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Interest income for the year ended June 30, 2006 decreased by approximately $0.3 million over the prior year, principally as a result of lower interest-bearing
receivables.
Foreign exchange gains and losses consist of foreign currency transactional and functional currency re-measurements, offset by net foreign currency exchange
contract gains and losses. A net foreign exchange gain of $0.1 million occurred for the year ended June 30, 2006 and a net foreign exchange loss of $0.4 million
occurred for the year ended June 30, 2005. The Company utilizes foreign exchange contracts and debt in non-functional currencies to hedge foreign currency exposure.
The Company’s foreign exchange policy prohibits entering into speculative transactions.
Provision For Income Taxes
Income tax expense was $21.6 million and $22.0 million for the years ended June 30, 2006 and 2005, respectively, reflecting an effective income tax rate of 35.0%
and 38.0%, respectively. The decrease in the tax rate is attributable to the current year utilization of foreign net operating loss carryforwards and the reversal of valuation
allowances previously established on a portion of the Belgian deferred tax assets.
Minority Interest in Income of Consolidated Subsidiaries
The Company recorded $225,000 of minority interest income in fiscal 2006 for Netpoint’s minority shareholders. In fiscal year 2005, the Company recorded
$291,000 of minority interest income for two majority-owned subsidiaries. The decrease in minority interest income relates to the Company’s purchase of additional equity
in its subsidiaries. As of fiscal 2006, only Netpoint had a minority ownership.
Net Income
The following table summarizes the Company’s net income:
2006 2005 Difference Change
Percentage of Net Sales
2006 2005
(In thousands)
Fiscal year ended $39,816 $35,604 $4,212 11.8% 2.4% 2.4%
The increase in the amount of net income in 2006 from 2005 is attributable to the changes in operating profits and provision for income taxes discussed above. Net
income as a percentage of net sales in 2006 remained comparable to 2005.
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