Vistaprint 2007 Annual Report Download - page 55

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development and infrastructure support organizations, and increased website infrastructure and
hosting costs of $0.6 million, offset by an increase of approximately $1.5 million in the amount of
internal-use software development costs capitalized.
The increase in our marketing and selling expenses of $36.7 million for fiscal 2007 as compared
to fiscal 2006 was driven primarily by increases of $22.2 million in advertising costs related to new
customer acquisition and costs of promotions targeted at our existing customer base, increases in
payroll and benefits related costs of $5.9 million, and increased share-based compensation costs of
$3.0 million. The share-based compensation costs include a charge of $1.4 million related to the
modification of the vesting of options that was incurred related to a departing employee. During this
period, we continued to expand our marketing organization and our design, sales and services center.
At June 30, 2007, we employed 422 employees in these organizations compared to 343 employees at
June 30, 2006. In addition, payment processing fees paid to third-parties increased by $2.2 million
during this period due to increased order volumes.
The increase in our marketing and selling expenses of $18.8 million for fiscal 2006 as compared
to fiscal 2005 was driven primarily by increases of $12.6 million in advertising costs related to new
customer acquisition and costs of promotions targeted at our existing customer base, increases in
payroll and benefits related costs of $3.3 million, and share-based compensation costs related to
share-based awards granted to our sales and marketing personnel of $0.2 million. During fiscal 2006,
we continued to expand our marketing organization and our design, sales and services center. At
June 30, 2006, we employed 343 employees in these organizations compared to 257 employees at
June 30, 2005. In addition, payment processing fees paid to third-parties increased by $1.7 million
during this period due to increased order volumes.
The increase in our general and administrative expenses of $7.1 million for fiscal 2007 as
compared to fiscal 2006 was primarily due to increased payroll and benefit costs of $3.6 million
resulting from the continued growth of our finance and human resource organizations, as well as
increases in third party professional fees of $3.2 million. The third party professional fees include
accounting, legal, recruiting (which increased $1.4 million from fiscal 2006), insurance and
organizational consulting service fees. Share-based compensation costs decreased by $1.0 million
during fiscal 2007 as compared to fiscal 2006. Fiscal 2006 included a charge of $3.2 million related to
the modification of the vesting of options as the result of a transition agreement entered into with our
then Chief Financial Officer. At June 30, 2007, we employed 91 employees in these organizations
compared to 52 employees at June 30, 2006.
The increase in our general and administrative expenses of $10.8 million for fiscal 2006 as
compared to fiscal 2005 was primarily due to increases in payroll and benefit costs of $2.1 million and
share-based compensation costs of $4.0 million, resulting from the continued growth of our finance and
human resource organizations and $3.2 million charge associated with the modification of the vesting
of options held by our former Chief Financial Officer, as well as increases in insurance costs of $0.7
million and third party professional fees of $3.6 million. The third party professional fees include
accounting, legal, recruiting and organizational consulting service fees.
Interest income
Interest income increased by $1.8 million during fiscal 2007 to $4.7 million as compared to $2.9
million in fiscal 2006. The increase was primarily due to increased levels of invested cash and
marketable securities and higher interest rate yields on those investments.
Interest income increased by $2.6 million during fiscal 2006 to $2.9 million as compared to $0.3 million
in fiscal 2005. The increase was primarily due to increases in interest income resulting from the investment
of the net proceeds received from our IPO in cash and cash equivalents and marketable securities.
Form 10-K
51