Vistaprint 2012 Annual Report Download - page 22

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• impairments of our tangible and intangible assets including goodwill.
We base our operating expense budgets in part on expected revenue trends. A portion of our expenses,
such as office leases, depreciation, and personnel costs, are relatively fixed, and we may be unable to adjust
spending quickly enough to offset any revenue shortfall. Accordingly, any shortfall in revenue may cause significant
variation in operating results in any quarter. Based on the above factors, among others, we believe that quarter-to-
quarter comparisons of our operating results may not be a good indication of our future performance. Our operating
results may sometimes be below the expectations of public market analysts and investors, in which case the price
of our ordinary shares will likely fall.
Seasonal fluctuations in our business place a strain on our operations and resources.
Our second fiscal quarter includes the majority of the holiday shopping season and in each of the last three
fiscal years has accounted for more of our revenue and earnings than any other quarter, primarily due to higher
sales of home and family products such as holiday cards, calendars, photo books, and personalized gifts. We
believe our second fiscal quarter is likely to continue to account for a disproportionate amount of our revenue and
earnings for the foreseeable future. In anticipation of increased sales activity during our second fiscal quarter
holiday season, we typically incur significant additional capacity related expenses each year to meet our seasonal
needs, including facility expansions, equipment purchases and increases in the number of temporary and
permanent employees. Lower than expected sales during the second quarter would likely have a disproportionately
large impact on our operating results and financial condition for the full fiscal year. If we are unable to accurately
forecast and respond to seasonality in our business, our business and results of operations may be materially
harmed.
A significant portion of our revenues and expenses are transacted in currencies other than the U.S. dollar,
our reporting currency. We therefore have currency exchange risk.
We are exposed to fluctuations in currency exchange rates that may impact items such as the translation of
our revenues and expenses, remeasurement of our intercompany balances, and the value of our cash and cash
equivalents denominated in currencies other than the U.S. dollar. For example, when currency exchange
movements are unfavorable to our business, the U.S. dollar equivalent of our revenue and operating income
recorded in other currencies is diminished, particularly in certain currencies where we have disproportionate
revenues or expenses. As we have expanded and continue to expand our revenues and operations throughout the
world and to additional currencies, our exposure to currency exchange rate fluctuations has increased and we
expect will continue to increase. Additionally, our income tax rate may be impacted by fluctuations in currency
exchange rates in jurisdictions where our tax returns are prepared in a currency other than the functional currency.
Our revenue and results of operations may differ materially from expectations as a result of currency exchange rate
fluctuations
Our global operations and expansion place a significant strain on our management, operational, and other
resources and subject us to additional risks.
We are growing rapidly. We currently operate production facilities or offices in 14 countries and have
approximately 30 localized websites to serve various geographic markets. We expect to establish operations and
sell our products and services in additional geographic regions, including emerging markets, where we may have
limited or no experience. We are subject to a number of risks and challenges that relate to our global operations
and expansion, including, among others:
• difficulty managing operations in, and communications among, multiple locations and time zones;
• difficulty complying with multiple tax laws, treaties, and regulations and limiting our exposure to onerous
or unanticipated taxes, duties, and other costs;
• local regulations that may restrict or impair our ability to conduct our business as planned;
• protectionist laws and business practices that favor local producers and service providers;