Vistaprint 2007 Annual Report Download - page 93

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VISTAPRINT LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Years Ended June 30, 2007, 2006 and 2005
(in thousands, except share and per share data)
14. Commitments and Contingencies
Operating Lease Commitments
The Company rents office space under operating leases expiring on April 30, 2009,
December 31, 2011 and April 26, 2017. Total rent expense for the years ended June 30, 2007, 2006
and 2005 were $2,537, $1,324, and $1,283, respectively. Sublease income received for the years
ended June 30, 2007, 2006 and 2005 were $9, $181 and $140, respectively.
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 $43,000. The lease requires a security deposit in the form
of a letter of credit in the amount of $1,100. This amount is classified as restricted cash and is included
in deposits, image licenses and other non-current assets in the consolidated balance sheet.
Future minimum rental payments required under operating leases for the next five fiscal years
and thereafter are as follows at June 30, 2007:
2008 ........................................................................ $ 4,025
2009 ........................................................................ 4,518
2010 ........................................................................ 4,597
2011 ........................................................................ 4,651
2012 ........................................................................ 4,708
Thereafter ................................................................... 23,614
Total ........................................................................ $46,113
The Company executed a lease in October 2006 related to the Company’s office facility in
Lexington, Massachusetts, pursuant to which the Company provided a customary indemnification to the
lessor for certain claims that may arise under the lease. A maximum obligation is not explicitly stated,
thus the potential amount of future maximum payments that might arise under this indemnification
obligation cannot be reasonably estimated. The Company has not experienced any prior claims against
similar lease indemnifications in the past and management has determined that the associated fair value
of the liability is not material. As such, the Company has not recorded any liability for this indemnity in the
accompanying consolidated financial statements. The Company does, however, accrue for losses for any
known contingent liability, including those that may arise from indemnification provisions, when future
payment is both reasonably estimable and probable. The Company carries specific and general liability
insurance policies, which the Company believes would provide, in most cases, some, if not total,
recourse to any claims arising from this lease indemnification provision.
Guarantees and Indemnification Obligations
The Company has entered into arrangements with financial institutions and vendors to provide
guarantees for the obligations of the Company’s subsidiaries under banking arrangements and
purchase contracts. The guarantees vary in length of time but, in general, guarantee the financial
obligations of the subsidiaries under such arrangements. The financial obligations of the Company’s
subsidiaries under such arrangements are reflected in the Company’s consolidated financial
statements and these notes.
89
Form 10-K