primarily to losses incurred in certain jurisdictions (mainly Brazil, India, Japan and the Netherlands) for
which management has determined, based on current profitability projections, that it is more likely than not that
these losses will not be utilized within the applicable carryforward periods available under local law. We have not
recorded a valuation allowance against $10,578 of deferred tax asset associated with current and prior year tax
losses generated in Switzerland. Management believes there is sufficient positive evidence in the form of historical
and future projected profitability to conclude that it is more likely than not that all of the losses in Switzerland will be
utilized against future taxable profits within the available carryforward period. Our assessment is reliant on the
attainment of our future operating profit goals. Failure to achieve these operating profit goals may change our
assessment of this deferred tax asset, and such change would result in an additional valuation allowance and an
increase in income tax expense to be recorded in the period of the change in assessment. We will continue to
review our forecasts and profitability trends on a quarterly basis.
Additionally, we have recorded a full valuation allowance against the $2,396 deferred tax asset related to an
interest rate derivative instrument for which management has determined, based on current profitability projections,
that it is more likely than not that it will not be recognized in the foreseeable future. The impact of this deferred tax
asset and associated valuation allowance has been recorded in accumulated other comprehensive (loss) income
on the balance sheet.