Vistaprint 2010 Annual Report Download - page 24

season and has become our strongest quarter for sales of our consumer-oriented products. In the
fiscal year ended June 30, 2010, sales during our second fiscal quarter accounted for more of our
revenue and earnings than any other quarter, and we believe our second fiscal quarter is likely to
continue to account for a disproportionate amount of our revenue and earnings for the foreseeable
future. In anticipation of increased sales activity during our second fiscal quarter holiday season, we
expect to incur significant additional capacity related expenses each year to meet our seasonal needs
including facility expansions, equipment purchases and increases in the number of temporary and
permanent employees. If we experience lower than expected sales during the second quarter, it would
likely have a disproportionately large impact on our operating results and financial condition for the full
fiscal year. In the future, our seasonal sales patterns may become more pronounced or may change
to the extent we introduce additional products and services targeted to the consumer marketplace,
including products and services that may be unrelated to the second quarter holiday period. If we are
unable to accurately forecast and respond to seasonality in our business caused by demand for our
consumer-oriented products, our business and results of operations may be materially harmed.
A significant portion of our revenues and operations are transacted in currencies other than
the United States dollar, our reporting currency. We therefore have currency exchange risk.
We have substantial revenues and operations transacted in currencies other than our reporting
currency. As a result, we are exposed to fluctuations in currency exchange rates that may impact the
translation of our revenues and expenses, remeasurement of our intercompany balances, and the
value of our cash and cash equivalents denominated in currencies other than the U.S. dollar. For
example, when currency exchange rates are unfavorable with respect to the U.S. dollar, the
U.S. dollar equivalent of our revenue and operating income recorded in other currencies is diminished.
As we have expanded our international revenues and operations, our exposure to currency exchange
rate fluctuations has increased. Our revenue and results of operations may differ materially from
expectations as a result of currency exchange rate fluctuations.
We are dependent upon our own facilities for the production of our products, and any
significant interruption in the operations of these facilities or any inability to increase capacity
at these facilities would have an adverse impact on our business.
We produce the vast majority of our products internally. We seek to ensure that we can satisfy
all of our production demand from our facilities, including at periods of peak demand, while
maintaining the level of product quality and timeliness of delivery that customers require. We have not
identified alternatives to these facilities to serve us in the event of a labor strike, work stoppage or
other issue with our workforce in one or more of our facilities or the loss or substantial damage to one
or more of our facilities due to fire, natural disaster or other events. If we are unable to meet demand
from our own facilities or to successfully expand those facilities on a timely basis to meet customer
demand, we would likely turn to an alternative supplier in an effort to supplement our production
capacity. However, an alternative supplier may not be able to meet our production requirements on a
timely basis or on commercially acceptable terms, or at all. If we are unable to fulfill orders in a timely
fashion at a high level of product quality through our facilities and are unable to find a satisfactory
supply replacement, our business and results of operations would be substantially harmed.
Interruptions to our website operations, information technology systems, production
processes or customer service operations for any reason could damage our reputation and
brand and substantially harm our business and results of operations.
The satisfactory performance, reliability, security and availability of our websites, transaction
processing systems, network infrastructure, production facilities and customer service operations are
critical to our reputation and to our ability to attract and retain customers and to maintain adequate
customer service levels. Expanding our systems and infrastructure may require us to commit
substantial financial, operational and technical resources before the volume of our business increases,
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