Vistaprint 2007 Annual Report Download - page 68

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VISTAPRINT LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended June 30, 2007, 2006 and 2005
(in thousands, except share and per share data)
1. Description of the Business
VistaPrint Limited, a Bermuda company (the “Company”), is the leading online supplier of high-
quality graphic design services and customized printed products to small businesses and consumers
worldwide. Through the use of proprietary Internet-based graphic design software, localized websites,
proprietary order receiving and processing technologies and advanced computer integrated printing
facilities, the Company offers a broad spectrum of products ranging from business cards and
brochures to invitations and holiday cards. The Company focuses on serving the graphic design and
printing needs of the small business market, generally businesses or organizations with fewer than 10
employees. The Company also provides graphic design services and printed products to the consumer
market.
Prior to May 2005, the Company purchased all of its printed materials for the fulfillment of North
American customer orders from a related party, Mod-Pac Corporation (“Mod-Pac”), pursuant to a long-
term supply agreement (see Note 3). Since May 2005, the Company has been producing printed
materials for the fulfillment of North American customer orders at its manufacturing facility near
Windsor, Ontario, Canada. Printed materials for the fulfillment of customer orders outside of
North America are produced by the Company’s manufacturing facility in Venlo, the Netherlands. Since
September 2005, the Company has produced 100% of its customer print orders at its internal
manufacturing facilities.
2. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly owned
subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting
principles requires management to make estimates and assumptions that affect the amounts reported
in the consolidated financial statements and accompanying notes. Actual results could differ from those
estimates.
On an ongoing basis, the Company evaluates its estimates, including those related to the
accounts receivable and sales returns allowance, useful lives of property and equipment, and income
taxes, among others. The Company bases its estimates on historical experience and on various other
assumptions that are believed to be reasonable at the time they are made, the results of which form
the basis for making judgments about the carrying values of assets and liabilities.
Cash, Cash Equivalents and Marketable Securities
The Company considers all highly liquid investments purchased with an original maturity (at the
date of purchase) of three months or less to be the equivalent of cash for the purpose of balance sheet
and statement of cash flows presentation. Cash equivalents consist principally of money market funds
and commercial paper with original maturities of three months or less at the date of purchase.
64