Vistaprint 2009 Annual Report Download - page 96

VISTAPRINT LIMITED
(predecessor to Vistaprint N.V.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Years Ended June 30, 2009, 2008 and 2007
(in thousands, except share and per share data)
In connection with VistaPrint USA, Incorporated’s lease for approximately 202,000 square feet of
office space in Lexington, Massachusetts, the lease requires a security deposit in the form of a letter of
credit in the amount of $728. This amount is classified as restricted cash and is included in other
assets in the consolidated balance sheet. Escalating rent payments and rent abatement are
recognized on a straight-line basis over the term of the lease. In addition, 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.
In June 2009, VistaPrint Netherlands B.V.entered into a $1,100 Standby Letter of Credit (the
Letter of Credit”) with JPMorgan. The Letter of Credit was obtained in compliance with the Company’s
agreement with a vendor, the beneficiary of the Letter of Credit, which provides payment processing
services. The Letter of Credit expires on August 23, 2013.
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.
The Company enters into agreements in the ordinary course of business with, among others,
vendors, lessors, financial institutions, service providers, distributors and certain marketing customers,
pursuant to which it has agreed to indemnify the other party for certain matters, such as property damage,
personal injury, acts or omissions of the Company, its employees, agents or representatives, or third party
claims alleging that the Company’s intellectual property infringes a patent, trademark or copyright.
In accordance with their respective charter and by-laws and with various indemnification
agreements with specific employees, the Company and its subsidiaries have agreed to indemnify the
directors, executive officers and employees of the Company and its subsidiaries, to the extent legally
permissible, against all liabilities reasonably incurred in connection with any action in which the individual
may be involved by reason of such individual being or having been a director, officer or employee.
Based upon the Company’s historical experience and information known to the Company as of
June 30, 2009, the Company believes its liability on the above guarantees and indemnities at June 30,
2009 is immaterial.
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