Vistaprint 2006 Annual Report Download - page 74

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Table of Contents VISTAPRINT LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Years Ended June 30, 2006, 2005 and 2004
(in thousands, except share and per share data)
On August 30, 2004, the Company paid to Mod−Pac a termination fee of $22,000 in consideration of the termination of the existing Supply
Agreements and Mod−Pac entering into the New Supply Agreement. As a result of this payment and agreements, the Company recorded a loss of
$21,000. The Company deferred $1,000 of the total termination fee of $22,000, representing the effective reduction of the mark−up on costs of
purchased products estimated to be purchased over the contract period of the New Supply Agreement. This deferral was recorded as a deferred
cost within prepaid and other current assets on the Company’s consolidated balance sheet and was amortized over the twelve month term of the
New Supply Agreement.
On April 15, 2005, the Company signed an amendment to the New Supply Agreement with Mod−Pac which permitted the Company to
manufacture printed products destined for North American customers at its production facility in Windsor, Ontario, Canada. In exchange, the
Company paid to Mod−Pac a fee for each unit shipped based on the type of item produced through August 30, 2005. Since August 30, 2005, the
Company has not placed any orders with Mod−Pac.
4. Property, Plant and Equipment
Property, plant and equipment consist of the following:
June 30,
2006 2005
Land and land improvements $ 2,286 $ 2,137
Building and building improvements 11,468 10,592
Computer software and equipment 8,804 5,765
Furniture, fixtures and office equipment 1,684 922
Leasehold improvements 792 165
Machinery and print production equipment 28,196 11,776
Construction in progress 7,393 3,348
60,623 34,705
Less: accumulated depreciation (10,312) (4,792)
$ 50,311 $29,913
At June 30, 2006 and 2005, construction in progress consisted mainly of expenditures related to the purchase of print production
equipment for the Company’s printing facilities in Windsor, Ontario, Canada and Venlo, the Netherlands. Depreciation expense totaled $5,388,
$2,818 and $1,205 for the years ended June 30, 2006, 2005 and 2004, respectively.
5. Long−Term Debt
In November 2003, VistaPrint B.V. (a wholly owned subsidiary of the Company) entered into a 5,000 euro revolving credit agreement (the
“Credit Agreement”) with ABN AMRO Bank N.V., a Netherlands based bank. The borrowings were used to finance the construction of the
Company’s printing facility located in Venlo, the Netherlands. The Company had $5,793 and $5,818 outstanding under the Credit Agreement as of
June 30, 2006 and 2005. The loan is secured by a mortgage on the land and building and is payable in quarterly installments beginning on
October 1, 2004 through 2024 of 63 euros ($79 and $76 at June 30, 2006 and 2005, respectively). On April 1, 2006, the Company elected a fixed
rate option and the interest rate was fixed at 5.20% through April 1, 2016 at which time the rate will be reset.
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