Vistaprint 2011 Annual Report Download - page 37

owns shares in the CFC directly or indirectly through non-U.S. entities on the last day of the CFC’s
taxable year, must include in its gross income for United States federal income tax purposes its pro
rata share of the CFC’s “subpart F income,” even if the subpart F income is not distributed. A
non-U.S. corporation is considered a CFC if one or more 10% U.S. Shareholders together own more
than 50% of the total combined voting power of all classes of voting shares of the
non-U.S. corporation or more than 50% of the total value of all shares of the corporation on any day
during the taxable year of the corporation. The rules defining ownership for these purposes are
complicated and depend on the particular facts relating to each investor. For taxable years in which
we are a CFC for an uninterrupted period of 30 days or more, each of our 10% U.S. Shareholders will
be required to include in its gross income for United States federal income tax purposes its pro rata
share of our subpart F income, even if the subpart F income is not distributed to enable such taxpayer
to satisfy this tax liability. Based upon our existing share ownership, we do not believe we are a CFC.
However, whether we are treated as a CFC depends on questions of fact as to our share ownership
that can only be determined at the end of each tax year. Accordingly, we cannot be certain that we
will not be treated as a CFC for our current tax year or for any subsequent year.
Our tax rate may increase if our profitability declines. Additionally, we will pay taxes even if we
are not profitable on a consolidated basis, which would harm our results of operations.
The intercompany service and related agreements among Vistaprint N.V. and our direct and
indirect subsidiaries ensure that the subsidiaries realize profits based on their operating expenses. As
a result, if the Vistaprint group is less profitable, or even not profitable on a consolidated basis, the
majority of our subsidiaries will be profitable and incur income taxes in their respective jurisdictions. In
periods of declining operating profitability or losses on a consolidated basis this structure will increase
our tax rate or our consolidated losses and further harm our results of operations.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
We own real property associated with the three computer integrated manufacturing facilities we
have constructed for the production of our products. Our 512,000 square foot facility located near
Windsor, Ontario, Canada services the North American market, our 195,800 square foot facility
located in Venlo, the Netherlands primarily services our European market, and our 124,000 square
foot facility located in Deer Park, Australia primarily services the Asia-Pacific markets. Our web
servers are located in data center space at a Cable & Wireless co-location and hosting facility in
Devonshire, Bermuda. We own a 12 acre site in Montego Bay, Jamaica on which we expect to
construct a new 92,000 square foot building for a customer service, sales and design support center
which will replace the leased spaces in Jamaica noted below.
34