Vistaprint 2013 Annual Report Download - page 19

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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, despite our efforts to mitigate such risk
through our currency hedging program.
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. While we engage in hedging activities to try and mitigate the impact of currency exchange
rate fluctuations, our revenue and results of operations may differ materially from expectations as a result of such
fluctuations. As we expand our revenues and operations throughout the world and to additional currencies, our
exposure to currency exchange rate fluctuations is increasing. 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 global operations and expansion place a significant strain on our management, employees, facilities
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;
• our inexperience in marketing and selling our products and services within unfamiliar countries and
cultures;
• our failure to properly understand and develop graphic design content and product formats appropriate
for local tastes;
• disruptions caused by political and social instability that may occur in some countries;
• corrupt business practices, such as bribery, that may be common in some countries;
• difficulty expatriating our earnings from some countries;
• disruptions or cessation of important components of our international supply chain;
• the challenge of complying with disparate laws in multiple countries;
• restrictions imposed by local labor practices and laws on our business and operations; and
• failure of local laws to provide a sufficient degree of protection against infringement of our intellectual
property.
To manage our operations and anticipated growth, we must continue to refine our operational, financial, and
management controls, human resource policies, reporting systems, and procedures in the locations in which we
operate. If we are unable to implement improvements to these systems and controls in an efficient or timely manner
or if we discover deficiencies in our existing systems and controls, then our ability to provide a high-quality customer