Vistaprint 2006 Annual Report Download - page 54

Table of Contents
The credit agreement with ABN AMRO requires us to cause VistaPrint B.V. to maintain tangible net worth at a minimum of 30% of
VistaPrint B.V.’s adjusted balance sheet and restricts VistaPrint B.V.’s ability to incur additional indebtedness. VistaPrint B.V. was in compliance
with all loan covenants at June 30, 2006 and 2005. There are no restrictions in the credit agreement on VistaPrint B.V.’s ability to pay dividends.
In November 2004, VistaPrint North American Services Corp., our Canadian production subsidiary, entered into an $11.0 million credit
facility with Comerica Bank—Canada. The borrowings were used to finance new printing equipment purchases and the construction of a printing
facility located in Windsor, Ontario, Canada. The loan is secured by guarantees from VistaPrint Limited and two of our subsidiaries and is payable
in monthly installments beginning November 1, 2005 and continuing through 2009, plus interest. Interest on the equipment loan was based, at our
election at the beginning of the applicable period, on a LIBOR rate plus 2.75% or Comerica’s prime rate. Interest on the construction loan was
based, at our election at the beginning of the applicable period, on a LIBOR rate plus 1.75% or Comerica’s prime rate less 1.00%. On
December 1, 2005, the interest rates for the equipment term loan and the construction loan were fixed at 6.47% and 6.37%, respectively, over the
remaining terms of the loan. At June 30, 2006, there was $10.2 million outstanding under this credit facility.
In December 2005, VistaPrint North American Services Corp. amended its existing credit agreement with Comerica Bank to include an
additional $10.0 million equipment term loan. The borrowings have been and will be used to finance new printing equipment purchases for the
Windsor printing facility. The loan is secured by guarantees from VistaPrint Limited and two of our subsidiaries and is payable in monthly
installments, plus interest, beginning on December 1, 2006 and continuing through 2010. Interest on the loan is based, at our election at the
beginning of the applicable period, on a LIBOR rate plus 3.00%, or Comerica’s prime rate plus 0.5%, or a fixed rate option. As of June 30, 2006,
the interest rates on the various borrowings to date under this term loan had been fixed over the remaining term of the loan at rates ranging from
7.82% to 8.50%. At June 30, 2006, the Company had $8.4 million outstanding under this term loan.
The credit agreement with Comerica Bank includes covenants that require us to, under certain circumstances, maintain a consolidated
ratio of funded debt to cash flow at a maximum of 2.50 to 1.00 and VistaPrint North American Services Corp. to maintain a minimum debt service
coverage ratio of 1.40 to 1.00 unless we maintain at least $30.0 million in unrestricted cash and cash equivalents. Debt service coverage ratio is
defined as the ratio of cash flow to the sum of required principal payments plus cash interest paid. As of June 30, 2006, the minimum debt service
coverage covenant did not apply because we maintained at least $30.0 million in unrestricted cash and cash equivalents. We and VistaPrint North
American Services Corp. were in compliance with all loan covenants at June 30, 2006.
Operating Leases. We rent office space under operating leases expiring on April 30, 2007 and April 30, 2009. We recognize rent
expense on our operating leases that include free rent periods and scheduled rent payments on a straight−line basis from the commencement of
the lease.
Purchase Commitments. At June 30, 2006, we had unrecorded commitments under contracts to purchase print production equipment of
approximately $15.1 million compared to approximately $4.7 million at June 30, 2005.
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