Vistaprint 2009 Annual Report Download - page 64
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The increase in our general and administrative expenses of $8.9 million for fiscal 2008 as
compared to fiscal 2007 was primarily due to increased payroll and benefit costs of $5.8 million and
increased share-based compensation costs of $3.2 million resulting from the continued growth of our
finance and human resource organizations, partially offset by decreases in third party professional fees
of $1.0 million. At June 30, 2008, we employed 132 employees in these organizations compared to 91
employees at June 30, 2007.
Interest income
Interest income, which consists of interest income earned on cash, cash equivalents and
marketable securities, was $1.7 million, $4.2 million and $4.7 million during fiscal 2009, 2008 and
2007, respectively. The change in each year was primarily due to lower interest rate yields on our
investments.
Other (expense) income, net
Other (expense) income, net, which primarily consists of gains and losses from foreign currency
transactions, was $0.8 million of expense, $0.4 million of income and $45,000 of expense for fiscal
2009, 2008 and 2007, respectively. The changes each year were driven by foreign currency exchange
gains and losses realized during each period.
Interest expense
Interest expense, which consists of interest paid to financial institutions on outstanding balances
on our credit facilities, was $1.4 million, $1.7 million and $1.8 million in fiscal 2009, 2008 and 2007,
respectively. The decrease each year was due to a decrease in the outstanding principal on our bank
loans during the period.
Income tax provision
In thousands
Year Ended June 30,
2009 2008 2007
Income tax provision ................................................ $5,417 $4,261 $2,880
Effective tax rate...................................................... 8.9% 9.7% 9.6%
For the fiscal year ended June 30, 2009, 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, Swiss and Tunisian 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. The decrease in the effective tax rate in fiscal 2009 as compared to fiscal 2008 is due to a
geographic shift in profits, resulting in increased profits residing in jurisdictions with lower tax rates.
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