Summary of Significant Accounting Policies

3 Months Ended

Sep. 30, 2011

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

     Basis of Presentation

          The consolidated financial statements include the accounts of Vistaprint N.V., its wholly owned subsidiaries, and those entities in which we have a variable interest and are the primary beneficiary. Intercompany balances and transactions have been eliminated.

          The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and, accordingly, do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting primarily of normal recurring accruals, considered necessary for a fair presentation of the results of operations for the interim periods reported and of our financial condition as of the date of the interim balance sheet have been included. Operating results for the three months ended September 30, 2011 are not necessarily indicative of the results that may be expected for the year ending June 30, 2012 or for any other period. The condensed consolidated balance sheet at June 30, 2011 has been derived from our audited consolidated financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended June 30, 2011 included in the our Annual Report on Form 10-K filed with the United States Securities and Exchange Commission (the “SEC”).

     Cash, Cash Equivalents and Marketable Securities

          We consider all highly liquid investments purchased with an original maturity of three months or less to be the equivalent of cash for the purpose of balance sheet and statement of cash flows presentation. Marketable securities, when held, consist primarily of investment-grade corporate bonds, U.S. government agency issues, and certificates of deposit. At June 30, 2011, we held one municipal auction rate security (“ARS”), which was redeemed in the three months ended September 30, 2011 under a tender offer initiated by the issuer. We did not hold any marketable securities as of September 30, 2011.

          We review our investments for other-than-temporary impairment whenever the fair value of an investment is less than amortized cost and evidence indicates that an investment’s carrying amount is not recoverable within a reasonable period of time. There were no other-than-temporary impairments during the three months ended September 30, 2011 and 2010.

          The carrying value of our cash, cash equivalents and marketable securities at September 30, 2011 and June 30, 2011 is equal to fair value.

     Inventories

          Inventories consist primarily of raw materials and are recorded at the lower of cost or market value using a first-in, first-out method.

     Treasury Shares

          Treasury shares are accounted for under the cost method and included as a component of shareholders’ equity. During the three months ended September 30, 2011, we repurchased 3,074,832 of our ordinary shares for a total cost of $91,088, inclusive of transaction costs, in connection with our publicly announced share repurchase program authorized by our Supervisory Board on November 4, 2010. There is no amount remaining available for future purchases under this program; however, on October 3, 2011, we announced that our Supervisory Board authorized the repurchase of up to 10% of our outstanding ordinary shares on the open market (including block trades that satisfy the safe harbor provisions of Rule 10b-18 pursuant to the Securities Exchange Act of 1934) or in one or more self tender offers.

     Share-Based Compensation

          During the three months ended September 30, 2011 and 2010, we recorded share-based compensation expense of $4,723 and $5,371, respectively. Share-based compensation costs capitalized as part of software and website development costs were $57 and $124 for the three months ended September 30, 2011 and 2010, respectively.

          At September 30, 2011, there was $35,953 of total unrecognized compensation cost related to unvested share-based compensation arrangements, net of estimated forfeitures. This cost is expected to be recognized over a weighted average period of 2.7 years.

     Income Taxes

          Income tax expense increased to $2,107 for the three months ended September 30, 2011, as compared to $1,292  for the prior year period. The change in the income tax expense for the three months ended September 30, 2011 as compared to the same period in 2010 is primarily attributable to growth in our operating expenses, which form the basis upon which our transfer pricing agreements determine pre-tax profits and related income tax expense for most of our legal entities. The intercompany services and related agreements among Vistaprint N.V. and its subsidiaries ensure that our subsidiaries realize profits based on their operating expenses, which results in taxable profits regardless of the level of consolidated per-tax income or loss. Since our income tax expense is mainly a function of our operating expenses and cost-based transfer pricing methodologies and not a function of our consolidated per-tax income, our effective tax rate will typically vary inversely to changes in our consolidated pre-tax income. The change in the effective tax rate from the same prior year period is largely due to the reduction in our consolidated pre-tax income as a result of planned investments in support of our long-term growth strategy. Additionally, the scheduled expiration of the U.S. federal research and development tax credit on December 31, 2011 resulted in a higher projected annual effective tax rate, which is applied to our quarterly results.

          As of September 30, 2011, we had a liability for unrecognized tax benefits included in the balance sheet of approximately $2,522, including accrued interest of $323. There have been no significant changes to these amounts during the three months ended September 30, 2011. The total amount of unrecognized tax benefits will reduce the effective tax rate if recognized. We recognize interest and, if applicable, penalties related to unrecognized tax benefits in the provision for income taxes.

          One of our U.S. subsidiaries and one of our Bermuda subsidiaries are under audit by the United States Internal Revenue Service (IRS). In April 2011, the U.S. subsidiary received a Revenue Agent’s Report (RAR) from the IRS assessing tax for the years under examination. We disagree with the position taken by the IRS and have filed a written protest for submission to the IRS Office of Appeals. However, the matter currently remains at the Examination stage pending further review and discussion with the IRS. Also, the same U.S. subsidiary is under audit by the Commonwealth of Massachusetts. In addition, the Canada Revenue Agency is auditing one of our Canadian subsidiaries. We do not believe that the resolution of these tax examinations will have a material impact on our financial position or results of operations.

     Net Income Per Share

          Basic net income per share is computed by dividing net income by the weighted-average number of ordinary shares outstanding for the fiscal period. Diluted net income per share gives effect to all potentially dilutive securities, including share options and restricted share units (“RSUs”), using the treasury stock method as our unvested share options and RSUs do not have rights to dividends.

          The following table sets forth the reconciliation of the weighted average number of ordinary shares for purposes of computing net income per share:

	Three Months Ended
	September 30,
	2011		2010
Weighted average shares outstanding, basic		41,256,341		43,895,913
Weighted average shares issuable upon exercise/vesting of outstanding share options/RSUs		1,053,165		1,335,475
Shares used in computing diluted net income per share		42,309,506		45,231,388
Weighted average anti-dilutive shares excluded from diluted net income per share		1,646,549		1,138,603

     Recently Issued Accounting Pronouncements

          In May 2011, the Financial Accounting Standards Board issued ASU 2011-04 Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in GAAP and International Financial Reporting Standards (“IFRS”), which is intended to result in convergence between GAAP and IFRS requirements for measurement of, and disclosures about, fair value. The new standard clarifies or changes certain fair value measurement principles and enhances the disclosure requirements, particularly for Level 3 fair value measurements. The new guidance is effective for our third quarter of the current fiscal year, and we do not expect its adoption to have a material effect on our financial position or results of operations.

          In June 2011, the Financial Accounting Standards Board issued ASU 2011-05 Presentation of Comprehensive Income, which makes the presentation of items within other comprehensive income (“OCI”) more prominent. The new standard will require companies to present items of net income, items of OCI and total comprehensive income in one continuous statement or two separate consecutive statements, and companies will no longer be allowed to present items of OCI in the statement of shareholders’ equity. Reclassification adjustments between OCI and net income will be presented separately on the face of the financial statements. The new guidance is effective for our fiscal year ending June 30, 2013, and its adoption will not have a material effect on our financial position or results of operations.

          In September 2011, the Financial Accounting Standards Board issued ASU 2011-08 Testing Goodwill for Impairment, which provides updated guidance on the periodic testing of goodwill for impairment. This new standard will allow companies to assess qualitative factors to determine if it is more-likely-than-not that goodwill might be impaired and whether it is necessary to perform the two-step goodwill impairment test required under current accounting standards. The new guidance is effective for our fiscal year ending June 30, 2013, with early adoption permitted, and we do not expect its adoption to have a material effect on our financial position or results of operations.