Vistaprint 2007 Annual Report Download - page 24

successfully promote the VistaPrint brand, we may fail to significantly increase our revenues. Customer
awareness of, and the perceived value of, our brand will depend largely on the success of our
marketing efforts and our ability to provide a consistent, high-quality customer experience. To promote
our brand, we have incurred and will continue to incur substantial expense related to advertising and
other marketing efforts.
A component of our brand promotion strategy is establishing a relationship of trust with our
customers, which we believe can be achieved by providing a high-quality customer experience. In
order to provide a high-quality customer experience, we have invested and will continue to invest
substantial amounts of resources in our website development and technology, graphic design
operations, production operations, and customer service operations. We also redesign our websites
from time to time to seek to attract customers to our websites. Our ability to provide a high-quality
customer experience is also dependent, in large part, on external factors over which we may have little
or no control, including the reliability and performance of our suppliers, third-party carriers and
communication infrastructure providers. If we are unable to provide customers with high-quality
customer experiences for any reason, our reputation would be harmed and our efforts to develop
VistaPrint as a trusted brand would be adversely impacted. The failure of our brand promotion activities
could adversely affect our ability to attract new customers and maintain customer relationships, and, as
a result, substantially harm our business and results of operations.
We are dependent upon our own printing facilities for the production of printed products sold
to our customers and any significant interruption in the operations of these facilities or any
inability to increase capacity at these facilities would have an adverse impact on our business.
We produce all of our printed products internally at our facilities in Windsor, Ontario, Canada and
Venlo, the Netherlands. We have been operating our Canadian facility since May 2005 and our Dutch
facility since January 2004. We seek to ensure that we can satisfy all of our production demand from
our facilities, including at periods of peak demand, while maintaining the level of product quality and
timeliness of delivery that customers require. If we are unable to meet demand from our own facilities
or to successfully expand those facilities on a timely basis to meet customer demand, we would likely
attempt to turn to an alternative supplier to supplement our production capacity. However, an
alternative supplier may not be able to meet our requirements on a timely basis or on commercially
acceptable terms, if at all. If we are unable to fulfill orders in a timely fashion at a high level of product
quality through our facilities and are unable to find a satisfactory supply replacement, our business and
results of operations would be substantially harmed.
We have incurred operating losses in the past and may not be able to sustain profitability in the
future.
We experienced significant operating losses in each quarter from our inception in 1995 through
March 1998 and in each quarter from June 1999 through June 2001. As the result of a charge of
$21 million related to the termination of our exclusive supply agreement with Mod-Pac Corporation, we
experienced a significant loss in the quarter ended September 30, 2004, which caused a significant
loss for the year ended June 30, 2005. If we are unable to produce our products and provide our
services at commercially reasonable costs, if revenues decline or if our expenses otherwise exceed
our expectations, we may not be able to sustain or increase profitability on a quarterly or annual basis.
Changes in stock based compensation accounting rules have had and are expected to continue
to have an adverse affect on our operating results.
We use options to acquire our common shares and other equity based awards to attract, motivate
and retain our employees in a competitive market for talent. Statement of Financial Accounting
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