Vistaprint 2015 Annual Report Download - page 24

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16
the development effort could be disruptive to our business and existing systems. We must make long-term
investments, develop or obtain appropriate intellectual property, and commit significant resources before knowing
whether our mass customization platform will be successful and make us more effective and competitive. As a
result, there can be no assurance that we will successfully develop the platform nor that we will realize expected
returns on the capital expended to develop the platform.
Seasonal fluctuations in our business place a strain on our operations and resources.
Our profitability has historically been highly seasonal. Our second fiscal quarter includes the majority of the
holiday shopping season and accounts for a disproportionately high portion of our earnings for the year, primarily
due to higher sales of home and family products such as holiday cards, calendars, photo books, and personalized
gifts. Our operating income during the second fiscal quarter represented 62%, 61%, and 72% of annual operating
income in the years ended June 30, 2015, 2014, and 2013, respectively. In anticipation of increased sales activity
during our second fiscal quarter holiday season, we typically incur significant additional capacity related expenses
each year to meet our seasonal needs, including facility expansions, equipment purchases and leases, and
increases in the number of temporary and permanent employees. Lower than expected sales during the second
quarter would likely have a disproportionately large impact on our operating results and financial condition for the
full fiscal year. In addition, if our manufacturing and other operations are unable to keep up with the high volume of
orders during our second fiscal quarter, we and our customers can experience delays in order fulfillment and
delivery and other disruptions. If we are unable to accurately forecast and respond to seasonality in our business,
our business and results of operations may be materially harmed.
Our hedging activity could negatively impact our results of operations and cash flows.
We have entered into derivatives to manage our exposure to interest rate and currency movements. If we
do not accurately forecast our results of operations, execute contracts that do not effectively mitigate our economic
exposure to interest rates and currency rates, elect to not apply hedge accounting, or fail to comply with the
complex accounting requirements for hedging, our results of operations and cash flows could be volatile, as well as
negatively impacted. Also, our hedging objectives may be targeted at non-GAAP financial metrics, which could
result in increased volatility in our GAAP results.
We face risks related to interruption of our operations and lack of redundancy.
Our production facilities, websites, infrastructure, supply chain, customer service centers, and operations
may be vulnerable to interruptions, and we do not have redundancies or alternatives in all cases to carry on these
operations in the event of an interruption. In addition, because we are dependent in part on third parties for the
implementation and maintenance of certain aspects of our communications and production systems, we may not be
able to remedy interruptions to these systems in a timely manner or at all due to factors outside of our control.
Some of the events that could cause interruptions in our operations or systems are, among others:
• fire, natural disasters, or extreme weather - for example, the computer hardware for our websites is
located in Bermuda, and our largest customer service center is located in Jamaica, both of which
locations are subject to the risk of hurricanes
• labor strike, work stoppage, or other issues with our workforce
• political instability or acts of terrorism or war
• power loss or telecommunication failure
• attacks on our external websites or internal network by hackers or other malicious parties
• undetected errors or design faults in our technology, infrastructure, and processes that may cause our
websites to fail
• inadequate capacity in our systems and infrastructure to cope with periods of high volume and demand
• human error, including poor managerial judgment or oversight