Vistaprint 2008 Annual Report Download - page 56

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.
Interest income
Interest income decreased by $0.5 million during fiscal 2008 to $4.2 million as compared to $4.7
million in fiscal 2007. The decrease was primarily due to lower interest rate yields on our investments.
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 our investments.
Other income, net
Other income, net changed to $427,000 of income for fiscal 2008 as compared to $45,000 of
expense for fiscal 2007. Other income (expense), net changed from $45,000 of expense for fiscal 2007
as compared to $494,000 of expense for fiscal 2006. The changes each year were driven by foreign
currency exchange gains and losses realized during each period.
Interest expense
Interest expense decreased by $0.1 million during fiscal 2008 to $1.7 million as compared to $1.8
million in fiscal 2007. The decrease in fiscal 2008 compared to the same period in 2007 was due to a
decrease in the outstanding principal on our bank loans during the period. Interest expense increased
by $0.5 million during fiscal 2007 to $1.8 million as compared to $1.3 million in fiscal 2006. The
increase in fiscal 2007 was due to 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.
Income tax provision
In thousands
Year Ended June 30,
2008 2007 2006
Income taxes:
Income tax provision........................................... $4,261 $2,880 $783
Effective tax rate ................................................ 9.7% 9.6% 3.9%
For the fiscal year ended June 30, 2008, our tax expense, which is calculated on a jurisdiction by
jurisdiction basis, primarily consisted of tax provisions for our subsidiaries in the United States, the
Netherlands, Spain, Canada and Switzerland. The taxable income for the United States, Dutch,
Spanish Canadian and Swiss entities is a function of their level of costs incurred and charged to
VistaPrint Limited under service agreements, which we also refer to as transfer pricing agreements.
The resulting tax liability is incurred regardless of whether the consolidated group is profitable.
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