Vistaprint 2007 Annual Report Download - page 59

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, 2007 and 2006. 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, 2007, there was $8.9 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 was 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,
2007, 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, 2007, the Company had
$9.2 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, 2007, 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, 2007.
Operating Leases. We rent office space under operating leases expiring on various dates
through 2017. 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.
In October 2006, VistaPrint USA, Incorporated, entered into an operating lease for approximately
163,000 square feet of office space in Lexington, Massachusetts. The lease term for this space
commenced on April 27, 2007 and expires on April 26, 2017. Future rental payments required under
the lease are an aggregate of approximately $43 million. The lease requires a security deposit in the
form of a letter of credit in the amount of $1.1 million.
In December 2006, our Spanish subsidiary, VistaPrint España S.L., entered into an operating
lease for approximately 19,000 square feet of office space in Barcelona, Spain. The lease term for this
space commenced on January 1, 2007 and expires on December 31, 2011. Future minimum rental
payments required under the lease are an aggregate of approximately 1.7 million euros ($2.3 million
Form 10-K
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