UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

þ		Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

o		Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 000-51539

VISTAPRINT N.V.

(Exact Name of Registrant as Specified in its Charter)

The Netherlands		98-0417483
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)

     Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

     Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a small reporting company. See definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (check one):

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o		Smaller Reporting Company o
				(Do not check if a smaller reporting company)

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

     As of October 21, 2011, there were outstanding 38,411,630 ordinary shares of the registrant, par value €.01 per share.

 

 

FORM 10-Q

INDEX

		Page
PART I FINANCIAL INFORMATION
ITEM 1: Financial Statements			3
Unaudited Condensed Consolidated Balance Sheets as of September 30, 2011 and June 30, 2011			3
Unaudited Condensed Consolidated Statements of Income for the three months ended September 30, 2011 and 2010			4
Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended September 30, 2011 and 2010			5
Notes to Unaudited Condensed Consolidated Financial Statements			6
ITEM 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations			12
ITEM 3: Quantitative and Qualitative Disclosures About Market Risk			20
ITEM 4: Controls and Procedures			20
PART II OTHER INFORMATION
ITEM 1: Legal Proceedings			21
ITEM 1A: Risk Factors			21
ITEM 2: Unregistered Sales of Equity Securities and Use of Proceeds			35
ITEM 6: Exhibits			35
Signatures			36
EX-2.1
EX-10.1
EX-10.2
EX-10.3
EX-10.4
EX-10.5
EX-10.6
EX-10.7
EX-10.8
EX-31.1
EX-31.2
EX-32.1
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

VISTAPRINT N.V.

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited in thousands, except share and per share data)

		September 30,				June 30,
		2011				2011
Assets
Current assets:
Cash and cash equivalents		$	161,092			$	236,552
Marketable securities			—				529
Accounts receivable, net of allowances of $183 and $243, respectively			12,714				13,389
Inventory			8,462				8,377
Prepaid expenses and other current assets			11,704				13,444
Total current assets			193,972				272,291
Property, plant and equipment, net			253,611				262,104
Software and website development costs, net			6,135				6,046
Deferred tax assets			6,438				6,522
Other assets			8,822				8,937
Total assets		$	468,978			$	555,900
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable		$	14,465			$	15,998
Accrued expenses			73,246				68,989
Deferred revenue			9,346				8,819
Total current liabilities			97,057				93,806
Deferred tax liabilities			3,530				3,794
Other liabilities			8,214				8,207
Total liabilities			108,801				105,807
Commitments and contingencies (Note 7)
Shareholders’ equity:
Preferred shares, par value €0.01 per share, 120,000,000 shares authorized; none issued and outstanding			—				—
Ordinary shares, par value €0.01 per share, 120,000,000 shares authorized; 49,950,289 and 49,950,289 shares issued and 40,151,267 and 43,144,718 shares outstanding, respectively			699				699
Treasury shares, at cost, 9,799,022 and 6,805,571 shares, respectively			(176,019	)			(85,377	)
Additional paid-in capital			276,617				273,260
Retained earnings			256,806				248,634
Accumulated other comprehensive income			2,074				12,877
Total shareholders’ equity			360,177				450,093
Total liabilities and shareholders’ equity		$	468,978			$	555,900

See accompanying notes.

VISTAPRINT N.V.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited in thousands, except share and per share data)

		Three Months Ended
		September 30,
		2011				2010
Revenue		$	212,360			$	170,487
Cost of revenue (1)			78,064				62,833
Technology and development expense (1)			26,674				23,207
Marketing and selling expense (1)			76,344				57,533
General and administrative expense (1)			21,532				14,581
Income from operations			9,746				12,333
Interest income			83				99
Other income (expense), net			450				(252	)
Interest expense			—				107
Income before income taxes			10,279				12,073
Income tax provision			2,107				1,292
Net income		$	8,172			$	10,781
Basic net income per share		$	0.20			$	0.25
Diluted net income per share		$	0.19			$	0.24
Weighted average shares outstanding—basic			41,256,341				43,895,913
Weighted average shares outstanding—diluted			42,309,506				45,231,388
(1)   Share-based compensation expense is allocated as follows:
		Three Months Ended
		September 30,
		2011				2010
Cost of revenue		$	94			$	203
Technology and development expense			859				1,132
Marketing and selling expense			555				1,049
General and administrative expense			3,215				2,987

See accompanying notes.

VISTAPRINT N.V.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited in thousands)

		Three Months Ended
		September 30,
		2011				2010
Operating activities
Net income		$	8,172			$	10,781
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			13,107				12,128
Loss on sale, disposal, or impairment of long-lived assets			26				11
Amortization of premiums and discounts on marketable securities			—				83
Share-based compensation expense			4,723				5,371
Excess tax benefits derived from share-based compensation awards			(134	)			(149	)
Deferred income taxes			(253	)			(70	)
Changes in operating assets and liabilities:
Accounts receivable			309				(1,376	)
Inventory			(442	)			(498	)
Prepaid expenses and other assets			(1,221	)			(894	)
Accounts payable			(1,951	)			(5,106	)
Accrued expenses and other liabilities			8,205				(1,479	)
Net cash provided by operating activities			30,541				18,802
Investing activities
Purchases of property, plant and equipment			(10,998	)			(14,147	)
Maturities and redemptions of marketable securities			529				1,900
Purchases of intangible assets			(89	)			—
Capitalization of software and website development costs			(1,682	)			(1,791	)
Net cash used in investing activities			(12,240	)			(14,038	)
Financing activities
Repayments of long-term debt			—				(333	)
Payments of withholding taxes in connection with vesting of restricted share units			(1,075	)			(1,287	)
Repurchases of ordinary shares			(91,088	)			—
Excess tax benefits derived from share-based compensation awards			134				149
Proceeds from issuance of shares			69				661
Net cash used in financing activities			(91,960	)			(810	)
Effect of exchange rate changes on cash			(1,801	)			2,301
Net (decrease) increase in cash and cash equivalents			(75,460	)			6,255
Cash and cash equivalents at beginning of period			236,552				162,727
Cash and cash equivalents at end of period		$	161,092			$	168,982

See accompanying notes.

VISTAPRINT N.V.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Description of the Business

          The Vistaprint group of companies offers micro businesses the ability to market their businesses with a broad range of brand identity and promotional products, marketing services and digital solutions. Through the use of proprietary Internet-based graphic design software, localized websites, proprietary order receiving and processing technologies and advanced computer integrated production facilities, we offer a broad spectrum of products, such as business cards, website hosting, apparel, signage, promotional gifts, brochures, online marketing and creative services. We focus on serving the marketing, graphic design and printing needs of the micro business market, generally businesses or organizations with fewer than 10 employees and usually 2 or fewer. We also provide personalized products for home and family use.

2. Summary of Significant Accounting Policies

     Basis of Presentation

          The consolidated financial statements include the accounts of Vistaprint N.V., its wholly owned subsidiaries, and those entities in which we have a variable interest and are the primary beneficiary. Intercompany balances and transactions have been eliminated.

          The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and, accordingly, do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting primarily of normal recurring accruals, considered necessary for a fair presentation of the results of operations for the interim periods reported and of our financial condition as of the date of the interim balance sheet have been included. Operating results for the three months ended September 30, 2011 are not necessarily indicative of the results that may be expected for the year ending June 30, 2012 or for any other period. The condensed consolidated balance sheet at June 30, 2011 has been derived from our audited consolidated financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended June 30, 2011 included in the our Annual Report on Form 10-K filed with the United States Securities and Exchange Commission (the “SEC”).

     Cash, Cash Equivalents and Marketable Securities

          We consider all highly liquid investments purchased with an original maturity of three months or less to be the equivalent of cash for the purpose of balance sheet and statement of cash flows presentation. Marketable securities, when held, consist primarily of investment-grade corporate bonds, U.S. government agency issues, and certificates of deposit. At June 30, 2011, we held one municipal auction rate security (“ARS”), which was redeemed in the three months ended September 30, 2011 under a tender offer initiated by the issuer. We did not hold any marketable securities as of September 30, 2011.

          We review our investments for other-than-temporary impairment whenever the fair value of an investment is less than amortized cost and evidence indicates that an investment’s carrying amount is not recoverable within a reasonable period of time. There were no other-than-temporary impairments during the three months ended September 30, 2011 and 2010.

          The carrying value of our cash, cash equivalents and marketable securities at September 30, 2011 and June 30, 2011 is equal to fair value.

     Inventories

          Inventories consist primarily of raw materials and are recorded at the lower of cost or market value using a first-in, first-out method.

     Treasury Shares

          Treasury shares are accounted for under the cost method and included as a component of shareholders’ equity. During the three months ended September 30, 2011, we repurchased 3,074,832 of our ordinary shares for a total cost of $91,088,

inclusive of transaction costs, in connection with our publicly announced share repurchase program authorized by our Supervisory Board on November 4, 2010. There is no amount remaining available for future purchases under this program; however, on October 3, 2011, we announced that our Supervisory Board authorized the repurchase of up to 10% of our outstanding ordinary shares on the open market (including block trades that satisfy the safe harbor provisions of Rule 10b-18 pursuant to the Securities Exchange Act of 1934) or in one or more self tender offers.

     Share-Based Compensation

          During the three months ended September 30, 2011 and 2010, we recorded share-based compensation expense of $4,723 and $5,371, respectively. Share-based compensation costs capitalized as part of software and website development costs were $57 and $124 for the three months ended September 30, 2011 and 2010, respectively.

          At September 30, 2011, there was $35,953 of total unrecognized compensation cost related to unvested share-based compensation arrangements, net of estimated forfeitures. This cost is expected to be recognized over a weighted average period of 2.7 years.

     Income Taxes

          Income tax expense increased to $2,107 for the three months ended September 30, 2011, as compared to $1,292  for the prior year period. The change in the income tax expense for the three months ended September 30, 2011 as compared to the same period in 2010 is primarily attributable to growth in our operating expenses, which form the basis upon which our transfer pricing agreements determine pre-tax profits and related income tax expense for most of our legal entities. The intercompany services and related agreements among Vistaprint N.V. and its subsidiaries ensure that our subsidiaries realize profits based on their operating expenses, which results in taxable profits regardless of the level of consolidated per-tax income or loss. Since our income tax expense is mainly a function of our operating expenses and cost-based transfer pricing methodologies and not a function of our consolidated per-tax income, our effective tax rate will typically vary inversely to changes in our consolidated pre-tax income. The change in the effective tax rate from the same prior year period is largely due to the reduction in our consolidated pre-tax income as a result of planned investments in support of our long-term growth strategy. Additionally, the scheduled expiration of the U.S. federal research and development tax credit on December 31, 2011 resulted in a higher projected annual effective tax rate, which is applied to our quarterly results.

          As of September 30, 2011, we had a liability for unrecognized tax benefits included in the balance sheet of approximately $2,522, including accrued interest of $323. There have been no significant changes to these amounts during the three months ended September 30, 2011. The total amount of unrecognized tax benefits will reduce the effective tax rate if recognized. We recognize interest and, if applicable, penalties related to unrecognized tax benefits in the provision for income taxes.

          One of our U.S. subsidiaries and one of our Bermuda subsidiaries are under audit by the United States Internal Revenue Service (IRS). In April 2011, the U.S. subsidiary received a Revenue Agent’s Report (RAR) from the IRS assessing tax for the years under examination. We disagree with the position taken by the IRS and have filed a written protest for submission to the IRS Office of Appeals. However, the matter currently remains at the Examination stage pending further review and discussion with the IRS. Also, the same U.S. subsidiary is under audit by the Commonwealth of Massachusetts. In addition, the Canada Revenue Agency is auditing one of our Canadian subsidiaries. We do not believe that the resolution of these tax examinations will have a material impact on our financial position or results of operations.

     Net Income Per Share

          Basic net income per share is computed by dividing net income by the weighted-average number of ordinary shares outstanding for the fiscal period. Diluted net income per share gives effect to all potentially dilutive securities, including share options and restricted share units (“RSUs”), using the treasury stock method as our unvested share options and RSUs do not have rights to dividends.

          The following table sets forth the reconciliation of the weighted average number of ordinary shares for purposes of computing net income per share:

		Three Months Ended
		September 30,
		2011				2010
Weighted average shares outstanding, basic			41,256,341				43,895,913
Weighted average shares issuable upon exercise/vesting of outstanding share options/RSUs			1,053,165				1,335,475
Shares used in computing diluted net income per share			42,309,506				45,231,388
Weighted average anti-dilutive shares excluded from diluted net income per share			1,646,549				1,138,603

     Recently Issued Accounting Pronouncements

          In May 2011, the Financial Accounting Standards Board issued ASU 2011-04 Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in GAAP and International Financial Reporting Standards (“IFRS”), which is intended to result in convergence between GAAP and IFRS requirements for measurement of, and disclosures about, fair value. The new standard clarifies or changes certain fair value measurement principles and enhances the disclosure requirements, particularly for Level 3 fair value measurements. The new guidance is effective for our third quarter of the current fiscal year, and we do not expect its adoption to have a material effect on our financial position or results of operations.

          In June 2011, the Financial Accounting Standards Board issued ASU 2011-05 Presentation of Comprehensive Income, which makes the presentation of items within other comprehensive income (“OCI”) more prominent. The new standard will require companies to present items of net income, items of OCI and total comprehensive income in one continuous statement or two separate consecutive statements, and companies will no longer be allowed to present items of OCI in the statement of shareholders’ equity. Reclassification adjustments between OCI and net income will be presented separately on the face of the financial statements. The new guidance is effective for our fiscal year ending June 30, 2013, and its adoption will not have a material effect on our financial position or results of operations.

          In September 2011, the Financial Accounting Standards Board issued ASU 2011-08 Testing Goodwill for Impairment, which provides updated guidance on the periodic testing of goodwill for impairment. This new standard will allow companies to assess qualitative factors to determine if it is more-likely-than-not that goodwill might be impaired and whether it is necessary to perform the two-step goodwill impairment test required under current accounting standards. The new guidance is effective for our fiscal year ending June 30, 2013, with early adoption permitted, and we do not expect its adoption to have a material effect on our financial position or results of operations.

3. Fair Value Measurements

          The fair value of our financial assets was determined using the following inputs at September 30, 2011:

						Quoted Prices in
						Active								Significant
						Markets for				Significant Other				Unobservable
						Identical Assets				Observable Inputs				Inputs
		Total				(Level 1)				(Level 2)				(Level 3)
Cash and cash equivalents		$	161,092			$	161,092			$	—			$	—
Total assets recorded at fair value		$	161,092			$	161,092			$	—			$	—

          The following table presents a roll forward of assets measured at fair value using significant unobservable inputs (Level 3) at September 30, 2011:

Balance at June 30, 2011		$	529
Redemptions			(529	)
Balance at September 30, 2011		$	—

4. Comprehensive (Loss) Income

          Comprehensive (loss) income consisted of the following:

		Three Months Ended
		September 30,
		2011				2010
Net income		$	8,172			$	10,781
Unrealized gain on marketable securities			—				24
Reclassification of gain on cash flow hedge to net income			—				(49	)
Change in cumulative foreign currency translation adjustments			(10,803	)			13,036
Comprehensive (loss) income		$	(2,631	)		$	23,792

5. Segment Information

          Operating segments are based upon our internal organization structure, the manner in which our operations are managed and the availability of separate financial information reported internally to the Chief Executive Officer, who constitutes our Chief Operating Decision Maker (“CODM”) for purposes of making decision about how to allocate resources and assess performance. We have three geographically based operating segments: North America, Europe and Asia Pacific. The CODM measures and evaluates the performance of our operating segments based on revenue and income or loss from operations.

          The costs associated with shared central functions are not allocated to the operating segments and instead are reported and disclosed under the caption “Corporate and global functions,” which includes expenses related to corporate support functions, software and manufacturing engineering, and the global component of our IT operations and customer service, sales and design support. We do not allocate non-operating income or expenses to our segment results. There are no internal revenue transactions between our reporting segments and all intersegment transfers are recorded at cost for presentation to the CODM, for example, products manufactured by our Venlo, the Netherlands facility for the Asia-Pacific segment; therefore, there is no intercompany profit or loss recognized on these transactions. At this time, we do not allocate support costs across operating segments or corporate and global functions, which may limit the comparability of income from operations by segment.

          Revenue by segment and geography is based on the country-specific website through which the customer’s order was transacted. The following tables set forth revenue and income from operations by operating segment.

		Three Months Ended
		September 30,
		2011				2010
Revenue:
North America		$	118,691			$	101,312
Europe			79,979				60,989
Asia-Pacific			13,690				8,186
Total revenue		$	212,360			$	170,487

		Three Months Ended
		September 30,
		2011				2010
Income from operations:
North America		$	30,061			$	27,482
Europe			19,059				14,631
Asia-Pacific			2,367				982
Corporate and global functions			(41,741	)			(30,762	)
Total income from operations		$	9,746			$	12,333

          The following tables set forth revenue and long-lived assets by geographic area:

		Three Months Ended
		September 30,
		2011				2010
Revenue:
United States		$	112,939			$	97,013
Non-United States (1)			99,421				73,474
Total revenue		$	212,360			$	170,487
		September 30,				June 30,
		2011				2011
Long-lived assets (1):
Canada		$	101,869			$	103,005
Netherlands			76,114				82,594
Australia			41,362				43,971
Bermuda			14,327				15,022
Jamaica			11,550				8,858
United States			10,363				10,167
Switzerland			4,127				4,288
Spain			2,120				2,317
Other			2,568				2,697
		$	264,400			$	272,919

6. Accrued Expenses

          Accrued expenses included the following:

		September 30,				June 30,
		2011				2011
Advertising costs (1)		$	24,703			$	21,407
Compensation costs (2)			16,465				23,142
Income and indirect taxes (3)			11,624				8,427
Shipping costs			4,945				2,694
Purchases of property, plant and equipment			2,376				1,236
Professional costs			1,941				1,716
Other			11,192				10,367
Total accrued expenses		$	73,246			$	68,989

7. Commitments and Contingencies

     Purchase Commitments

          At September 30, 2011, we had unrecorded commitments under contract of $25,043, which were principally composed of site development and construction costs for our Jamaican customer service, sales and design support center of approximately $13,619, production and computer equipment purchases of approximately $8,001, and other unrecorded purchase commitments of $3,423.

     Legal Proceedings

          We are not currently party to any material legal proceedings, but from time to time we are involved in various legal proceedings arising from the normal course of business activities. Although we cannot predict with certainty the results of litigation and claims, we do not expect resolution of any of our current matters to have a material adverse impact on our consolidated results of operations, cash flows or financial position. In all cases, at each reporting period, we evaluate whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. Legal costs relating to legal proceedings are expensed as incurred.

8. Subsequent Events

          Pursuant to the share repurchase program approved on October 3, 2011 and discussed in Note 2, we have purchased 1,757,660 of our ordinary shares subsequent to September 30, 2011 and through October 21, 2011 for a total cost of $50,415, inclusive of transaction costs.

          On October 21, 2011, we entered into a $250,000 senior unsecured revolving credit facility with a maturity date of October 21, 2016. Any borrowings under the facility will bear interest at LIBOR plus 1.25% to 1.50%, depending on our leverage ratio, which is the ratio of our consolidated total indebtedness to our consolidated earnings before interest, taxes, depreciation and amortization. We must also pay a commitment fee of 0.175% to 0.225% depending on our leverage ratio. The credit agreement evidencing the facility contains customary representations, warranties, covenants and events of default.

          On October 24, 2011, we announced our agreement to acquire Albumprinter Holding, B.V., a leading provider of photo books and other photo products to consumers in Europe, for total cash consideration of up to €65,000, consisting of €60,000 payable upon closing subject to net working capital and net debt adjustments, and up to €5,000 payable based on a performance based earn-out covering the period from January 1, 2012 to December 31, 2012. The transaction is subject to customary closing conditions and is expected to close during the quarter ending December 31, 2011.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Report contains forward-looking statements that involve risks and uncertainties. The statements contained in this Report that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including but not limited to our statements about anticipated income and revenue growth rates, future profitability and market share, new and expanded products and services, geographic expansion and planned capital expenditures. Without limiting the foregoing, the words “may,” “will,” “should,” “could,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “designed,” “potential,” “continue,” “target,” “seek” and similar expressions are intended to identify forward-looking statements. All forward-looking statements included in this Report are based on information available to us up to, and including the date of this document, and we disclaim any obligation to update any such forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain important factors, including those set forth in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” and elsewhere in this Report. You should carefully review those factors and also carefully review the risks outlined in other documents that we file from time to time with the United States Securities and Exchange Commission.

Executive Overview

     For the three months ended September 30, 2011, we reported revenue of $212.4 million, representing 25% revenue growth from the same period in the prior year. Constant-currency revenue growth was 20% for this period. Diluted earnings per share (“EPS”) decreased 21% for the three months ended September 30, 2011 over the same period in the prior year to $0.19 due to planned investments made in support of our long-term growth strategy. Results for the three months ended September 30, 2011 also included increased revenue from existing customers, continued geographic expansion, and revenue growth across our businesses.

     Over the last 15 years, we have grown to become a leader in the large and fragmented market for small business marketing solutions. We have built significant competitive advantages via our marketing approach, proprietary technology, and manufacturing expertise. We have driven growth and developed scale advantages by executing on our core strengths in mass customization technologies and by introducing a broad range of small business marketing products. We believe we are now well positioned to capitalize on our past success in order to capture more of the market opportunity we see ahead. To do so, we have adopted an investment approach designed to support our ability to scale faster and drive significant long-term shareholder returns.

     On July 28, 2011, we introduced five-year organic revenue and EPS targets, along with an evolved financial and investment strategy to achieve our goals. We believe that by making disciplined but significant investments in fiscal years 2012 and 2013, we will be able to sustain high organic revenue growth rates over the five-year period, and position ourselves to deliver longer-term EPS growth at higher rates than we would have been able to achieve at a smaller investment scale.

     Our long-term goal is to be the leading online provider of micro business marketing solutions for businesses or organizations with fewer than 10 employees. Additionally, we plan to continue to focus on key market adjacencies where we believe we can drive additional long-term growth by employing our unique business model and customer value proposition. These adjacencies include digital marketing services, new geographic markets, personalized products for home and family usage, and up-market customers.

     The strategy for growth in our core micro business marketing opportunity is to make investments and drive success in the following areas:

	•		Customer Value Proposition. We believe our customers currently spend only a small portion of their annual budget for marketing products and services with us. By shifting our success metrics from transactionally focused profit measures to longer-term customer satisfaction and economic measures, we believe we can deliver improvements to our customer experience and value proposition that will significantly increase customer loyalty and lifetime value. Examples of these programs include improving the customer experience on our site, such as ease of use, less cross selling before customers reach the checkout, and expanded customer service.
	•		Lifetime Value Based Marketing. We have traditionally acquired customers by targeting micro businesses who are already shopping online through marketing channels such as search marketing, email marketing, and other online advertising. We believe a significant portion of micro businesses in our core markets do not currently use online

			providers of marketing services. By investing more deeply into existing marketing channels, as well as opening up new channels such as television broadcast and direct mail, we believe we can accelerate our new customer growth and reach offline audiences that are not currently looking to online partners for marketing needs.
	•		World Class Manufacturing. We believe our manufacturing processes are best-in-class with respect to the printing industry, but when we compare ourselves to the best manufacturing companies in the world, we believe we have significant opportunities to drive further efficiencies and competitive advantages. By focusing additional top engineering talent on key process approaches, we believe we can make a step-function improvement in product quality and reliability, and significantly lower unit manufacturing costs.
Our strategy to drive longer-term growth by addressing market adjacencies is to develop our business in the following areas:
	•		Digital Marketing Services. We estimate that less than 50% of micro businesses have a website today, but digital marketing services, including websites, email marketing, online search marketing and social media marketing, are the fastest-growing part of the small business marketing space. We believe there is great value in helping customers understand the powerful ways in which physical and digital marketing can be combined. Our current digital offering includes websites, email marketing, and local search visibility. Additionally, in fiscal 2011, we added several digital marketing services products or enhancements, including blogs, a search engine optimization tool for website customers, and personalized email domain names. Since we launched digital marketing services in April 2008, our number of unique paying digital subscribers has grown to approximately 340,000.
	•		Geographies outside North America and Europe. For the three months ended September 30, 2011, revenue generated outside of North America and Europe accounted for approximately 6% of our total revenue. We believe that we have significant opportunities to expand our revenue both in the countries we currently service and in new markets. We completed construction of a production facility near Melbourne, Australia and launched a marketing office in Sydney, Australia in June 2010 to better support our business and customers in Asia Pacific. We intend to further extend our geographic reach by continuing to introduce localized websites in additional countries and languages, expanding our marketing efforts and customer service capabilities, and offering graphic design content, products, payment methodologies and languages specific to local markets.
	•		Home and Family. Although we expect to maintain our primary focus on micro business marketing products and services, we also participate in the market for customized home and family products such as invitations, announcements, calendars, holiday cards and apparel. We intend to add new products and services targeted at the home and family market, such as embroidered stockings. We believe that the economies of scale provided by cross sales of these products to our extensive micro business customer base, our large production order volumes and our integrated design and production software and facilities support and will continue to support our effort to profitably grow our home and family business. In addition, on October 24, 2011, we announced our agreement to acquire Albumprinter Holding, B.V., a leading provider of photo books and other photo products to the home and family market in Europe.
	•		Up-market Customers. We serve customers across the spectrum of micro businesses with fewer than 10 employees, but our strength has traditionally been in the smallest and most price sensitive of these customers. In comparison to our customer base, which is concentrated in businesses with 2 or fewer employees, the micro businesses in the “up-market” portion of this spectrum tend to have more sophisticated marketing needs, typically spend more per year on their marketing activities and often have 3 to 10 employees. We believe that as we continue to research customer needs and make customer value proposition improvements for our traditional core customer base, we will develop a stronger ability to focus on “up-market” small business customers. We expect this adjacency can serve as a driver of longer-term growth 3 to 5 years from now.

Recent Developments

     During the three months ended September 30, 2011, we repurchased 3,074,832 of our ordinary shares for a total cost of $91.1 million, inclusive of transaction costs, in connection with our publicly announced share repurchase program authorized by our Supervisory Board on November 4, 2010. There is no amount remaining available for future purchases under this program; however, on October 3, 2011, we announced that our Supervisory Board authorized a new program for the repurchase of up to 10% of our outstanding ordinary shares on the open market (including block trades that satisfy the safe harbor provisions of Rule 10b-18 pursuant to the Securities Exchange Act of 1934) or in one or more self tender offers.

Pursuant to our new share repurchase program discussed above, we have purchased 1,757,660 of our ordinary shares subsequent to September 30, 2011 and through October 21, 2011 for a total cost of $50.4 million, inclusive of transaction costs.

     On October 21, 2011, we entered into a $250.0 million senior unsecured revolving credit facility with a maturity date of October 21, 2016. Any borrowings under the facility will bear interest at LIBOR plus 1.25% to 1.50%, depending on our leverage ratio, which is the ratio of our consolidated total indebtedness to our consolidated earnings before interest, taxes, depreciation and amortization (“EBITDA”). We must also pay a commitment fee of 0.175% to 0.225% depending on our leverage ratio. The credit agreement evidencing the facility contains customary representations, warranties, covenants and events of default.

     On October 24, 2011, we announced our agreement to acquire Albumprinter Holding, B.V., a leading provider of photo books and other photo products to consumers in Europe, for total cash consideration of up to €65.0 million, consisting of €60.0 million payable upon closing subject to net working capital and net debt adjustments, and up to €5.0 million payable based on a performance-based earn-out covering the period from January 1, 2012 to December 31, 2012. The transaction is subject to customary closing conditions and is expected to close during the quarter ending December 31, 2011.

Results of Operations

     The following table presents our operating results for the periods indicated as a percentage of revenue:

		Three Months Ended
		September 30,
		2011				2010
Revenue			100.0	%			100.0	%
Cost of revenue			36.8	%			36.9	%
Technology and development expense			12.6	%			13.6	%
Marketing and selling expense			35.9	%			33.7	%
General and administrative expense			10.1	%			8.6	%
Income from operations			4.6	%			7.2	%
Interest income			0.0	%			0.1	%
Other income (expense), net			0.2	%			(0.1	)%
Interest expense			0.0	%			0.1	%
Income before income taxes			4.8	%			7.1	%
Income tax provision			1.0	%			0.8	%
Net income			3.8	%			6.3	%

In thousands

		Three Months Ended September 30,
		2011				2010				FY12 vs. FY11
Revenue		$	212,360			$	170,487				25	%
Cost of revenue		$	78,064			$	62,833				24	%
% of revenue			36.8	%			36.9	%

Revenue

     We generate revenue primarily from the sale and shipment of customized manufactured products, and the provision of digital services, website design and hosting, email marketing services, as well as a small percentage from order referral fees and other third-party offerings. Revenue in our second fiscal quarter includes a favorable impact from increased seasonal product sales.

     We seek to increase our revenue by increasing the number of customers who purchase from us (“unique active customers”), as well as the amount our customers spend on our offerings (“average bookings per unique active customer”). We use the combination of unique active customers and average bookings per unique active customer to describe our revenue performance as we believe this approach is aligned with the way we manage our business and our efforts to increase our revenue. We believe that metrics relating to our unique active customers and average bookings per unique active customer offer shareholders a useful means of assessing our execution against our strategy. Because changes in one of these metrics may be offset by changes in the other metric, no single factor is determinative of our revenue and profitability trends, and we

assess them together to understand their overall impact on revenue and profitability. A number of factors influence our ability to drive increases in these metrics:

	•		Unique active customers. The unique active customer count is the number of individual customers who purchased from us in a given period, with no regard to the frequency of purchase. For example, if a single customer makes 2 distinct purchases within a twelve-month period, that customer is tallied only once in the unique active customer count. We determine the uniqueness of a customer by looking at certain customer data. Unique active customers are driven by both the number of new customers we acquire, as well as our ability to retain customers after their first purchase. During our early growth phase, we focused more resources on the acquisition of new customers through the value of our offering and our broad-based marketing efforts targeted at the mass market for micro-business customers. As we have grown larger, we have supplemented our acquisition focus with expanded retention efforts, such as email offers, customer service, and expansions in our product offerings. Our unique active customer count has grown significantly over the years, and we expect it will continue to grow as we see additional opportunities to drive both the acquisition of new customers and increased retention rates. A retained customer is any unique active customer in a specific period who has also purchased in any prior period.
	•		Average bookings per unique active customer. Average bookings per unique active customer is total bookings, which represents the value of total customer orders received on our websites, for a given period of time divided by the total number of unique active customers who purchased during that same period of time. We seek to increase our average bookings per unique active customer as a means of increasing revenue. Average bookings per unique active customer are influenced by the frequency that a customer purchases from us, the number of products and feature upgrades a customer purchases in a given period and the mix of tenured customers versus new customers within the unique active customer count, as tenured customers tend to purchase more than new customers. Average bookings per unique active customer have grown over a multi-year period, although they sometimes fluctuate from one quarter to the next depending upon the type of products we promote during a period and the promotional discounts we offer. For example, among other things, seasonal product offerings, such as holiday cards, can cause changes in bookings per customer in our second fiscal quarter ending December 31.

     Total revenue for the three months ended September 30, 2011 increased 25% to $212.4 million compared to the three months ended September 30, 2010, due to increases in sales across our product and service offerings, as well as across all geographies. The overall growth during this period was due to increases in the number of unique active customers, driven by growth in both new customer additions and repeat customers, as well as an increase in average bookings per unique active customer. New customer additions during the three months ended September 30, 2011 grew 19% to approximately 1.9 million. The weaker U.S. dollar positively impacted our revenue growth by an estimated 480 basis points in the three months ended September 30, 2011, as compared to the three months ended September 30, 2010.

     In addition to the drivers of our quarterly revenue performance, we monitor unique active customers and average bookings per unique active customer on a trailing twelve-month (“TTM”) basis. The following table summarizes our operational revenue metrics for the TTM ended September 30, 2011 and 2010:

		TTM Ended September 30,
		2011				2010				Increase%
Unique active customers		11.9 million				10.0 million					19	%
New customer additions		7.7 million				6.6 million					17	%
Retained customers		4.2 million				3.4 million					24	%
Average bookings per unique active customer			$73				$70				4	%

     Total revenue by geographic segment for the three months ended September 30, 2011 and 2010 is shown in the following table (in thousands):

														Currency
		Three Months Ended												Impact:				Constant—Currency
		September 30,												(Favorable)				Revenue
		2011				2010				% Change				/ Unfavorable				Growth(1)
North America		$	118,691			$	101,312				17	%			—	%			17	%
Europe			79,979				60,989				31	%			(10	)%			21	%
Asia Pacific			13,690				8,186				67	%			(22	)%			45	%
Total revenue		$	212,360			$	170,487				25	%			(5	)%			20	%

Cost of revenue

     Cost of revenue includes materials used to manufacture our products, payroll and related expenses for production personnel, depreciation of assets used in the production process and in support of digital marketing service offerings, shipping, handling and processing costs, third-party production costs, production costs of free products, and other related costs of products sold by us.

     The increase in cost of revenue for the three months ended September 30, 2011 compared to the same periods in fiscal 2011 was primarily attributable to the increased volume of product shipments during the current year period. The decrease in the cost of revenue as a percentage of total revenue for the three months ended September 30, 2011 compared to the same prior year period was primarily attributable to favorable shifts in product mix including an increase in sales of digital services and productivity improvements at our manufacturing locations. The decrease in the cost of revenue as a percentage of total revenue was partially offset by the weaker U.S. dollar, which was primarily driven by the net impact of changes in European currencies.

In thousands

		Three Months Ended September 30,
		2011				2010				FY12 vs. FY11
Technology and development expense		$	26,674			$	23,207				15	%
% of revenue			12.6	%			13.6	%
Marketing and selling expense		$	76,344			$	57,533				33	%
% of revenue			35.9	%			33.7	%
General and administrative expense		$	21,532			$	14,581				48	%
% of revenue			10.1	%			8.6	%

Technology and development expense

     Technology and development expense consists primarily of payroll and related expenses for our employees engaged in software and manufacturing engineering, information technology operations, content development, amortization of capitalized software and website development costs, hosting of our websites, asset depreciation, patent amortization, legal settlements in connection with patent-related claims, and other technology infrastructure-related costs. Depreciation expense for information technology equipment that directly supports the delivery of our digital marketing services products is included in cost of revenue.

     The increase in our technology and development expenses of $3.5 million for the three months ended September 30, 2011 as compared to the same prior year period was primarily due to increased payroll and facility-related costs of $4.4 million associated with an increase in headcount in our technology development and information technology support organizations related to the implementation of our long-term growth strategy. At September 30, 2011, we employed 475 employees in these organizations compared to 383 employees at September 30, 2010. In addition, other technology and development expenses decreased $1.2 million as compared to the same prior year period due to a legal settlement of a patent claim included in the prior year period, offset by increased employee travel and training costs and increased depreciation, hosting services and other costs related to the continued investment in our website infrastructure.

Marketing and selling expense

     Marketing and selling expense consists primarily of advertising and promotional costs; payroll and related expenses for our employees engaged in marketing, sales, customer support and public relations activities; and third-party payment processing fees.

     The increase in our marketing and selling expenses of $18.8 million for the three months ended September 30, 2011 as compared to the same prior year period was driven primarily by increases of $15.7 million in advertising costs and commissions related to new customer acquisition and costs of promotions targeted at our existing customer base related to the implementation of our long-term growth strategy, and increases in payroll and facility-related costs of $2.0 million. We continued to expand our marketing organization and our customer service, sales and design support centers and at September 30, 2011, we employed 1,223 employees in these organizations compared to 838 employees at September 30, 2010. In addition, payment processing fees paid to third parties increased by $0.9 million during the three months ended September 30, 2011 as compared to the same prior year period due primarily to increased order volumes.

General and administrative expense

     General and administrative expense consists primarily of general corporate costs, including third-party professional fees, insurance and payroll and related expenses of employees involved in executive management, finance, legal, and human resources.

     The increase in our general and administrative expenses of $7.0 million for the three months ended September 30, 2011 as compared to the same prior year period was primarily due to increased payroll and facility-related costs of $3.9 million resulting from the continued investment in our executive management, finance, legal and human resource organizations to support our expansion and growth. At September 30, 2011, we employed 283 employees in these organizations compared to 207 employees at September 30, 2010. In addition, third-party professional fees increased $1.7 million during the three months ended September 30, 2011 as compared to the same period in fiscal 2011 due primarily to increased costs of ongoing litigation including a patent infringement trial that concluded in July 2011. Furthermore, other general and administrative activities increased $1.1 million as compared to the same prior year period, which includes $0.5 million related to employee travel and training.

Other income (expense), net

     Other income (expense), net, which primarily consists of gains and losses from currency transactions or revaluation, was $0.5 million of income for the three months ended September 30, 2011 as compared to $0.3 million of expense for the same prior year period. Increases in other income (expense), net are due to currency exchange rate fluctuations on transactions or balances denominated in currencies other than the functional currency of our subsidiaries.

Income tax provision

		Three Months Ended
In thousands		September 30,
		2011				2010
Income tax provision		$	2,107			$	1,292
Effective tax rate			20.5	%			10.7	%

     Income tax expense increased to $2.1 million for the three months ended September 30, 2011, as compared to $1.3 million for the prior year period. The change in the income tax expense for the three months ended September 30, 2011 as compared to the same period in 2010 is primarily attributable to growth in our operating expenses, which form the basis upon which our transfer pricing agreements determine pre-tax profits and related income tax expense for most of our legal entities. The intercompany services and related agreements among Vistaprint N.V. and its subsidiaries ensure that our subsidiaries realize profits based on their operating expenses, which results in taxable profits regardless of the level of consolidated pre-tax income or loss. Since our income tax expense is mainly a function of our operating expenses and cost-based transfer pricing methodologies and not a function of our consolidated pre-tax income, our effective tax rate will typically vary inversely to changes in our consolidated pre-tax income. The change in the effective tax rate from the same prior year period is largely due to the reduction in our consolidated pre-tax net income as a result of planned investments in support of our long-term growth strategy. Additionally, the scheduled expiration of the U.S. federal research and development tax credit on December 31, 2011 resulted in a higher projected annual effective tax rate, which is applied to our quarterly results.

Liquidity and Capital Resources

     In thousands

		Three Months Ended
		September 30,
		2011				2010
Capital expenditures		$	(10,998	)		$	(14,147	)
Capitalization of software and website development costs			(1,682	)			(1,791	)
Depreciation and amortization			13,107				12,128
Cash flows provided by operating activities			30,541				18,802
Cash flows used in investing activities			(12,240	)			(14,038	)
Cash flows used in financing activities			(91,960	)			(810	)

     At September 30, 2011, we had $161.1 million of cash and cash equivalents and no long-term debt. Cash and cash equivalents decreased $75.5 million in the three months ended September 30, 2011. The cash flows during the three months ended September 30, 2011 related primarily to the following items:

Cash inflows:

	•		Net income of $8.2 million;
	•		Positive adjustments for non-cash items of $17.5 million including depreciation and amortization of $13.1 million and share-based compensation costs of $4.7 million and $4.9 million provided by working capital and other activities; and
	•		Redemption of our municipal auction rate security, resulting in proceeds of $0.5 million.

Cash outflows:

	•		Repurchases of our ordinary shares of $91.1 million;
	•		Capital expenditures of $11.0 million of which $4.0 million were related to the purchase of manufacturing and automation equipment for our production facilities, $2.8 million were related to the purchase of land and facilities, and $4.2 million were related to purchases of other assets including information technology infrastructure and office equipment;
	•		Internal costs for software and website development that we capitalized of $1.7 million; and
	•		Payments of the minimum withholding taxes related to shares withheld on vested restricted stock units of $1.1 million.

     Additional Liquidity and Capital Resources Information. During the three months ended September 30, 2011, we financed our operations primarily through internally generated cash flows from operations. We believe that our available cash, cash flows generated from operations and our debt financing capacity will be sufficient to satisfy our working capital and planned investments to support our new growth strategy including capital expenditure requirements for the foreseeable future. We currently plan to invest approximately $60.0 million to $75.0 million on capital expenditures in fiscal 2012, which represents an increase of 60% to 101% from fiscal 2011, primarily due to plans to expand our manufacturing capacity in Europe, construction of our Jamaican customer service, sales and design support center, and other IT and manufacturing equipment requirements to support our long-term growth strategy.

     We may also use a combination of available cash, cash flow generated from operations, and debt financing to repurchase our ordinary shares. As discussed in Recent Developments, on October 3, 2011, we announced that our Supervisory

Board authorized a new program for the repurchase of up to 10% of our outstanding ordinary shares on the open market (including block trades that satisfy the safe harbor provisions of Rule 10b-18 pursuant to the Securities Exchange Act of 1934) or in one or more self tender offers. As of October 21, 2011, we have purchased 1,757,660 of our ordinary shares under this new program for a cost of $50.4 million, inclusive of transaction costs, leaving 2,256,382 ordinary shares available for future purchases.

     On October 21, 2011, we entered into a $250.0 million senior unsecured revolving credit facility with a maturity date of October 21, 2016. Any borrowings under the facility will bear interest at LIBOR plus 1.25% to 1.50%, depending on our leverage ratio, which is the ratio of our consolidated total indebtedness to our consolidated EBITDA. We mast also pay a commitment fee of 0.175% to 0.225% depending on our leverage ratio. The credit agreement evidencing the facility contains customary representations, warranties, covenants and events of default. We have begun borrowing under this facility as of the date of filing.

     As part of our growth strategy we also expect to be more proactive in assessing potential merger and acquisition targets, though we will continue to be prudent and selective. For example, on October 24, 2011, we announced our agreement to acquire Albumprinter Holding, B.V., for total cash consideration of approximately €65.0 million, consisting of €60.0 million payable upon closing subject to net working capital and net debt adjustments, and up to €5.0 million payable based on a performance based earn-out covering the period from January 1, 2012 to December 31, 2012. This will be funded through existing cash and our revolving credit facility. If we were to make additional investments incremental to our plan in areas such as mergers and acquisitions, we may need to raise capital through future debt or equity financing to fund such investments.

Contractual Obligations

     Contractual obligations at September 30, 2011 are as follows:

     In thousands

		Payments Due by Period
						Less												More
						than 1												than 5
		Total				year				1-3 years				3-5 years				years
Operating lease obligations		$	44,280			$	9,206			$	15,769			$	14,505			$	4,800
Purchase obligations		$	25,043			$	25,043			$	—			$	—			$	—
Total		$	69,323			$	34,249			$	15,769			$	14,505			$	4,800

     Operating Leases. We rent office space under operating leases expiring on various dates through 2018. 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.

     Purchase Commitments. At September 30, 2011, we had unrecorded commitments under contract of $25.0 million, which were principally composed of site development and construction of our Jamaican customer service, sales and design support center of approximately $13.6 million, production and computer equipment purchases of approximately $8.0 million, and other unrecorded purchase commitments of $3.4 million.

  Recently Issued and Adopted Accounting Pronouncements

     For a discussion of recently issued and adopted accounting pronouncements refer to Note 2 “Summary of Significant Accounting Policies” in the accompanying notes to the condensed consolidated financial statements included in Item 1 of Part I of this Report.

  Critical Accounting Policies and Estimates

     Our financial statements are prepared in accordance with GAAP. To apply these principles, we must make estimates and judgments that affect our reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. In some instances, we reasonably could have used different accounting estimates and, in other instances, changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, actual

results could differ significantly from our estimates. We base our estimates and judgments on historical experience and other assumptions that we believe to be reasonable at the time under the circumstances, and we evaluate these estimates and judgments on an ongoing basis. We refer to accounting estimates and judgments of this type as critical accounting policies and estimates. Management believes there have been no material changes during the three months ended September 30, 2011 to the critical accounting policies reported in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of our Annual Report on Form 10-K filed with the Securities and Exchange Commission on August 17, 2011.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Interest Rate Risk. Our exposure to interest rate risk relates primarily to our cash, cash equivalents and marketable securities that at September 30, 2011 consisted of money market funds, which are held for working capital purposes. Due to the nature of our investments, we do not believe we have a material exposure to interest rate risk.

     Currency Exchange Rate Risk. As we conduct business in multiple currencies through our worldwide operations but report our financial results in U.S. dollars, we are affected by fluctuations in exchange rates of such currencies versus the U.S. dollar as follows:

•		Translation of our non-U.S. dollar revenues and expenses: Revenue related expenses generated in currencies other than the U.S. dollar could result in higher or lower net income when, upon consolidation, those transactions are translated to U.S. dollars. When the value or timing of revenue and expenses in a given currency are materially different, we may be exposed to significant impacts on our net income.
•		Remeasurement of monetary assets and liabilities: Transaction gains and losses generated from remeasurement of monetary assets and liabilities denominated in currencies other than the functional currency of a subsidiary are included in other expense, net on the consolidated statements of income. Our subsidiaries have intercompany accounts that are eliminated in consolidation and cash and cash equivalents denominated in various currencies that expose us to fluctuations in currency exchange rates. A hypothetical 10% change in currency exchange rates was applied to total net monetary assets denominated in currencies other than the functional currencies at the balance sheet dates to compute the impact these changes would have had on our income before taxes in the near term. A hypothetical decrease in exchange rates of 10% against the functional currency of our subsidiaries would have resulted in an increase of $1.6 million and $0.6 million on our income before income taxes for the three months ended September 30, 2011 and 2010, respectively.
•		Translation of our non-U.S. dollar assets and liabilities: Each of our subsidiaries translates its assets and liabilities to U.S. dollars at current rates of exchange in effect at the balance sheet date. The resulting gains and losses from translation are included as a component of accumulated other comprehensive income on the balance sheet. Fluctuations in exchange rates can materially impact the carrying value of our assets and liabilities.

     Foreign currency transaction gains (losses) included in other income (expense), net for the three months ended September 30, 2011 and 2010, were $0.5 million of gains and $0.3 million of losses, respectively.

ITEM 4. CONTROLS AND PROCEDURES

     Our management, with the participation of our chief executive officer and our chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2011. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Securities Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Securities Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of September 30, 2011, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

      There were no changes in our internal control over financial reporting during the fiscal quarter ended September 30, 2011 that materially affect, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     The information required by this item is incorporated by reference to the information set forth in Note 7 “Commitments and Contingencies” in the accompanying notes to the condensed consolidated financial statements included in Item 1 of Part I of this Report.

ITEM 1A. RISK FACTORS

     We caution you that our actual future results may vary materially from those contained in forward-looking statements that we make in this Report and other filings with the SEC, press releases, communications with investors and oral statements due to the following important factors, among others. Our forward-looking statements in this Report and in any other public statements we make may turn out to be wrong. These statements can be affected by, among other things, inaccurate assumptions we might make or by known or unknown risks and uncertainties or risks we currently deem immaterial. Many factors mentioned in the discussion below will be important in determining future results. Consequently, no forward-looking statement can be guaranteed. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Risks Related to Our Business

If we are unable to attract customers in a cost-effective manner, our business and results of operations could be harmed.

     Our success depends on our ability to attract customers in a cost-effective manner. We rely on a variety of methods to draw visitors to our websites and promote our products and services, such as purchased search results from online search engines, e-mail, direct mail, advertising banners and other links on third parties’ websites directing customers to our websites, and television broadcast. In addition, we rely heavily upon word of mouth customer referrals. If we are unable to develop or maintain effective means of reaching micro businesses and home and family customers, if the costs of attracting customers using these methods significantly increase, or if we are unable to develop new cost-effective means to obtain customers, then our ability to attract new and repeat customers would be harmed, traffic to our websites would be reduced, and our business and results of operations would be harmed.

Purchasers of micro-business marketing products and services, including graphic design and customized printing, may not choose to shop online, which would prevent us from acquiring new customers that are necessary to the success of our business.

     The online market for micro-business marketing products and services is less developed than the online market for other business and home and family products. If this market does not gain or maintain widespread acceptance, our business may suffer. Our success will depend in part on our ability to attract customers who have historically purchased products and services we offer through offline channels. Furthermore, we may have to incur significantly higher and more sustained advertising and promotional expenditures or price our services and products more competitively than we currently anticipate in order to attract consumers to our websites and convert them into purchasing customers. Specific factors that could prevent prospective customers from purchasing from us as an online retailer include:

	•		concerns about buying graphic design services and marketing products without face-to-face interaction with sales personnel;
	•		the inability to physically handle and examine product samples;
	•		delivery time associated with Internet orders;
	•		concerns about the security of online transactions and the privacy of personal information;
	•		delayed shipments or shipments of incorrect or damaged products; and
	•		the inconvenience associated with returning or exchanging purchased items.

If our long-term growth strategy is not successful or if our financial projections relating to the effects of our strategy turn out to be incorrect, our business and financial results could be harmed.

     In July 2011, we announced a new long-term investment and financial strategy and associated financial projections relating to the growth of our business over the next five years, but we may not achieve our announced objectives, and our investments in our business may fail to affect our revenue or diluted EPS growth as anticipated. Some of the factors that could cause our investment strategy and our overall business strategy to fail to achieve our objectives include, among others:

	•		our failure to adequately execute our operational strategy or anticipate and overcome obstacles to achieving our strategic goals;
	•		our failure to make our intended investments because the investments are more costly than we expected or because we are unable to devote the necessary operational and financial resources;
	•		our inability to purchase or develop technologies and production platforms to increase our efficiency, enhance our competitive advantage and scale our operations;
	•		the failure of our current supply chain to provide the resources we need and our inability to develop new or enhanced supply chains;
	•		our failure to acquire new customers and enter new markets, retain our current customers and sell more products to current and new customers;
	•		our failure to promote, strengthen, and protect our brand;
	•		the failure of our current and new marketing channels to attract customers;
	•		our failure to manage the growth and complexity of our business and expand our operations;
	•		unanticipated changes in our business, current and anticipated markets, industry or competitive landscape; and
	•		general economic conditions.

     In addition, projections are inherently uncertain and are based on assumptions and judgments by management that may be flawed or based on information about our business and markets that may change in the future, many of which are beyond our control. Our actual results may differ materially from our projections due to various factors, including but not limited to the factors listed immediately above; currency exchange fluctuations, which may affect our revenues and costs; change in the laws and regulations or in the interpretations of laws and regulations to which we are subject, including tax laws, or the institution of new laws or regulations that affect our business; costs and judgments resulting from litigation; and costs and disruptions caused by acquisitions.

     If our strategy is not successful, or if there is a market or industry perception that our strategy is not successful, then our revenue and earnings may not grow as anticipated or may decline, our reputation and brand may be damaged, and the price of our shares may decline. In addition, we may change our financial strategy or other components of our overall business strategy if we believe it is not effective, if our business or markets change, or for other reasons, which may cause fluctuations in our financial results and volatility in our share price.

We may not succeed in promoting, strengthening and continuing to establish the Vistaprint brand, which would prevent us from acquiring new customers and increasing revenues.

     A primary component of our business strategy is the continued promotion and strengthening of the Vistaprint brand in order to attract new and repeat customers to our websites. In addition to the challenges posed by establishing and promoting our brand among the many businesses that promote products and services on the Internet, we face significant competition from graphic design and printing companies marketing to micro businesses who also seek to establish strong brands. If we are unable to successfully promote the Vistaprint brand, we may fail to increase our revenues. Customer awareness of our brand and its perceived value depend largely on the success of our marketing efforts and our ability to provide a consistent, high-quality customer experience. To promote our brand, we have incurred and will continue to incur substantial expenses related to advertising and other marketing efforts. We may choose to increase our branding expense materially, but we cannot be sure that this investment will be profitable. Underperformance of significant future branding efforts could materially damage our financial results.

     A component of our brand promotion strategy is establishing a relationship of trust with our customers by providing a high-quality customer experience. In order to provide a high-quality customer experience, we have invested and will continue to invest substantial amounts of resources in our website development, design and technology, graphic design operations, production operations, and customer service operations. Our ability to provide a high-quality customer experience is also dependent, in large part, on external factors over which we may have little or no control, including the reliability and performance of our suppliers, third-party carriers and communication infrastructure providers. If we are unable to provide customers with a high-quality customer experience for any reason, our reputation would be harmed, and our efforts to develop Vistaprint as a trusted brand would be adversely impacted. The failure of our brand promotion activities could adversely affect our ability to attract new customers and maintain customer relationships, and, as a result, substantially harm our business and results of operations.

Our quarterly financial results will often fluctuate, which may lead to volatility in our share price.

     Our revenues and operating results often vary significantly from quarter to quarter due to a number of factors, some of which are inherent in our business strategies but many of which are outside of our control. We target annual, rather than quarterly, EPS objectives, which can lead to fluctuations in our quarterly results. Other factors that could cause our quarterly revenue and operating results to fluctuate or result in earnings that are lower than our guidance, or both, include among others:

•

seasonality-driven or other variations in the demand for our products and services;

•

currency fluctuations, which affect our revenues and costs;

•

our ability to attract visitors to our websites and convert those visitors into customers;

•

our ability to retain customers and generate repeat purchases;

•

business and home and family preferences for our products and services;

•

shifts in product mix toward less profitable products;

•

our ability to manage our production, fulfillment and support operations;

•

costs to produce and deliver our products and provide our services, including the effects of inflation;

•

our pricing and marketing strategies and those of our competitors;

•

investments in our business to generate or support revenues and operations in future periods, such as incurring marketing, engineering or consulting expenses in a current period for revenue growth or support in future periods;

•

compensation expense and charges related to agreements entered into with our executives and employees;

•

costs and charges resulting from litigation;

•

a significant increase in credits, beyond our estimated allowances, for customers who are not satisfied with our products;

•

costs to acquire businesses or integrate acquired businesses; and

•

charges to earnings if our long-lived assets including goodwill or amortizable intangible assets become impaired.

     We base our operating expense budgets in part on expected revenue trends. A portion of our expenses, such as office leases, depreciation and personnel costs, are relatively fixed, and we may be unable to adjust spending quickly enough to offset any revenue shortfall. Accordingly, any shortfall in revenue may cause significant variation in operating results in any quarter. Based on the factors cited above, among others, we believe that quarter-to-quarter comparisons of our operating

results may not be a good indication of our future performance. Our operating results may sometimes be below the expectations of public market analysts and investors, in which case the price of our ordinary shares will likely fall.

Seasonal fluctuations in our business place a strain on our operations and resources.

     Our second fiscal quarter includes the majority of the holiday shopping season and in each of the last three fiscal years has accounted for more of our revenue and earnings than any other quarter, primarily due to higher sales of home and family products such as holiday cards, calendars and personalized gifts. 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 typically 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. 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. If we are unable to accurately forecast and respond to seasonality in our business, 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 U.S. dollar, our reporting currency. We therefore have currency exchange risk.

     We are exposed to fluctuations in currency exchange rates that may impact items such as 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 movements are unfavorable to our business, the U.S. dollar equivalent of our revenue and operating income recorded in other currencies is diminished. As we have expanded and continue to expand our revenues and operations throughout the world and to additional currencies, our exposure to currency exchange rate fluctuations has increased and we expect will continue to increase. Our revenue and results of operations may differ materially from expectations as a result of currency exchange rate fluctuations.

If we are unable to market and sell products and services beyond our existing target markets and develop new products and services to attract new customers, our revenues may not increase or may decline.

     We believe we need to address additional markets and attract new customers to grow our business. To access new markets and customers, we expect that we will need to develop, market and sell new products and services, expand our marketing and sales channels, expand our business and operations geographically by introducing localized websites in different countries, and develop new strategic relationships. Any failure in these areas could harm our business, financial condition and results of operations.

If we are unable to manage our expected growth and expand our operations successfully, our reputation would be damaged and our business and results of operations would be harmed.

     In recent years, our number of employees and geographic footprint has grown rapidly, and we expect the number of countries and facilities from which we operate to continue to increase in the future. Our growth, combined with the geographical separation of our operations, has placed, and will continue to place, a strain on our management, administrative and operational infrastructure. Our ability to manage our operations and anticipated growth will require us to continue to refine our operational, financial and management controls, human resource policies, reporting systems and procedures in the locations in which we operate. If we are unable to implement improvements to our management information and control systems in an efficient or timely manner or if we discover deficiencies in our existing systems and controls, then our ability to provide a high-quality customer experience could be harmed, which would damage our reputation and brand and substantially harm our business and results of operations.

If we are unable to manage the challenges associated with our global operations, the growth of our business could be negatively impacted.

     We operate production facilities or offices in 13 countries and have 25 localized websites to serve various geographic markets. We are subject to a number of risks and challenges that specifically relate to our international operations. These risks and challenges include, among others:

•

difficulty managing operations in, and communications among, multiple locations and time zones;

•

difficulty complying with multiple tax laws, treaties and regulations and limiting our exposure to onerous or unanticipated taxes, duties and other costs;

•

local regulations that may restrict or impair our ability to conduct our business as planned;

•

protectionist laws and business practices that favor local producers and service providers;

•

failure to properly understand and develop graphic design content and product formats appropriate for local tastes;

•

disruptions caused by political and social instability that may occur in some countries;

•

disruptions or cessation of important components of our international supply chain;

•

restrictions imposed by local labor practices and laws on our business and operations; and

•

failure of local laws to provide a sufficient degree of protection against infringement of our intellectual property.

     Our global operations may not be successful if we are unable to overcome these challenges, which could limit the growth of our business and may have an adverse effect on our business and operating results.

We face risks related to interruption of our operations and lack of redundancy.

     Our production facilities, websites, transaction processing systems, network infrastructure, supply chain and customer sales, service and design operations may be vulnerable to interruptions, and we do not have redundancies in all cases to carry on these operations in the event of an interruption. Some of the events that could cause interruptions in our operations or systems are, among others:

•

fire, flood, earthquake, hurricane or other natural disaster or extreme weather;

•

labor strike, work stoppage or other issue with our workforce;

•

political instability or acts of terrorism or war;

•

power loss or telecommunication failure;

•

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, particularly during promotional campaign periods and in the seasonal peak we experience in our second fiscal quarter; and

•

human error, including but not limited to poor managerial judgment or oversight.

     In particular, both Bermuda, where substantially all of the computer hardware necessary to operate our websites is located in a single facility, and Jamaica, our largest customer service, sales and design support operation, are subject to a high degree of hurricane risk and extreme weather conditions.

     We have not identified alternatives to all of our facilities, systems, supply chains and infrastructure, including production, to serve us in the event of an interruption, and if we were to find alternatives, they may not be able to meet our requirements on commercially acceptable terms or at all. In addition, we are dependent in part on third parties for the implementation and maintenance of certain aspects of our communications and production systems, and because many of the causes of system interruptions or interruptions of the production process may be outside of our control, we may not be able to remedy such interruptions in a timely manner, or at all.

     Any interruptions that cause any of our websites to be unavailable, reduce our order fulfillment performance or interfere with our manufacturing, technology or customer service operations could result in lost revenue, increased costs, negative publicity, damage to our reputation and brand, and an adverse effect on our business and results of operations.

Building redundancies into our infrastructure, systems and supply chain to mitigate these risks may require us to commit substantial financial, operational and technical resources, in some cases before the volume of our business increases with no assurance that our revenues will increase.

We face intense competition.

     The markets for small business marketing products and services and home and family custom products, including the printing and graphic design market, are intensely competitive, highly fragmented and geographically dispersed. We expect competition to increase in the future. The increased use of the Internet for commerce and other technical advances have allowed traditional providers of these products and services to improve the quality of their offerings, produce and deliver those products and services more efficiently and reach a broader purchasing public. Competition may result in price pressure, reduced profit margins and loss of market share, any of which could substantially harm our business and results of operations. Current and potential competitors include:

•

traditional storefront printing and graphic design companies;

•

office superstores, drug store chains, food retailers and other major retailers targeting small business and home and family markets;

•

wholesale printers;

•

online printing and graphic design companies, many of which provide printed products and services similar to ours;

•

self-service desktop design and publishing using personal computer software with a laser or inkjet printer and specialty paper;

•

email marketing services companies;

•

website design and hosting companies;

•

suppliers of custom apparel, promotional products and customized gifts;

•

online photo product companies; and

•

Internet firms and retailers.

     Many of our current and potential competitors have advantages over us, including longer operating histories, greater brand recognition, more focus on a given sub-set of our business, existing customer and supplier relationships, or significantly greater financial, marketing and other resources. Many of our competitors currently work together, and additional competitors may do so in the future through strategic business agreements or acquisitions. Increased competition may result in reduced operating margins as well as loss of market share and brand recognition.

     Some of our competitors that either already have an online presence or are seeking to establish an online presence may be able to devote substantially more resources to website and systems development than we can. In addition, larger, more established and better capitalized entities may acquire, invest or partner with online competitors as use of the Internet and other online services increases. Competitors may also develop new or enhanced products, technologies or capabilities that could render many of the products, services and content we offer obsolete or less competitive, which could harm our business and results of operations.

     In addition, we have in the past and may in the future choose to collaborate with certain of our existing and potential competitors in strategic partnerships that we believe will improve our competitive position and results of operations, such as through a retail in-store or web-based collaborative offering. It is possible, however, that such ventures will be unsuccessful and that our competitive position and results of operations will be adversely affected as a result of such collaboration.

Failure to meet our customers’ price expectations would adversely affect our business and results of operations.

     Demand for our products and services is sensitive to price. Changes in our pricing strategies have had, and are likely to continue to have, a significant impact on our revenues and results of operations. Many factors can significantly impact our

pricing strategies, including the production, marketing, personnel and other costs of running our business, our competitors’ pricing and marketing strategies, and the effects of inflation. We offer some free or discounted products and services as a means of attracting customers and encouraging repeat purchases, but these free offers and discounts reduce our profit margins and may not result in an increase in our revenues. If we fail to meet our customers’ price expectations, our business and results of operations will suffer.

Failure to protect our network and the confidential information of our customers against security breaches and to address risks associated with credit card fraud could damage our reputation and brand and substantially harm our business and results of operations.

     Online commerce and communications depend on the secure transmission of confidential information over public networks. Currently, a majority of our sales are billed to our customers’ credit card accounts directly, and we retain our customers’ credit card information for a period of time that varies depending on the services we provide to each customer. We rely on encryption and authentication technology licensed from third parties to effect secure transmission of confidential information, including credit card numbers. Advances in computer capabilities, new discoveries in the field of cryptography or other developments may result in a compromise or breach of our network or the technology that we use to protect our network and our customer transaction data, such as credit card information. Although we maintain network security insurance, we cannot be certain that our coverage will be adequate for liabilities actually incurred or that insurance will continue to be available to us on reasonable terms, or at all. In addition, anyone who is able to circumvent our security measures could misappropriate our proprietary information or cause interruptions in our operations. We may need to expend significant resources to protect against security breaches or to address problems caused by breaches. Any compromise of our network or our security could damage our reputation and brand and expose us to losses, litigation and possible liability, which would substantially harm our business and results of operations.

     In addition, we may be liable for fraudulent transactions conducted on our websites, such as through the use of stolen credit card numbers. To date, quarterly losses from payment fraud have not exceeded 1% of total revenues in any quarter, but we continue to face the risk of significant losses from this type of fraud. Our failure to limit fraudulent credit card transactions could damage our reputation and brand and substantially harm our business and results of operations.

We depend on search engines to attract a substantial portion of the customers who visit our websites, and losing these customers would adversely affect our business and results of operations.

     Many customers access our websites by clicking through on search results displayed by search engines such as Google, Bing and Yahoo!. If the search engines on which we rely modify their algorithms, terminate their relationships with us or increase the prices at which we may purchase listings, this could increase our costs and result in fewer customers clicking through to our websites, requiring us to resort to other more costly resources to replace this traffic, which could adversely affect our revenues and operating and net income and could harm our business. In addition, some of our competitors purchase the term “Vistaprint” and other terms incorporating our proprietary trademarks from Google and other search engines as part of their search listing advertising. Courts do not always side with the trademark owners in cases involving search engines, and Google has refused to prevent companies from purchasing search results that use the trademark “Vistaprint.” As a result, we may not be able to prevent our competitors from advertising to, and directly competing for, customers who search for the term “Vistaprint” on search engines.

Various private ‘spam’ blacklisting and similar entities have in the past, and may in the future, interfere with our e-mail solicitation, the operation of our websites and our ability to conduct business.

     We depend significantly on e-mail to market to and communicate with our customers. Various private entities attempt to regulate the use of e-mail for commercial solicitation, and some of these entities maintain “blacklists” of companies that do not adhere to what the blacklisting entity believes are appropriate standards of conduct or practices for commercial e-mail solicitations, which are often more stringent than currently legal requirements. Although we believe that our commercial e-mail solicitations comply with all applicable laws, some of our Internet protocol addresses appear on various private entities’ blacklists from time to time, which means that e-mails sent from those addresses may be blocked if they are sent to any Internet domain or Internet address that subscribes to the blacklisting entity’s service or purchases its blacklist. We may not be successful in convincing blacklisting entities to remove us from their lists, and we may be put on additional blacklists in the future. The blacklisting sometimes interferes with our ability to send operational e-mails—such as password reminders, invoices and electronically delivered products—to customers and others, and to send and receive emails to and from our corporate email accounts. In addition, as a result of being blacklisted, we have had disputes with, or concerns raised by, various service providers who perform services for us, including co-location and hosting services, Internet service providers and electronic mail distribution services. Blacklisting of this type could interfere with our ability to market our products and

services, communicate with our customers and otherwise operate our websites, and operate and manage our corporate email accounts, all of which could have a material negative impact on our business and results of operations.

Our customers create products that incorporate images, illustrations and fonts that we license from third parties, and any loss of the right to use these licensed materials may substantially harm our business and results of operations.

     Many of the images, illustrations, and fonts incorporated in the design products and services we offer are the copyrighted property of other parties that we use under license agreements. If one or more of our licenses covering a significant amount of content were terminated, the amount and variety of content available on our websites would be significantly reduced, and we may not be able to find, license and introduce substitute content in a timely manner, on acceptable terms or at all.

The loss of key personnel or an inability to attract and retain additional personnel could affect our ability to successfully grow our business.

     We are highly dependent upon the continued service and performance of our senior management team and key technical, marketing and production personnel, and any of our executives may cease their employment with us at any time with minimal advance notice. The loss of one or more of our key employees may significantly delay or prevent the achievement of our business objectives. We face intense competition for qualified individuals from numerous technology, marketing, financial services, manufacturing and e-commerce companies. We may be unable to attract and retain suitably qualified individuals, and our failure to do so could have an adverse effect on our ability to implement our business plan.

Acquisitions may be disruptive to our business.

     Our business and our customer base have been built primarily through organic growth, and while individuals on our Supervisory Board and management team have experience making acquisitions in their professional experience outside of Vistaprint, we have limited experience making acquisitions as a company. However, a component of our strategy is to selectively pursue acquisitions of businesses, technologies or services in order to expand our capabilities, enter new markets, or increase our market share. Integrating any newly acquired businesses, technologies or services may be complex, expensive and time consuming and we may not be able to retain customers and key employees of acquired businesses. In addition, acquisitions may lead to reduced earnings if the transaction is dilutive for a period of time. To finance any acquisitions, it may be necessary for us to raise additional funds, which may not be available on terms that are favorable to us, or at all, and could cause dilution to our shareholders or subject us to covenants restricting the activities we may undertake. We may be unable to operate any acquired businesses profitably or otherwise implement our strategy successfully. If we are unable to integrate newly acquired businesses, technologies or services effectively, our business and results of operations could suffer. The time and expense associated with finding suitable and compatible businesses, technologies or services to acquire could also disrupt our ongoing business and divert our management’s attention. Acquisitions could also result in large and immediate write-offs or assumptions of debt and contingent liabilities, any of which could substantially harm our business and results of operations.

Our business and results of operations may be negatively impacted by general economic and financial market conditions, and such conditions may increase the other risks that affect our business.

     Despite recent signs of economic recovery in some markets, many of the markets in which we operate are still in an economic downturn that we believe has had and will continue to have a negative impact on our business. Turmoil in the world’s financial markets materially and adversely impacted the availability of financing to a wide variety of businesses, including micro businesses, and the resulting uncertainty led to reductions in capital investments, marketing expenditures, overall spending levels, future product plans, and sales projections across industries and markets. These trends could have a material and adverse impact on the demand for our products and services and our financial results from operations.

The United States government may further increase border controls and impose duties or restrictions on cross-border commerce that may substantially harm our business by impeding our shipments into the United States from our Canadian manufacturing facility.

     For the fiscal year ended June 30, 2011 and for the first quarter of fiscal 2012, we derived 53% of our revenue from sales to customers made through Vistaprint.com, our United States-focused website. We produce substantially all physical products for our United States customers at our facility in Windsor, Ontario, and the United States imposes restrictions on shipping goods into the United States from Canada. The United States also imposes protectionist measures such as customs duties and tariffs that limit free trade, some of which may apply directly to product categories that comprise a material

portion of our revenues. The customs laws, rules and regulations that we are required to comply with are complex and subject to unpredictable enforcement and modification. We have from time to time experienced delays in shipping our manufactured products into the United States as a result of these restrictions which have, in some instances, resulted in delayed delivery of orders.

     In the future, the United States could impose further border controls and restrictions, interpret or apply regulations in a manner unfavorable to the importation of products from outside of the U.S., impose quotas, tariffs or import duties, increase the documentation requirements applicable to cross border shipments or take other actions that have the effect of restricting the flow of goods from Canada and other countries to the United States. For example, if there were a serious threat to U.S. security, such as war or an attack on the United States, the U.S. government could shut down the U.S.-Canadian border for an extended period of time, impose policies that would result in significant Canadian export delays or otherwise disrupt our North American business operations. If we experienced greater difficulty or delays shipping products into the United States or were foreclosed from doing so, or if our costs and expenses materially increased, our business and results of operations could be harmed.

If we are unable to protect our intellectual property rights, our reputation and brand could be damaged, and others may be able to practice our technology, which could substantially harm our business and results of operations.

     We rely on a combination of patent, trademark, trade secret and copyright law and contractual restrictions to protect our intellectual property, but these protective measures afford only limited protection. Despite our efforts to protect our proprietary rights, unauthorized parties may copy aspects of our trademarks, websites features and functionalities or obtain and use information that we consider proprietary, such as the technology used to operate our websites and our production operations.

     We intend to continue to pursue patent coverage in the United States and other countries to the extent we believe such coverage is justified, appropriate, and cost efficient, but there can be no guarantee that any of our pending applications or continuation patent applications will be granted. In addition, we have in the past and may in the future face infringement, invalidity, intellectual property ownership or similar claims brought by third parties with respect to our current or future patents. Any such claims, whether or not successful, could be extremely costly, damage our reputation and brand and substantially harm our business and results of operations.

     Although we hold trademark registrations for the Vistaprint trademark in jurisdictions throughout the world, our competitors or other entities may adopt names or marks similar to ours, thereby impeding our ability to build brand identity and possibly leading to customer confusion. There could be potential trade name or trademark infringement claims brought by owners of other trademarks that incorporate variations of the term “Vistaprint” or our other trademarks, and we may institute such claims against other parties. Any claims or customer confusion related to our trademarks could damage our reputation and brand and substantially harm our business and results of operations.

Intellectual property disputes and litigation are costly and could cause us to lose our exclusive rights, subject us to liability or require us to stop some of our business activities.

     From time to time, we are involved in lawsuits or disputes in which third parties claim that we infringe their intellectual property rights or that we improperly obtained or used their confidential or proprietary information. In addition, from time to time we receive letters from third parties who claim to have patent rights that cover aspects of the technology that we use in our business and that the third parties believe we must license in order to continue to use such technology.

     The cost to us of any litigation or other proceeding relating to intellectual property rights, even if resolved in our favor, could be substantial, and litigation diverts our management’s efforts from managing and growing our business. Potential adversaries may be able to sustain the costs of complex intellectual property litigation more effectively than we can because they have substantially greater resources. Uncertainties resulting from any litigation could limit our ability to continue our operations. If any parties successfully claim that our sale, use, manufacturing or importation of technologies infringes upon their intellectual property rights, we might be forced to pay significant damages and attorney’s fees, and a court could enjoin us from performing the infringing activity, which could restrict our ability to use certain technologies important to the operation of our business.

     Alternatively, we may be required to, or decide to, enter into a license with a third party that claims infringement by us. Any such patent license may not be made available on commercially acceptable terms, if at all. In addition, such licenses are likely to be non-exclusive, and therefore our competitors may have access to the same technology licensed to us. If we fail to obtain a required license and are unable to design around a third party’s patent, we may be unable to effectively

conduct certain of our business activities, which could limit our ability to generate revenues, grow our business or maintain profitability.

     In addition, from time to time, we initiate lawsuits, proceedings or claims to enforce our patents, copyrights, trademarks and other intellectual property rights or to determine the scope and validity of third-party proprietary rights. Our ability to enforce our intellectual property rights is subject to general litigation risks, as well as uncertainty as to the enforceability of our intellectual property rights in various countries. When we seek to enforce our rights, we may be subject to claims that our intellectual property rights are invalid or unenforceable or are licensed to the party against whom we are asserting a claim. There is also a risk that our assertion of intellectual property rights could result in the other party’s seeking to assert alleged intellectual property rights of its own against us, which may adversely impact our business in the manner discussed above. Our inability to enforce our intellectual property rights may negatively impact our competitive position and business.

If we are unable to acquire or maintain domain names for our websites, then we could lose customers, which would substantially harm our business and results of operations.

     We sell our products and services primarily through our websites. We currently own or control a number of Internet domain names used in connection with our various websites, including Vistaprint.com and similar names with alternate URL names, such as .net, .de and .co.uk. Domain names are generally regulated by Internet regulatory bodies. If we are unable to use a domain name in a particular country, then we would be forced to purchase the domain name from the entity that owns or controls it, which we may not be able to do on commercially acceptable terms or at all; incur significant additional expenses to market our products within that country, including the development of a new brand and the creation of new promotional materials and packaging; or elect not to sell products in that country. Any of these results could substantially harm our business and results of operations. Furthermore, the relationship between regulations governing domain names and laws protecting trademarks and similar proprietary rights is unclear and subject to change. We might not be able to prevent third parties from acquiring domain names that infringe or otherwise decrease the value of our trademarks and other proprietary rights. Regulatory bodies could establish additional top-level domains, appoint additional domain name registrars or modify the requirements for holding domain names. As a result, we may not be able to acquire or maintain the domain names that utilize the name Vistaprint in all of the countries in which we currently or intend to conduct business.

Our results of operations may be negatively affected if we are required to charge sales, value added or other taxes on Internet sales.

     In many jurisdictions where we sell products and services, we do not collect or have imposed upon us sales, value added or other consumption taxes, which we refer to as indirect taxes. The application of indirect taxes to e-commerce businesses such as Vistaprint is a complex and evolving issue. Many of the fundamental statutes and regulations that impose these taxes were established before the growth of the Internet and e-commerce, and in many cases, it is not clear how existing statutes apply to the Internet or e-commerce. Bills have been introduced in the U.S. Congress that could affect the ability of state governments to require out of state Internet retailers to collect and remit indirect taxes on goods and certain services, and some state governments have imposed or are seeking to impose indirect taxes on Internet sales. The imposition by national, state or local governments, whether within or outside the United States, of various taxes upon Internet commerce could create administrative burdens for us and could decrease our revenue. Additionally, a successful assertion by one or more governments in jurisdictions where we are not currently collecting sales or value added taxes that we should be, or should have been, collecting indirect taxes on the sale of our products could result in substantial tax liabilities for past sales, discourage customers from purchasing products from us, decrease our ability to compete with traditional retailers or otherwise negatively impact our results of operations.

Our business is dependent on the Internet, and unfavorable changes in government regulation of the Internet, e-commerce and email marketing could substantially harm our business and results of operations.

     Due to our dependence on the Internet for our sales, regulations and laws specifically governing the Internet, e-commerce and email marketing may have a greater impact on our operations than other more traditional businesses. Existing and future laws and regulations may impede the growth of e-commerce and our ability to compete with traditional graphic designers, printers and small business marketing companies, as well as desktop printing products. These regulations and laws may cover taxation, restrictions on imports and exports, customs, tariffs, user privacy, data protection, commercial email, pricing, content, copyrights, distribution, electronic contracts and other communications, consumer protection, the provision of online payment services, broadband residential Internet access and the characteristics and quality of products and services. It is not clear how existing laws governing many of these issues apply to the Internet and e-commerce, as the vast majority of applicable laws were adopted before the advent of the Internet and do not contemplate or address the unique issues raised by

the Internet or e-commerce. Those laws that do reference the Internet, such as the Bermuda Electronic Transactions Act 1999, the U.S. Digital Millennium Copyright Act and the U.S. CAN-SPAM Act of 2003, are only beginning to be interpreted by the courts, and their applicability and reach are therefore uncertain. Those current and future laws and regulations or unfavorable resolution of these issues may substantially harm our business and results of operations.

We face judicial and regulatory challenges to our practice of offering free products and services, which, if successful, could hinder our ability to attract customers and generate revenue.

     We regularly offer free products and services as an inducement for customers to try our products and services. Although we believe that we conspicuously and clearly communicate all details and conditions of these offers—for example, that customers are required to pay shipping and processing charges to take advantage of a free product offer—from time to time we face claims, complaints and inquiries from our customers, competitors, governmental regulators, standards bodies and others that our free offers are misleading or do not comply with applicable legislation or regulation, and we may receive similar complaints, claims and inquiries in the future. If we are compelled or determine to curtail or eliminate our use of free offers as the result of any such actions, our business prospects and results of operations could be materially harmed.

If we were required to review the content that our customers incorporate into our products and interdict the shipment of products that violate copyright protections or other laws, our costs would significantly increase, which would harm our results of operations.

     Because of our focus on automation and high volumes, our operations do not involve any human-based review of content for the vast majority of our sales. Although our websites’ terms of use specifically require customers to represent that they have the right and authority to reproduce a given content and that the content is in full compliance with all relevant laws and regulations, we do not have the ability to determine the accuracy of these representations on a case-by-case basis. There is a risk that a customer may supply an image or other content for a product order that we produce that is the property of another party used without permission, that infringes the copyright or trademark of another party, or that would be considered to be defamatory, hateful, racist, scandalous, obscene, or otherwise objectionable or illegal under the laws of the jurisdiction(s) where that customer lives or where we operate. If we should become legally obligated in the future to perform manual screening and review for all orders destined for a jurisdiction, we will encounter increased production costs or may cease accepting orders for shipment to that jurisdiction, which could substantially harm our business and results of operations. In addition, if we were held liable for actions of our customers, we could be required to pay substantial penalties, fines or monetary damages.

The third party membership programs previously offered on our website may continue to draw customer complaints, litigation and governmental inquiries, which can be costly and could hurt our reputation.

     We previously offered on our website third party membership discount programs, some of which have been, and may continue to be, the subject of consumer complaints, litigation, and governmental regulatory actions alleging that the enrollment and billing practices involved in the programs violate various consumer protection laws or are otherwise deceptive. Although we removed all such membership discount program offerings from our websites as of November 2009 and terminated our relationship with the third party merchant responsible for these programs, we continue to receive complaints from our customers and inquiries by state attorneys general and government agencies regarding these programs. Any private or governmental claims or actions that may be brought against us relating to these third party membership programs could result in our being obligated to pay substantial damages or incurring substantial legal fees in defending claims and have an adverse affect on our results of operations. Even if we are successful in defending against these claims, such a defense may result in distraction of management and significant costs. In addition, customer dissatisfaction or damage to our reputation as a result of these claims could have a negative impact on our brand, revenues and profitability.

We are subject to customer payment-related risks.

     We accept payments for our products and services on our websites by a variety of methods, including credit or debit card, PayPal, check, wire transfer or other methods. In many geographic regions, we rely on one or two third party companies to provide payment processing services. If these companies became unwilling or unable to provide these services to us, then we would need to find and engage replacement providers, which we may not be able to do on terms that are acceptable to us or at all, or to process the payments ourselves, which could be costly and time consuming. Either of these scenarios could disrupt our business.

     As we offer new payment options to our customers, we may be subject to additional regulations, compliance requirements and fraud risk. For certain payment methods, including credit and debit cards, we pay interchange and other

fees, which may increase over time and raise our operating costs and lower our profit margins or require that we charge our customers more for our products. We are also subject to payment card association and similar operating rules and requirements, which could change or be reinterpreted to make it difficult or impossible for us to comply. If we fail to comply with these rules and requirements, we may be subject to fines and higher transaction fees and lose our ability to accept credit and debit card payments from our customers or facilitate other types of online payments, and our business and operating results could be materially adversely affected.

We may be subject to product liability claims if people or property are harmed by the products we sell.

     Some of the products we sell may expose us to product liability claims relating to personal injury, death, or property damage, and may require product recalls or other actions. Although we maintain product liability insurance, we cannot be certain that our coverage will be adequate for liabilities actually incurred or that insurance will continue to be available to us on reasonable terms, or at all.

If we are unable to retain security authentication certificates, which are supplied by third party providers over which we exercise little or no control, our business could be harmed.

     We are dependent on a limited number of third party providers of website security authentication certificates that are necessary for conducting secure transactions over the Internet. Despite any contractual protections we may have, these third party providers can disable or revoke, and in the past have disabled or revoked, our security certificates without our consent, which would render our websites inaccessible to some of our customers and could discourage other customers from accessing our sites, unless we are able to procure a replacement certificate from one of a limited number of alternative third party providers. Any interruption in our customers’ ability or willingness to access our websites if we do not have adequate security certificates could result in a material loss of revenue and profits and damage to our brand.

Risks Related to Our Corporate Structure

Challenges by various tax authorities to our complex international structure could, if successful, increase our effective tax rate and adversely affect our earnings.

     We are a Dutch limited liability company that operates through various subsidiaries in a number of countries throughout the world. Consequently, we are subject to tax laws, treaties and regulations in the countries in which we operate. Our income taxes are based upon the applicable tax laws and tax rates in the countries in which we operate and earn income as well as upon our operating structures in these countries. Many countries’ tax laws and international treaties impose taxation upon entities that conduct a trade or business or operate through a permanent establishment in those countries. However, these applicable laws or treaties are subject to interpretation. From time to time, we are subject to tax audits and claims by the tax authorities in these countries that a greater portion of the income of the Vistaprint N.V. group should be subject to income or other tax in their respective jurisdictions. For more information about audits to which we are currently subject refer to Note 2 “Summary of Significant Accounting Policies—Income Taxes” in the accompanying notes to the condensed consolidated financial statements included in Item 1 of Part I of this Report. This could result in an increase to our effective tax rate and adversely affect our results of operations.

     A change in tax laws, treaties or regulations, or their interpretation, of any country in which we operate could result in a higher tax rate on our earnings, which could result in a significant negative impact on our earnings and cash flow from operations. We continue to assess the impact of various international tax proposals and modifications to existing tax treaties between the Netherlands and other countries that could result in a material impact on our income taxes. We cannot predict whether any specific legislation will be enacted or the terms of any such legislation. However, if such proposals were enacted, or if modifications were to be made to certain existing treaties, the consequences could have a materially adverse impact on us, including increasing our tax burden, increasing costs of our tax compliance or otherwise adversely affecting our financial condition, results of operations and cash flows.

Our intercompany arrangements may be challenged, resulting in higher taxes or penalties and an adverse effect on our earnings.

     We operate pursuant to written intercompany service and related agreements, which we also refer to as transfer pricing agreements, among Vistaprint N.V. and its subsidiaries. These agreements establish transfer prices for production, marketing, management, technology development and other services performed by these subsidiaries for other group companies. Transfer prices are prices that one company in a group of related companies charges to another member of the group for goods, services or the use of property. If two or more affiliated companies are located in different countries, the tax laws or

regulations of each country generally will require that transfer prices be consistent with those between unrelated companies dealing at arm’s length. With the exception of the transfer pricing arrangements applicable to our Dutch, French and Australian operations, our transfer pricing arrangements are not binding on applicable tax authorities and no official authority in any other country has made a determination as to whether or not we are operating in compliance with its transfer pricing laws. If tax authorities in any country were to successfully challenge our transfer prices as not reflecting arm’s length transactions, they could require us to adjust our transfer prices and thereby reallocate our income to reflect these revised transfer prices. A reallocation of taxable income from a lower tax jurisdiction to a higher tax jurisdiction would result in a higher tax liability to us. In addition, if the country from which the income is reallocated does not agree with the reallocation, both countries could tax the same income, resulting in double taxation.

Our Articles of Association, Dutch law and the independent foundation, Stichting Continuïteit Vistaprint, may make it difficult to replace or remove management, may inhibit or delay a change of control or may dilute your voting power.

     Our Articles of Association, or Articles, as governed by Dutch law limit our shareholders’ ability to suspend or dismiss the members of our management board and supervisory board or to overrule our supervisory board’s nominees to our management board and supervisory board by requiring a vote of two thirds of the votes cast representing more than 50% of the outstanding ordinary shares to do so under most circumstances. As a result, there may be circumstances in which shareholders may not be able to remove members of our management board or supervisory board even if holders of a majority of our ordinary shares favor doing so.

     In addition, we have established an independent foundation, Stichting Continuïteit Vistaprint, or the “Foundation,” to safeguard the interests of Vistaprint N.V. and its stakeholders, which include but are not limited to our shareholders, and to assist in maintaining Vistaprint’s continuity and independence. To this end, we have granted the Foundation a call option pursuant to which the Foundation may acquire a number of preferred shares equal to the same number of ordinary shares then outstanding, which is designed to provide a protective measure against unsolicited take-over bids for Vistaprint and other hostile threats. If the Foundation were to exercise the call option, it may prevent a change of control or delay or prevent a takeover attempt, including a takeover attempt that might result in a premium over the market price for our ordinary shares. Exercise of the preferred share option would also effectively dilute the voting power of our outstanding ordinary shares by one half.

We have limited flexibility with respect to certain aspects of capital management.

     Dutch law requires shareholder approval for the issuance of shares and grants preemptive rights to existing shareholders to subscribe for new issuances of shares. In August 2009, our shareholders granted our supervisory board and management board the authority to issue ordinary shares and preferred shares as the boards determine appropriate, without obtaining specific shareholder approval for each issuance, and to limit or exclude shareholders’ preemptive rights. However, this authorization expires in August 2014. Although we are currently seeking re-approval from our shareholders , which would extend the expiration date to November 3, 2016, we may not succeed in obtaining this or future re-approvals. In addition, subject to specified exceptions, Dutch law requires shareholder approval for many corporate actions, such as the approval of dividends and authorization to repurchase outstanding shares. Situations may arise where the flexibility to issue shares, pay dividends, repurchase shares or take other corporate actions without a shareholder vote would be beneficial to us, but is not available under Dutch law.

Because of our corporate structure, our shareholders may find it difficult to pursue legal remedies against the members of our supervisory board or management board.

     Our Articles and our internal corporate affairs are governed by Dutch law, and the rights of our shareholders and the responsibilities of our supervisory board and management board are different from those established under United States laws. For example, class action lawsuits and derivative lawsuits are generally not available under Dutch law, and our supervisory board and management board are responsible for acting in the best interests of the company, its business and all of its stakeholders generally (including employees, customers and creditors), not just shareholders. Furthermore, we are obligated to indemnify the members of our supervisory board and management board against liabilities for their good faith actions in connection with their service on either board, subject to various exceptions. As a result, our shareholders may find it more difficult to protect their interests against actions by members of our supervisory board or management board than they would if we were a U.S. corporation.

Because of our corporate structure, our shareholders may find it difficult to enforce claims based on United States federal or state laws, including securities liabilities, against us or our management team.

     We are incorporated under the laws of the Netherlands, and the vast majority of our assets are located outside of the United States. In addition, some of our officers and management board members reside outside of the United States. In most cases, a final judgment for the payment of money rendered by a U.S. federal or state court would not be directly enforceable in the Netherlands. The party in whose favor such final judgment is rendered would need to bring a new suit in the Netherlands and petition the Dutch court to enforce the final judgment rendered in the United States, and there can be no assurance that a Dutch court would impose civil liability on us or our management team in such a suit or in any other lawsuit predicated solely upon U.S. securities laws. In addition, because most of our assets are located outside of the United States, it could be difficult for investors to place a lien on our assets in connection with a claim of liability under U.S. laws. As a result, it may be difficult for investors to effect service of process within the United States upon us or our management team, enforce U.S. court judgments obtained against us or our management team outside of the U.S., or enforce rights predicated upon the U.S. securities laws.

We may not be able to make distributions or repurchase shares without subjecting our shareholders to Dutch withholding tax.

     A Dutch withholding tax may be levied on dividends and similar distributions made by Vistaprint N.V. to its shareholders at the statutory rate of 15% if we cannot structure such distributions as being made to shareholders in relation to a reduction of par value, which would be non-taxable for Dutch withholding tax purposes. We have repurchased our shares and may seek to repurchase additional shares in the future. Under our Dutch Advanced Tax Ruling, a repurchase of shares should not result in any Dutch withholding tax if we hold the repurchased shares in treasury for the purpose of issuing shares pursuant to certain employee share awards or for the funding of acquisitions. However, if the shares cannot be used for these purposes, or the Dutch tax authorities challenge the use of the shares for these purposes, such a repurchase of shares for the purposes of capital reduction may be treated as a partial liquidation subject to the 15% Dutch withholding tax to be levied on the difference between our recognized paid in capital for Dutch tax purposes and the redemption price.

We may be treated as a passive foreign investment company for United States tax purposes, which may subject United States shareholders to adverse tax consequences.

     If our passive income, or our assets that produce passive income, exceed levels provided by law for any taxable year, we may be characterized as a passive foreign investment company, or a PFIC, for United States federal income tax purposes. If we are treated as a PFIC, U.S. holders of our ordinary shares would be subject to a disadvantageous United States federal income tax regime with respect to the distributions they receive and the gain, if any, they derive from the sale or other disposition of their ordinary shares.

     We believe that we were not a PFIC for the tax year ended June 30, 2011 and we expect that we will not become a PFIC in the foreseeable future. However, whether we are treated as a PFIC depends on questions of fact as to our assets and revenues 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 PFIC for our current tax year or for any subsequent year.

If a United States shareholder acquires 10% or more of our ordinary shares, it may be subject to increased United States taxation under the “controlled foreign corporation” rules.

     Each “10% U.S. Shareholder” of a non-U.S. corporation that is a “controlled foreign corporation,” or CFC, for an uninterrupted period of 30 days or more during a taxable year, and that 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 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

     On November 9, 2010, we announced that our Supervisory Board authorized a repurchase of up to an aggregate of $160.0 million of our ordinary shares in open market or privately negotiated transactions subject to the purchase parameters set by our shareholders and Supervisory Board including a limit that the repurchases cannot exceed 10% of our issued and outstanding ordinary shares as of November 4, 2010, the date of our Annual General Meeting of Shareholders. During the three months ended September 30, 2011 we purchased 3,074,832 of our ordinary shares for a cost of $91.1 million, inclusive of transaction costs, bringing the total ordinary shares repurchased under the program to 4,401,765 for a total cost of $148.0 million.

     On October 3, 2011, we announced that our Supervisory Board authorized the repurchase of up to 10% of our outstanding ordinary shares on the open market (including block trades that satisfy the safe harbor provisions of Rule 10b-18 pursuant to the Securities Exchange Act of 1934) or in one or more self tender offers. We have purchased 1,757,660 of our ordinary shares subsequent to September 30, 2011 and through October 21, 2011 for a total cost of $50.4 million, inclusive of transaction costs, under this share purchase program.

     The following table outlines the purchases of our ordinary shares during the three months ended September 30, 2011:

										Total Number of				Approximate Dollar
										Shares Purchased as				Value of
		Total Number				Average				Part of a Publicly				Shares that May
		of Shares				Price Paid				Announced				Yet be Purchased
		Purchased				Per Share (1)				Program				Under the Program (2)
July 1, 2011 through July 31, 2011			378,606			$	40.42				378,606			$	87,805,832
August 1, 2011 through August 31, 2011			2,696,226			$	28.11				2,696,226			$	—
September 1, 2011 through September 30, 2011			—			$	—				—			$	—
Total			3,074,832			$	29.62				3,074,832

ITEM 6. EXHIBITS

     We are filing the exhibits listed on the Exhibit Index following the signature page to this Report.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: October 28, 2011

EXHIBIT INDEX

Exhibit No.		Description
2.1		Share Purchase Agreement between Vistaprint and Albumprinter Beheer B.V. regarding Albumprinter Holding B.V. dated October 24, 2011
10.1*		Form of Restricted Share Unit Agreement for employees and executives under our 2011 Equity Incentive Plan
10.2*		Form of Restricted Share Unit Agreement for Supervisory Board members under our 2011 Equity Incentive Plan
10.3*		Form of Nonqualified Share Option Agreement under our 2011 Equity Incentive Plan
10.4*		Form of FY2012 Annual Award Agreement under our Performance Incentive Plan for Covered Employees
10.5*		Form of FY2012-2015 Four-Year Award Agreement under our Performance Incentive Plan for Covered Employees
10.6*		Amendment No. 2 to Employment Agreement between Vistaprint USA, Incorporated and Robert S. Keane dated September 28, 2011
10.7*		Employment Agreement between Vistaprint USA, Incorporated and Ernst J. Teunissen effective July 1, 2011
10.8*		Avenant au Contrat de travail (Amendment to Employment Agreement) between Vistaprint SARL and Ernst Teunissen dated October 14, 2011
10.9		Credit Agreement dated as of October 21, 2011 among Vistaprint Limited, Vistaprint Schweiz GmbH and Vistaprint B.V., as borrowers; Vistaprint N.V., as guarantor; the lenders named therein as lenders; JPMorgan Chase Bank N.A., as administrative agent; HSBC Bank USA, National Association, as syndication agent; RBS Citizens, N.A. as documentation agent; and J.P. Morgan Securities LLC as sole bookrunner and sole lead arranger, is incorporated by reference to our Current Report on Form 8-K filed with the SEC on October 26, 2011
31.1		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Rule 13a-14(a)/15d-14(a), by Chief Executive Officer
31.2		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Rule 13a-14(a)/15(d)-14(a), by Chief Financial Officer
32.1		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Chief Executive Officer and Chief Financial Officer
101.INS		XBRL Instance Document**
101.SCH		XBRL Taxonomy Extension Schema Document**
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document**
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document**
101.LAB		XBRL Taxonomy Extension Label Linkbase Document**
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document**

Attached as Exhibit 101 to this report are the following materials from this Quarterly Report on Form 10-Q, formatted in Extensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Cash Flows, and (iv) Notes to Condensed Consolidated Financial Statements.

In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q is deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act, is deemed not filed for purposes of section 18 of the Exchange Act, and otherwise is not subject to liability under these sections.

Exhibit 10.2

SHARE PURCHASE AGREEMENT

between

VISTAPRINT N.V.

and

ALBUMPRINTER BEHEER B.V.

regarding

ALBUMPRINTER HOLDING B.V.

dated 24 October 2011

Kennedy Van der Laan
Haarlemmerweg 333
PO Box 58188, 1040 HD Amsterdam
Tel: +31-20-5506666
Fax: +31-20-5506792

TABLE OF CONTENTS

1. Interpretation			5
2. Sale and Purchase of Shares			5
3. Consideration			6
4. Earn-Out Payment			7
5. Condition precedent			10
6. Closing			11
7. Post Closing Obligations			13
8. Tax matters			16
9. Representations and warranties Buyer			16
10. Representations and warranties Seller			17
11. Breach of Warranty			18
12. Specific Indemnification			20
13. Claims			21
14. Protective Covenants			22
15. Seller’s security			24
16. Set-off			25
17. Confidentiality			25
18. Notices			26
19. Transfer of Buyer’s rights and obligations			27
20. Amendments and Waivers			28
21. Entire Agreement			28
22. Fees and Expenses			28
23. Binding Nature; Waiver; Severability			28
24. No conflict			29
25. Governing law and forum			29

(G)		Hema letter
1.1		Definitions
2.2		Deed of Transfer
3.2		Closing Accounts
6.4(e)		Employment agreements
6.4(i)		Disclosure Letter
6.4(m)		Non-compete Agreement
6.4(n)		Non-solicitation Agreement
6.4 (q)		Escrow agreement and Deed of Deposit
7.4		IP transfer deeds
8.2		Tax matters
9		Buyer warranties
10.1		Seller Warranties
15.1		Bank Guarantee
15.2		Guarantee
15.3		Escrow Agreement

2.6		Group Structure Chart
5.1		Employees
5.10		Sick Employees
14.1		Property
16.1		Insurance

SHARE PURCHASE AGREEMENT

THIS AGREEMENT is made on the twenty-fourth day of October 2011.

The undersigned:

1.

VISTAPRINT N.V., a public company (naamloze vennootschap) incorporated under the laws of the Netherlands, having its seat (statutaire zetel) in Venlo and its principal place of business at Hudsonweg 8, 5928 LW Venlo, the Netherlands, registered with the Trade Register of the Chamber of Commerce for Limburg under number 14117527 (“Buyer”);

2.

ALBUMPRINTER BEHEER B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid), incorporated under the laws of the Netherlands, having its seat (statutaire zetel) in Amsterdam and its principal place of business at Stationsplein 53 -57, 1012 AB Amsterdam, the Netherlands, registered with the Trade Register of the Chamber of Commerce for Amsterdam under number 34247365 (“Seller”),

Hereinafter referred to as a “Party” or jointly as “Parties”.

Whereas:

(A)		Seller holds 100% of the issued and outstanding shares in the Company (as defined in Schedule 1.1);
(B)		the Company holds 100% of the issued and outstanding shares in the Subsidiaries (as defined in Schedule 1.1);
(C)		the Company and its Subsidiaries are engaged in the Business (as defined in Schedule 1.1);
(D)		Buyer has expressed an interest to acquire all of the shares in the Company and thereby an indirect 100% interest in the Subsidiaries;
(E)		based upon the process letter dated 3 May 2011, Buyer issued a non-binding offer to acquire a 100% interest in the Company on 14 June 2011;
(F)		Buyer and Seller have confirmed their mutual interest in a transaction whereby Seller shall sell to Buyer and Buyer shall acquire from Seller all of the shares in the Company, by a term sheet dated 5 July 2011 which was renegotiated as set out in a subsequent term sheet dated 26 September 2011;
(G)		the interest of Buyer to proceed with the transaction was conditional upon Buyer having met with representatives of Hema and Hema having provided certain written confirmations to the Buyer, which confirmations have since been given by Hema in the letter attached hereto as Schedule (G);
(H)		the Seller has given the Buyer and its advisors access to the Data Room from 6 July 2011 to 5 August 2011 to carry out due diligence as well as the opportunity to ask questions and carry out such investigations as the Buyer deemed necessary in relation to the businesses of the Target Group Members;
(I)		by letter dated on the same date of this Agreement, Buyer and Seller have complied with their respective obligations under the Dutch Merger Code (SER-besluit Fusiegedragsregels 2000);

(J)		Buyer and Seller hereby each confirm, on the basis of independent investigation undertaken by each of them, that it has no obligation to notify or seek approval for the transactions contemplated by this Agreement pursuant to the Dutch Competition Act (Mededingingswet);
(K)		by entering into this Agreement, the Parties wish to set forth the terms and conditions under which the Seller is prepared to sell and the Buyer is prepared to purchase the Shares.

Now therefore, the Parties hereby agree as follows:

1. Interpretation

1.1.

Definitions

In this Agreement, the Schedules and Annexes hereto, capitalised terms shall have the meaning ascribed thereto in Schedule 1.1.

1.2.

References

	(a)		References to the Agreement shall include the Schedules and Annexes unless the context requires otherwise.
	(b)		Reference to any statute (wet) or regulation (regelgeving) shall be construed as reference to such statute or regulation as in force on the date of execution of this Agreement.
	(c)		References to Dutch legal terms expressed in this Agreement in the English language shall be construed in accordance with Dutch law, including case law (rechtspraak) as published on or before the date of execution of this Agreement.
	(d)		References to words importing the singular will include the plural and vice versa and references to words importing one gender shall include both genders unless the context requires otherwise.
	(e)		If there is a discrepancy between an English language word and a Dutch language word used to clarify it and then to the extent of the conflict only, the meaning of the Dutch language word shall prevail.

1.3.

Background parties

The Agreement qualifies as a commercial transaction between professional parties, each with sufficient experience with the type of transactions contemplated hereby and each supported by qualified advisors.

2. Sale and Purchase of Shares

2.1.

Sale and Purchase

Subject to the terms and conditions set forth in this Agreement, Seller hereby sells to Buyer and Buyer hereby purchases from Seller the Shares.

2.2.

Delivery

Legal title to the Shares shall be delivered by Seller to Buyer by virtue of the execution of the Deed of Transfer attached hereto in the Agreed Form as Schedule 2.2. The Shares will be delivered by Seller to Buyer on the Closing Date free from any and all Encumbrances and together with all rights attaching thereto by law or the Articles.

3. Consideration

3.1.

Purchase Price

The total purchase price of the Shares is equal to the aggregate of:

(a)

the First Instalment which shall equal an aggregate amount in cash determined as follows:

	(i)		of €60,000,000 (sixty million Euros); plus or minus (as the case may be);
	(ii)		the amount of the euro for euro Net Debt adjustment as referred to in Section 3.2 below;

and

(b)

the Second Instalment, being a maximum earn-out payment for the Company’s financial year 2012 (the “Earn-Out Period”) in the amount of €5,000,000 (five million Euros) (the “Earn-Out Payment”), as further defined and to be calculated in conformance with Section 4,

and

(c)

the aggregate of the amounts payable by the Buyer under Section 8.1 hereof in respect of the Refund Payment.

(collectively the “Purchase Price”).

3.2.

The First Instalment shall be adjusted on a euro for euro basis for the amount of Net Debt. The amount of Net Debt as evidenced by the Closing Accounts shall be determined in accordance with Schedule 3.2. This Net Debt adjustment to be made to the First Instalment shall be calculated in conformance with Schedule 3.2. Subject to any Earn-Out Payment, the result of such adjustment shall fix the definitive purchase price. The date on which the Closing Accounts and calculations provided therewith are finally determined in accordance with Schedule 3.2, is hereinafter defined as the “Determination Date”.

3.3.

Payment

The Purchase Price shall be paid by Buyer to Seller as follows:

(a)

ultimately one (1) Business Day before the Closing Date, the Buyer will pay or procure the payment of an amount equal to EUR 60,000,000 minus the IP Holdback Amount (such amount hereinafter the “Closing Amount”) into the Third Party Account where it shall be held by the Civil Law Notary for and on behalf of the Buyer until the execution of the Deed of Transfer. Upon execution of the Deed of Transfer, the Civil Law Notary shall hold the Closing Amount for and on behalf of the Seller and shall release it by remitting an amount equal to the Escrow Amount to the Escrow Account in accordance with the Escrow

			Agreement, and (ii) the remainder into the bank account of the Seller with number 1288.60.448;
	(b)		within 5 (five) Business Days following the Determination Date, Seller shall pay to Buyer, or Buyer shall pay to Seller, as the case may be, the balance of the Net Debt adjustment;
	(c)		the Second Instalment consisting of the Earn-Out Payment shall be paid in conformance with Section 4;
	(d)		an amount equal to the aggregate of the net amounts of the Refund Payment received by any of the Target Group Members after Closing shall be paid in accordance with Section 8.1.

3.4.

If and to the extent any amount is paid by the Seller in respect of a breach of this Agreement, such amount shall be treated as a reduction of the Purchase Price.

4. Earn-Out Payment

4.1.		As part of the Purchase Price Buyer will pay Seller an earn-out payment of up to a maximum of €5,000,000 (five million Euros) (the “Earn-Out Payment”), subject to the provisions of this Section 4.
4.2.		In order for any Earn-Out Payment to become payable both (a) a minimum of 96% of the 2012 Revenue Target and (b) a minimum of 96% of the 2012 EBITDA Target need to be met, and the Earn-Out Payment shall be calculated as follows:

	(a)		if 96% of each of (i) the 2012 Revenue Target, being an amount of €49,152,000 (forty-nine million one hundred and fifty-two thousand Euros), and (ii) the congruent pro rata 2012 EBITDA Target, being an amount of €10,560,000 (ten million five hundred and sixty thousand Euros), are reached, 20% of the maximum Earn-Out Payment shall be payable by Buyer to Seller, i.e. an amount of €1,000,000 (one million Euros);
	(b)		if 97% of each of (i) the 2012 Revenue Target, being an amount of €49,664,000 (forty-nine million six hundred and sixty-four thousand Euros), and (ii) the congruent pro rata 2012 EBITDA Target, being an amount of €10,670,000 (ten million six hundred and seventy thousand Euros), are reached, 40% of the maximum Earn-Out Payment shall be payable by Buyer to Seller, i.e. an amount of €2,000,000 (two million Euros);
	(c)		if 98% of each of (i) the 2012 Revenue Target, being an amount of €50,176,000 (fifty million one hundred and seventy-six thousand Euros), and (ii) the congruent pro rata 2012 EBITDA Target, being an amount of €10,780,000 (ten million seven hundred and eighty thousand Euros), are reached, 60% of the maximum Earn-Out Payment shall be payable by Buyer to Seller, i.e. an amount of €3,000,000 (three million Euros);
	(d)		if 99% of each of (i) the 2012 Revenue Target, being an amount of €50,688,000 (fifty million six hundred and eighty-eight thousand Euros), and (ii) the congruent pro rata 2012 EBITDA Target, being an amount of €10,890,000 (ten million eight hundred and ninety thousand Euros), are reached, 80% of the maximum Earn-Out Payment shall be payable by Buyer to Seller, i.e. an amount of €4,000,000 (four million Euros); or

	(e)		if 100% of each of (i) the 2012 Revenue Target, being an amount of €51,200,000 (fifty-one million two hundred thousand Euros), and (ii) the congruent pro rata 2012 EBITDA Target, being an amount of €11,000,000 (eleven million Euros), are reached, 100% of the maximum Earn-Out Payment shall be payable by Buyer to Seller, i.e. an amount of €5,000,000 (five million Euros);
	(f)		in calculating the Earn-Out Payment, the Revenue for the financial year 2012 and the EBITDA for the financial year 2012, Dutch GAAP and accounting principles and procedures shall be applied, on a basis consistent with past practices within the Target Group Members prior to Closing and, in addition, in order to provide a true like-for-like comparison to the Target Group Members’ business as exists per the Closing Date, the following principles shall apply for the purposes of calculating the Earn-Out Payment, the Revenue for the financial year 2012 and the EBITDA for the financial year 2012 and when applying these principles Parties shall act in good faith and apply standards of reasonableness and fairness:

	(i)		any and all costs, , imposed on or otherwise incurred by any of the Target Group Members that would not have been incurred if the Target Group members would not have been acquired by Buyer but which are unrelated to the Target Group Members sales (for example costs related to becoming US GAAP compliant) shall not be included;
	(ii)		any amounts generated by Buyer’s synergies (including but not limited to sales of photo books to Buyer’s customers or the sale of Buyer’s products to Target Group Members’ customers) (“Buyer’s Synergies”) shall not be included (for the avoidance of doubt, (i) sales to Buyer’s customers to whom any of the Target Group Members have sold products prior to the Closing Date and (ii) sales to Buyer’s customers other than specifically targeted at Buyer’s customers by using Buyer’s customer databases, shall not be deemed amounts generated by Buyer’s Synergies);
	(iii)		any additional costs associated with the (generation of) Buyer’s Synergies (as carved out pursuant to Sub-Section 4.2(f)(ii) above) shall not be included;
	(iv)		any integration costs which are imposed on the Company relating to this transaction and the new ownership but which are unrelated to the Company sales (for example costs related to becoming US GAAP compliant), shall not be included;
	(v)		the impact of the outcome of the VAT court case won by the Company shall be included but income associated with the receipt of any VAT Refunds as defined in Section 8.1 relating to sales prior to the Closing Date shall be excluded;
	(vi)		revenue and EBITDA accrued as a consequence of any post Closing acquisitions by any of the Target Group Members as well as any costs and expenses associated therewith, shall not be included;
	(vii)		EBITDA shall be computed without regard to “exceptional items’’ as defined in Dutch GAAP;

	(viii)		EBITDA shall not include any gains, losses or profits realized from the sale of any assets other than in the ordinary course of business;
	(ix)		any intercompany charges, if any, charged by Buyer to the Company shall not be included in calculating the EBITDA; and
	(x)		any legal or accounting fees and expenses arising out of this Sale and Purchase Agreement including accounting fees directly attributable to US GAAP compliance shall not be included in calculating the EBITDA.

For the avoidance of doubt, in the event that the Company achieves at least 96% of both the 2012 Revenue Target and 2012 EBITDA Target, but one of these factors is achieved at a higher percentage, the Earn-Out Payment will be based on the lower percentage achieved. For example, if the Company achieves 98% of the 2012 Revenue Target and 96% of the EBITDA Target, an amount of €1,000,000 (one million Euros) will be payable.

4.3.

For the protection of the Seller in relation to this Section 4, the Buyer undertakes for the duration of the Earn-Out Period to cause the Target Group Members to operate their business in the ordinary course, consistent with good business practice, with the aim of preserving their business organisation, goodwill and reputation. If during the Earn-Out Period Buyer implements a material change to the ordinary and usual course of business of the Target Group Members as conducted on the Closing Date, whereby

	(a)		such change relates to any of the following matters (i) any Target Group member entering into any material agreement or assuming any material obligation outside the ordinary course of business as the same has been conducted in the 12 months prior to the date of this Agreement, (ii) any Target Group Member entering into any transaction(s) with any related party on terms other than may be deemed arm’s length, (iii) dismissal or suspension of Mr. C.D. Arends as CEO and/or any change to his position of managing director (statutair directeur) after Closing and/or (iv) dismiss or suspend any Key Employees; and
	(b)		such change (i) cannot be deemed to be commercially reasonable in light of the market and economic conditions affecting the Target Group Members’ business or operations at the time of such change and (ii) has, or may reasonably be expected to have, the negative effect of decreasing the amount of the Earn-Out Payment,
			then Parties shall enter into good faith negotiations to discuss in all reasonableness any consequences of such material change on the Earn-Out Payment. Buyer shall inform Seller of such material change as soon as possible and shall try to do so prior to the implementation of such change if such is reasonably possible.

4.4.

For the purpose of this Section 4 the Buyer shall for the duration of the Earn-Out Period,

	(a)		furnish, or cause the Target Group Members to furnish, to the Seller or those persons authorised by the Seller, monthly reports with respect to the financial position of the Target Group members and their businesses;
	(b)		organize two face to face meetings per year in which the Target Group Members will explain the monthly reports;

(c)

give the auditors of Seller full access to all books and records of the Target Group Members, during normal business hours on any Business Day and shall provide such information regarding the businesses and affairs of the Target Group Members as the Seller may require in order to enable Seller to audit the final numbers for a particular financial year which forms part of the Earn-Out Period upon the reasonable request thereto by Seller but in any event limited to once a year and any costs associated with the audit shall be borne by Seller.

4.5.

For the avoidance of doubt the confidentiality obligation as included in Section 17 of this Agreement shall apply to any information provided to Seller or those persons authorised by Seller in accordance with this Section 4.

5. Condition precedent

5.1.

The provisions of and the transactions contemplated in this Agreement and the related agreements, are conditional upon the following condition precedent (opschortende voorwaarde) being fulfilled by the due date(s) stated below, namely:

(a)

no Material Adverse Effect having occurred, or become known to Buyer, in the period as from the date hereof up to the Closing.

		(a “Condition”).
5.2.		The Condition must be:

	(a)		fulfilled; or
	(b)		waived in accordance with Section 5.5,

		no later than 17.00 CET on the fifth Business Day following signing date of this Agreement (the “Fulfilment Date”).
5.3.		The Parties must use their best efforts to achieve the satisfaction of the Condition as soon as possible and in any event by the Fulfilment Date.
5.4.		If at any time a Party becomes aware of a fact or circumstance that might prevent a Condition being satisfied, it must immediately inform the other Party in writing.
5.5.		At any time before the Fulfilment Date applicable to each Condition, Buyer may waive, in whole or in part, any condition set out in Section 5.1, which condition are inserted for the sole benefit of Buyer. In all cases by written notice to Seller. Any waiver notice must be narrowly construed as relating only to the matters expressly mentioned in it.
5.6.		If any Condition is not:

	(a)		satisfied by the relevant Fulfilment Date; or
	(b)		waived in accordance with Section 5.5 by Buyer,

		the Buyer may, at its sole discretion elect to move the Closing to a date not more than thirty (30) Business Days after the Fulfilment Date.
5.7.		If the Condition has not been fulfilled or waived by the Fulfilment Date, this Agreement will lapse and be of no further force and effect, without prejudice to the Parties’ accrued rights and

obligations at that time, and except for the provisions of this Section 5.7, Section 1 (Interpretation), 17 (Confidentiality), 18 (Notices), 20 (Amendment and Waivers), 21 (Entire Agreement), 22 (Fees and Expenses), 23 (Binding Nature, Waiver, Severability) and 25 (Governing Law and Forum), which shall survive lapse of this Agreement.

6. Closing

6.1.		Subject to the terms and conditions of this Agreement upon satisfaction or valid waiver of the condition precedent as meant in Section 5, the consummation of the sale and purchase of the Shares shall take place on the Closing Date.
6.2.		Closing shall take place at the offices of the Civil Law Notary at 31 October 2011 or at such other time and place as shall be agreed upon by the Parties.
6.3.		Closing Agenda
6.4.		On the Closing Date, the following actions shall be taken in the sequence stated below:

	(a)		written confirmation by Buyer of the satisfaction or valid waiver of the Condition as meant in Section 5;
	(b)		confirmation by Buyer that Buyer has obtained all necessary (corporate) approvals;
	(c)		confirmation by the Civil Law Notary of receipt in the Third Party Account of the Closing Amount with a value date not later than the Closing Date;
	(d)		delivery by Seller to Buyer of evidence that Seller has assumed, or procured the release as of the Closing Date of all guarantees and other securities of any kind issued to secure obligations of Seller and/or any member of Seller’s Group that the Company has executed and/or assumed;
	(e)		delivery by Seller of the executed employment agreements or where relevant addenda thereto between Buyer and the Key Employees in the Agreed Form attached hereto as Schedule 6.4(e);
	(f)		delivery by Seller to Buyer of written confirmation from the Coöperatieve Rabobank Utrecht en Omstreken U.A. that the Coöperatieve Rabobank Utrecht en Omstreken U.A. will not use any of the termination rights or other change of control rights contained within the agreements with the Coöperatieve Rabobank Utrecht en Omstreken U.A. as a result of the transactions contemplated by this Agreement or for any other reason to date;
	(g)		delivery by Seller to Buyer of confirmation that Coöperatieve Rabobank Utrecht en Omstreken U.A. has released Seller from the security rights granted by Seller to Coöperatieve Rabobank Utrecht en Omstreken U.A. in connection with the relevant credit agreement it being understood that Buyer undertakes to provide such cooperation (including where relevant by granting security rights in the form of a parent guarantee under terms acceptable to Buyer) as may reasonably be required by the bank for continuation of the current credit agreement in order to effectuate that Seller will be released from its obligations thereunder or otherwise allow the same to be terminated at Closing;

	(h)		delivery by Seller to Buyer of written confirmation from the insurance companies which have entered into insurance policies with Target Group Members that such insurance companies will not use any of the termination rights or other change of control rights contained within the insurance policies and the conditions applicable thereto as a result of the transactions contemplated by this Agreement or for any other reason to date;
	(i)		delivery by Seller to Buyer of the Disclosure Letter as attached hereto as Schedule 6.4(i);
	(j)		delivery by Seller to Civil Law Notary of the original shareholders’ register of the Company;
	(k)		delivery by Seller to the Buyer of the Bank Guarantee;
	(l)		delivery by Seller to the Buyer of the guarantees as referred to in Section 15.2;
	(m)		delivery by the Seller to the Buyer of Non-Compete Agreements entered into by each of Mr. C.D. Arends, Mr. J.J. Schuijff, Mr. E.H. Smid, Mr. H. Veldhuizen and Mr. J. Keijzer and Mr. H. Deitmers in Agreed Form attached hereto as Schedule 6.4(m);
	(n)		delivery by the Seller to the Buyer of Non-Solicitation Agreements entered into by each of Wouter Staatsen and Maarten Wensveen in Agreed Form attached hereto as Schedule 6.4(n);
	(o)		Seller shall represent and warrant to Buyer that, except as disclosed to Buyer, each and every statement set out in Schedule 10.1 is true and accurate and not misleading on the Closing Date;
	(p)		Buyer shall represent and warrant to Seller that each and every statement set out in Schedule 9 is true and accurate and not misleading on the Closing Date;
	(q)		delivery by the Seller to the Buyer of two copies of a DVD containing the information made available in the Data Room one copy of which will be held in deposit by the Notary pursuant to the escrow agreement and the Deed of Deposit each attached hereto in Agreed Form as Schedule 6.4(q);
	(r)		delivery by the Seller, in it’s capacity of sole shareholder of the Company, of (i) the resignation letter of C.D. Arends Taxus Management B.V. as managing director of the relevant Target Group Members and (ii) of a written shareholder’s resolution granting full and final discharge to C.D. Arends Taxus Management B.V. of its management of the relevant Target Group Members up to the Closing Date;
	(s)		execution by the Buyer, the Seller and the Civil Law Notary of the Deed of Deposit;
	(t)		execution by Buyer, Seller and the Escrow Agent of the Escrow Agreement attached hereto in agreed from as Schedule 15.3;
	(u)		execution by the Civil Law Notary of the Deed of Transfer;
	(v)		appointment by the General Meeting of the Company of each of Mr. C.D. Arends, Mr. Nicholas Ruotolo and Mr. Arnaldo Munoz as members to the Board and the Company as managing director of those Target Group Members from which board of managing directors C.D. Arends Taxus Management B.V. resigned;

(w)

release of the Closing Amount as meant in Section 3.3(a) by the Civil Law Notary to Seller. The Seller shall be entitled to any interest on these funds.

6.5.		Closing considered as a single transaction
		It is agreed that all actions and transactions constituting the Closing shall be regarded as a single transaction so that, at the option of the Party having interest in the carrying out of an action or transaction, no action or transaction shall be deemed to have taken place unless all other actions and transactions shall have taken place as provided in this Agreement. Buyer shall cause the Company to register the transfer of the Shares, including the details of the Deed of Transfer, in its shareholders register as soon as reasonably practicable after Closing, but this action shall not be deemed part of Closing for the purposes of this Section 6.5.

7. Post Closing Obligations

7.1.		The Parties must do or ensure that all further acts are done, and execute, or ensure the execution of, all further documents as may in the reasonable opinion of the Buyer be necessary to fully effect transfer of the Shares and the other transactions contemplated in this Agreement.
7.2.		Effective immediately following the Closing, Seller shall, and shall procure that each member of its Group and the members of the Groups of each of the Seller’s direct and indirect shareholders (other than those persons who will continue to be in the service of the Target Group Members after Closing) shall, not hold itself out as being connected with the Company or any member of the Company’s Group. Seller shall change its corporate name into a name not including “Albumprinter” within 20 Business Days after the Closing Date.
7.3.		Seller hereby acknowledges and agrees that, immediately following the Closing, all arrangements between Seller or a member of its Group and the Target Group Members shall be terminated by Seller or shall automatically lapse in accordance with their terms as a result of the transactions contemplated by this Agreement, including but not limited to, all inter-company arrangements between Seller’s Group and the Target Group Members.
7.4.		Transfer of IP Rights AlbumPrinter N.V.

	(a)		Seller shall secure that all intellectual property rights relating to the Target Group Members’ business, owned or formerly owned by AlbumPrinter N.V., a company incorporated under the laws of the Netherlands Antilles, shall be legally transferred to AlbumPrinter B.V. within 60 Business Days after Closing.
	(b)		As an incentive for Seller to perform its obligations under Section 7.4(a) Buyer shall at Closing retain part of the First Instalment, in the amount of EUR 1,000,000 (the “IP Holdback Amount”) as a holdback. Buyer shall release the IP Holdback Amount to Seller within 5 Business Days of receipt by Buyer of duly executed copies of the deeds of transfer relating to the intellectual property rights to AlbumPrinter B.V. attached hereto in agreed form as Schedule 7.4.
	(c)		The 60 Business Day period referred to in Section 7.4(a) does not constitute a firm date (fatale termijn) so that, if and to the extent that the intellectual property rights referred to in Section 7.4(a) are not transferred to AlbumPrinter B.V. within the 60 Business Day period,

such shall not lead to forfeiture by Seller of its right to receive the IP Holdback Amount in accordance with this Section 7.4 as soon as the intellectual property rights referred to in Section 7.4(a) have been transferred, provided that performance of the obligations in Section 7.4(a) has not become impossible and without prejudice to Buyer’s rights to claim damages for breach of contract in accordance with the Dutch Civil Code. If and to the extent that the intellectual property rights referred to in Section 7.4(a) have not been transferred to AlbumPrinter B.V. within 5 years after Closing, Buyer will on the 5^th anniversary of the Closing Date, remit the IP-Holdback Amount increased with interest, reasonable for the period of time held and interest applying to Buyer’s normal banking arrangements, from the Closing Date up to the date the payment is made, to the Seller provided that (i) Seller has used all commercially reasonable endeavours to cause the transfer of the abovementioned intellectual property rights to AlbumPrinter B.V. and (ii) no claims from third parties have been made (and remain unresolved) against the Buyer and/or any Target Group Member or the Target Group Members have filed claims against third parties which remain unresolved or which were unsuccessful due to the inability to prove a valid chain of ownership with respect to the abovementioned intellectual property rights, in respect of the use of, or title to, the abovementioned intellectual property rights after the Closing Date.

7.5.		Seller shall use all reasonable endeavours to cause Albumprinter Pty Ltd to provide an irrevocable power of attorney to Buyer, governed by the laws of the Netherlands to transfer the Australian national trademarks ‘ALBELLI’ (word mark, application number 1295660), ‘ALBUMPRINTER’ (word mark, application number 1295661), ‘ALBUMPRINTING’ (word and device mark, application number 1204217) and ‘albumprinter’ (word mark, application number 1112703) to a Vistaprint group entity in Australia and to perform all acts and to file all registrations which are required in order to effectuate this transfer as soon as reasonably practicable after the Closing Date.
7.6.		Seller shall cooperate to the fullest extent as may reasonably be required with respect to the registration of the Swedish national trademarks “Önskefoto” (word mark, application number 2009/07447), “-ett minne för livet — “Önskefoto” (word and device mark, application number 2006/06333) and “SnapSend” (word mark, application number 2004/02675) so as to reflect the assignment thereof to AlbumPrinter B.V. under the asset transfer agreement between AlbumPrinter B.V. and Online Nordic Brands AB.
7.7.		Release of Seller

	(a)		The Buyer shall procure ultimately at Closing the release of the Seller, and any other member of the Seller’s Group from any guarantee, indemnity, contribution obligations (bijdrageverplichtingen), letter of comfort or Encumbrances or other similar liability given or incurred by it for the benefit of (i) any of the Target Group Members or any of the managing directors or employees of any of the Target Group Members, whether actual or contingent.
	(b)		The Buyer acknowledges that the Seller shall (i) terminate, at Closing or in any event within 2 Business Days following Closing, any statements of joint and several liability issued by the Seller under Section 2:403 of the Dutch Civil Code in respect of any of the Dutch Target Group Members and (ii) terminate, as soon as possible after Closing, any remaining liability under such statements of joint and several liability in accordance with Section 2:404 of the

Dutch Civil Code. If any creditors of any of the Dutch Target Group Members object to the termination of such remaining liability, the Buyer shall provide such objecting creditor(s) with sufficient comfort as shall have been requested by these creditor(s) or as may have been determined by a court, insofar as such can reasonably be expected from Buyer and only at at arm’s length terms.

7.8. Wrong Pocket

	(a)		Insofar as any asset exclusively or primarily used by the Target Group Members in the conduct of its Business is determined to be owned by a member of the Seller’s Group (not being a Target Group Member) and this Agreement contains no express provision regarding the disposition thereof, the Parties shall engage in good faith negotiations on arm’s length terms with a view toward allowing the use by the Target Group Members of such asset, whether by means of a transfer of legal title (eigendomsoverdracht), license or otherwise, for no additional consideration to be paid by Buyer to Seller.
	(b)		Insofar as any contract exclusively or primarily inuring to the benefit or burden of the Target Group Members in the conduct of their Business is determined to be held by a member of the Seller’s Group (not being any Target Group Member) and this Agreement contains no express provision regarding the disposition thereof, the Parties shall engage in good faith negotiations on arm’s length terms with a view toward allowing the use by the Target Group Member of such contract, whether by means of assignment (contractsovername), license or otherwise, for no additional consideration to be paid by either Party to the other Party and with regard to any third-party consents required.
	(c)		Until the final disposition of such asset or contract, Seller hereby grants and shall cause the relevant member of its Group to grant to the relevant Target Group Member a royalty-free license to use such asset or contract.

7.9. Retention of Books and Records

	(a)		Buyer shall, and shall procure that the Company shall, retain for a period of 7 (seven) years from the Closing Date, or such longer period as may be prescribed by applicable law, all books, records and other written information relating to the Target Group Members prior to the Closing Date, insofar as the same has been delivered to Buyer or is in the possession of the Target Group Members pursuant to this Agreement.
	(b)		Seller shall, and shall procure that the relevant members of its Group shall, retain for a period of 7 (seven) years from the Closing Date, or such longer period as may be prescribed by applicable law, all books, records and other written information relating to the Target Group Members prior to the Closing Date, insofar as the same remains in the possession of Seller or a member of its Group pursuant to this Agreement.
	(c)		Buyer and Seller shall allow each other and their respective representatives, upon reasonable prior written notice, access during normal business hours to such books, records and information, including the right to inspect and take copies at the cost of the Party seeking the same, insofar as such access is reasonably required by that Party to comply with its statutory and contractual obligations.

7.10.

The Seller shall procure that all communications, notices, correspondence, information, orders or enquiries relating to any of the Target Group Members which are received by the Seller or any member of the Seller’s Group on or after Closing shall be immediately passed to the Buyer.

8. Tax matters

8.1.

The Seller has provided evidence to the Buyer that the Dutch Tax authorities have withdrawn their appeal that was pending in the Amsterdam Appeal Court with respect to the Seller’s favorable lower court ruling approving a lower rate of VAT chargeable on the sale of photobooks. The Company and certain of its wholly owned subsidiaries form the Seller’s VAT group in the Netherlands. The Seller has represented that the Company should be entitled to a VAT refund, (“VAT Refund”) for sales made prior to the Closing Date where a higher rate of VAT was charged. If the Seller executes a written agreement with the Dutch Tax authorities confirming the amount, method and timing of the VAT Refund prior to the Closing Date, the Seller shall provide a copy of the agreement to the Buyer. If the Seller has not received a written agreement from the Dutch tax authorities prior to the Closing Date, the Target Group Members will take, in close consultation with Seller, all reasonable efforts to obtain the VAT Refund from the Dutch tax authorities with the assistance of external tax and legal advisors, whereby the Seller may request the Buyer to take or cause the Target Group Members to take any action reasonably necessary to obtain the Tax Refund and Buyer will accede to such request if such can reasonably be expected from Buyer and such request fairly balances the interests of both Seller and Buyer in relation to the VAT Refund. To the extent the Buyer incurs external tax and legal advisor costs associated with the collection of the VAT Refund, the Seller shall bear the costs. Due to the fact that any VAT Refund received by the Company or its subsidiaries will be subject to Dutch corporate income tax, the Buyer and the Seller agree that the amount of any payment due to the Seller shall be net of the Dutch corporate income tax at the statutory rate actually applicable. For purposes of clarity, the amount of any payment to the Seller relating to a VAT Refund (the “Refund Payment”) shall be the amount of the VAT Refund to be actually received by Buyer from the Dutch tax authorities after Closing, less applicable CIT due (for the Dutch corporate income tax liability), plus any statutory interests and possible other compensations actually received and less any external tax or legal costs incurred by the Buyer and less any amounts due to HEMA under the HEMA Contract. The Buyer will pay any Refund Payment to the Seller within 10 Business Days of receiving the VAT Refund from the Dutch Tax authorities. Any Refund Payment made to the Seller shall be deemed an increase of the Purchase Price.

8.2.

Schedule 8.2 includes a detailed description on how Seller and Buyer will deal with relevant Tax matters, the provisions of which Schedule shall apply to all pending and future Tax related issues, other than the Tax Warranties.

9. Representations and warranties Buyer

Buyer represents and warrants (garandeert en staat er voor in) to Seller that, as at the date of this Agreement and shall on the Closing Date represent and warrant that, each of the Warranties set out in Schedule 9 is true, accurate and not misleading.

10. Representations and warranties Seller

10.1.		Seller represents and warrants (garandeert en staat er voor in) to Buyer that, as at the date of this Agreement and shall on the Closing Date represent and warrant that, each of the Warranties set out in Schedule 10.1 is true, accurate and not misleading, except as otherwise provided in Section 10.8.
10.2.		Each of the Warranties shall be construed as a separate and independent representation and warranty (garantie) such that Buyer shall have a separate claim and right of action for every breach of this warranty and shall not be limited by the terms of any other Warranty, either expressly or by means of reference.
10.3.		Seller acknowledges that each of the Warranties is material and that the truth and accuracy in respect of each of the Warranties is essential for the Buyer’s decision to enter into this Agreement on the stated terms and conditions, including the valuation given to the Target Group Members by Buyer and the amount of the Purchase Price. The Parties therefore intend that the Seller is liable for any breach of any of the Warranties subject only to the limitations expressly set out in this Agreement.
10.4.		Seller is not aware of any fact, matter, event or circumstance relating to the affairs of the Target Group Members, which has not been disclosed in this Agreement, the Exhibits or the Schedules thereto or in the Disclosed Information, the knowledge of which could reasonably be expected to adversely influence the decision of a reasonably prudent buyer to purchase the Company in any material respect.
10.5.		For the purpose of the automatic repetition of the Warranties on the Closing Date, each reference in the Warranties to the “date of this Agreement” is to be construed as a reference to the date of this Agreement and the Closing Date.
10.6.		Where any Warranty refers to the knowledge and information of the Seller, that reference will be considered to include the knowledge of, and information available to:

	(a)		the Seller; and
	(b)		any supervisory or managing directors of the Seller or any of Messrs. Kees Arends, Wouter Staatsen and Maarten Wensveen;

with respect to the facts and circumstances as meant in the relevant Warranty and in each case after proper and diligent enquiries.

10.7.

The applicability of Book 7, Title 1 of the Netherlands Civil Code is hereby excluded.

10.8.

The ability of Buyer to rely on the Warranties is limited by, and Seller shall not be in breach of or be liable for any Warranties Breaches in respect of, matters fairly disclosed in the Disclosed Information and sufficiently clear on the face of the relevant document, such that a reasonably experienced buyer reading such information would understand the nature and scope of it and its likely impact on the Target Group Members, without needing to ask for further information or documents. For the avoidance of doubt, a reference to information or a document that is not in fact included in the Disclosed Information or the documents attached to it does not result in the document or the information in it to be fairly disclosed as meant in this Section 10.8.

10.9.		The Buyer acknowledges and agrees that the Seller makes no representation or warranty and does not accept any duty of care as to the accuracy of any forecasts, estimates, projections, statements of intent or statements of opinion howsoever provided to the Buyer or any of its representatives or advisors. The Buyer acknowledges that no representations or warranties, express or implied are given other than the Warranties.
10.10.		The Buyer hereby represents and warrants to the Seller that upon signing of this Agreement the Buyer has no awareness that there is any breach of any of the Warranties.
11.		Breach of Warranty
11.1.		In the event of a breach of any Warranty (“Breach”), Seller shall be liable to Buyer for all Damages incurred as a result of such breach in accordance with the provisions of this Section 11 and shall indemnify and hold harmless (vrijwaren) the Buyer (or at the request of the Buyer, the relevant Target Group Member) from and against any Damages incurred by the Buyer or any Target Group Member directly resulting from such Breach.
11.2.		Damages shall, for the purposes of this agreement include the costs, expenses, damages or liabilities incurred by the Buyer, including those incurred in preventing, limiting and/or determining the scope of the damage and the reasonable costs incurred in obtaining satisfaction of its damages claim against Seller, including reasonable attorneys’ fees, it being understood that if and to the extent that such costs and expenses are borne by another member of Buyer’s Group, Seller shall reimburse the relevant member of Buyer’s Group.
11.3.		Limitations in time
		Seller shall be liable to Buyer for Breach under this Section 11 occurring on or after 00.00 hours on the Closing Date:

	(a)		for a period unlimited in time for the Warranties as meant in Sections 1 and 2, except for the Warranties in section 1.5 of Schedule 10.1 (corporate authority and title to shares);
	(b)		for a period of five years for the Warranties as meant in Sections19.1 and 19.3 of Schedule 10.1 (compliance) but only insofar the Breach relates to an environmental matter;
	(c)		for a period equal to the applicable statute of limitations (verjaringstermijn) plus six (6) months after the Closing Date with respect to the Warranties stated in Section 15 of Schedule 10.1 (Tax); and
	(d)		for a period of 18 months after the Closing Date for all other Warranties.

11.4.		Limitations in amount
		Buyer is not entitled to recover Damages for a Breach:

	(a)		to the extent the face value of an individual Breach (or a series of Breaches arising out of substantially identical facts or circumstances) does not exceed €15,000; and
	(b)		to the extent the aggregate amount thereof does not exceed €300,000. Once this minimum has been exceeded, Seller shall compensate Buyer for all damages and costs suffered including such minimum;

		to the extent the relevant Breach relates to Employment Warranties lower thresholds of €2,000 and €100,000 shall apply respectively.
11.5.		The total liability of Seller for any and all claims under this Agreement (including any Indemnity Claims) shall not exceed an amount equal to the amount of the Purchase Price actually received by the Seller.
11.6.		With the exception of Warranties as meant in Sections 1 and 2, except for the Warranties in section 1.5 (corporate authority and title to shares) and Section 8 (Intellectual Property) of Schedule 10.1, which are not subject to any limitation, other than the limitation set out in Section 10.8 and 11.5, the total liability for all claims constituting a Breach of Warranties will be equal to €6,000,000 (six million Euros), which amount will be increased with an amount equal to 10% of the actual Earn-Out Payment determined pursuant to Section 4, up to a maximum of €6,500,000 (six million five hundred thousand Euros) when the full Earn-Out Payment is paid.
11.7.		The Buyer shall not be entitled to recover more than once in respect of the same Damages suffered or in respect of matters that have been included in the adjustment of the Purchase Price pursuant to Section 3.
11.8.		The minimum and maximum thresholds stipulated in Sections 11.4 and 11.5 shall be determined exclusive of any penalties, interest and expenses.
11.9.		In calculating the liability of Seller for any claim under this Agreement, that liability will be reduced by the sum of the following economic benefit, if any, relating to that claim:

	(a)		the amount of any Tax refund received or reasonably certain to be received by any of the Target Group Members, the Buyer or any other member of the Buyer’s Group and (ii) any reduction in Tax payable by any of the Target Group Members, to the extent that such refund or reduction is attributable to the facts or circumstances giving rise to the liability of the Seller;
	(b)		the amount of any provision, allowance or reserve which is attributable to the facts giving or circumstances giving rise to the liability of the Seller, in the Accounts;
	(c)		any amount actually received or reasonably certain to be received by the Buyer or any of the Target Group Members under an insurance policy or from a third party, to the extent that such amount is attributable to the facts giving rise to the claim; and
	(d)		any amount that would have been covered under any insurance policy of any of the Target Group Members in effect immediately prior to Closing, had such insurance policy been maintained after the Closing Date.

11.10.

The Seller shall not be liable under this Agreement in respect of any matter, act, omission or circumstance (or any combination thereof), including the aggravation of a matter or circumstance to the extent that the same would not have occurred but for:

(a)

any matter or thing done or omitted to be done pursuant to and in compliance with this Agreement or otherwise at the request or with the approval of the Buyer;

(b)

any act, omission or transaction of the Buyer or any other member of the Buyer’s Group or any of their respective directors, officers, employees or agents or successors in title after the date of this Agreement.

11.11.		The limitation of the liability of Seller pursuant to this Section 11 shall not apply in the event of fraud (fraude), wilful misconduct (opzet), intentional misrepresentation (bedrog) or gross negligence (grove schuld) on the part of Seller as a result of which one or more Warranties is inaccurate or misleading.
12.		Specific Indemnification
12.1.		Seller shall indemnify (vrijwaren) and hold Buyer and each Target Group Member harmless (schadeloosstellen), against any and all Damages suffered in relation to any of the following third-party claims (“Indemnification Claim”), it being understood that if and to the extent that any costs and expenses are borne by another member of Buyer’s Group in connection with an Indemnification Claim, Seller shall reimburse the relevant member of Buyer’s Group for such costs and expenses:

	(a)		the Tax Indemnity Claims as specified in Schedule 8.2;
	(b)		any claims from (former) Employees pursuant to the fact that they have worked on an average 40 hour per week contract basis instead of the mandatory average 36 hour per week as put down in the applicable Collective Bargaining Agreement to the extent that these claims relate to the period up to Closing;
	(c)		any claims from the contemplated resignation of Mr Cubric;
	(d)		any claims following from the potential applicability of the Grafimedia Collective Bargaining Agreement to employees of the Target Group Members working at the Company’s offices in Amsterdam to the extent that these claims relate to the period up to Closing;
	(e)		any claims pursuant to the potential dispute with CeWe Color AG & Co, a German competitor of the Company regarding the matters set out in the letters from CeWe Color AG & Co dated 30 September 2010 and 1 February 2011 limited to the actual amount lost irrespective of which Buyer’s Group member or Target Group Member will suffer the Damages;
	(f)		any claims pursuant to the credit facility with Rabobank in relation to the deeds of pledge of the Benelux word mark “ALBELLI” and the domain name “AlbumPrinter”;
	(g)		any claims pursuant to the full ownership regarding Intellectual Property Rights, including, but not limited to, all Indictis related Intellectual Property Rights, relevant to the business of the relevant Target Group Members not having been legally transferred to the relevant Target Group Members;
	(h)		any claims resulting from the missing tax certificates (VAR-verklaring) which could result the Company and/or the Subsidiairies having to pay backdated employer tax and social security;
	(i)		any claims pursuant to soil pollution at Laan van Ypenburg 34-38 in The Hague, by the Company in the past;

(j)

any claims by the sellers of Onskefoto and Bonusprint against any Target Group Member for any deferred consideration related to the acquisitions by the relevant Target Group Member of the aforementioned companies insofar as these claims exceed the estimate of the total payment obligation included in the Closing Accounts;

12.2.		The limitations of liability as set out in Sections 11.4 and 11.6 shall not apply to an Indemnification Claim. All costs, including reasonable attorneys’ fees, incurred by the Buyer, the Target Group Members and each Group Company in connection with an Indemnification Claim, if valid, shall be borne by Seller.
13.		Claims
13.1.		Notice of Claims

	(a)		Notice of any claims against the Seller under this Agreement shall be provided in writing by Buyer to Seller in accordance with Section 18.
	(b)		Said notice shall be provided as soon as reasonably possible, but ultimately within 30 Business Days following determination by Buyer that the relevant facts and circumstances qualify as a Claim.
	(c)		Notice of a Claim shall include (i) all reasonable particulars of the facts underlying the Claim and all relevant underlying documentation and information as may reasonably be required by the Seller to assess the merits of the claim, and (ii) a reasonable estimate by Buyer of the Damages which form the subject of the Claim.

13.2.

Disputed Claims

	(a)		Insofar as Seller denies liability for a claim of the Buyer under this Agreement, each of the Parties shall be under the obligation to endeavour, on a best efforts basis, to resolve amicably the relevant matter in dispute. If the dispute or difference is not resolved to the satisfaction of both Parties within 30 Business Days after it has arisen, the dispute or difference may be referred to the court of competent jurisdiction in Amsterdam in accordance with Section 25.
	(b)		Any claim, with the exception of any Third Party Claim, notified to the Seller shall (if it has not been previously satisfied, settled or withdrawn) be deemed to be irrevocably withdrawn 6 (six) months after the Buyer has filed notice in accordance with Section 13.1(b), unless legal proceedings in respect of it (i) have been formally commenced and (ii) are being and continue to be pursued with reasonable diligence.

13.3.		Disputed Warranty Claims relating to Accounts, Net Debt and Net Working Capital
13.4.		Insofar as Seller denies a Warranty Claim, in whole or in part, relating to any of the Accounts, Net Debt and / or Net Working Capital Warranties, stated in Schedule 3.2, the provisions of Section 3 of Schedule 3.2 shall apply mutatis mutandis.
13.5.		Defence of Third Party Claims

(a)

If the Buyer is confronted with or otherwise becomes aware of any claim of a third party, with the exception of claims from any Tax Authority for which claims the arrangements as

			set out in Schedule 8.2 will prevail, against the Buyer or any of the Target Group Members, which claim, if valid, would result in liability of the Seller under this Agreement (a “Third Party Claim”), the Buyer shall notify the Seller of such Third Party Claim as soon as possible after having become aware thereof in accordance with Section 13.1. As soon as possible following the date of that notification the Parties shall consult each other on the course of action to be taken. The Seller shall, however, at its sole discretion and subject only to any restriction under any insurance policy, be entitled to take, or request the Buyer to take, or to procure that the relevant Target Group Member shall, take any reasonable action necessary to defend or settle the Third Party Claim, and Buyer shall not withhold its cooperation with respect to such a reasonable request on unreasonable grounds. Each of Seller and Buyer shall bear its own costs in connection with a Third Party Claim. The Seller shall use best endeavours to strike a fair balance between the interests of the Seller in keeping its liability in connection with the Third Party Claim as low as possible and the interests of the Buyer and the Target Group Members to maintain good business relations with the third party concerned.
	(b)		If Seller does not elect to assume the conduct as contemplated above, Buyer may elect to assume the conduct of any appeal, dispute, compromise or defence of the Third Party Claim and of any incidental negotiations as long as this does not have any adverse effect on the Seller. Seller shall however in this event reimburse all Buyer’s costs in connection with the Third Party Claim.
	(c)		The Parties will cooperate with each other in dealing with any Third Party Claim and will allow each other access to all books and records which might be useful for such purpose, during normal business hours and at the place where the same are normally kept, with full right to make copies thereof or take extracts therefrom. Such books and records shall be subject to a duty of confidentiality except for disclosures necessary for resolving such Third Party Claim or otherwise required by applicable law or stock exchange rules.
	(d)		Neither Buyer nor Seller shall admit liability, settle or otherwise compromise the third-party claim without the prior written consent of the other Party, which consent shall not unreasonably be withheld. The Party entitled to grant such consent shall respond in writing within 10 Business Days following the issue of a request thereto, in the absence of which consent shall be deemed to have been granted. Buyer and Seller shall procure that the members of their respective Group adhere to this Section 13.5(a).

13.6.		Payment of Claims
		Seller shall remit payment of the Damages to Buyer or, at the option of Buyer, to the Company within 30 Business Days following the date as per which Parties have reach the amicable agreement pursuant to Section 13.3, in the amount agreed upon.
14.		Protective Covenants
14.1.		Non-competition

	(a)		For a period of two years following the Closing Date, Seller shall refrain and shall cause each member of its Group to refrain from directly or indirectly engaging or participating in any business in the Protected Field.
	(b)		For purposes of this Section 14.1, the Protected Field is defined as the Business of the Company and its Subsidiaries as conducted on the Closing Date.
	(c)		The restriction in Section 14.1(a) shall apply in the territory in which the Seller engaged in the Protected Field on the Closing Date as well as the territory in which the Seller has incurred investments in order to conduct future business in the Protected Field, being Europe.
	(d)		The Parties hereby mutually acknowledge and agree that the restrictions as stated in this Section 14.1 are necessary and proportionate to allow the Buyer to enjoy and protect the value of the Target Group Members acquired pursuant hereto.
	(e)		Each of the restrictions in each sub-clause of Section 14.1 shall be enforceable independently of each other and its validity shall not be affected if any of the others is invalid.

14.2.

Seller Non-solicitation

	(a)		For a period of two years following the Closing Date the Seller shall refrain and shall cause each member of its Group to refrain from inducing any customer or supplier with whom the Target Group Members traded on the Closing Date, as well as any Person with whom the Target Group Members traded in the 12 (twelve) months preceding the Closing Date, to terminate its business relationship with the relevant Target Group Members.
	(b)		For a period of two years following the Closing Date Seller shall not, and shall cause each member of its Group not to, solicit any Person employed by the Target Group Members on the Closing Date to terminate his/her employment, except for such Persons who (a) answer a public advertisement or (b) are approached by the Seller or a member of its Group following termination of that Person’s employment by the Target Group Members.
	(c)		With respect to the HEMA Contract dated 16 February 2007, as amended on 16 February 2011,and HEMA in general, in relation to the topics covered under (a) and (b) of this Section 14.2 Parties agree that the respective applicable periods will be extended for up to the expiration date of the last HEMA Contract, being 15 February 2016 instead of two years considering the crucial role of these contracts for the Target Group Members and it’s business, and Parties explicitly agree and acknowledge that such extended periods are reasonable.

14.3.		Penalty
		In the event of a breach or a threatened breach of this Section 14 by Seller, Buyer shall be entitled to seek appropriate injunctive relief. In the event of a breach, Buyer shall also be entitled to seek actual damages and any other relief permitted under law including specific performance (nakoming). Without prejudice to the rights of Buyer as stated in this Section 14.3, Buyer is entitled to a penalty (boete) in the amount of €100,000 for each breach of Section 14.1 and an amount of €10,000 for each day in which the breach continues.

15.		Seller’s security
15.1.		As security (zekerheid) for any claims of the Buyer against the Seller under this Agreement, the Seller shall cause a bank guarantee to be issued by Rabobank Utrecht en Omstreken Coöperatief U.A. for the benefit of the Buyer on the Closing Date in the principal amount of €6,000,000 (six million Euros), which amount will be increased with an amount equal to 10% of the actual Earn-Out Payment determined pursuant to Section 4, up to a maximum of €6,500,000 (six million five hundred thousand Euros) when the full Earn-Out Payment is paid, in the agreed form (the “Bank Guarantee”), which Bank Guarantee shall remain in full force and effect until 18 months after Closing, in the Agreed Form attached hereto as Schedule 15.1.
15.2.		As security for the performance by the Seller of its payment obligations towards the Buyer under this Agreement, and only to the extent that the Bank Guarantee offers insufficient recourse for the Buyer, each of the following persons shall bind itself as surety (borgstellen) by and subject to the terms of the Guarantee (overeenkomst van borgtocht) entered into for the benefit of the Buyer in the Agreed Form attached hereto as Schedule 15.2.: Van den Ende & Deitmers Crossmedia B.V., Mr. H. Veldhuizen, Mr. A. Grimbergen, Mr. M. Plomp, Mr. J. Schuijff, Mr. E. Smid, Mr. J. Overweg, Mr. H. Pesch, Mrs. S. Hartingsveldt, Mr. J. Keijzer, Mr. C.D. Arends, Mr. W. Staatsen, Mr. M. Wensveen, Mr. L. Delaney, Mr. S. Nagtegaal, Mr. E. de Greef, Mr. R. Heusinkveld, Mr. J. Buurman, Mr. F. van Run, Mr. K. Waslander, Mr. Q. la Riviere, Mr. D. Eldering and Mr. P. Kooi.
15.3.		Escrow for deferred consideration Önskefoto and Bonusprint