Vistaprint 2006 Annual Report Download - page 50

Table of Contents
The third party professional fees include accounting, legal, recruiting and organizational consulting service fees. The share−based compensation
costs include a charge of $3.2 million related to the modification of the vesting of options that were incurred as the result of a transition agreement
entered into with our former Chief Financial Officer. See Note 2 of the Notes to Consolidated Financial Statements included as part of this Annual
Report on Form 10−K.
The increase in our general and administrative expenses of $1.8 million for fiscal 2005 as compared to fiscal 2004 was primarily due to
increases in payroll related costs resulting from the growth of our finance and human resource organizations and third party professional fees.
On July 2, 2004, we signed a termination agreement with Mod−Pac that effectively terminated all existing supply agreements as of
August 30, 2004. Under the termination agreement, we paid Mod−Pac a one−time $22.0 million termination fee. On the same date, we entered
into a new supply agreement with Mod−Pac, which expired on August 30, 2005. As a result of the termination agreement and the payment made
to Mod−Pac, we recorded a loss from the termination of the existing supply agreements of $21.0 million. We deferred $1.0 million of the total
termination fee of $22.0 million which represented the effective reduction of the mark−up on costs of purchased products reflected in the new
supply agreement estimated to be purchased over the contract period. This deferred amount was recorded as a deferred cost within prepaid and
other current assets on our consolidated balance sheet and was amortized to cost of revenue over the twelve month term of the new supply
agreement.
Other income (expenses), net
Other income (expenses), net changed by $2.5 million to $2.4 million of income, for fiscal 2006 as compared to $78,000 of net expense for
fiscal 2005. The increase in other income was primarily due to an increase in interest income resulting from our investments in cash equivalents
and marketable securities.
Other income (expenses), net changed by $125,000 to $78,000 of net expense for fiscal 2005 as compared to income of $47,000 for fiscal
2004. The increase in expense was primarily due to losses on foreign currency transactions.
Interest expense
Interest expense increased by $0.9 million during fiscal 2006 to $1.3 million as compared to $0.4 million in fiscal 2005 due to our bank loan
obligations that were used to finance, in part, the construction of our Dutch and Canadian production facilities and various print production
equipment purchases we made during the period.
Interest expense increased by $0.3 million during fiscal 2005 to $0.4 million as compared to $83,000 in fiscal 2004 due to our bank loan
obligations that were used to finance, in part, the construction of our Dutch and Canadian production facilities.
Income tax provision (benefit)
In thousands
Year Ended
June 30,
2006 2005 2004
Income taxes:
Income tax provision (benefit) $783 $ 84 $(150)
Effective tax rate 3.9% 0.5% (4.6)%
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