Vistaprint 2015 Annual Report Download - page 48

Download and view the complete annual report

Please find page 48 of the 2015 Vistaprint annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 160

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160

40
of other income (expense), net:
Year Ended June 30,
2015 2014 2013
Gains (losses) on derivative instruments . . . . . . . . . . . . . . . . . . . . . . $ 9,317 $ (7,473) $ 29
Currency related gains (losses), net . . . . . . . . . . . . . . . . . . . . . . . . . . 10,245 (1,764) (92)
Loss on disposal of Namex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (12,681) —
Other gains (losses) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 572 288 —
Total other income (expense), net . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 20,134 $ (21,630) $ (63)
During fiscal 2015, we recognized $20.1 million of other income as compared to $21.6 million of losses
during fiscal 2014. The increase in other income (expense), net is due in part to net gains of $9.3 million recognized
on our currency forward contracts, of which $1.9 million is unrealized, as compared to net losses of $7.5 million that
were recognized during fiscal 2014. We expect this volatility to continue in future periods as we do not currently
apply hedge accounting for our currency forward contracts. In fiscal 2013 we elected hedge accounting for all of our
currency forward contracts and therefore did not have similar results.
Changes in our corporate entity operating structure, effective on October 1, 2013, required us to alter our
intercompany transactional and financing activities in fiscal 2014. As a result, we have significant non-functional
currency intercompany relationships subject to currency exchange rate volatility that resulted in a gain of $10.2
million during fiscal 2015, as compared to $1.8 million loss during fiscal 2014.
In addition, in fiscal 2014 we recognized a loss of $12.7 million on the sale of our equity investment in
Namex Limited which did not occur in fiscal 2015 or fiscal 2013.
Interest expense, net
Interest expense, net was $16.7 million, $7.7 million and $5.3 million for the years ended June 30, 2015,
2014 and 2013, respectively. Interest expense, net primarily consists of interest paid on outstanding debt balances
and amortization of debt issuance costs. The increase in interest expense, net from fiscal 2014 to 2015 is primarily
a result of increased borrowing levels under our credit facility and the issuance of our senior unsecured notes in
March 2015. The increase in interest expense, net from fiscal 2013 to 2014 is a result of increased borrowing levels
under our credit facility. We expect interest expense, net to increase in future periods relative to historical trends as
a result of our senior unsecured notes.
Income tax provision
Year Ended June 30,
2015 2014 2013
Income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,441 $ 10,590 $ 9,387
Effective tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.5% 18.7% 23.0%
For the year ended June 30, 2015, our effective tax rate is 10.5% as compared to the prior year effective
tax rate of 18.7%. The main causes for this decrease are higher tax benefits in fiscal 2015 related to changes to our
corporate entity operating structure as described in further detail in Note 14, combined with an increase in our
consolidated pre-tax income and a more favorable geographical mix of earnings as compared to fiscal 2014. These
benefits to the fiscal 2015 tax rate were offset by greater losses incurred in fiscal 2015 as compared to fiscal 2014 in
certain jurisdictions where we are unable to recognize a tax benefit. For the year ended June 30, 2014, we
recognized a loss on our investment in Namex for which there was no tax benefit and this adversely impacted the
effective tax rate for fiscal 2014.
Our cash paid for income taxes for fiscal 2015 is higher than our income tax expense primarily as a result of
non-cash tax benefits relating to tax losses for which the cash benefit is expected to occur in a future period. This
was partially offset by cash tax benefits from stock-based compensation deductions that are recorded in
shareholder’s equity.
We are currently under income tax audits in various jurisdictions. We believe that our income tax reserves
associated with these matters are adequate as the positions reported on our tax returns will be sustained on their