Vistaprint 2008 Annual Report Download - page 60

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,
2008, 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, 2008, the Company had
$7.9 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, 2008, 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, 2008.
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
202,000 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 $50 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 1.3 million euros ($2.1 million
at June 30, 2008). The lease requires a security deposit in the form of a bank guarantee in the amount
of 126,225 euros ($199,300 at June 30, 2008).
In November 2007, VistaPrint Schweiz, GmbH, our Swiss subsidiary, entered into an operating
lease for approximately 12,000 square feet of office space in Winterthur, Switzerland. The lease term
for this space commenced on November 1, 2007 and expires on February 28, 2013. Future minimum
rental payments under the lease are an aggregate of approximately 1.0 million Swiss francs ($1.0
million at June 30, 2008). The lease requires a security deposit in the form of a bank guarantee in the
amount of 132,000 Swiss francs ($130,000 at June 30, 2008).
Purchase Commitments. At June 30, 2008, we had unrecorded commitments under contracts to
expand our printing facility in Windsor and to purchase print production equipment at the Windsor and Venlo
printing facilities of approximately $21.9 million compared to approximately $14.9 million at June 30, 2007.
On August 12, 2008, we announced that our Board of Directors had authorized our repurchase of
up to an aggregate of $50.0 million of our common shares from time to time on the open market. The
timing and amount of any shares repurchased will be determined by our management based on its
evaluation of market conditions and other factors. The share repurchase authorization expires on
February 8, 2010, but may be suspended or discontinued by us at any time.
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