What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2020-08-11 compared with 2019-08-09 · 705 added, 697 removed, 1047 unchanged (57% of the section changed)

Financial Statements and Supplementary Data

CIMPRESS N.V.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Cimpress N.V.

To the Board of Directors and Shareholders of Cimpress plc

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Cimpress N.V.

and its subsidiaries (the “Company”) as of June 30, 2019 and June 30, 2018, and the related consolidated statements of operations, of comprehensive income (loss), of shareholders’ equity and of cash flows for each of the three years in the period ended June 30, 2019, including the related notes (collectively referred to as the “consolidated financial statements”).

We have audited the accompanying consolidated balance sheets of Cimpress plc (formerly known as Cimpress N.V.), and its subsidiaries (the “Company”) as of June 30, 2020 and 2019, and the related consolidated statements of operations, of comprehensive income, of shareholders' equity and of cash flows for each of the three years in the period ended June 30, 2020, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of June 30, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of June 30, 2019 and June 30, 2018 , and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2019 in conformity with accounting principles generally accepted in the United States of America.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of June 30, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2020 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for leasing arrangements in 2019.

Basis for Opinions

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We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s Report on Internal Control over Financial Reporting, management has excluded Build A Sign LLC ("BuildASign") from its assessment of internal control over financial reporting as of June 30, 2019 because it was acquired by the Company in a purchase business combination during fiscal year 2019.

We have also excluded BuildASign from our audit of internal control over financial reporting.

BuildASign is a wholly-owned subsidiary whose total assets and total revenue excluded from management’s assessment and our audit of internal control over financial reporting represent approximately 2% and 4%, respectively, of the related consolidated financial statement amounts as of and for the year ended June 30, 2019.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

A company’s internal control over financial

reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

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Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Goodwill - Quantitative Impairment Assessment

As described in Note 8 to the consolidated financial statements, the Company performed a quantitative impairment analysis on five of its twelve reporting units.

The Company’s consolidated goodwill balance was $718.9 million as of June 30, 2019, with a portion of the total goodwill balance associated with the five reporting units.

Furthermore, an impairment charge of $7.5 million was recognized for the year ended June 30, 2019 relating to the Printi reporting unit, which is one of the five aforementioned reporting units.

Management conducts an impairment test as of May 31 of each year, or more frequently if events or circumstances indicate that the carrying value of goodwill may not be recoverable.

An impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value.

For the Printi reporting unit, management used a market-based approach based on the guideline public company method.

For the remaining four reporting units for which a quantitative analysis was performed, management estimated the fair value using an income approach, which was determined based on the present value of estimated future cash flows.

Management’s cash flow projections are based on management’s estimate of revenue growth rates and operating margins, taking into consideration recent business and market trends.

The discount rates were based on the weighted-average cost of capital adjusted for the related business-specific risk.

The principal considerations for our determination that performing procedures relating to the goodwill quantitative impairment assessment is a critical audit matter are there was significant judgment required by management when developing the fair value measurement of the reporting units.

This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures over the significant assumptions, including revenue growth rates, operating margins, and discount rates.

In addition, the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing these procedures and evaluating the audit evidence obtained from these procedures.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the significant assumptions used in the valuation of the Company’s reporting units.

These procedures also included, among others, testing management’s process for developing the fair value estimate;

evaluating the appropriateness of the discounted cash flow model and market-based approach;

testing the completeness, accuracy, and relevance

of underlying data used in the model;

and evaluating the significant assumptions used by management, including the revenue growth rates, operating margins, and discount rates.

Evaluating management’s assumptions related to the revenue growth rates and operating margins involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the reporting units, (ii) the consistency external market and industry data, and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in the valuation of the Company's discounted cash flow model and certain significant assumptions, including the discount rates.

Acquisition of BuildASign - Intangible Assets

As described in Notes 2 and 7 to the consolidated financial statements, the Company completed the acquisition of BuildASign for net consideration of $275 million on October 1, 2018, which resulted in $88.9 million of intangible assets being recorded.

Those intangible assets were comprised of trade names of $47.6 million, developed technology of $28.9 million, and customer relationships of $12.4 million.

The Company recorded the acquired intangible assets at fair value on the date of acquisition using the income approach to value trade names and customer relationship and a replacement cost approach to value developed technology.

The methods used to estimate the fair value of acquired intangible assets involves significant assumptions regarding the estimates a market participant would make in order to evaluate an asset, including a market participant’s use of the asset.

The valuations are also dependent upon other assumptions including, where applicable, historical financial results, forecasted revenue growth rates, estimated customer renewal rates, projected operating margins, the royalty rate, and discount rates.

The principal considerations for our determination that performing procedures relating to the intangible assets recorded with the acquisition of BuildASign is a critical audit matter are there was a high degree of auditor judgment and subjectivity in applying procedures related to the fair value of intangible assets acquired due to the significant amount of judgment required by management when developing the fair value of the intangible assets.

Significant audit effort was required in performing procedures to evaluate the forecasted revenue growth rates, estimated customer renewal rates, the royalty rate, and discount rates.

The audit effort also involved the use of professionals with specialized skill and knowledge.

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill - Quantitative Impairment Assessment - Exaprint and National Pen Reporting Units

As described in Note 8 to the consolidated financial statements, the Company’s goodwill balance was $621.9 million as of June 30, 2020.

During March 2020, all of the Company’s businesses experienced varying levels of decline in revenue due to the disruptions associated with the COVID-19 pandemic.

Although management expects the impacts to be temporary, the negative effects of the pandemic on revenue and profitability triggered an assessment of goodwill, as management expected some of its businesses to achieve materially lower financial results than previously expected.

Management’s March 31, 2020 goodwill impairment test resulted in impairment charges to the Exaprint reporting unit of $40.4 million, included within The Print Group reportable segment, and the National Pen reporting unit of $34.4 million.

Management used the income approach, specifically the discounted cash flow method, to derive the fair value.

This approach calculates fair value by estimating the after-tax cash flows attributable to a reporting unit and then discounting the after-tax cash flows to a present value using a risk-adjusted discount rate.

The cash flow projections in the fair value analysis are considered Level 3 inputs, and consist of management's estimates of revenue growth rates and operating margins, taking into consideration historical results, as well as industry and market conditions.

The discount rate used in the fair value analysis is based on a weighted average cost of capital, which represents the average rate a business must pay its providers of debt and equity, plus a risk premium.

The principal considerations for our determination that performing procedures relating to the goodwill quantitative impairment assessments for the Exaprint and National Pen reporting units is a critical audit matter are the significant judgment by management when developing the fair value of the reporting units, which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures over the significant assumptions related to the revenue growth rates, operating margins, and discount rates;

and the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of intangible assets and controls over development of the assumptions related to the valuation of the intangible assets, including forecasted revenue growth rates, estimated customer renewal rates, the royalty rate, and discount rates.

These procedures also included, among others (i) reading the purchase agreement;

(ii) testing management’s process for estimating the fair value of intangible assets;

and (iii) evaluating the appropriateness of the valuation methods, testing the completeness and accuracy of the data, and evaluating the reasonableness of significant assumptions including forecasted revenue growth rates, estimated customer renewal rates, the royalty rate, and discount rates.

Evaluating the reasonableness of the forecasted revenue growth rates and estimated customer renewal rates involved considering the past performance of the acquired businesses, as well as the business, industry and peer data, and considering whether they were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in evaluating significant assumptions, including discount rates and the royalty rate.

These procedures also included, among others, (i) testing management’s process for developing the fair value of the reporting units;

(ii) evaluating the appropriateness of the discounted cash flow model;

(iii) testing the completeness, accuracy and relevance of underlying data used in the model;

and (iv) evaluating the reasonableness of management’s significant assumptions related to the revenue growth rates, operating margins, and discount rates.

Evaluating the reasonableness of management’s significant assumptions related to the revenue growth rates and operating margins involved evaluating whether the assumptions used by management were reasonable considering the current and past performance of the reporting units, the consistency with external market and industry data, and

whether these assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company's discounted cash flow model and the reasonableness of the discount rates.

/s/ PricewaterhouseCoopers LLP

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We have served as the Company’s auditor since 2014.

CIMPRESS N.V.

CONSOLIDATED BALANCE SHEETS

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Property, plant and equipment, net (1)

Operating lease assets, net (1)

Software and website development costs, net

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Intangible assets, net

Liabilities, noncontrolling interests and shareholders’ equity

Liabilities, noncontrolling interests and shareholders’ (deficit) equity

Current liabilities:

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Short-term debt

Operating lease liabilities, current (1)

Other current liabilities

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Deferred tax liabilities

Lease financing obligation

Long-term debt

Lease financing obligation (1)

Operating lease liabilities, non-current (1)

Other liabilities

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Redeemable noncontrolling interests

Shareholders’ equity:

Preferred shares, par value €0.01 per share, 100,000,000 shares authorized;

Shareholders’ (deficit) equity:

Preferred shares, nominal value €0.01 per share, 100,000,000 shares authorized;

none issued and outstanding

Ordinary shares, par value €0.01 per share, 100,000,000 shares authorized;

Ordinary shares, nominal value €0.01 per share, 100,000,000 shares authorized;

44,080,627 shares issued;

and 25,885,675 and 30,445,669 shares outstanding, respectively

Deferred ordinary shares, nominal value €1.00 per share, 25,000 shares authorized, issued and outstanding

Treasury shares, at cost, 18,194,952 and 13,634,958 shares, respectively

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Accumulated other comprehensive loss

Total shareholders’ equity attributable to Cimpress N.V.

Noncontrolling interests (Note 14)

Total shareholders' equity

Total liabilities, noncontrolling interests and shareholders’ equity

Total shareholders' (deficit) equity

Total liabilities, noncontrolling interests and shareholders’ (deficit) equity

____________________

(1) Due to our adoption of the new leasing standard on July 1, 2019, we recognized operating lease assets and liabilities.

Additionally, all costs previously capitalized for our build-to-suit leases included in property, plant and equipment, net and lease financing obligation have been de-recognized and are now classified as operating leases.

Refer to Note 2 for additional details.

See accompanying notes.

CIMPRESS N.V.

CONSOLIDATED STATEMENTS OF OPERATIONS

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Restructuring expense (1)

Impairment of goodwill

(Gain) on sale of subsidiaries

Impairment of goodwill and acquired intangible assets

Income (loss) from operations

Income from operations

Other income (expense), net

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Loss on early extinguishment of debt

Income (loss) before income taxes

Income tax expense (benefit)

Net income (loss)

Net loss (income) attributable to noncontrolling interest

Net income (loss) attributable to Cimpress N.V.

Basic net income (loss) per share attributable to Cimpress N.V.

Diluted net income (loss) per share attributable to Cimpress N.V.

Income before income taxes

Income tax (benefit) expense

Net (income) loss attributable to noncontrolling interest

Net income attributable to Cimpress plc

Basic net income per share attributable to Cimpress plc

Diluted net income per share attributable to Cimpress plc

Weighted average shares outstanding — basic

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See accompanying notes.

CIMPRESS N.V.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

Year Ended June 30,

Net income (loss)

Other comprehensive income (loss), net of tax:

Foreign currency translation gains (losses), net of hedges

Other comprehensive income, net of tax:

Foreign currency translation gains, net of hedges

Net unrealized (losses) gains on derivative instruments designated and qualifying as cash flow hedges

Amounts reclassified from accumulated other comprehensive loss to net income (loss) on derivative instruments

Unrealized loss on available-for-sale-securities

Amounts reclassified from accumulated other comprehensive loss to net income (loss) for realized gains on available-for-sale securities

Amounts reclassified from accumulated other comprehensive loss to net income on derivative instruments

(Loss) gain on pension benefit obligation, net

Comprehensive income (loss)

Comprehensive loss (income) attributable to noncontrolling interests

Total comprehensive income (loss) attributable to Cimpress N.V.

Comprehensive income

Comprehensive (income) loss attributable to noncontrolling interests

Total comprehensive income attributable to Cimpress plc

See accompanying notes.

CIMPRESS N.V.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

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Treasury Shares

Number of Shares

Accumulated Other

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Restricted share units vested, net of shares withheld for taxes

Grant of restricted share awards

Share-based compensation expense

Purchase of ordinary shares

Net loss attributable to Cimpress N.V.

Redeemable noncontrolling interest accretion to redemption value

Reclassification of mandatorily redeemable noncontrolling interest

Net income attributable to Cimpress plc

Adoption of new accounting standard

Amounts reclassified from accumulated other comprehensive loss to retained earnings

Net unrealized gain on derivative instruments designated and qualifying as cash flow hedges

Unrealized loss on marketable securities

Realized gain on sale of marketable securities

Foreign currency translation, net of hedges

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Purchase of ordinary shares

Net income attributable to Cimpress N.V.

Net income attributable to Cimpress plc

Adjustment for purchase of noncontrolling interest

Adjustment to noncontrolling interest for share forfeiture

Adoption of new accounting standard

Amounts reclassified from accumulated other comprehensive loss to retained earnings

Net unrealized gain on derivative instruments designated and qualifying as cash flow hedges

Noncontrolling interest accretion to redemption value

Net unrealized loss on derivative instruments designated and qualifying as cash flow hedges

Foreign currency translation, net of hedges

Unrealized gain on pension benefit obligation, net of tax

Unrealized loss on pension benefit obligation, net of tax

Balance at June 30, 2019

See accompanying notes.

CIMPRESS N.V.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (CONTINUED)

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Ordinary Shares

Deferred Ordinary Shares

Treasury Shares

Number of Shares

Accumulated Other

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Shareholders’

Equity (Deficit)

Balance at June 30, 2019

Issuance of ordinary shares due to share option exercises, net of shares withheld for taxes

Restricted share units vested, net of shares withheld for taxes

Issuance of deferred ordinary shares

Grant of restricted share awards

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Purchase of ordinary shares

Net income attributable to Cimpress N.V.

Adjustment for purchase of noncontrolling interest

Adjustment to noncontrolling interest for share forfeiture

Adoption of new accounting standard

Noncontrolling interest accretion to redemption value

Net income attributable to Cimpress plc

Redeemable noncontrolling interest accretion to redemption value

Adoption of new accounting standards

Issuance of warrants

Net unrealized loss on derivative instruments designated and qualifying as cash flow hedges

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See accompanying notes.

CIMPRESS N.V.

CONSOLIDATED STATEMENTS OF CASH FLOWS

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Operating activities

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

Impairment of goodwill and acquired intangible assets

Impairment of goodwill

Share-based compensation expense

Deferred taxes

Abandonment of long-lived assets

Gain on sale of subsidiaries

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Change in contingent earn-out liability

Gain on sale of available-for-sale securities

Unrealized (gain) loss on derivatives not designated as hedging instruments included in net income (loss)

Unrealized (loss) gain on derivatives not designated as hedging instruments included in net income

Effect of exchange rate changes on monetary assets and liabilities denominated in non-functional currency

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Proceeds from the sale of assets

Proceeds from sale of available-for-sale securities

Realized loss on derivatives designated as hedging instruments

Proceeds from (payments for) settlement of derivatives designated as hedging instruments

Other investing activities

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Proceeds from issuance of senior notes

Proceeds from issuance of second lien notes

Proceeds from issuance of warrants

Payments of debt

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Payments of withholding taxes in connection with equity awards

Payments of capital lease obligations

Purchase of ordinary shares

Purchase of noncontrolling interests

Payments of finance lease obligations

See accompanying notes.

CIMPRESS N.V.

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

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Year Ended June 30,

Financing activities (continued)

Purchase of noncontrolling interests

Proceeds from sale of noncontrolling interest

Distribution to noncontrolling interest

Purchase of ordinary shares

Proceeds from issuance of ordinary shares

Issuance of loans

Capital contribution from noncontrolling interest

Distribution to noncontrolling interest

Other financing activities

Net cash provided by (used in) financing activities

Net cash (used in) provided by financing activities

Effect of exchange rate changes on cash

Change in cash held for sale

Net (decrease) increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period

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Capitalization of construction costs related to financing lease obligation (1)

Property and equipment acquired under capital leases

Property and equipment acquired under finance leases

Amounts accrued related to business acquisitions

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(1) Due to our adoption of the new leasing standard on July 1, 2019, any costs previously capitalized for a build-to-suit lease and included in the financing lease obligation are now classified as an operating lease and the lease financing obligation has been de-recognized.

Refer to Note 2 for additional details.

See accompanying notes.

CIMPRESS N.V.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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We limit all other central activities to only those which absolutely must be performed centrally.

On December 3, 2019, Cimpress moved its place of incorporation from the Netherlands to Ireland through a cross-border merger in which Cimpress N.V., a Dutch public limited company, merged with and into Cimpress plc, an Irish public limited company, with Cimpress plc surviving the Irish Merger.

As a result of the Irish Merger, all of Cimpress N.V.'s outstanding ordinary shares, par value € 0.01 per share, were exchanged on a one-for-one basis for newly issued ordinary shares, nominal value of € 0.01 per share, of Cimpress plc, and Cimpress plc assumed all of Cimpress N.V.'s existing rights and obligations.

In conjunction with the Irish Merger, 25,000 Cimpress plc deferred ordinary shares were issued to meet the Irish statutory minimum capital requirements of an Irish public limited company.

The deferred ordinary shares remain outstanding following the completion of the Irish Merger and will continue to be outstanding until redeemed or surrendered.

These deferred ordinary shares (i) do not have any voting rights;

(ii) do not entitle the holders thereof to any dividends or other distributions of Cimpress plc;

and (iii) do not entitle the holders thereof to participate in the surplus assets of Cimpress plc on a winding-up beyond, in total, the nominal value of such deferred ordinary shares held.

Accordingly, these deferred ordinary shares do not dilute the economic ownership of Cimpress plc shareholders.

The Irish Merger was accounted for as a merger between entities under common control.

The historical financial statements of Cimpress N.V.

for periods prior to the Irish Merger are considered to be the historical financial statements of Cimpress plc.

The Irish Merger has not had and is not expected to have a material impact on how Cimpress conducts its day-to-day operations, its financial position, consolidated effective tax rate, results of operations or cash flows.

Summary of Significant Accounting Policies

Basis of Presentation

The consolidated financial statements include the accounts of Cimpress N.V., its wholly owned subsidiaries, entities in which we maintain a controlling financial interest, and those entities in which we have a variable interest and are the primary beneficiary.

The consolidated financial statements include the accounts of Cimpress plc, its wholly owned subsidiaries, entities in which we maintain a controlling financial interest, and those entities in which we have a variable interest and are the primary beneficiary.

Intercompany balances and transactions have been eliminated.

Investments in entities in which we cannot exercise significant influence, and the related equity securities do not have a readily determinable fair value, are accounted for using the cost method and are included in other assets on the consolidated balance sheets.

Given the current and expected impact of the COVID-19 pandemic on our business we evaluated our liquidity position as of the date of the issuance of these consolidated financial statements.

Based on this evaluation, management believes, despite the ongoing impact of COVID-19 on our business, that our financial position, net cash provided by operations combined with our cash and cash equivalents, borrowing availability under our revolving credit facility, and the April 2020 temporary maintenance covenant suspension and capital raise as described in Note 10, will be sufficient to fund our current obligations, capital spending, debt service requirements and working capital requirements over at least the next twelve months.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.

The preparation of financial statements in conformity with U.S.

generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.

We believe our most significant estimates are associated with the ongoing evaluation of the recoverability of our long-lived assets and goodwill, estimated useful lives of assets, share-based compensation, accounting for business combinations, and income taxes and related valuation allowances, among others.

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Actual results could differ from those estimates.

Due to the COVID-19 pandemic, there has been uncertainty and disruption in the global economy and financial markets.

Subsequent to June 30, 2020 , we are not aware of any specific event or circumstance that would require an update to our estimates or judgments or a revision of the carrying value of our assets or liabilities as of August 11, 2020 , the date of issuance of this Annual Report on Form 10-K.

These estimates may change as new events occur and additional information is obtained.

Actual results could differ materially from these estimates under different assumptions or conditions.

Cash and Cash Equivalents

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Cash and cash equivalents restricted for use were $ 86 and $ 87 as of June 30, 2020 and 2019 , respectively, and are included in other assets in the accompanying consolidated balance sheets.

Marketable Securities

We determine the appropriate classification of marketable securities at the date of purchase and reevaluate the classification at each balance sheet date.

Our marketable securities are classified as "available-for-sale" and carried at fair value, with the unrealized gains and losses, net of taxes if applicable, reported as a separate component of accumulated other comprehensive loss.

For bank accounts that are overdrawn at the end of a reporting period, including any net negative balance in our notional cash pool, we reclassify these overdrafts to short-term debt on our consolidated balance sheets.

Book overdrafts that result from outstanding checks in excess of our bank balance are reclassified to other current liabilities.

As of June 30, 2020, we reclassified $ 3,768 to short-term debt within our consolidated balance sheets and presented the overdraw within financing activities in our consolidated statement of cash flows.

We did not have a bank overdraw in the prior period.

As of June 30, 2020, we did not record a book overdraft, however as of June 30, 2019, we reclassified a book overdraft of $ 2,144 to other current liabilities.

Accounts Receivable

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We capitalize eligible salaries and payroll-related costs of employees who devote time to the development of websites and internal-use computer software.

Capitalization begins when the preliminary project stage is complete, management with the relevant authority authorizes and commits to the funding of the software project, and it is probable that the project will be completed and the software will be used to perform the function intended.

Capitalization begins when the preliminary project stage is

complete, management with the relevant authority authorizes and commits to the funding of the software project, and it is probable that the project will be completed and the software will be used to perform the function intended.

These costs are amortized on a straight-line basis over the estimated useful life of the software, which is generally over a three year period.

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Amortization of previously capitalized amounts in the years ended June 30, 2020, 2019 and 2018 was $ 40,753 , $ 35,068 and $ 31,332 , respectively, resulting in accumulated amortization of $ 180,993 and $ 136,721 at June 30, 2020 and 2019 , respectively.

We categorize leases at their inception as either operating or capital leases.

Costs for operating leases that include incentives such as payment escalations or rent abatements are recognized on a straight-line basis over the term of the lease.

Additionally, inducements received are treated as a reduction of our costs over the term of the agreement.

Leasehold improvements are capitalized at cost and amortized over the shorter of their expected useful life or the life of the lease, excluding renewal periods.

Capital leases are accounted for as an acquisition of an asset and incurrence of an obligation.

Assets held under capital leases are recorded at the lower of the present value of the minimum lease payments or the fair value of the leased asset at the inception of the lease, and amortized over the useful life of the asset.

The corresponding capital lease obligation is recorded at the present value of the minimum lease payments at inception of the lease.

For lease arrangements where we are deemed to be involved in the construction of structural improvements prior to the commencement of the lease or take some level of construction risk, we are considered the owner of the assets during the construction period.

Accordingly, as the lessor incurs the construction project costs, the assets and corresponding financial obligation are recorded in our consolidated balance sheet.

Once the construction is completed, if the lease meets certain “sale-leaseback” criteria, we will remove the asset and related financial obligation from the balance sheet and treat the building lease as either an operating or capital lease based on our assessment of the guidance.

If, upon completion of construction, the project does not meet the “sale-leaseback” criteria, the lease will be treated as a financing obligation and we will depreciate the asset over its estimated useful life for financial reporting purposes.

Insurance Recoveries

Insurance proceeds related to incurred losses are recognized when recovery is probable, while business interruption recoveries follow the gain contingency model and are recognized when realized or realizable and earned.

Intangible Assets

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Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or any other significant adverse change that would indicate that the carrying amount of an asset or group of assets may not be recoverable.

During the year ended June 30, 2017, we recognized a partial impairment charge for the acquired intangible assets of our Tradeprint reporting unit of $ 3,211 .

During the years ended June 30, 2019 and 2018, we did not recognize any impairment charges for acquired intangible assets.

During the year ended June 30, 2017 we committed to plans to abandon certain manufacturing equipment and recognized losses of $ 2,408 .

The related loss during the year ended June 30, 2017 was recognized in cost of revenue, technology and development expense, and restructuring expense for $ 1,119 , $ 678 , and $ 611 , respectively.

We did not recognize any abandonment charges during the fiscal years ended June 30, 2019 or 2018.

We did not recognize any impairment or abandonment charges for acquired intangible assets in any of the periods presented.

Business Combinations

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For acquisitions that qualify as business combinations, we record an obligation for such contingent payments at fair value on the acquisition date.

We estimate the fair value of contingent consideration obligations through valuation models that incorporate probability adjusted assumptions related to the achievement of the milestones and thus likelihood of making related payments or by using a Monte Carlo simulation model.

We revalue these contingent consideration obligations each reporting period.

Changes in the fair value of our contingent consideration obligations are recognized within general and administrative expense in our consolidated statements of operations.

The evaluation of goodwill for impairment is performed at a level referred to as a reporting unit.

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To perform the quantitative approach, we estimate the fair value of our reporting units using a discounted cash flow methodology.

If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then we record an impairment loss equal to the difference.

If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, then we record an impairment loss equal to the difference.

Refer to Note 8 for additional information.

Debt Issuance Costs

Expenses associated with the issuance of debt instruments are capitalized and are amortized over the terms of the respective financing arrangement on a straight-line basis through the maturity date of the related debt instrument.

During the years ended June 30, 2019 and 2018 , we capitalized debt issuance costs related to the refinancing of our senior secured credit facility and senior unsecured notes of $ 1,800 and $ 11,666 , respectively.

Amortization expense and the write-off of costs related to debt modifications are included in interest expense, net in the consolidated statements of operations and amounted to $ 2,367 , $ 1,821 , and $ 1,578 , for the years ended June 30, 2019, 2018 and 2017, respectively.

During the year ended June 30, 2018, we also expensed $ 2,921 of unamortized costs related to the extinguishment of our senior unsecured notes, which has been presented separately in the consolidated statements of operations as part of loss on early extinguishment of debt.

Refer to Note 10 for additional information.

Unamortized debt issuance costs were $ 12,018 and $ 12,585 as of June 30, 2019 and 2018 , respectively.

When we make changes to our financing arrangements, we re-evaluate the capitalization of these costs which could result in the immediate recognition of any unamortized debt issuance costs in our statement of operations.

Costs associated with the issuance of debt instruments are capitalized and amortized over the term of the respective financing arrangement on a straight-line basis through the maturity date of the related debt instrument.

We evaluate all changes to our debt arrangements, to determine whether the changes represent a modification or extinguishment to the old debt arrangement.

If a debt instrument is deemed to be modified, we capitalize all new lenders fees and expense all third-party fees.

If we determine that an extinguishment of one of our debt instruments has occurred, the unamortized financing fees associated with the extinguished instrument are expensed.

For the revolving loans associated with our senior secured credit facility, all lender and third-party fees are capitalized, and in the event the amendment reduces the committed capacity under the revolving loans, we expense a portion of any unamortized fees on a pro-rata basis in proportion to the decrease in the committed capacity.

Derivative Financial Instruments

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Derivatives designated and qualifying as hedges of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges which could include interest rate swap contracts and cross-currency swap contracts.

In a cash flow hedging relationship, the effective portion of the change in the fair value of the hedging derivative is initially recorded in accumulated other comprehensive loss, while any ineffective portion is recognized directly in earnings, as a component of other income (expense), net.

In a cash flow hedging relationship, the effective and ineffective portion of the change in the fair value of the hedging derivative is initially recorded in accumulated other comprehensive loss.

The portion of gain or loss on the derivative instrument previously recorded in accumulated other comprehensive (loss) income remains in accumulated other comprehensive (loss) income until the forecasted transaction is recognized in earnings.

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Derivatives designated and qualifying as hedges of currency exposure of a net investment in a foreign operation are considered net investment hedges which could include cross-currency swap and currency forward contracts.

In hedging the currency exposure of a net investment in a foreign operation, the effective portion of gains and losses on the hedging instruments is recognized in accumulated other comprehensive loss as part of currency translation adjustment, while any ineffective portion is recognized directly in earnings, as a component of other income (expense), net.

The portion of gain or loss on the derivative instrument previously recorded in accumulated other comprehensive

loss remains in accumulated other comprehensive loss until we reduce our investment in the hedged foreign operation through a sale or substantial liquidation.

In hedging the currency exposure of a net investment in a foreign operation, the effective and ineffective portion of gains and losses on the hedging instruments is recognized in accumulated other comprehensive (loss) income as part of currency translation adjustment.

The portion of gain or loss on the derivative instrument previously recorded in accumulated other comprehensive (loss) income remains in accumulated other comprehensive (loss) income until we reduce our investment in the hedged foreign operation through a sale or substantial liquidation.

We also enter into derivative contracts that are intended to economically hedge certain of our risks, even though we may not elect to apply hedge accounting or the instrument may not qualify for hedge accounting.

When hedge accounting is not applied, the changes in the fair value of the derivatives are recorded directly in earnings as a component of other income (expense), net.

When hedge accounting is not applied, the changes in the fair value of the derivatives are recorded directly in earnings as a component of other (expense) income, net.

In accordance with the fair value measurement guidance, our accounting policy is to measure the credit risk of our derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

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Mandatorily redeemable noncontrolling interests are presented as liability-based financial instruments and are re-measured on a recurring basis to the expected redemption value.

Refer to Note 14 for additional details.

Shareholders’ Equity

Shareholders’ (Deficit) Equity

Comprehensive Income (Loss)

Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources.

Comprehensive income (loss) is composed of net income (loss), unrealized gains and losses on marketable securities and derivatives, unrealized loss on pension benefit obligation, and cumulative foreign currency translation adjustments, which are included in the accompanying consolidated statements of comprehensive income.

Comprehensive income (loss) is composed of net income, unrealized gains and losses on derivatives, unrealized loss on pension benefit obligation, and cumulative foreign currency translation adjustments, which are included in the accompanying consolidated statements of comprehensive income.

Treasury Shares

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Upon issuance of treasury shares we determine the cost using the average cost method.

During the fourth quarter of 2020, we issued warrants in conjunction with the issuance of second lien debt.

The warrants are legally detachable from the debt and settleable only in our shares.

We account for the warrants in accordance with ASC 470-20, Debt with Conversion and Other Options, which requires us to bifurcate and separately account for the detachable warrant as a separate equity instrument.

The value assigned to the warrants was determined based on a relative fair value allocation between the warrants and related debt.

The fair value of the warrants was determined using a Monte Carlo valuation and applying a discount for the lack of marketability for the warrants.

We present the allocated value for the warrants within additional paid-in capital in our consolidated balance sheet.

Refer to Note 10 for additional details related to the refinancing.

Revenue Recognition

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We have elected to recognize shipping and handling activities that occur after transfer of control of the products as fulfillment activities and not as a separate performance obligation.

Accordingly, we recognize revenue for our single performance obligation upon the transfer of control of the fulfilled orders, which generally occurs upon delivery to the shipping carrier.

Accordingly, we recognize revenue

for our single performance obligation upon the transfer of control of the fulfilled orders, which generally occurs upon delivery to the shipping carrier.

If revenue is recognized prior to completion of the shipping and handling activities, we accrue the costs of those activities.

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We record deferred revenue when cash payments are received in advance of our satisfaction of the related performance obligation.

The satisfaction of performance obligations generally occur shortly after cash payment and we expect to recognize our deferred revenue balance as revenue within three months subsequent to June 30, 2019.

The satisfaction of performance obligations generally occurs shortly after cash payment and we expect to recognize our deferred revenue balance as revenue within three months subsequent to June 30, 2020.

We periodically provide marketing materials and promotional offers to new customers and existing customers that are intended to improve customer retention.

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Costs related to free products are included within cost of revenue and sample products are included within marketing and selling expense.

We have elected to apply the practical expedient under ASC 340-40-25-4 to expense incremental direct costs as incurred, which primarily includes sales commissions, since our contract periods generally are less than one year and the related performance obligations are satisfied within a short period of time.

We have elected to expense incremental direct costs as incurred, which primarily includes sales commissions, since our contract periods generally are less than one year and the related performance obligations are satisfied within a short period of time.

Additional revenue disaggregation disclosure requirements resulting from the adoption of ASC 606 are included in Note 16.

Revenue Recognition - Adoption of ASC 606

On July 1, 2018, we adopted ASC 606, Revenue from Contracts with Customers, using the modified retrospective transition approach.

Under the modified retrospective approach, we applied the new standard for any contracts that were not complete as of the adoption date and recognized any cumulative impacts as of the adoption date within retained earnings on our consolidated balance sheet.

We did not adjust the prior comparable period.

The following table summarizes the cumulative effect of adopting the new revenue standard as of the adoption date of July 1, 2018:

Consolidated Balance Sheet

As reported at

June 30, 2018

ASC 606 adjustments

Adjusted balance at

Prepaid expenses and other current assets

Deferred tax assets

Liabilities and Shareholders' Equity

Deferred revenue

Retained earnings

The following table summarizes the impact as of and for the year ended June 30, 2019 from adopting the new revenue standard as compared to the previous revenue standard:

(current revenue standard)

Current period adjustments

(previous revenue standard)

Consolidated Statement of Operations for the Year Ended June 30, 2019

Marketing and selling expense (1)

Income tax expense

Consolidated Balance Sheet as of June 30, 2019

Prepaid expenses and other current assets

Deferred tax assets

Liabilities and Shareholders' Equity

Accrued expenses

Deferred revenue

Retained earnings

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(1) During the year ended June 30, 2019 , the adjustment to marketing and selling expense was the impact from National Pen's direct mail costs that resulted in lower expense of $ 295 .

The timing of the expense recognition would have been different under the previous revenue standard since they would have been capitalized within prepaid expense and other current assets and amortized over the customer response period to marketing and selling expense.

As of July 1, 2018, we recognized a cumulative effect adjustment within retained earnings of $ 3,738 .

The material impact of our adoption of ASC 606 is related to the timing for recognizing direct-response advertising costs, which were costs previously capitalized and expensed based on the guidance outlined in ASC 340 - "Other Assets and Deferred Assets".

The guidance included in ASC 340 is eliminated by ASC 606, and under the new revenue standard these costs are expensed as incurred because they do not meet the requirements for capitalization since they are not direct and incremental to obtaining a contract.

Historically the direct mail costs were capitalized and amortized over the customer response period (typically 3-4 months) and now costs are recognized when the direct mail is sent to the customers.

This creates volatility in our quarterly profitability but should not have a significant impact on an annual basis and has no impact on cash flow.

By applying the modified retrospective approach for implementing the standard, we adjusted the cumulative impact of capitalized costs of $ 3,738 , resulting in a decrease to prepaid expenses and other current assets and a decrease to retained earnings, as well as the related tax impact of $ 595 , resulting in an increase to deferred tax assets and an increase to retained earnings on July 1, 2018.

We also identified an impact related to customer loyalty programs that are offered by several of our businesses.

Under the new revenue standard, the rewards associated with these programs are recognized as an additional performance obligation, resulting in an allocation of the transaction price and deferral of revenue until the subsequent reward redemption.

By applying the modified retrospective approach for implementing the standard, we adjusted the cumulative impact of $ 103 , resulting in an increase to deferred revenue and a decrease to retained earnings on July 1, 2018.

All other impacts during the current periods were not considered material.

Restructuring

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Restructuring initiatives require us to make estimates in several areas, including expenses for severance and other employee separation costs and our ability to generate sublease income to enable us to terminate lease obligations at the estimated amounts.

One-time termination benefits generally are expensed at the date we notify the employee, unless the employee must provide future service beyond the statutory minimum retention period, in which case the benefits are expensed ratably over the future service period.

If in certain jurisdictions there are minimum statutory benefits for involuntary terminations, we recognize the expense in the period that management has committed to a plan and the payment of benefits is probable and the amount is reasonably estimable.

One-time termination benefits are expensed at the date we notify the employee, unless the employee must provide future service beyond the statutory minimum retention period, in which case the benefits are expensed ratably over the future service period.

Liabilities for costs associated with a facility exit or disposal activity are recognized when the liability is incurred, as opposed to when management commits to an exit plan, and are measured at fair value.

Restructuring costs are presented as a separate financial statement line within our consolidated statement of operations.

For jurisdictions in which there are statutorily required minimum benefits for involuntary terminations, or severance benefits documented in an employee manual or labor contract, we evaluate these benefits under ASC 712 as ongoing benefit arrangements.

We recognize the liability for these arrangements when it is probable that the employee would be entitled to the benefits and the amounts can be reasonably estimated.

Advertising Expense

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In the event that actual results differ from our estimates or we adjust our estimates in the future, we may need to increase or decrease income tax expense, which could have a material impact on our financial position and results of operations.

In the event we have disproportionate income tax effects in accumulated other comprehensive loss on the consolidated balance sheet, we release such tax effects to income tax expense within the consolidated statement of operations as the associated pre-tax balance is recorded to earnings.

We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the tax position.

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Year Ended June 30,

Gains (losses) on derivatives not designated as hedging instruments (1)

Gains on derivatives not designated as hedging instruments (1)

Currency-related gains (losses), net (2)

Other gains (3)

Total other income (expense), net

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(1) Primarily relates to both realized and unrealized gains (losses) on derivative currency forward and option contracts not designated as hedging instruments, as well as the ineffectiveness associated with our cash flow hedges.

Primarily relates to both realized and unrealized gains on derivative currency forward and option contracts not designated as hedging instruments, as well as certain interest rate swap contracts that have been de-designated from hedge accounting due to their ineffectiveness.

We have significant non-functional currency intercompany financing relationships that we may change at times and are subject to currency exchange rate volatility.

The currency-related (losses) gains, net for the years ended June 30, 2019 and 2018 are primarily driven by this intercompany activity.

The currency-related gains (losses), net for the years ended June 30, 2020, 2019 and 2018 are primarily driven by this intercompany activity.

In addition, we have certain cross-currency swaps designated as cash flow hedges, which hedge the remeasurement of certain intercompany loans, both presented in the same component above.

Unrealized loss related to cross-currency swaps was $ 3,484 for the year ended June 30, 2019 , and unrealized gains were $ 2,722 , and $ 3,737 for the years ended June 30, 2018 and 2017 , respectively.

(3) The gain recognized during the year ended June 30, 2018, was primarily related to insurance recoveries of $ 675 .

During the year ended June 30, 2017, we recognized a gain of $ 2,268 related to the sale of Plaza Create Co.

available for sale securities.

Net Income (Loss) Per Share Attributable to Cimpress N.V.

Basic net income (loss) per share attributable to Cimpress N.V.

is computed by dividing net income (loss) attributable to Cimpress N.V.

by the weighted-average number of ordinary shares outstanding for the respective period.

Diluted net income (loss) per share attributable to Cimpress N.V.

gives effect to all potentially dilutive securities, including share options, restricted share units (“RSUs”), restricted share awards ("RSAs") and performance share units ("PSUs"), if the effect of the securities is dilutive using the treasury stock method.

The unrealized gain related to cross-currency swaps was $ 929 for the year ended June 30, 2020 as compared to an unrealized loss of $ 3,484 for the year ended June 30, 2019, and an unrealized gain of $ 2,722 for the year ended June 30, 2018.

Net Income Per Share Attributable to Cimpress plc

Basic net income per share attributable to Cimpress plc is computed by dividing net income attributable to Cimpress plc by the weighted-average number of ordinary shares outstanding for the respective period.

Diluted net income per share attributable to Cimpress plc gives effect to all potentially dilutive securities, including share options, restricted share units (“RSUs”), restricted share awards ("RSAs"), warrants, and performance share units ("PSUs"), if the effect of the securities is dilutive using the treasury stock method.

Awards with performance or market conditions are included using the treasury stock method only if the conditions would have been met as of the end of the reporting period and their effect is dilutive.

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Weighted average shares outstanding, basic

Weighted average shares issuable upon exercise/vesting of outstanding share options/RSUs/RSAs

Shares used in computing diluted net income (loss) per share attributable to Cimpress N.V.

Weighted average anti-dilutive shares excluded from diluted net income (loss) per share attributable to Cimpress N.V.

Weighted average shares issuable upon exercise/vesting of outstanding share options/PSUs/RSUs/RSAs/warrants (1)

Shares used in computing diluted net income per share attributable to Cimpress plc

Weighted average anti-dilutive shares excluded from diluted net income per share attributable to Cimpress plc

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(1) In the periods in which a net loss is recognized, the impact of share options, RSUs, and RSAs is not included as they are anti-dilutive.

On May 1, 2020, we entered into a financing arrangement with Apollo Global Management, Inc., which included 7-year warrants with a strike price of $ 60 that have a potentially dilutive impact on our weighted average shares outstanding.

For the year ended June 30, 2020, the weighted average dilutive effect of the warrants was 73,719 shares.

Refer to Note 10 for additional details about the arrangement.

Compensation Expense

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For awards with a performance condition vesting feature, compensation cost is recorded if it is probable that the performance condition will be achieved.

We have issued performance share units, or PSUs, which are estimated at fair value on the date of grant, which is fixed throughout the vesting period.

The fair value is determined using a Monte Carlo simulation valuation model.

As the PSUs include both a service and market condition the related expense is recognized using the accelerated expense attribution method over the requisite service period for each separately vesting portion of the award.

For PSUs that meet the service vesting condition, the expense recognized over the requisite service period will not be reversed if the market condition is not achieved.

In addition to a service vesting and market condition (based on the three year moving average of the Cimpress share price) contained in our standard performance share units, we also issue awards that contain financial performance conditions.

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Total share-based compensation expense was $ 34,874 , $ 21,716 and $ 50,466 for the years ended June 30, 2020, 2019 and 2018 , respectively.

During the first quarter of fiscal 2018, we issued supplemental performance share units ("supplemental PSUs") to certain members of management (excluding Robert Keane, our Chairman and CEO) that were incremental to our typical long-term incentive awards.

The supplemental PSUs are subject to a three-year cumulative financial performance condition intended to provide a stretch goal for participants in addition to service vesting and share price performance conditions.

The evaluation of achievement of the performance condition is at the discretion of the Compensation Committee and, therefore, the awards are subject to mark-to-market accounting throughout the performance vesting period.

Beginning in the second quarter of fiscal 2018, we concluded that the achievement of the performance condition was probable and recognized $ 15,397 of expense cumulatively through the first quarter of fiscal 2019.

In the second quarter of fiscal 2019, which is seasonally significant, we concluded that the achievement of the three-year cumulative performance condition was no longer probable, and we reversed the previously recognized expense of $ 15,397 .

As of June 30, 2019 we continue to consider achievement of the performance condition to not be probable.

If, in a future period, we determine that it is probable that the financial performance condition will be achieved based on our financial performance, we will cumulatively catch up the expense in that period.

Sabbatical Leave

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We maintain an allowance for doubtful accounts for potential credit losses based upon specific customer accounts and historical trends, and such losses to date in the aggregate have not materially exceeded our expectations.

Build-to-Suit Lease Arrangements

For accounting purposes, we were deemed to be the owner of two projects during their respective construction periods:

the Waltham, Massachusetts office building lease and a lease executed during the first quarter of fiscal 2019 for a production facility in Dallas, Texas.

For both build-to-suit leases, property, plant and equipment, net, was $ 124,408 and $ 111,926 as of June 30, 2019 and June 30, 2018 , respectively, related to the buildings.

The financing lease obligation and deferred rent credit related to the buildings on our consolidated balance sheets was $ 124,643 and $ 115,312 as of June 30, 2019 and June 30, 2018 , respectively.

All additions during the current period were capitalized construction costs related to the Dallas facility.

As part of our adoption of the new leasing standard on July 1, 2019, and discussed further below, we will recognize our build-to-suit lease arrangements as operating leases under the new standard.

Refer below for additional discussion of these changes.

Lease Accounting

Lease accounting - adoption of ASC 842

On July 1, 2019, we adopted ASC 842, Leases, using a modified retrospective transition approach.

Under the modified retrospective approach, we recognized any cumulative impacts as of the adoption date within retained earnings on our consolidated balance sheet.

We did not adjust the prior comparable period.

Additionally, as part of our transition, we elected several practical expedients that streamlined the transition to the new guidance whereby we did not reassess the following:

whether a lease under the prior standard continues to meet the definition of a lease under the new standard;

whether the application of the new standard would have an impact on the classification of our existing leases, with the exception of our build-to-suit leases;

the existence of any initial direct costs associated with our leases.

We also elected the practical expedient to account for our lease components as a single lease component rather than separating them into lease and nonlease components, which would have resulted in recognizing only the lease components in the measurement of our lease assets and liabilities.

This expedient was applied to all underlying classes of assets we lease.

We elected the short-term lease exception policy, permitting us to not apply the recognition requirements of ASC 842 to short-term leases, which are defined as leases with a term of twelve months or less.

Short-term leases are not recorded on our consolidated balance sheet and are expensed on a straight-line basis over the lease term in our consolidated statement of operations.

We determine the lease term by including the exercise of renewal options that are considered reasonably certain at lease inception.

The following table summarizes the cumulative effect of adopting the new lease standard as of the adoption date of July 1, 2019:

Consolidated Balance Sheet

As reported at

June 30, 2019

ASC 842 adjustments

Adjusted balance at

Prepaid expenses and other current assets

Property, plant and equipment, net

Operating lease assets, net

Deferred tax assets

Liabilities and shareholders' equity

Operating lease liabilities, current

Other current liabilities

Lease financing obligation

Operating lease liabilities, non-current

Other liabilities

Retained earnings

The new standard impacted the classification of our build-to-suit leases for our Waltham, Massachusetts and Dallas, Texas building leases, which resulted in a change of their classification to operating leases.

On July 1, 2019, we de-recognized the existing lease assets included within property, plant and equipment, net of $ 121,254 , the related lease financing obligations of $ 124,665 , and associated deferred rent of $ 418 .

This change resulted in an $ 817 decrease to deferred tax assets and a net increase to retained earnings of $ 2,989 .

In addition, on July 1, 2019, we recognized operating lease assets of $ 169,668 and operating lease liabilities of $ 176,383 , inclusive of our Waltham, Massachusetts lease which commenced prior to the transition date.

The difference between the operating lease assets and liabilities resulted from the reclassification of deferred rent and tenant allowance balances presented in other financial statement lines of the consolidated balance sheet, which are now included in the operating lease assets.

For the year ended June 30, 2020 , the change in lease classification for our build-to-suit leases resulted in a reduction to operating income within our consolidated statement of operations of $ 7,440 , with a corresponding decrease to interest expense, net.

In our consolidated statement of cash flows, the change in classification resulted in a decrease to cash from operating activities and increase to cash from financing activities of $ 4,117 during the year ended June 30, 2020 .

Other than the impact from our build-to-suit leases, the new standard did not have a material impact on our consolidated statement of operations and consolidated statement of cash flows.

Refer to Note 17 for additional lease disclosure.

Lease accounting policy

We determine if an arrangement contains a lease at contract inception.

We consider an arrangement to be a lease if it conveys the right to control an identifiable asset for a period of time.

Costs for operating leases that include incentives such as payment escalations or rent abatements are recognized on a straight-line basis over the term of the lease.

Additionally, inducements received are treated as a reduction of our costs over the term of the agreement.

Leasehold improvements are capitalized at cost and amortized over the shorter of their expected useful life or the lease term, excluding renewal periods.

Lease right-of-use ("ROU") assets and liabilities for operating and finance leases are recognized based on the present value of the future lease payments over the lease term at lease commencement date.

As most of our leases do not provide an implicit interest rate, we use our incremental borrowing rate based on the information available at the lease commencement date.

Our incremental borrowing rate approximates the interest rate on a collateralized basis for the economic environments where our leased assets are located, and is established by considering the credit spread associated with our existing debt arrangements, as well as observed market rates for instruments with a similar term to that of the lease payments.

ROU assets also include any lease payments made at or before the lease commencement, as well as any initial direct costs incurred.

Lease incentives received from the lessor are recognized as a reduction to the ROU asset.

Our initial determination of the lease term is based on the facts and circumstances that exist at lease commencement.

The lease term may include the effect of options to extend or terminate the lease when it is reasonably certain that those options will be exercised.

We consider these options reasonably certain to be exercised based on our assessment of economic incentives, including the fair market rent for equivalent properties under similar terms and conditions, costs of relocating, availability of comparable replacement assets, and any related disruption to operations that would be experienced by not renewing the lease.

Finance leases are accounted for as an acquisition of an asset and incurrence of an obligation.

Assets held under finance leases are recorded at the lower of the present value of the minimum lease payments or the fair value of the leased asset at the inception of the lease, and amortized over the useful life of the asset.

The corresponding finance lease obligation is recorded at the present value of the minimum lease payments at inception of the lease.

Operating leases are included in operating lease assets and current and non-current operating lease liabilities in the consolidated balance sheets.

Finance lease assets are included in property, plant, and equipment, net, and the related liabilities are included in other current liabilities and other liabilities in the consolidated balance sheets.

Variable lease payments are excluded from the operating lease assets and liabilities and are recognized as expense in the period in which the obligation is incurred.

Variable lease payments primarily include index-based rent escalation associated with some of our real estate leases, as well as property taxes and common area

maintenance payments for most real estate leases, which are determined based on the costs incurred by the lessor.

We also make variable lease payments for certain print equipment leases that are determined based on production volumes.

Accordingly, as the lessor incurs the construction project costs, the assets and corresponding financial obligation are recorded in our consolidated balance sheet.

Once the construction is completed, if the lease meets certain “sale-leaseback” criteria, we will remove the asset and related financial obligation from the balance sheet and treat the building lease as either an operating or finance lease based on our assessment of the guidance.

We have subleased a small amount of our equipment and real estate lease portfolio to third parties, making us the lessor.

Most of these subleases meet the criteria for operating lease classification and the related sublease income is recognized on a straight-line basis over the lease term within the consolidated statement of operations.

To a lesser extent, we have leases in which we are the lessees, classify the leases as finance leases and have subleased the asset under similar terms, resulting in their classification as direct financing leases.

For direct financing leases, we recognize a sublease receivable within prepaid expenses and other current assets and other assets in the consolidated balance sheets.

Recently Issued or Adopted Accounting Pronouncements

New Accounting Standards Adopted

In May 2017, the FASB issued Accounting Standards Update No.

2017-09, "Compensation - Stock Compensation (Topic 718)," (ASU 2017-09), which clarifies the application of Topic 718 when accounting for changes in the terms and conditions of a share-based payment award.

Under the new standard, changes to the terms or conditions of a share-based payment award are to be accounted for under modification accounting unless there is no change to the fair value, vesting conditions and classification of the award after modification.

We adopted the amendment on its effective date of July 1, 2018.

The amendment is applied prospectively, and the new standard did not have a material impact on our consolidated financial statements.

In November 2016, the FASB issued Accounting Standards Update No.

2016-18, "Statement of Cash Flows (Topic 230) Restricted Cash" (ASU 2016-18), which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents.

Therefore, amounts generally described as restricted cash should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows.

We adopted the new standard on July 1, 2018.

The new standard did not have a material effect on our consolidated financial statements.

In March 2016, the FASB issued Accounting Standards Update No.

2016-04, "Liabilities - Extinguishment of Liabilities (Subtopic 405-20):

Recognition of Breakage for Certain Prepaid Stored-Value Products" (ASU 2016-04), which requires an entity to recognize breakage for a liability resulting from the sale of a prepaid stored-value product in proportion to the pattern of rights expected to be exercised by the product holder only to the extent that it is probable that a significant reversal of the recognized breakage amount will not subsequently occur.

The new standard is effective for us on July 1, 2018.

The standard should be applied either retrospectively to each period presented or by means of a cumulative adjustment to retained earnings as of the beginning of the fiscal year adopted.

We adopted the new standard on July 1, 2018.

The new standard did not have a material effect on our consolidated financial statements.

In May 2014, the FASB issued Accounting Standards Update No.

2014-09, "Revenue from Contracts with Customers" (ASU 2014-09), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers.

This guidance replaced most existing revenue recognition guidance in U.S.

The new standard is effective for us as of July 1, 2018.

The standard permits the use of either the retrospective or modified retrospective method.

We adopted the new standard during the first quarter of fiscal 2019.

Refer to the information above for additional details of the adoption.

Issued Accounting Standards to be Adopted

In August 2018, the FASB issued Accounting Standards Update No.

2018-15 "Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40)" (ASU 2018-15), which requires a customer in a cloud computing arrangement that is a service contract to follow the internal use software guidance in ASC 350-40 to determine which implementation costs to capitalize as assets or expense as incurred.

The new standard is effective for us on July 1, 2020 and we plan to early adopt the new standard on July 1, 2019.

We do not expect the new standard to have a material impact on our consolidated financial statements.

The standard would be effective on July 1, 2020 and we early adopted the new standard on July 1, 2019.

The standard did not have a material impact on our consolidated financial statements.

In August 2017, the FASB issued Accounting Standards Update No.

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Targeted Improvements to Accounting for Hedging Activities (Topic 815)," (ASU 2017-12), which better aligns a company’s financial reporting for hedging activities with the economic objectives of those activities.

The amendment is effective for us on July 1, 2019 and permits early adoption, including adoption in an interim period.

The standard requires a modified retrospective transition approach, in which we will recognize the cumulative effect of the change on the opening balance of each affected component of equity in the statement of financial position as of the date of adoption.

Upon transitioning to the new standard on July 1, 2019, we will reverse the cumulative effect of expense recognized for the ineffective portion of our interest rate swap contracts, which will result in an adjustment to retained earnings and accumulated other comprehensive loss within our consolidated balance sheet of $ 193 .

We will prospectively recognize any ineffectiveness associated with any effective and designated cash flow hedges within accumulated other comprehensive loss, rather than in earnings.

We do not expect these changes to have a material impact on our consolidated financial statements.

We adopted the amendment on its effective date of July 1, 2019.

The standard requires a modified retrospective transition approach, and we recognized the cumulative effect of the change within shareholders' equity as of the date of adoption.

Upon transitioning to the new standard on July 1, 2019, we reversed the cumulative effect of expense previously recognized in earnings for the ineffective portion of our interest rate swap contracts, which resulted in an adjustment to retained earnings and accumulated other comprehensive loss within our consolidated balance sheet of $ 153 , net of tax.

We will prospectively recognize any ineffectiveness associated with our effective and designated cash flow hedges within accumulated other comprehensive loss, rather than in earnings.

These changes did not have a material impact on our consolidated financial statements.

In March 2016, the FASB issued Accounting Standards Update No.

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The standard also retains a distinction between finance leases and operating leases.

The new standard is effective for us on July 1, 2019 and we will adopt the new standard using the modified retrospective approach.

We will use the transition relief package, in which we will not reassess the classification of our existing leases, whether any expired or existing contracts contain leases and if our existing leases have any initial direct costs.

We have completed the process of collecting our existing lease contracts and we are completing changes to our systems and processes.

The new standard will impact the classification of our build-to-suit leases, for our Waltham, Massachusetts and Dallas, Texas building leases, which under the new standard will result in their classification as operating leases.

Therefore, on July 1, 2019, we will reverse the existing lease asset included within property, plant and equipment, net of $ 124,408 and the related financing lease obligations of $ 124,643 .

In addition, we will recognize an operating lease asset and liability, which is included in our estimated amounts below.

For our fiscal year 2020, the change in lease classification for our build-to-suit leases will include the reclassification of interest expense to our operating expense financial statement lines, resulting in a reduction to operating income within our consolidated statement of operations of approximately $ 7,200 .

In our consolidated statement of cash flows, the change in classification will result in a decrease to cash from operating activities and increase to cash from financing activities of approximately $ 4,100 .

Upon transition on July 1, 2019, we will recognize an operating lease asset of approximately $ 165,000 and an operating lease liability of approximately $ 170,000 .

The difference between the operating lease asset and liability will result from the reclassification of deferred rent and tenant allowance balances presented in other financial statement lines of the consolidated balance sheet, which will subsequently be included in the operating lease asset.

Other than the impact from our build-to-suit leases, we do not expect the new standard to have a material impact on our consolidated statement of operations and consolidated statement of cash flows.

We adopted the standard on its effective date of July 1, 2019.

Refer to the information above for additional details of the adoption.

Issued Accounting Standards to be Adopted

In December 2019, the FASB issued Accounting Standards Update No.

2019-12 "Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes" (ASU 2019-12), which modifies certain aspects of income tax accounting.

The standard is effective for us on July 1, 2020.

We do not expect the effect of ASU 2019-12 to have a material impact on our consolidated financial statements.

In June 2016, the FASB issued Accounting Standards Update No.

2016-13 "Financial Instruments—Credit Losses (Topic 326)" (ASU 2016-13), which introduces a new accounting model for recognizing credit losses on certain financial instruments based on an estimate of current expected credit losses.

The standard is effective for us on July 1, 2020.

We do not expect the effect of ASU 2016-13 to have a material impact on our consolidated financial statements.

Fair Value Measurements

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Observable Inputs

Interest rate swap contracts

Cross-currency swap contracts

Currency forward contracts

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Total assets recorded at fair value

Interest rate swap contracts

Cross-currency swap contracts

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Although we have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to appropriately reflect both our own nonperformance risk and the respective counterparties' nonperformance risk in the fair value measurement.

However, as of June 30, 2019 , we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and have determined that the credit valuation adjustments are not significant to the overall

valuation of our derivatives.

However, as of June 30, 2020 , we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives.

As a result, we have determined that our derivative valuations in their entirety are classified in Level 2 in the fair value hierarchy.

As of June 30, 2020 and June 30, 2019 , the carrying amounts of our cash and cash equivalents, accounts receivable, accounts payable and other current liabilities approximated their estimated fair values.

As of June 30, 2019 and June 30, 2018 the carrying value of our debt, excluding debt issuance costs and debt discounts, was $ 1,035,585 and $ 839,429 , respectively, and the fair value was $ 1,045,334 and $ 847,520 , respectively.

As of June 30, 2020 and June 30, 2019 , the carrying value of our debt, excluding debt issuance costs and debt premiums and discounts, was $ 1,482,177 and $ 1,035,585 , respectively, and the fair value was $ 1,450,719 and $ 1,045,334 , respectively.

Our debt at June 30, 2020 includes variable-rate debt instruments indexed to LIBOR that resets periodically, as well as fixed-rate debt instruments.

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Derivatives are recorded in the consolidated balance sheets at fair value.

If the derivative is designated as a cash flow hedge or net investment hedge, then the effective portion of changes in the fair value of the derivative is recorded in accumulated other comprehensive loss and is subsequently reclassified into earnings in the period the hedged forecasted transaction affects earnings.

If a derivative is deemed to be ineffective, then the ineffective portion of the change in fair value of the derivative is recognized directly in earnings.

If the derivative is designated as a cash flow hedge or net investment hedge, then the change in the fair value of the derivative is recorded in accumulated other comprehensive loss and subsequently reclassified into earnings in the period the hedged forecasted transaction affects earnings.

On July 1, 2019, we adopted the new hedge accounting standard, in which we no longer recognize the ineffective portion of an effective hedge within earnings, rather any ineffectiveness associated with any effective and designated hedge is recognized within accumulated other comprehensive loss.

Refer to Note 2 for additional details.

The change in the fair value of derivatives not designated as hedges is recognized directly in earnings as a component of other income (expense), net.

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Realized gains or losses from interest rate swaps are recorded in earnings as a component of interest expense, net.

A portion of eight of our interest rate swap contracts was deemed to be ineffective during the year ended June 30, 2019 and during the year ended June 30, 2018 , a portion of six of our interest rate swap contracts was deemed to be ineffective.

During the year ended June 30, 2019, we recognized $ 721 of losses and during the years ended June 30, 2018 and 2017, we recognized gains of $ 255 and $ 273 , respectively, for the portion of the interest rate swaps that were deemed ineffective, respectively, within other income (expense), net in our consolidated statement of operations.

Amounts reported in accumulated other comprehensive loss related to interest rate swap contracts will be reclassified to interest expense, net as interest payments are accrued or made on our variable-rate debt.

As of June 30, 2020 , we estimate that $ 10,364 will be reclassified from accumulated other comprehensive loss to interest expense during the twelve months ending June 30, 2021 .

As of June 30, 2019 , we had nine outstanding interest rate swap contracts indexed to USD LIBOR.

These instruments were designated as cash flow hedges of interest rate risk and have varying start dates and maturity dates through December 2025 .

As of June 30, 2020 , we had ten outstanding interest rate swap contracts indexed to USD LIBOR, of which seven of these instruments were designated as cash flow hedges of interest rate risk and have varying start dates and maturity dates through December 2025.

During the fourth quarter of fiscal 2020, we de-designated three contracts from hedge accounting due to an increased floor to our LIBOR borrowing costs related to the April 2020 amendment to our senior secured credit facility.

As a result of this change in the underlying debt being hedged, these three forward starting hedges were no longer highly effective.

These de-designated hedges have varying start dates and maturity dates through December 2026.

Interest rate swap contracts outstanding:

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Cross-currency swaps involve an initial receipt of the notional amount in the hedge currency in exchange for our reporting currency based on a contracted exchange rate.

Subsequently, we receive fixed rate

payments in our reporting currency in exchange for fixed rate payments in the hedged currency over the life of the contract.

Subsequently, we receive fixed rate payments in our reporting currency in exchange for fixed rate payments in the hedged currency over the life of the contract.

At maturity, the final exchange involves the receipt of our reporting currency in exchange for the notional amount in the hedged currency.

Cross-currency swap contracts designated as cash flow hedges are executed to mitigate our currency exposure to the interest receipts as well as the principal remeasurement and repayment associated with certain intercompany loans denominated in a currency other than our reporting currency, the U.S.

During the year ended June 30, 2020 , we terminated one of our cross-currency swaps, resulting in cash proceeds of $ 9,177 which were recognized within cash provided by operating activities in our consolidated statement of cash flows.

As of June 30, 2020 , we had two outstanding cross-currency swap contracts designated as cash flow hedges with a total notional amount of $ 120,874 , both maturing during June 2024 .

We entered into the two cross-currency swap contracts to hedge the risk of changes in one Euro-denominated intercompany loan entered into with one of our consolidated subsidiaries that has the Euro as its functional currency.

We entered into the two cross-currency swap

contracts to hedge the risk of changes in one Euro-denominated intercompany loan entered into with one of our consolidated subsidiaries that has the Euro as its functional currency.

Amounts reported in accumulated other comprehensive loss will be reclassified to other income (expense), net as interest payments are accrued or paid and upon remeasuring the intercompany loan.

As of June 30, 2020 , we estimate that $ 2,994 of income will be reclassified from accumulated other comprehensive loss to interest expense, net during the twelve months ending June 30, 2021 .

Cross-currency swap contracts designated as net investment hedges are executed to mitigate our currency exposure of net investments in subsidiaries that have reporting currencies other than the U.S.

As of June 30, 2019 , we did not hold any cross-currency swaps designated as net investment hedges.

Other Currency Contracts

We execute currency forward and option contracts in order to mitigate our exposure to fluctuations in various currencies against our reporting currency, the U.S.

As of June 30, 2019 , we had nine currency forward contracts designated as net investment hedges with a total notional amount of $ 294,991 , maturing during various dates through April 2024 .

During the year ended June 30, 2020 , we terminated nine forward contracts designated as net investment hedges, resulting in cash proceeds of $ 29,791 which continues to be recognized in accumulated other comprehensive income (loss).

The cash proceeds were recognized as cash provided by investing activities within our consolidated statement of cash flow.

As of June 30, 2020 , we had five currency forward contracts designated as net investment hedges with a total notional amount of $ 149,604 , maturing during various dates through April 2023 .

We entered into these contracts to hedge the risk of changes in the U.S.

Dollar equivalent value of a portion of our net investment in two consolidated subsidiaries that have Euro as their functional currency.

dollar equivalent value of a portion of our net investment in two consolidated subsidiaries that have the Euro as their functional currency.

Amounts reported in accumulated other comprehensive loss are recognized as a component of our cumulative translation adjustment.

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Number of Instruments

November 2017 through June 2019

Various dates through June 2021

September 2018 through June 2020

Various dates through October 2024

Financial Instrument Presentation

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Liability Derivatives

Derivatives designated as hedging instruments

Balance Sheet line item

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Gross amount offset in Consolidated Balance Sheet

Derivatives designated as hedging instruments

Derivatives in cash flow hedging relationships

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Other current assets / other assets

Other current liabilities / other liabilities

Other liabilities

Cross-currency swaps

Other current assets

Other current liabilities

Other liabilities

Derivatives in net investment hedging relationships

Currency forward contracts

Other non-current assets

Other current liabilities / other liabilities

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Derivatives not designated as hedging instruments

Interest rate swaps

Other liabilities

Currency forward contracts

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Interest rate swaps

Other non-current assets

Other current liabilities / other liabilities

Cross-currency swaps

Other non-current assets

Other liabilities

Derivatives in net investment hedging relationships

Cross-currency swaps

Other non-current assets

Other liabilities

Currency forward contracts

Other non-current assets

Other liabilities

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Total derivatives not designated as hedging instruments

The following table presents the effect of the effective portion of our derivative financial instruments designated as hedging instruments and their classification within comprehensive income (loss) for the years ended June 30, 2019, 2018 and 2017 :

Amount of Gain (Loss) Recognized in Comprehensive Income (Loss) on Derivatives (Effective Portion)

The following table presents the effect of our derivative financial instruments designated as hedging instruments and their classification within comprehensive (loss) income for the years ended June 30, 2020, 2019 and 2018 :

Amount of Net (Loss) Gain on Derivatives Recognized in Comprehensive Income

Year Ended June 30,

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Currency forward contracts

________________

(1) Upon transitioning to the new hedge accounting standard on July 1, 2019, we reversed the cumulative effect of expense recognized for the ineffective portion of our interest rate swap contracts that are designated as hedging instruments, which resulted in an adjustment to accumulated other comprehensive loss of $ 153 , net of tax, which is included within the interest rate swap loss recognized for the year ended June 30, 2020 .

The following table presents reclassifications out of accumulated other comprehensive loss for the years ended June 30, 2020, 2019 and 2018 :

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Income before income taxes

Income tax expense (benefit)

The following table presents the adjustment to fair value recorded within the consolidated statements of operations for derivative instruments for which we did not elect hedge accounting, as well as the effect of the ineffective portion and de-designated derivative financial instruments that no longer qualify as hedging instruments in the period:

Amount of Gain (Loss) Recognized in Net Income (Loss)

Income tax (benefit) expense

The following table presents the adjustment to fair value recorded within the consolidated statements of operations for the years ended June 30, 2020, 2019 and 2018 for derivative instruments for which we did not elect hedge accounting and de-designated derivative financial instruments that no longer qualify as hedging instruments in the period.

Amount of Gain (Loss) Recognized in Net Income

Affected line item in the

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Other income (expense), net

Accumulated Other Comprehensive Loss

The following table presents a roll forward of amounts recognized in accumulated other comprehensive loss by component, net of tax of $ 5,901 , $ 1,371 , and ($ 710 ) for the years ended June 30, 2019, 2018 and 2017 :

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(1) Upon our adoption of the new hedge accounting standard on July 1, 2019, we prospectively recognize any ineffectiveness associated with effective and designated hedges within accumulated other comprehensive loss, rather than in earnings.

In the fourth quarter of fiscal 2020, we de-designated three of our interest rate swaps and therefore no longer apply hedge accounting.

Subsequent to their de-designation, we recognize any fair value adjustments to those instruments in other income (expense), net, as included in the table above.

Accumulated Other Comprehensive Income (Loss)

The following table presents a roll forward of amounts recognized in accumulated other comprehensive income (loss) by component, net of tax of $ 1,709 , $ 5,901 and $ 1,371 for the years ended June 30, 2020, 2019 and 2018 :

Gains (losses) on cash flow hedges (1)

Gains (losses) on available for sale securities

Gains (losses) on pension benefit obligation

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Balance as of June 30, 2017

Other comprehensive income (loss) before reclassifications

Amounts reclassified from accumulated other comprehensive loss to net (loss) income

Net current period other comprehensive income (loss)

Balance as of June 30, 2017

Amounts reclassified from accumulated other comprehensive loss to retained earnings

Other comprehensive income (loss) before reclassifications

Amounts reclassified from accumulated other comprehensive loss to net income (loss)

Net current period other comprehensive income (loss)

Other comprehensive income before reclassifications

Amounts reclassified from accumulated other comprehensive loss to net income

Net current period other comprehensive income

Balance as of June 30, 2018

Other comprehensive (loss) income before reclassifications

Amounts reclassified from accumulated other comprehensive loss to net income (loss)

Amounts reclassified from accumulated other comprehensive loss to net income

Net current period other comprehensive (loss) income

Balance as of June 30, 2019

Other comprehensive (loss) income before reclassifications

Amounts reclassified from accumulated other comprehensive loss to net income

Net current period other comprehensive (loss) income

Balance as of June 30, 2020

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(1) Gains (losses) on cash flow hedges include our interest rate swap and cross-currency swap contracts designated in cash flow hedging relationships.

(2) As of June 30, 2019 , 2018, and 2017 the translation adjustment is inclusive of the effects of our net investment hedges, of which, unrealized losses of $ 731 , $ 22,014 , and $ 17,048 respectively, net of tax, have been included in accumulated other comprehensive loss.

(2) As of June 30, 2020, 2019 and 2018 , the translation adjustment is inclusive of the effects of our net investment hedges, of which, unrealized gains of $ 20,509 and unrealized losses of $ 731 and $ 22,014 , respectively, net of tax, have been included in accumulated other comprehensive loss.

Property, Plant, and Equipment, Net

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Machinery and production equipment

Machinery and production equipment under capital lease

Machinery and production equipment under finance lease

Computer software and equipment

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Construction in progress

Less accumulated depreciation, inclusive of assets under capital lease

Less accumulated depreciation, inclusive of assets under finance lease

Property, plant, and equipment, net

Depreciation expense, inclusive of assets under capital leases, totaled $ 84,558 , $ 87,956 , and $ 87,145 for the years ended June 30, 2019, 2018 and 2017 , respectively.

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(1) Upon our adoption of the new leasing standard on July 1, 2019, our Waltham, MA and Dallas, TX build-to-suit lease asset balances of $ 124,408 were de-recognized, resulting in a decrease to building and building improvements.

Refer to Note 2 for additional details.

Depreciation expense, inclusive of assets under finance leases, totaled $ 74,665 , $ 84,558 and $ 87,956 for the years ended June 30, 2020, 2019 and 2018 , respectively.

Business Combinations and Divestitures

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The put and call purchase price is based on BuildASign's revenue growth and EBITDA for the fiscal year in which the option is exercised.

Due to the presence of the put arrangement, the noncontrolling interest is presented as redeemable noncontrolling interest as redemption is not solely within our control.

We initially recognized the noncontrolling

interest at fair value of $ 3,356 and will adjust the balance for the pro rata impact of the BuildASign earnings or loss, as well as adjustments to increase the balance to the redemption value, if necessary.

Due to the presence of the put arrangement, the noncontrolling interest is presented as redeemable

noncontrolling interest as redemption is not solely within our control.

We initially recognized the noncontrolling interest at fair value of $ 3,356 and will adjust the balance for the pro rata impact of the BuildASign earnings or loss, as well as adjustments to increase the balance to the redemption value, if necessary.

The excess purchase price over the fair value of BuildASign's net assets was recorded as goodwill, which is primarily attributable to the value of its workforce, its manufacturing and marketing processes and know-how, as well as synergies which include leveraging Cimpress' scale-based sourcing channels.

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(1) In connection with the BuildASign acquisition, we recorded an indemnification asset of $ 5,433 , which represents the seller's obligation under the merger agreement to indemnify us for a portion of their potential contingent liabilities related to certain tax matters.

We also recognized a contingent liability of $ 8,925 , which represents our estimate based on guidance within ASC 450 - "Contingencies," as of the acquisition date.

(2) During the third quarter of fiscal 2019, we recorded immaterial measurement period adjustments, which related primarily to the contingent liabilities, as discussed above, and resulted in a decrease to goodwill of $ 482 .

(1) In connection with the BuildASign acquisition, we recorded an indemnification asset of $ 5,433 , which represented the seller's obligation under the merger agreement to indemnify us for a portion of their potential contingent liabilities related to certain tax matters.

We also recognized a contingent liability of $ 8,925 , which represented our estimate based on guidance within ASC 450 - "Contingencies," as of the acquisition date.

BuildASign Pro Forma Financial Information

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Pro forma revenue

Pro forma net income attributable to Cimpress N.V.

Pro forma net income attributable to Cimpress plc

We utilized proceeds from our credit facility in order to finance the acquisition.

In connection with the acquisition, we incurred $ 1,140 in general and administrative expenses during the year ended June 30, 2019, primarily related to legal, financial, and other professional services.

Acquisition of VIDA Group Co.

On July 2, 2018, we acquired approximately 73 % of the shares of VIDA Group Co.

("VIDA"), a U.S.-based startup, with options to increase our ownership beginning in fiscal 2023.

For the noncontrolling interest, we entered into put and call options with each employee who holds shares, which become exercisable starting in fiscal 2023, or earlier if the employee terminates their employment.

The total consideration was $ 18,703 , net of cash acquired.

VIDA brings manufacturing access and an e-commerce marketplace to artists, thereby enabling artists to convert ideas in beautiful, original products for customers, ranging from fashion, jewelry and accessories to home accent pieces.

This investment supports our strategy to build a competitively differentiated portfolio of focused brands by providing access to the textiles marketplace.

We recognized the assets, liabilities and noncontrolling interest on the basis of their fair values at the date of the acquisition, with any excess of the purchase price paid over the fair value of the net assets recorded as goodwill.

The aggregate allocation to goodwill, net liabilities and noncontrolling interest was $ 26,017 , $ 647 , and $ 5,705 , respectively.

The revenue and earnings included in our consolidated financial statements for the year ended June 30, 2019 are not material.

We utilized proceeds from our credit facility to finance the acquisition.

Fiscal 2018 Divestiture

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Additionally, we agreed to provide Albumprinter with certain transitional support services for a period of up to one year from the date of the sale.

Fiscal 2017 acquisition

Acquisition of National Pen Co.

On December 30, 2016, we acquired 100% of the equity interests of National Pen Co.

LLC, a manufacturer and marketer of custom writing instruments for small- and medium-sized businesses.

At closing, we paid $ 214,573 in cash, subject to post closing adjustments based on acquired cash, debt and working capital balances.

During the third quarter of fiscal 2017, we finalized and received payment for the post closing adjustment, which reduced the purchase price by $ 1,941 .

The acquisition supports our strategy to build competitively differentiated supply chain capabilities that we can make available via our mass customization platform, which we bring to market through a portfolio of focused brands.

We expect National Pen will also complement our organic investments in technology and supply chain capabilities for promotional products, apparel and gift offerings.

The table below details the consideration transferred to acquire National Pen:

Cash consideration

Final post closing adjustment

Total purchase price

The excess purchase price over the fair value of National Pen's net assets was recorded as goodwill, which is primarily attributable to the value of its workforce, its manufacturing and marketing process and know-how, as well as synergies which include leveraging National Pen's scale-based sourcing channels, integrating into our mass customization platform, and supporting the development of its e-commerce platform.

We attributed $ 34,520 of goodwill to the National Pen reportable segment, and allocated $ 23,200 of goodwill to the Vistaprint segment for certain synergies that are expected to be realized by the Vistaprint segment as a result of the acquisition.

The amount of goodwill that is deductible for tax purposes is approximately $ 19,000 .

The fair value of the assets acquired and liabilities assumed was:

Weighted Average

Useful Life in Years

Tangible assets acquired and liabilities assumed (1):

Cash and cash equivalents

Accounts receivable, net

Other current assets

Property, plant and equipment, net

Other non-current assets

Accounts payable

Accrued expenses

Other current liabilities

Deferred tax liabilities

Long-term liabilities

Identifiable intangible assets:

Developed Technology

Customer Relationships

Total purchase price

(1) National Pen has materially impacted our working capital balances post-acquisition, resulting in increased accounts receivable, inventory, accounts payable and accrued expenses balances in our consolidated balance sheet.

We utilized proceeds from our credit facility in order to finance the acquisition.

In connection with the acquisition, we incurred $ 2,005 in general and administrative expenses during the year ended June 30, 2017, primarily related to legal, financial, and other professional services.

Goodwill and Acquired Intangible Assets

Goodwill and Acquired Intangibles

The carrying amount of goodwill by reportable segment as of June 30, 2020 and June 30, 2019 was as follows:

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Balance as of June 30, 2018

Acquisitions (1)

Impairments (2)

Effect of currency translation adjustments (3)

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Acquisitions (1)

Impairment (3)

Impairments (2)

Adjustments (4)

Effect of currency translation adjustments (3)

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(1) During the first quarter of fiscal 2020, we recognized goodwill related to an immaterial acquisition within our PrintBrothers reportable segment.

In fiscal year 2019 we acquired the BuildASign and VIDA businesses as well as an immaterial supplier of one of our businesses within The Print Group reportable segment.

(2) During the third quarter of fiscal 2020, we identified triggering events in response to the COVID-19 pandemic, resulting in the recognition of impairment to goodwill, please refer below for further detail.

Additionally, during the fourth quarter of fiscal 2020, we divested our VIDA business and recognized a loss of $ 1,520 , in addition to the goodwill impairment recognized.

In fiscal year 2019 we recorded an impairment charge for the goodwill of our Printi reporting unit.

Refer below for additional details.

(3) Related to goodwill held by subsidiaries whose functional currency is not the U.S.

(2) Refer to Note 7 for additional details related to our acquisitions of BuildASign and VIDA.

We also recognized goodwill related to a small acquisition of a supplier by one of our businesses within The Print Group reportable segment.

(3) During fiscal 2019 we recorded an impairment charge of $ 7,503 , related to our Printi reporting unit.

See below for additional details.

(4) Due to changes in the composition of our reportable segments during the first quarter of fiscal 2020, we reclassified the goodwill associated with our Vistaprint Corporate Solutions reporting unit from All Other Businesses to our Vistaprint reportable segment.

Refer to Note 16 for additional details on the changes in our reportable segments.

Impairment Review

Our annual goodwill impairment test is performed as of May 31;

however, during the fourth quarter of fiscal 2019, we identified triggering events associated with our Printi reporting unit, which indicated that it was more likely than not that the fair value of the reporting unit is below the carrying amount.

Fiscal 2020 Annual Impairment Test

Our goodwill accounting policy establishes an annual goodwill impairment test date of May 31.

As described below, we identified triggering events during the third quarter of fiscal 2020 that required an interim period impairment analysis for all of our reporting units in response to disruptions associated with the COVID-19 pandemic.

For our annual impairment assessment, we performed a qualitative test for all eight reporting units with goodwill, which focused on comparing key performance indicators between the pandemic-related financial models used in our quantitative test during the third quarter triggering event assessment, to the actual performance through our annual test date.

For each of our reporting units, we are experiencing a better than previously expected recovery when comparing our revenue and EBITDA results for April and May 2020.

In addition, we considered our current forecasts for the beginning of fiscal 2021, which again anticipates a better recovery as compared to the third quarter financial models that were used for our third quarter quantitative tests.

Lastly, we also considered macroeconomic factors, as well as the headroom between our estimated fair value and carrying value from our third quarter

impairment analysis.

We continue to believe that the impacts of the pandemic are temporary, so the better than expected results, combined with an improved near-term outlook were key inputs into our annual impairment analysis, in which we concluded that no impairment exists.

Our goodwill analysis requires significant judgment, including the identification of reporting units and the amount and timing of expected future cash flows.

While we believe our assumptions are reasonable, actual results could differ from our projections.

There have been no indications of impairment that would require analysis for any of our other reporting units as of June 30, 2020 .

COVID-19 Triggering Event

During March 2020, all of our businesses experienced varying levels of decline in revenue due to the disruptions associated with the COVID-19 pandemic.

Although we expect the impacts to be temporary, the negative effects of the pandemic on revenue and profitability triggered an assessment of goodwill, as we expected some of our businesses to achieve materially lower financial results than previously expected.

A triggering event existed for all ten reporting units with goodwill, which required us to perform an impairment test in the third quarter of fiscal 2020.

As required, prior to performing the quantitative goodwill impairment test during the third quarter, we first evaluated the recoverability of long-lived assets as the change in expected long-term cash flows is indicative of a potential impairment.

We performed the recoverability test using undiscounted cash flows for the asset groups of all of our reporting units and concluded that no impairment of long-lived assets existed.

As of our March 31, 2020 test date, seven of our ten reporting units had a significant level of headroom between the estimated fair value and carrying value of the reporting units from our most recent test, and significant headroom remained after considering the deterioration in cash flow due to COVID-19, resulting in no indication of impairment during the third quarter of fiscal 2020.

We identified triggering events that extended beyond the near-term impacts of the pandemic for three of our reporting units, which resulted in reductions to the long-term profitability outlooks for our Exaprint, National Pen and VIDA reporting units.

The triggering events in these specific reporting units were due to a combination of the near-term disruptions outlined above, along with reductions to the long-term profitability expected from each business, as compared to prior expectations.

In light of our decision to exit the VIDA business, which was completed on April 10, 2020, the negotiated sale price was the primary input in our goodwill analysis.

Our March 31, 2020 goodwill impairment test resulted in impairment charges to our Exaprint reporting unit, included within The Print Group reportable segment, the National Pen reporting unit, and our VIDA reporting unit, included within our All Other Business reportable segment.

In order to execute the quantitative goodwill impairment test, we compared the fair value of each reporting unit to its carrying value.

We used the income approach, specifically the discounted cash flow method, to derive the fair value.

We selected this method as being the most meaningful in preparing our goodwill assessment as we believe the income approach most appropriately measures our income-producing assets.

We considered using the market approach but concluded it was not appropriate in valuing these particular reporting units given the lack of relevant market comparisons available.

The discount rate used in the fair value analysis is based on a weighted average cost of capital (“WACC”), which represents the average rate a business must pay its providers of debt and equity, plus a risk premium.

The respective WACC percentages used for each reporting unit within our goodwill impairment test were derived from a group of comparable companies for each respective reporting unit and adjusted for the risk premium associated with each reporting unit.

Based on the goodwill impairment test performed, we recognized the following impairment charges during the third quarter of fiscal 2020:

A partial impairment of the goodwill of our Exaprint reporting unit of $ 40,391 , using a WACC of 14.5 % , resulting in $ 23,767 of goodwill that remains after the impairment as of June 30, 2020

A full impairment of the goodwill of our National Pen reporting unit of $ 34,434 , using a WACC of 13.0 %

A full impairment of the goodwill of our VIDA reporting unit of $ 26,017 , based upon our negotiated sale price

During fiscal 2019, we identified triggering events associated with our Printi reporting unit, which indicated that it was more likely than not that the fair value of the reporting unit is below the carrying amount.

Printi is the leader in Brazil's online printing industry and has grown quickly since its founding.

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As a result, we implemented restructuring activities and aligned future operating plans during the fourth quarter of fiscal 2019 that negatively impacted our cash flow forecasts for this business.

As required, prior to performing the quantitative goodwill impairment test, we first evaluated the recoverability of the Printi long-lived assets as the change in expected long-term cash flows was indicative of a potential impairment.

We performed the recoverability test using undiscounted cash flows for our Printi asset group and evaluated the fair value of their long-lived assets which are comprised primarily of production equipment and concluded there is no impairment of the long-lived assets.

Subsequent to performing the long-lived asset impairment test, we performed our goodwill impairment test which resulted in an impairment charge of the total goodwill of the Printi reporting unit of $ 7,503 .

In order to execute the quantitative goodwill impairment test, we compared the fair value of the Printi reporting unit to its carrying value.

We considered using an income approach, but due to the continued investments that are expected in the near-term discrete cash flow period, we used a market approach to derive fair value, based on the guideline public company method.

We considered a revenue multiple approach, which we believe is appropriate for an early stage operation, like our Printi business.

We concluded that the fair value of the reporting unit indicated a full impairment of the Printi goodwill.

For our annual goodwill impairment test as of May 31, 2019, we evaluated each of our remaining eleven reporting units with goodwill individually.

We considered the timing of our most recent fair value assessment and associated headroom, the actual operating results as compared to the cash flow forecasts used in those fair value assessments, the current long-term forecasts for each reporting unit, and the general market and economic environment of each reporting unit.

After performing this qualitative assessment for seven of our reporting units, we determined that there was no indication the carrying values of those reporting units exceeded their respective fair values.

Based on the qualitative procedures performed we then performed a quantitative analysis for four of our reporting units during this testing cycle in order to gain additional assurance there were no impairments.

We estimated the fair value of each reporting unit, using the income approach, which was determined based on the present value of estimated future cash flows.

The cash flow projections are based on our estimates of revenue growth rates and operating margins, taking into consideration recent business and market trends.

The discount rates used were based on the weighted-average cost of capital adjusted for the related business-specific risks.

For each of these reporting units, we compared the estimated fair value to the carrying value, and considered the estimated level of headroom.

Based on the substantial level of headroom associated with each of these reporting units, we concluded there was no impairment for any of the remaining reporting units.

During fiscal 2017, we changed the composition of our Tradeprint reporting unit (a part of The Print Group reportable segment).

This change, when combined with an updated profit outlook that was lower than originally forecasted as of the acquisition date, indicated that it was more likely than not that the fair value of the reporting unit was below the carrying amount.

We performed the recoverability test using undiscounted cash flows for our Tradeprint asset group and concluded that an impairment of long-lived assets existed.

We proceeded to estimate the fair value of the assets, using an income and cost approach based on market participant assumptions and recognized a partial impairment charge for our acquired intangible assets of $ 3,211 .

Subsequent to performing the long-lived asset impairment test, we performed our goodwill impairment test which resulted in an additional impairment charge of the total goodwill of the Tradeprint reporting unit of $ 6,345 .

In order to execute the quantitative goodwill impairment test, we compared the fair value of the Tradeprint reporting unit to its carrying value.

Based upon these changes to the business, we determined that it was more likely than not that the fair value of the reporting unity was below the carrying amount.

We concluded that the fair value of the reporting unit indicated a full impairment of the Printi goodwill, resulting in an impairment charge of $ 7,503 .

Acquired Intangible Assets

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June 30, 2019

Gross Carrying Amount

Accumulated Amortization

Net Carrying Amount

Developed technology

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Acquired intangible assets amortization expense for the years ended June 30, 2020, 2019 and 2018 was $ 51,786 , $ 53,256 and $ 49,881 , respectively.

During the year ended June 30, 2019 , the increase in acquired intangible asset amortization is primarily related to our fiscal 2019 acquisition of BuildASign.

Estimated intangible assets amortization expense for each of the five succeeding fiscal years and thereafter is as follows:

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Advertising costs (2)

Interest payable (3)

Production costs (2)

Shipping costs

Sales returns

Purchases of property, plant and equipment

Shipping costs (2)

Professional fees

Interest payable

Purchases of property, plant and equipment

Total accrued expenses

___________________

(1) The increase in income and indirect taxes is primarily due to government incentive programs in certain European jurisdictions, which has allowed for the deferral of payment of indirect taxes until fiscal 2021.

(2) The decline in advertising, production and shipping costs is due to the COVID-19 pandemic and related restrictions, which drove lower demand and a reduction in costs during the fourth quarter of the year ended June 30, 2020.

(3) The increase in interest payable is due to the additional offering of $ 200,000 of Senior Unsecured Notes in the third quarter and $ 300,000 in Second Lien Notes issued to Apollo Global Management, Inc.

during the fourth quarter of fiscal 2020.

Refer to Note 10 for further detail.

Other current liabilities included the following:

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June 30, 2019

Short-term derivative liabilities

Current portion of finance lease obligations

Current portion of lease financing obligation (1)

Current portion of capital lease obligations

Short-term derivative liabilities

Total other current liabilities

___________________

(1) Due to our adoption of the new leasing standard on July 1, 2019, our Waltham, MA, and Dallas, TX leases, which were previously classified as build-to-suit, are now classified as operating leases and therefore the lease financing obligation has been de-recognized.

Refer to Note 2 for additional details.

Other liabilities included the following:

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June 30, 2019

Long-term capital lease obligations

Long-term finance lease obligations

Long-term derivative liabilities (1)

Liability-based equity award (1)

Mandatorily redeemable noncontrolling interest (1)

Total other liabilities

___________________

(1) These liabilities relate to share-based compensation awards and mandatorily redeemable noncontrolling interest associated with our Printi business.

As of June 30, 2019, we estimated the future redemption value to be zero, primarily due to lower forecasted financial results, of which the redemption value is calculated based on certain contractual financial measures in the period we expect the put or call option to be exercised.

We have made separate prepayments for these obligations, in the form of loans to the minority shareholders, so these liabilities have been reclassified as a reserve against the related loan receivables, resulting in a reduction in other liabilities on our balance sheet.

Refer to Note 15 for additional details.

(1) The increase in long-term derivative liabilities for the year ended June 30, 2020, is due to unrealized losses on our interest rate swaps resulting from a change in the macroeconomic interest rate environment during the year.

June 30, 2020

June 30, 2019

Senior secured credit facility

7.0% Senior unsecured notes due 2026

Debt issuance costs and debt discounts

Senior secured credit facility

12.0% Second lien notes due 2025

Debt issuance costs and debt premiums (discounts) (1)

Total debt outstanding, net

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_____________________

(1) Balances as of June 30, 2019 and June 30, 2018 are inclusive of short-term debt issuance costs and debt discounts of $ 2,419 and $ 2,012 , respectively.

(1) The debt premium (discount) balance as of June 30, 2020 includes $ 22,432 of a discount due to the fair value allocation of warrants in conjunction with the issuance of the second lien notes in May 2020.

Refer below for further detail of the transaction .

(2) Balances as of June 30, 2020 and June 30, 2019 are inclusive of short-term debt issuance costs, debt premiums and discounts of $ 10,362 and $ 2,419 , respectively.

Our various debt arrangements described below contain customary representations, warranties and events of default.

As of June 30, 2019 , we were in compliance with all financial and other covenants related to our debt.

As of June 30, 2020 , the pre-existing financial maintenance covenants under our senior secured credit facility covenants are suspended, and we were in compliance with all financial and other covenants under the credit agreement as amended, senior unsecured notes indenture, and second lien indenture.

Senior Secured Credit Facility

On January 7, 2019, we amended the terms of our senior secured credit facility, resulting in an increase in loan commitments to both our revolving loans and term loans.

The terms and covenants of the senior secured credit facility remain unchanged.

As of June 30, 2019 , we had a committed credit facility of $ 1,592,466 as follows:

Revolving loans of $ 1,087,257 with a maturity date of June 14, 2023

Term loans of $ 505,209 amortizing over the loan period, with a final maturity date of June 14, 2023

Under the terms of our credit agreement, borrowings bear interest at a variable rate of interest based on LIBOR plus 1.375 % to 2.0 % .

Interest rates depend on our leverage ratio, which is the ratio of our consolidated total indebtedness to our consolidated EBITDA, as defined by the credit agreement.

On April 28, 2020, we entered into an amendment to our senior secured credit agreement to suspend pre-existing maintenance covenants, including the total and senior secured leverage covenants and interest coverage ratio covenant, until the publication of our results for the quarter ending December 31, 2021, for which quarter the pre-amendment maintenance covenants will be reinstated.

The covenant suspension period could end earlier at our election if we have total leverage equal to or lower than 4.75x annualized EBITDA for each of two consecutive quarters and are compliant with pre-amendment maintenance covenants.

During the suspension period, we are required to comply with new maintenance covenants requiring minimum liquidity (defined in the credit agreement as unrestricted cash plus unused revolver) of $ 50,000 and EBITDA above zero in each of the quarters ending June 30, 2021 and September 30, 2021.

The amendment increased pricing to LIBOR plus 3.25% during the covenant suspension period and to LIBOR plus 2.50% to 3.25% after the covenant suspension period, depending on our total leverage ratio, including a 0.75% floor for LIBOR borrowings.

Additionally, as part of the amendment, the maturity date was changed from February 2025 to November 2024.

The amendment to the senior secured credit agreement also reduced the credit facility from $ 1,551,419 to $ 1,000,000 , made up of an $ 850,000 revolver and $ 150,000 term loan.

During the covenant suspension period, we have more restrictive limitations on certain activities and actions, including but not limited to:

the incurrence of additional indebtedness and liens,

the consummation of certain investments, including acquisitions,

the making of restricted payments, including the purchases of our ordinary shares and payment of dividends.

As of June 30, 2020 , we have drawn commitments under the credit facility of $ 570,483 as follows:

Revolving loans of $ 422,358 with a maturity date of November 15, 2024

Term loans of $ 148,125 amortizing over the loan period, with a final maturity date of November 15, 2024

As of June 30, 2020 , the weighted-average interest rate on outstanding borrowings was 5.4 % , inclusive of interest rate swap rates.

We are also required to pay a commitment fee on unused balances of 0.225 % to 0.35 % depending on our leverage ratio.

We are also required to pay a commitment fee on unused balances of 0.35 % to 0.5 %

depending on our total leverage ratio, and 0.5 % during the covenant suspension period .

We have pledged the assets and/or share capital of a number of our subsidiaries as collateral for our outstanding debt as of June 30, 2020 .

Our credit agreement contains financial and other covenants, including but not limited to limitations on (1) our incurrence of additional indebtedness and liens, (2) the consummation of certain fundamental organizational changes or intercompany activities, for example acquisitions, (3) investments and restricted payments including the amount of purchases of our ordinary shares or payments of dividends, and (4) the amount of consolidated capital expenditures that we may make in each of our fiscal years through June 30, 2023.

The credit agreement also contains financial covenants calculated on a trailing twelve month, or TTM, basis that:

our consolidated leverage ratio, which is the ratio of our consolidated indebtedness (*) to our TTM consolidated EBITDA (*), will not exceed 4.75 , but may, on no more than three occasions during the term of the Credit Agreement, be increased to 5.00 for four consecutive quarters for certain permitted acquisitions;

our senior secured leverage ratio, which is the ratio of our consolidated senior secured indebtedness (*) to our TTM consolidated EBITDA (*), will not exceed 3.25 to 1.00, but may, on no more than three occasions during the term of the Credit Agreement, be increased to 3.50 for four consecutive quarters for certain permitted acquisitions.

our interest coverage ratio, which is the ratio of our consolidated EBITDA (*) to our consolidated interest expense, will be at least 3.00 .

Indenture and Second Lien Notes

On May 1, 2020, we issued second lien notes and warrants to raise $ 300,000 from funds managed by affiliates of Apollo Global Management, Inc.

(the "Apollo Funds") via a private placement.

These notes and warrants were issued at a discount of $ 6,000 , resulting in net proceeds of $ 294,000 .

We used the proceeds to pay down a portion of the term loans under our senior secured credit facility and to pay fees and expenses incurred in connection with the financing and the above-described amendment.

The investment by the Apollo Funds is structured as 5-year second lien notes with a 12 % coupon, of which up to 50% can be paid-in-kind at our option.

We may prepay these notes in whole or in part after the first anniversary with a 3% premium, after the second anniversary with a 1% premium, and after the third anniversary with no premium with proceeds from certain debt financings.

The Apollo Funds also received 7-year warrants to purchase 1,055,377 ordinary shares of Cimpress, representing approximately 3.875 % of our outstanding diluted ordinary shares.

Based on the terms of the agreement, the two instruments exist separately and should be treated as separate securities;

therefore the warrants are considered to be detachable.

The warrants have an exercise price of $ 60 per share, representing an approximately 17 % premium to the 10-day volume weighted average price of our shares as of April 28, 2020.

The warrants are classified as equity as they are strictly redeemable in our own shares, and they may be exercised by cash payment or through cashless exercise by the surrender of warrant shares having a value equal to the exercise price of the portion of the warrant being exercised.

The warrants are accounted for in accordance with ASC No.

470-20, Debt with Conversion and Other Options, which requires us to bifurcate and separately account for the detachable warrant as a separated instrument.

The values were assigned to detachable warrants based on a relative fair allocation between the second lien notes and the warrants.

The fair value used for the warrants in this allocation was calculated using the Monte Carlo valuation model.

The inputs to the fair value analysis are considered Level 3 inputs, and consist of estimates of the expected volatility over the contract term of the warrants, taking into consideration the historical stock volatility, as well as industry and market conditions.

Based upon the terms of the note and warrant agreement, the warrants were determined to be equity-based instruments.

The valuation of the notes and warrants resulted in a carrying value allocated to the warrants of $ 22,432 , which, in addition to be being accounted for as an equity instrument recorded in additional paid in capital, will also be included as a discount to the second lien notes, in addition to the $ 6,000 discount at which they were issued.

The full discount will be amortized over the life of the notes.

Indenture and Senior Unsecured Notes

On June 15, 2018, we completed a private placement of $ 400,000 in aggregate principal amount of 7.0% senior unsecured notes due 2026 (the “2026 Notes”).

We issued the 2026 Notes pursuant to a senior notes indenture dated as of June 15, 2018, among Cimpress N.V., our subsidiary guarantors, and MUFG Union Bank, N.A., as trustee (the "Indenture").

We used the net proceeds from the 2026 Notes during fiscal 2018 to redeem all of the outstanding 7.0 % senior unsecured notes due 2022, repay a portion of the indebtedness outstanding under our revolving credit facility and pay all related fees and expenses.

On February 13, 2020, we completed an additional offering of $ 200,000 in aggregate principal of 7.0 % notes under the senior notes indenture between Cimpress plc and U.S.

Bank National Association (as successor trustee to MUFG Union Bank, N.A.) at a premium of 105.25 % .

These notes were issued in addition to the existing principal balance under the indenture of $ 400,000 , and are collectively referred to as the 2026 Notes.

All terms and covenants of the senior notes indenture remain unchanged.

The net proceeds from this add-on offering were used to repay a portion of the indebtedness outstanding under our senior secured credit facility and related transaction fees and expenses.

The 2026 Notes bear interest at a rate of 7.0 % per annum and mature on June 15, 2026.

Interest on the Notes is payable semi-annually on June 15 and December 15 of each year, commencing on December 15, 2018, to the holders of record of the 2026 Notes at the close of business on June 1 and December 1, respectively, preceding such interest payment date.

Interest on the Notes is payable semi-annually on June 15 and December 15 of each year to the holders of record of the 2026 Notes at the close of business on June 1 and December 1, respectively, preceding such interest payment date.

The 2026 Notes are senior unsecured obligations and rank equally in right of payment to all our existing and future senior unsecured debt and senior in right of payment to all of our existing and future subordinated debt.

The Notes are effectively subordinated to any of our existing and future secured debt to the extent of the value of the assets securing such debt.

Subject to certain exceptions, each of our existing and future subsidiaries that is a borrower under or guarantees our senior secured credit facilities will guarantee the 2026 Notes.

The indenture under which the 2026 Notes are issued contains various covenants, including covenants that, subject to certain exceptions, limit our and our restricted subsidiaries’ ability to incur and/or guarantee additional debt;

pay dividends, repurchase shares or make certain other restricted payments;

enter into agreements limiting dividends and certain other restricted payments;

prepay, redeem or repurchase subordinated debt;

grant liens on assets;

enter into sale and leaseback transactions;

merge, consolidate or transfer or dispose of substantially all of our consolidated assets;

sell, transfer or otherwise dispose of property and assets;

and engage in transactions with affiliates.

We have the right to redeem, at any time prior to June 15, 2021, some or all of the 2026 Notes at a redemption price equal to 100 % of the principal amount redeemed, plus a make-whole amount as set forth in the Indenture, plus, in each case, accrued and unpaid interest to, but not including, the redemption date.

In addition, we have the right to redeem, at any time prior to June 15, 2021, up to 40 % of the aggregate outstanding principal

amount of the 2026 Notes at a redemption price equal to 107 % of the principal amount thereof, plus accrued and unpaid interest to, but not including, the redemption date, with the net proceeds of certain equity offerings by Cimpress.

Subject to certain exceptions, each of our existing and future subsidiaries that is a borrower under or guarantees our senior secured credit facilities also guarantees the 2026 Notes.

We have the right to redeem, at any time prior to June 15, 2021, some or all of the 2026 Notes at a redemption price equal to 100 % of the principal amount redeemed, plus a make-whole amount as set forth in the indenture, plus accrued and unpaid interest to, but not including, the redemption date.

In addition, we have the right to redeem, at any time prior to June 15, 2021, up to 40 % of the aggregate outstanding principal amount of the 2026 Notes at a redemption price equal to 107 % of the principal amount thereof, plus accrued and unpaid interest to, but not including, the redemption date, with the net proceeds of certain equity offerings by Cimpress.

At any time on or after June 15, 2021, we may redeem some or all of the Notes at the redemption prices specified in the indenture, plus accrued and unpaid interest to, but not including, the redemption date.

As of June 30, 2019 , we were in compliance with all financial and other covenants under the credit agreement and senior unsecured notes indenture.

Other debt consists primarily of term loans acquired through our various acquisitions or used to fund certain capital investments.

As of June 30, 2020 and June 30, 2019 , we had $ 11,694 and $ 14,361 , respectively, outstanding for those obligations that are payable through March 2025 .

Shareholders’ Equity

Debt Issuance Costs

During the years ended June 30, 2020 and 2019 , we capitalized debt issuance costs related to the refinancing of our senior secured credit facility, and issuance of additional senior unsecured notes, and issuance of the second lien notes of $ 23,208 and $ 1,800 , respectively.

Amortization expense and the write-off of costs related to debt amendments and modifications are included in interest expense, net in the consolidated statements of operations.

For the years ended June 30, 2020, 2019 and 2018, we amortized $ 3,240 , $ 2,367 and $ 1,821 , respectively.

As part of the April 2020 amendment to our senior secured credit facility, we also expensed $ 568 of third-party fees associated with the modification of the term loans and wrote-off $ 1,438 of unamortized fees associated with the revolving loans, due to the reduction in loan commitments.

During the year ended June 30, 2018, we expensed $ 2,921 of unamortized costs related to the extinguishment of our senior unsecured notes, which was presented separately in the consolidated statements of operations as part of loss on early extinguishment of debt.

Unamortized debt issuance costs and debt premiums (discounts) were $ 48,587 and $ 12,018 as of June 30, 2020 and 2019 , respectively.

Shareholders’ Equity (Deficit)

Treasury shares

On November 17, 2017, we announced that our Board had authorized the repurchase of up to 6,200,000 of our ordinary shares and during the year ended June 30, 2019 , we purchased 240,429 shares under this authorization for a cost of $ 24,105 .

On February 12, 2019, we announced that our Board authorized the repurchase of up to 5,500,000 of our ordinary shares, which replaced the previous authorization.

On February 12, 2019, we announced that our Board authorized the repurchase of up to 5,500,000 of our ordinary shares, on the open market (including block trades), through privately negotiated transactions, or in one or more self-tender offers.

During the year ended June 30, 2020 , we purchased 4,119,965 shares under this authorization for a cost of $ 521,168 .

The February Repurchase Program terminated on November 25, 2019 when we announced the new November Repurchase Program described immediately below.

On November 25, 2019, we announced that our Board had approved a new share repurchase program that replaced the February Repurchase Program described immediately above.

Under this new program, we may repurchase up to 5,500,000 of our issued and outstanding ordinary shares on the open market (including block trades), through privately negotiated transactions, or in one or more self-tender offers.

This repurchase program expires on May 22, 2021, and we may suspend or discontinue our share repurchases at any time.

During the year ended June 30, 2020 , we purchased 882,053 shares under this share repurchase program for a cost of $ 105,888 .

On November 5, 2019, we repurchased 750,000 of our outstanding ordinary shares, par value € 0.01 per share, from two private investment partnerships affiliated with Prescott General Partners LLC ("PGP") at a price of $ 135.00 per share, representing a discount of $ 1.05 to the closing price of our ordinary shares on November 5, 2019 (the "Transaction").

PGP remained our largest shareholder, beneficially owning 3,906,492 of our ordinary shares immediately following the Transaction.

In addition, Scott J.

Vassalluzzo, a Managing Member of PGP, serves as a member of our Board of Directors.

In light of the foregoing, the disinterested members of our Audit Committee reviewed the Transaction under our related person transaction policy and considered, amount other things, Mr.

Vassalluzzo's and PGP's interest in the Transaction, the approximated dollar value of the Transaction, that the shares were being repurchased at a discount to the closing price, and the purpose and the potential benefits to Cimpress of entering into the Transaction.

Based on these considerations, the disinterested members of the Audit Committee concluded that the Transaction was in our best interest.

The Transaction was effected pursuant to the share repurchase program approved by our Board of Directors and announced on February 12, 2019.

On April 28, 2020, we entered into an amendment to our senior secured credit agreement, which suspended our financial maintenance covenants in addition to prohibiting us from repurchasing shares during the suspension period.

Refer to Note 10 for additional information.

In conjunction with our issuance of the second lien notes, as described in Note 10, we also issued 7-year warrants, to purchase 1,055,377 ordinary shares of Cimpress, representing approximately 3.875 % of our outstanding diluted ordinary shares.

The warrants are accounted for as equity, as they are redeemable only in our own shares, with an exercise price of $ 60 per share.

The warrants may be exercised by cash payment or through cashless exercise by the surrender of warrant shares having a value equal to the exercise price of the portion of the warrant being exercised.

The carrying value was assigned to detachable warrants based on a relative fair allocation between the second lien notes and the warrants, as described in Note 10.

The fair value used for the warrants in this allocation was calculated using the Monte Carlo valuation model.

Share-based awards

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Our 2005 Non-Employee Directors’ Share Option Plan allows us to grant share options to our non-employee directors upon initial appointment as a director and annually thereafter in connection with our annual general meeting of shareholders if they are continuing to serve as a director at such time.

We also have two additional plans with outstanding awards from which we will not grant any additional awards.

An aggregate of 5,815,482 ordinary shares were available for future awards under all of our share-based award plans as of June 30, 2020 .

For PSUs under our 2016 Plan, we assumed that we would issue ordinary shares equal to 250 % of the outstanding PSUs, which is the maximum potential share issuance.

A combination of new shares and treasury shares has historically been used in fulfillment of our share based awards.

For PSUs under our 2016 Plan, we assumed that we would issue ordinary shares

equal to 250 % of the outstanding PSUs, which is the maximum potential share issuance.

Treasury shares have historically been used in fulfillment of our share-based awards.

Share options

We granted options in prior years to purchase ordinary shares at prices that are at least equal to the fair market value of the shares on the date the option is granted and have a contractual term of approximately eight to ten years.

Options generally vest over 3 years for non-employee directors and over 4 years for employees .

We have previously granted options to purchase ordinary shares at prices that are at least equal to the fair market value of the shares on the date the option is granted and have a contractual term of approximately eight to ten years.

Options generally vested over 3 years for non-employee directors and over 4 years for employees.

The fair value of each option award subject only to service period vesting is estimated on the date of grant using the Black-Scholes option pricing model and is recognized as expense on a straight-line basis over the requisite service period.

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We value share options with a market condition using a lattice model with compensation expense recorded on an accelerated basis over the requisite service period.

We did not grant any share options in fiscal 2019 or 2018 .

We did not grant any share options in fiscal 2020.

A summary of our share option activity and related information for the year ended June 30, 2020 is as follows:

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Performance share units - 2016 Performance Equity Plan

The PSU awards entitle the recipient to receive Cimpress ordinary shares between 0 % and 250 % of the number of units, based upon continued service to Cimpress and the achievement of a compounded annual growth rate target based on Cimpress' three-year moving average share price that will be assessed annually in years 6 - 10 following the grant date.

PSU awards granted in fiscal 2020 will be assessed annually in years 4-8 following the grant date.

Awards with a grant date prior to fiscal 2020 will be assessed annually in years 6 - 10 following the grant date and awards with a grant date in fiscal 2020 will be assessed annually in years 4 - 8 following the grant date.

The fair value of the PSUs is based on a Monte Carlo simulation, and the resulting expense is recognized on an accelerated basis over the requisite service period.

During fiscal 2018, we issued supplemental performance share units ("supplemental PSUs") to certain members of management (excluding Robert Keane, our Chairman and CEO) that were incremental to our typical long-term incentive awards.

As of June, 30, 2019 we continue to consider achievement of the performance condition to not be probable.

The supplemental PSUs were subject to a three-year cumulative financial performance condition and as of June 30, 2020 the performance condition was not achieved.

In fiscal 2018 we concluded that the achievement of the three-year cumulative performance condition was probable and recognized expense of $ 15,397 , which we subsequently reversed in fiscal 2019 when we concluded that the achievement was no longer probable.

A summary of our PSU activity and related information for the fiscal year ended June 30, 2020 is as follows:

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The fair value of an RSU award is equal to the fair market value of our ordinary shares on the date of grant and the expense is recognized on a straight-line basis over the requisite service period.

RSUs generally vest over 4 years.

For awards with a performance condition, we recognize compensation cost on an accelerated basis over the requisite service period when achievement of the performance condition is deemed probable.

RSUs generally vest over 4 years, however, during the fourth quarter of fiscal 2020, we replaced a portion of some employees' salaries with RSU awards that generally vest after 4.5 months.

We granted 193,365 RSUs during the fourth quarter of fiscal 2020.

This program was put in place, as one of several measures taken to improve liquidity during the pandemic.

As of July 1, 2020, we suspended the program but will consider providing future grants in lieu of cash compensation if necessary.

A summary of our RSU activity and related information for the fiscal year ended June 30, 2020 is as follows:

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Unvested at the end of the period

The weighted average fair value of RSUs granted during the fiscal year ended June 30, 2017 was $ 97.25 .

We did not grant any RSUs during the fiscal year ended June 30, 2018 or 2019.

We did not grant any RSUs during the fiscal years ended June 30, 2019 and 2018.

The total intrinsic value of RSUs vested during the fiscal years ended June 30, 2020, 2019 and 2018 was $ 1,905 , $ 6,749 and $ 11,581 , respectively.

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As part of our acquisition of Tradeprint during the first quarter of fiscal 2016, we issued 65,050 restricted ordinary shares.

The fair value of the RSAs was determined based on our share price on the date of grant and is recognized as share-based compensation expense over the applicable service period.

These awards vest over a 2 to 4 year period.

A summary of our RSA activity and related information for the fiscal year ended June 30, 2019 is as follows:

Grant Date Fair

Unvested at the beginning of the period

Vested and released

Unvested at the end of the period

The fair value of the RSAs was determined based on our share price on the date of grant and was recognized as share-based compensation expense over the applicable service period.

These awards vested over a 2 to 4 year period.

The remaining 4,145 unvested shares vested during the year ended June 30, 2020, with a weighted average grant date value of $ 64.53 .

Share-based compensation

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From time to time we issue awards that are considered liability-based awards as they are settleable in cash.

As of June 30, 2019 , we have a liability-based award associated with our Printi LLC investment, of which the estimated settlement amount is zero .

Refer to Note 15 for additional details.

We previously had a liability-based award associated with our Printi LLC investment and we had fully reserved for the loan receivable in fiscal 2019 and throughout fiscal 2020 since the collateral value of the related liability was estimated to have no value.

This agreement was settled in the fourth quarter of fiscal 2020, refer to Note 15 for additional details.

Share-based compensation costs capitalized as part of software and website development costs were $ 1,157 , $ 1,141 and $ 1,607 for the years ended June 30, 2020, 2019 and 2018 , respectively.

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the opportunity to participate in one of these plans and match most employees' eligible contributions at various rates subject to service vesting as specified in each of the related plan documents.

This matching program has been temporarily suspended as of March 2020, and will continue to be paused on a discretionary basis through at least December 31, 2020.

We expensed $ 10,710 , $ 11,401 and $ 11,723 , for our government-mandated and defined contribution plans in the years ended June 30, 2020, 2019 and 2018 , respectively.

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Tax rate differential on non-U.S.

Change in tax residence

Tax on repatriated earnings

Irish foreign tax credit

Swiss tax reform

Compensation related items

Goodwill impairment

Change in valuation allowance

Irish foreign tax credit

Tax on repatriated earnings

Gain/loss on sale of subsidiary

Notional interest deduction (Italy)

Patent box (Italy)

Tax credits and incentives

Non-US tax rate changes

Business and withholding taxes

Uncertain Tax Positions

Nondeductible interest expense

Other non-deductible expenses

Tax on unremitted earnings

Change in tax residence

Nondeductible acquisition-related payments

Changes to variable interest entities

Goodwill impairment

Changes to derivative instruments

Patent box (Italy)

Notional interest deduction (Italy)

Nondeductible interest expense

Tax credits and incentives

Net tax benefit on intellectual property transfer

Gain on sale of subsidiary

Effective income tax rate

On February 12, 2019, our parent company, Cimpress N.V., changed its residency from the Netherlands to Ireland.

Cimpress N.V.

remains incorporated in the Netherlands.

However, effective from this date forward, Cimpress N.V.

will be centrally managed and controlled in Ireland.

In accordance with Irish tax law, and the applicable tax treaties, a company which is centrally managed and controlled in Ireland is regarded as resident in Ireland for taxation purposes.

As of February 12, 2019, profits generated by Cimpress N.V.

will be taxed in Ireland, accordingly.

The change in residency did not have a material impact on our fiscal 2019 tax provision due to valuation allowances on a significant portion of our deferred tax assets in both jurisdictions.

However, there is a significant change in how dividends received by Cimpress N.V.

from its lower tier subsidiaries are treated for tax purposes.

Historically, dividends received by Cimpress N.V.

were generally free from income tax in the Netherlands, in accordance with the Dutch participation exemption rules.

By contrast, in Ireland, such dividends will be immediately taxable to Cimpress N.V.

subject to the availability of foreign tax credit relief.

During fiscal 2019, Cimpress N.V.

received dividends from various subsidiaries which are subject to tax in Ireland.

However, the income tax owed on these dividends is entirely reduced by the availability of foreign tax credits resulting in no net income tax owed.

For the year ended June 30, 2019 , our U.S.

federal statutory tax rate was reduced from 28 % to 21 % as a result of the passage of U.S.

tax reform during our second quarter of fiscal 2018.

Our effective tax rate for the year was above our U.S.

federal statutory tax rate primarily due to losses in certain jurisdictions for which we cannot recognize a tax benefit.

For the year ended June 30, 2020 , our effective tax rate was significantly impacted by Swiss Tax Reform, as discussed in more detail below.

Without the Swiss Tax Reform benefit, our effective tax rate for the year was above our U.S.

federal statutory tax rate primarily due to non-deductible goodwill impairments and losses in certain

jurisdictions for which we cannot recognize a tax benefit.

The jurisdictions that have the most significant impact to our non-U.S.

tax provision include Australia, Austria, Canada, France, Germany, Ireland, Italy, Mexico, the Netherlands, Spain and Switzerland.

The applicable tax rates in these jurisdictions range from 10 % - 34 % .

The applicable tax rates in these jurisdictions range from 10 % to 32 % .

The total tax rate benefit from operating in non-U.S.

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For the year ended June 30, 2020 , our effective tax rate was ( 2,697.0 )% as compared to the prior year effective tax rate of 26.3 % .

The decrease in our effective tax rate as compared to the prior year is primarily due to a more favorable geographic mix on increased profits.

In addition, we recognized "Patent Box" tax benefits of $ 4,260

granted to our Pixartprinting business in Italy.

These impacts were offset by decreased share based compensation tax benefits of $ 1,539 as compared to $ 12,802 in fiscal 2018.

Our fiscal year 2018 effective tax rate was higher than fiscal year 2017 due primarily to a less favorable geographic mix on increased profits, the unfavorable impact to our deferred tax assets as a result of U.S.

tax reform, and the adoption of ASU 2016-16.

If we had not adopted ASU 2016-16 in fiscal year 2018, tax expense would have been lower by $ 8,363 .

In addition, we recognized a reduction to our deferred tax assets of $ 4,908 related to expected future changes to our U.S.

state apportionment.

These impacts were offset by increased share based compensation tax benefits of $ 12,802 as compared to $ 8,003 in fiscal 2017.

In fiscal 2018, we adopted ASU 2016-16, "Income Taxes (Topic 740):

Intra-Entity Transfers of Assets Other Than Inventory," which requires the immediate recognition for income tax consequences of an intra-entity transfer of assets other than inventory when the transfer occurs.

Under the prior accounting rules, any resulting gain or loss and immediate tax impact on an intra-entity transfer was eliminated and not recognized in the consolidated financial statements.

Instead, the tax effects were deferred and recognized over the economic lives of the transferred assets.

The adoption of ASU 2016-16 had a significant impact to our tax balances, primarily as it relates to transfers of intellectual property from subsidiaries within the Cimpress group to our subsidiary based in Switzerland.

Our subsidiary based in Switzerland is entitled to amortize the fair market value of the intellectual property received over five years for Swiss tax purposes.

Following the adoption of ASU 2016-16, we eliminated $ 24,573 of tax assets associated with the deferred tax costs of the transferor entities and recorded $ 18,710 of deferred tax assets for the unamortized value of intellectual property of our subsidiary in Switzerland, with a cumulative-effect adjustment to retained earnings of $ 5,863 .

The intellectual property amortization reduced our deferred tax asset and will no longer impact our effective tax rate in fiscal 2018 and beyond.

The net tax benefit recognized under the prior accounting associated with the amortization of the intellectual property was $ 12,926 in fiscal year 2017 and is included in the line "Net tax benefit on intellectual property transfer" in the above tax rate reconciliation table.

The decrease in our effective tax rate as compared to the prior year is primarily due to Swiss Tax Reform.

Also, in addition to a more favorable mix of earnings year-over-year, we recognized tax benefits of $ 15,705 related to excess tax benefits from share based compensation, as compared to $ 1,539 in fiscal 2019, and $11,188 for the re-measurement of U.S.

tax losses that will be carried back to tax years with higher U.S.

federal tax rates under the US CARES Act.

We also recognized tax expense of $ 41,900 to record a full valuation allowance against our U.S.

deferred tax assets and a portion for our Irish deferred tax assets.

The change in judgment to no longer recognize the deferred tax assets was driven by decreased profits due to impacts of the COVID-19 pandemic and goodwill impairments.

During fiscal 2020 we recognized "Patent Box" tax benefits granted to our Pixartprinting business in Italy of $ 728 , as compared to $ 4,260 in fiscal 2019 representing three years' worth of benefits.

Our fiscal year 2019 effective tax rate was lower than fiscal year 2018 primarily due a more favorable geographic mix on increased profits and the Italian Patent Box benefits, offset by decreased share-based compensation tax benefits of $ 1,539 as compared to $ 12,802 in fiscal 2018.

On October 25, 2019, the canton of Zurich enacted tax law changes by publishing the results of its referendum to adopt the Federal Act on Tax Reform and AHV Financing (TRAF), which we refer to as Swiss Tax Reform.

Swiss Tax Reform was effective as of January 1, 2020 and included the abolishment of various favorable federal and cantonal tax regimes.

Swiss Tax Reform provided transitional relief measures for companies that lost the tax benefit of a ruling, including a "step-up" for amortizable goodwill, equal to the amount of future tax benefit they would have received under their existing ruling, subject to certain limitations.

We recognized a tax benefit of $ 113,482 to establish new Swiss deferred tax assets related to transitional relief measures and to remeasure our existing Swiss deferred tax assets and liabilities.

We don't expect to realize the majority of this benefit until fiscal 2025 through fiscal 2030.

Significant components of our deferred income tax assets and liabilities consisted of the following at June 30, 2020 and 2019:

Year Ended June 30,

Deferred tax assets:

Swiss tax reform amortizable goodwill

Net operating loss carryforwards

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Depreciation and amortization

IP installment obligation

Capital leases

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Tax on unremitted earnings

Derivative financial instruments

Total deferred tax liabilities

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In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some or all of the deferred tax assets will not be realized.

The increase in the valuation allowance from the prior year relates primarily to $13,952 of Irish foreign tax credit carryforwards which do not expire, but for which management has determined it is more likely than not that these will not be utilized upon future repatriation.

In addition, we generated losses in certain jurisdictions (mainly Brazil, China, Japan, the United Kingdom, and the United States) for which management has determined, based on current profitability projections, that it is more likely than not that these losses will not be utilized within the applicable carryforward periods available under local law.

Offsetting the overall increase in the valuation allowance, we wrote-off deferred tax assets of $21,789 and the corresponding valuation allowance related to Cimpress N.V.'s Dutch net operating loss carryforwards as Cimpress N.V.

is no longer a resident of the Netherlands for Dutch tax purposes.

Also, a portion of our derivative financial instruments matured during fiscal 2019 resulting in an additional decrease to the valuation allowance.

We have recorded a full valuation allowance against $ 1,342 of deferred tax asset related to interest rate swaps for which management has determined, based on current profitability projections, that it is more likely than not that the deferred tax asset will not be recognized in the foreseeable future.

The impact of this deferred tax asset and associated valuation allowance has been recorded in Accumulated Other Comprehensive Loss on the balance sheet.

Additionally, we have recorded a partial valuation allowance of $ 4,134 against a deferred tax asset related to U.S.

state research and development credits for which management has determined that it is more likely than not that these credits will not be utilized within the applicable carryforward periods available under local law.

The increase in the valuation allowance from the prior year relates primarily to losses in certain jurisdictions (mainly the United States, Ireland, Brazil, China, Japan, and the United Kingdom) for which management has determined we cannot recognize the related deferred tax assets based on trailing three-year pre-tax profit or loss adjusted for permanent book versus tax differences.

In addition, losses on certain of our derivative financial instruments grew, resulting in an additional increase to the valuation allowance.

Also, Cimpress plc generated $ 2,442 of Irish foreign tax credit carryforwards which do not expire, but for which management has determined it is more likely than not that these will not be utilized upon future repatriation.

Offsetting the overall increase in the valuation allowance, we wrote-off deferred tax assets of $ 14,240 and the corresponding valuation allowance related to Cimpress N.V.'s Irish foreign tax credit carryforwards as these do not transfer to Cimpress plc subsequent to the Irish Merger.

We have recorded a full valuation allowance against $ 6,739 of deferred tax asset related to interest rate swaps for which management has determined that it is more likely than not that the deferred tax asset will not be recognized in the foreseeable future.

The impact of this deferred tax asset and associated valuation allowance of $ 5,213 has been recorded in Accumulated Other Comprehensive Loss on the balance sheet.

The remaining valuation allowance of $ 1,526 was recorded to continuing operations.

Additionally, we have recorded valuation allowances of $ 22,180 and $ 4,114 against deferred tax assets related to U.S.

research and development credits and U.S.

capital loss carryforwards, respectively, for which management has determined that it is more likely than not that these will not be utilized within the applicable carryforward periods available under local law.

We have recorded a partial valuation allowance of $ 1,149 related to the Swiss Tax Reform amortizable goodwill deferred tax asset as our current projections indicate we may not be able to utilize the full benefit.

We have not recorded a valuation allowance against $ 20,036 of deferred tax asset associated with prior year tax losses generated in Switzerland.

Management believes there is sufficient positive evidence in the form of historical and future projected profitability to conclude that it is more likely than not that all of the losses in Switzerland will be utilized against future taxable profits within the available carryforward period.

Our assessment is reliant on the attainment of our future operating profit goals.

Failure to achieve these operating profit goals may change our assessment of this deferred tax asset, and such change would result in an additional valuation allowance and an increase in income tax expense to be recorded in the period of the change in assessment.

Our assessments are reliant on the

attainment of our future operating profit goals.

Failure to achieve these operating profit goals may change our assessment of these deferred tax assets, and such change would result in additional valuation allowance and an increase in income tax expense to be recorded in the period of the change in assessment.

We will continue to review our forecasts and profitability trends on a quarterly basis.

No valuation allowance has been recorded against the majority of our deferred tax asset associated with share-based compensation charges at June 30, 2019 .

However, in the future, if the underlying awards expire, are released or are exercised with an intrinsic value less than the fair value of the awards on the date of grant, some or all of the benefit may not be realizable.

Additionally, no valuation allowance has been recorded against the $ 2,924 deferred tax asset associated with interest rate derivative instruments that has been recorded in accumulated other comprehensive loss on the balance sheet.

Based on the weight of available evidence at June 30, 2020 , management believes that it is more likely than not that all other net deferred tax assets will be realized in the foreseeable future.

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_________________

(1) Amount is primarily related to Irish foreign tax credits, U.S.

state research and development credits and non-U.S.

net operating losses.

(2) Amount is primarily related to acquired U.S.

net operating losses, unrealized losses on interest rate swaps included in Accumulated Other Comprehensive Loss and a decrease in deferred tax assets on non-U.S.

net operating losses due to currency exchange rate changes.

(1) Amount is primarily related to U.S.

research and development credits and capital loss carryforwards, U.S.

net operating losses, Irish foreign tax credits and Swiss tax reform amortizable goodwill.

(2) Amount is primarily related to decrease in deferred tax assets on non-U.S.

net operating losses due to currency exchange rate changes and sale of VIDA, offset by unrealized losses on interest rate swaps included in Accumulated Other Comprehensive Loss.

As of June 30, 2020 , we had gross U.S.

federal and state net operating losses of approximately $ 41,233 that expire on various dates from fiscal 2034 through fiscal 2039 or with unlimited carryforward .

We had gross non-U.S.

net operating loss and other carryforwards of $ 499,392 , a significant amount of which begin to expire in fiscal 2021, with the remaining amounts expiring on various dates from fiscal 2020 through fiscal 2039 or with unlimited carryforward.

In addition, we have $ 10,469 of tax credit carryforwards primarily related to U.S.

federal and state research and development credits expiring on various dates beginning in fiscal 2030.

federal and apportioned state net operating losses of approximately $ 41,107 that expire on various dates from fiscal 2036 through fiscal 2040 or with unlimited carryforward.

We also had gross non-U.S.

net operating loss carryforwards of $ 426,027 , a significant amount of which begin to expire in fiscal 2023, with the remaining amounts expiring on various dates from fiscal 2021 through fiscal 2029 or with unlimited carryforward.

In addition, we had $ 26,814 of tax credit carryforwards primarily related to U.S.

federal and state research and development credits, which expire on various dates beginning in fiscal 2031 or with unlimited carryforward.

Lastly, we had $ 18,164 and $ 5,662 of U.S.

federal and apportioned state capital loss carryforwards, respectively, which expire in fiscal 2025.

The benefits of these carryforwards are dependent upon the generation of taxable income in the jurisdictions where they arose.

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(i) the forecasts, budgets and financial requirements of both our parent company and its subsidiaries, both for the long term and for the short term;

and (ii) the tax consequences of any decision to reinvest earnings of any subsidiary.

(ii) the ability of Cimpress plc to fund its operations and obligations with earnings from other businesses within the global group without incurring substantial tax costs;

and (iii) the tax consequences of any decision to reinvest earnings of any subsidiary.

As of June 30, 2020 , no tax provision has been made for $ 36,584 of undistributed earnings of certain of our subsidiaries as these earnings are considered indefinitely reinvested.

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A cumulative deferred tax liability of $ 6,203 has been recorded attributable to undistributed earnings that we have deemed are not indefinitely reinvested.

The remaining undistributed earnings of our subsidiaries are not deemed to be indefinitely reinvested and can be repatriated no tax cost.

The remaining undistributed earnings of our subsidiaries are not deemed to be indefinitely reinvested and can be repatriated with no tax cost.

Accordingly, there has been no provision for income or withholding taxes on these earnings.

We currently benefit from various income tax holidays in certain jurisdictions.

The tax holidays expire on various dates from April 30, 2020 through August 7, 2022.

The tax holidays expire on various dates from October 2020 through August 2022.

When the tax holidays expire, we will be subject to tax at rates ranging from 10 % to 30 % .

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Reductions due to audit settlements

Reductions due to lapse of statute of limitations

Cumulative translation adjustment

Balance June 30, 2018

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Reductions based on tax positions related to prior tax years

Reductions due to audit settlements

Reductions due to lapse of statute of limitations

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Reductions based on tax positions related to prior tax years

Reductions due to audit settlements

Reductions due to lapse of statute of limitations

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For some of our subsidiaries, we own a controlling equity stake, and a third party or key member of the business' management team owns a minority portion of the equity.

The balance sheet and operating activity of these entities are included in our consolidated financial statements and we adjust the net income (loss) in our consolidated statement of operations to exclude the noncontrolling interests' proportionate share of results.

The balance sheet and operating activity of these entities are included in our consolidated financial statements and we adjust the net income in our consolidated statement of operations to exclude the noncontrolling interests' proportionate share of results.

We present the proportionate share of equity attributable to the redeemable noncontrolling interests as temporary equity within our consolidated balance sheet and the proportionate share of noncontrolling interests not subject to a redemption provision that is outside of our control as equity.

We recognize redeemable noncontrolling interests at fair value on the sale or acquisition date and adjust to the redemption value on a periodic basis, if that amount exceeds the fair value.

We recognize redeemable noncontrolling interests at fair value on the sale or acquisition date and adjust to the redemption value on a periodic basis with the offset to retained earnings in the consolidated balance sheet.

If the formulaic redemption value exceeds the fair value of the noncontrolling interest, then the accretion to redemption value is offset to the net (income) loss attributable to noncontrolling interest in our consolidated statement of operations.

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PrintBrothers

On December 20, 2018, we purchased the 12 % equity interest of our WIRmachenDRUCK subsidiary that was held by members of the management team for € 36,173 ( $ 41,177 based on the exchange rate as of the redemption date).

During the fourth quarter of fiscal 2019, we sold a minority equity interest in each of the three businesses within our PrintBrothers reportable segment to members of the management team.

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The put options associated with the redeemable noncontrolling interest are exercisable beginning in 2021, while the associated call options become exercisable in 2026.

As of June 30, 2019 , the redemption value was less than the carrying value, and therefore no adjustment was required.

The Print Group

On April 15, 2015, we acquired 70 % of the outstanding shares of Exagroup SAS.

The remaining 30 % was previously recognized as a redeemable noncontrolling equity interest, as it was redeemable in the future and not solely within our control.

On June 14, 2019, the put option was exercised and we acquired the remaining 30 % of the business for the fixed amount of € 39,000 ( $ 44,343 based on the exchange rate on the date of payment).

During the second quarter of fiscal 2020, we recorded an adjustment of $ 5,493 to increase the carrying value to the estimated redemption amounts, with the offset recognized in retained earnings in the consolidated balance sheet, since the estimated redemption amounts were less than the fair value.

As of June 30, 2020 , the redemption value was less than the carrying value, due in part to the decline in performance driven by the COVID-19 pandemic, and therefore no adjustment was required.

All Other Businesses

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As of June 30, 2020 , the redemption value was less than the carrying value, and therefore no adjustment was required.

Refer to Note 7 for additional details.

On July 2, 2018, we acquired approximately 73 % of the shares of VIDA Group Co.

The remaining 27 % is considered a redeemable noncontrolling equity interest, as it is redeemable in the future not solely within our control.

The shares we hold include certain liquidation preferences to all other share classes, and therefore the noncontrolling interest will bear any losses until the recoverable value of our investment declines below the stated redemption value.

As of June 30, 2019 , the redemption value is less than the carrying value and therefore no adjustment has been made.

Refer to Note 7 for additional details.

The following table presents the reconciliation of changes in our noncontrolling interests:

Redeemable noncontrolling interests

Noncontrolling interest

Balance as of June 30, 2017

Net income attributable to noncontrolling interest

Proceeds from sale of noncontrolling interest

Foreign currency translation

and on April 10, 2020, we sold all of the shares we held in the VIDA business.

Prior to the sale, the carrying value of the VIDA redeemable noncontrolling equity interest was zero.

The following table presents the reconciliation of changes in our redeemable noncontrolling interests:

Balance as of June 30, 2018

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Adjustment to additional-paid in capital for purchase of noncontrolling interest

Foreign currency translation

Other adjustments

Foreign currency translation

Balance as of June 30, 2019

Acquisition of noncontrolling interest (1)

Accretion to redemption value recognized in retained earnings (2)

Net income attributable to noncontrolling interest

Distribution to noncontrolling interest

Foreign currency translation

Balance as of June 30, 2020

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(1) During the fourth quarter of fiscal 2019, we sold a minority equity interest in each of the three businesses within the PrintBrothers reportable segment to members of the management team.

(2) Includes the noncontrolling interests related to our VIDA and BuildASign acquisitions.

Refer to Note 7 for additional details.

(1) During the first quarter of fiscal 2020, we acquired majority equity interests related to two immaterial businesses within our PrintBrothers reportable segment.

(2) Accretion of redeemable noncontrolling interests to redemption value recognized in retained earnings is the result of the redemption amount estimated to be greater than carrying value but less than fair value.

(4) During the second quarter of fiscal 2019, we purchased the WIRmachenDRUCK noncontrolling interest for $ 41,177 , of which a similar equity interest was sold during the fourth quarter of fiscal 2019 to the management team of our PrintBrothers reportable segment, as described above.

During the fourth quarter of fiscal 2019, we also purchased the remaining noncontrolling interest of our Exagroup business for $ 44,343 .

We recognized the difference between the carrying value of the noncontrolling interest and the amount paid, as part of additional paid-in capital, of $ 2,714 .

(5) During the first quarter of fiscal 2019, we amended our agreement with one noncontrolling interest holder and agreed to put and call options related to their existing noncontrolling interest.

As such, we reclassified the noncontrolling interest to redeemable noncontrolling interest since the exercise is not solely within our control.

Refer above for additional details.

Variable Interest Entity ("VIE")

Investment in Printi LLC

On August 7, 2014, we made a capital investment in Printi LLC, which operates in Brazil.

This investment provided us access to a new market and the opportunity to drive longer-term growth in Brazil.

The shareholders of Printi share profits and voting control on a pro-rata basis and as of June 30, 2019, we have a 53.7 % equity interest in Printi.

For accounting purposes, of the remaining equity interests, 36.2 % are liability-based equity awards and 10.1 % are mandatorily redeemable noncontrolling interests.

We agreed to acquire all of the remaining equity interests in Printi through a reciprocal put and call structure, contractually exercisable from April 1, 2021 through a mandatory redemption date of July 31, 2023.

The liability-based equity awards represent Printi restricted equity held by Printi employees that are now fully vested and marked to market each reporting period until cash settlement.

The mandatorily redeemable noncontrolling interest is within the scope of ASC 480 - "Distinguishing Liabilities from Equity" and is required to be presented as a liability on our consolidated balance sheet.

We adjust the liability to its estimated redemption value each reporting period and recognize any changes within interest expense, net in our consolidated statement of operations.

As of June 30, 2018, we estimated the redemption value of the liability-based equity awards and mandatorily redeemable noncontrolling interest to be $ 15,464 and $ 4,366 , respectively.

During the third quarter of fiscal 2019, we decreased the estimated redemption value of these liabilities to reflect our expectation to exercise our call option earlier than previously expected, and during the fourth quarter of fiscal 2019, we further reduced both liabilities to zero due to their recent underperformance and lower forecasted financial results which resulted in the goodwill impairment charge.

In May 2017, we entered into an arrangement with two Printi equity holders to provide loans, which represent prepayments for our future purchase of their equity interests.

The loans are payable on the date the put or call option is exercised and the loan proceeds will be used to offset our purchase of their remaining outstanding equity interest, which also serves as collateral.

As of June 30, 2019 and 2018, the net loan receivable including accrued interest was zero and $ 22,234 , respectively.

As discussed above, as of June 30, 2019 the collateral value of the related liabilities is estimated to have no value and therefore the equity interest was reduced to zero.

As a result of the reduction in the liability, we recognized a full reserve against the gross loan receivables primarily through the reclassification of the related liabilities, as well as an immaterial expense recognized in our consolidated statement of operations.

As of June 30, 2020 , we have a 96.3 % equity interest in Printi LLC, which owns an operating company in Brazil, and the shareholders of Printi share profits and voting control on a pro-rata basis.

During the fourth quarter of fiscal 2020, we entered into an agreement to purchase an additional 42.6 % economic interest in Printi.

In exchange for acquiring the additional equity interest, we did not make any additional outlays of cash;

rather we forgave loans provided to two previous Printi equity holders, which previously represented prepayments for our purchase of their equity interests.

Prior to purchasing the additional equity interest, the carrying value of the related loans were zero as we fully reserved for the loan receivable in fiscal year 2019 when we determined the collateral was estimated to have no value.

For the remaining minority equity interest, we previously agreed to acquire the remaining shares in Printi through a reciprocal put and call structure, contractually exercisable from April 1, 2021 through a mandatory redemption date of July 31, 2023.

This contractual obligation is presented as a liability on our consolidated balance sheet and we adjust the liability to its estimated redemption value each reporting period and recognize any changes within interest expense, net in our consolidated statement of operations.

As of June 30, 2020 and 2019, the carrying value of this liability is zero , based on its estimated redemption value.

Segment Information

Our operating segments are based upon the manner in which our operations are managed and the availability of separate financial information reported internally to the Chief Executive Officer, who is our Chief Operating Decision Maker (“CODM”) for purposes of making decisions about how to allocate resources and assess performance.

During the fourth quarter of fiscal 2019, we revised our internal organizational and reporting structure resulting in changes to our Upload and Print reportable segment.

Due to the organizational changes, our Upload and Print reportable segment have been split into two separate operating and reportable segments, PrintBrothers and The Print Group .

These changes in reporting structure are intended to position leaders closer to operations of the businesses, to lower costs, and to drive culture, priorities and technologies that improve customer and financial outcomes.

We have revised our presentation of all prior periods presented to reflect our revised segment reporting.

During the first quarter of fiscal 2020, we revised our internal organizational and reporting structure leading to changes in our Vistaprint and All Other Businesses reportable segments.

Our Vistaprint Corporate Solutions, Vistaprint India, and Vistaprint Japan businesses, which were previously aggregated based on materiality in our All Other Businesses, are now directly managed within the Vistaprint business.

These businesses are close derivatives or adjacencies of the Vistaprint business and leverage the Vistaprint brand, customers, technology, and/or other

This change in reporting structure positions them closer to the Vistaprint operations, capabilities, and resources.

Additionally, during the fourth quarter of fiscal 2020, we reorganized technology teams that previously existed within our Vistaprint business and our central teams.

The reorganization resulted in some team member reductions in both organizations, and the net transfer of 177 team members from Vistaprint to our central Cimpress technology team.

This change is intended to free up resources to make more Vistaprint technologies available to other Cimpress businesses in the future, to accelerate Vistaprint's re-platforming efforts, and to reduce costs where no longer necessary.

We have revised our presentation of all prior periods presented to reflect our revised segment reporting for the two changes made during fiscal 2020.

As of June 30, 2020 , we have numerous operating segments under our management reporting structure which are reported in the following five reportable segments:

Vistaprint - Includes the operations of our Vistaprint websites focused on the North America, Europe, Australia and New Zealand markets, and our Webs-branded business, which is managed with the Vistaprint-branded digital business in the previously listed geographies.

Vistaprint - Includes the operations of our global Vistaprint websites and our Webs-branded business, which is managed with the Vistaprint-branded digital business.

Also included is our Vistaprint Corporate Solutions business which serves medium-sized businesses and large corporations, as well as a legacy revenue stream with retail partners and franchise businesses

PrintBrothers - Includes the results of our druck.at, Printdeal, and WIRmachenDRUCK businesses

The Print Group - Includes the results of our Easyflyer, Exagroup, Pixartprinting, and Tradeprint businesses.

The Print Group - Includes the results of our Easyflyer, Exaprint, Pixartprinting, and Tradeprint businesses

National Pen - Includes the global operations of our National Pen business, which manufactures and markets custom writing instruments and promotional products, apparel and gifts

All Other Businesses - Includes a collection of businesses grouped together based on materiality:

BuildASign, acquired on October 1, 2018, is an internet-based provider of canvas-print wall décor, business signage and other large-format printed products, based in Austin, Texas.

BuildASign is an internet-based provider of canvas-print wall décor, business signage and other large-format printed products, based in Austin, Texas.

Printi is an online printing leader in Brazil, which offers a superior customer experience with transparent and attractive pricing, reliable service and quality.

VIDA, acquired on July 2, 2018, is an innovative startup that brings manufacturing access and an e-commerce marketplace to artists, thereby enabling artists to convert ideas into beautiful, original products for customers, ranging from custom fashion, jewelry and accessories to home accent pieces.

Vistaprint Corporate Solutions serves medium-sized businesses and large corporations, as well as a legacy revenue stream with retail partners and franchise businesses.

Vistaprint India operates a derivative of the Vistaprint business model, albeit with higher service levels and quality, fully domestic, Indian content, pricing that is a slight premium to many traditional offline alternatives, and almost no discounting.

Vistaprint Japan operates a derivative of the Vistaprint business model with a differentiated position relative to competitors who tend to focus on upload and print, not the self-service, micro-business customer which Vistaprint Japan serves.

Albumprinter through its divestiture date of August 31, 2017.

VIDA was part All Other Businesses segment through April 10, 2020, the date on which we sold our shares in the business.

YSD is a startup operation that provides end-to-end mass customization solutions to brands and intellectual property owners in China, supporting multiple channels including retail stores, websites, WeChat and e-commerce platforms to enhance brand awareness and competitiveness and develop new markets.

Central and corporate costs consist primarily of the team of software engineers that is building our mass customization platform;

shared service organizations such as global procurement;

technology services such as

hosting and security;

technology services such as hosting and security;

administrative costs of our Cimpress India offices where numerous Cimpress businesses have dedicated business-specific team members;

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These costs also include certain unallocated share-based compensation costs.

During the first quarter of fiscal 2020, we changed our segment profitability measure to an adjusted EBITDA metric.

The financial metric that we use to hold our businesses accountable on an annual basis is unlevered free cash flow.

Historically, we have reported segment profit based on adjusted net operating profit;

however, this is not a direct input to unlevered free cash flow.

We believe this change simplifies both our internal and external reporting, while also increasing the focus on a profitability metric that is a direct input into our internal operating measure, our steady-state free cash flow analysis that we report annually and our estimates of intrinsic value per share.

The primary difference between the segment profit we previously reported and the revised metric is depreciation and amortization.

The prior adjusted NOP-based metric only removed amortization of acquired intangibles, and the new segment EBITDA metric removes all depreciation and amortization, except for depreciation expense related to our Waltham, Massachusetts lease, which we treat in our historical results as operating expense.

The new segment EBITDA metric does include the cost of long-term incentive programs, including share-based compensation, just as the prior adjusted NOP-based metric.

For awards granted under our 2016 Performance Equity Plan, the PSU expense value is based on a Monte Carlo fair value analysis and is required to be expensed on an accelerated basis.

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All expense or benefit associated with our supplemental PSUs is recognized within central and corporate costs.

Segment profit (loss) is the primary profitability metric by which our CODM measures segment financial performance and allocates resources.

Certain items are excluded from segment profit (loss), such as acquisition-related amortization and depreciation, expense recognized for contingent earn-out related charges, including the changes in fair value of contingent consideration and compensation expense related to cash-based earn-out mechanisms dependent upon continued employment, share-based compensation related to investment consideration, certain impairment expense, and restructuring charges.

A portion of the interest expense associated with our Waltham, Massachusetts lease is included as expense in segment profit (loss) and allocated based on headcount to the appropriate business or corporate and global function.

Our definition of segment EBITDA is GAAP operating income excluding certain items, such as depreciation and amortization (with the exception of depreciation expense associated with our Waltham, Massachusetts lease for periods prior to our adoption of the new leasing standard on July 1, 2019), expense recognized for contingent earn-out related charges including the changes in fair value of contingent consideration and compensation expense related to cash-based earn-out mechanisms dependent upon continued employment, share-based compensation related to investment consideration, certain impairment expense, and restructuring charges.

For historical periods presented, a portion of the interest expense associated with our Waltham, Massachusetts lease is included as expense in segment EBITDA and allocated based on headcount to the appropriate business or corporate and global function.

The interest expense represents a portion of the cash rent payment and is considered an operating expense for purposes of measuring our segment performance.

We do not allocate non-operating income to our segment results.

Our All Other Businesses reportable segment includes businesses that have operating losses as they are in the early stage of investment relative to the scale of the underlying businesses, which may limit its comparability to other segments regarding profit (loss).

Beginning in fiscal 2020, as part of our adoption of the new leasing standard, the accounting treatment for our Waltham, Massachusetts lease has changed to an operating lease, so the expense associated with this lease is reflected in operating income and no longer requires an adjustment to segment EBITDA.

We do not allocate non-operating income, including realized gains and losses on currency hedges, to our segment results.

Our balance sheet information is not presented to the CODM on an allocated basis, and therefore we do not present asset information by segment.

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Revenue by segment is based on the business-specific websites or sales channel through which the customer’s order was transacted.

The following tables set forth revenue by reportable segments, as well as disaggregation of revenue by major geographic regions and reportable segments.

The following tables set forth revenue by reportable segment, as well as disaggregation of revenue by major geographic region and reportable segment.

Year Ended June 30,

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(2) PrintBrothers segment revenues include inter-segment revenue of $ 934 , $ 1,227 and $ 2,068 for the years ended June 30, 2020, 2019 and 2018 , respectively.

No inter-segment revenue was recognized for the year ended June 30, 2017.

(3) The Print Group segment revenues include inter-segment revenue of $ 5,994 , $ 796 and $ 690 for the years ended June 30, 2020, 2019 and 2018 , respectively.

No inter-segment revenue was recognized for the year ended June 30, 2017.

(4) National Pen segment revenues include inter-segment revenue of $ 7,806 , $ 3,729 and $ 2,956 for the years ended June 30, 2020, 2019 and 2018 , respectively.

No inter-segment revenue was recognized for the year ended June 30, 2017.

(5) All Other Businesses segment revenues include inter-segment revenue of $ 1,417 and $ 113 for the years ended June 30, 2020 and 2019 , respectively.

No inter-segment revenue was recognized for the year ended June 30, 2017.

Our All Other Businesses segment includes the revenue from our fiscal 2019 acquisitions, VIDA and BuildASign, from July 2, 2018 and October 1, 2018, respectively, as well as the Albumprinter business for a portion of the year ended June 30, 2018 (the sale completion date of August 31, 2017).

There was no inter-segment revenue for the year ended June 30, 2018 .

Our All Other Businesses segment includes the revenue from our BuildASign acquisition from October 1, 2018, and revenue from our Vida acquisition from July 2, 2018 through the divestiture date of April 10, 2020.

Year Ended June 30, 2020

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The Print Group

Revenue by Geographic Region:

North America

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The Print Group

Revenue by Geographic Region:

North America

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The Print Group

Revenue by Geographic Region:

North America

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Total external revenue

The following table includes segment profit (loss) by reportable segment, total income from operations and total income before income taxes.

The following table includes segment EBITDA by reportable segment, total income from operations and total income before income taxes.

Year Ended June 30,

Segment profit (loss):

Segment EBITDA:

PrintBrothers

The Print Group

National Pen (1)

All Other Businesses

Total segment profit

Total segment EBITDA

Central and corporate costs

Acquisition-related amortization and depreciation

Depreciation and amortization

Waltham, MA lease depreciation adjustment (1)

Proceeds from insurance

Earn-out related charges

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(1) During the first quarter of fiscal 2019, we adopted ASC 606, Revenue from Contracts with Customers, which is the new revenue standard described in Note 2 of the accompanying consolidated financial statements.

We applied the new standard under the modified retrospective method, in which we did not apply the new standard to the prior comparable period.

The adoption of the new standard had a positive impact on operating income and adjusted net operating profit of $ 295 for the year ended June 30, 2019 , as compared to the prior comparative period.

Direct mail advertising costs were previously capitalized and amortized over the customer response period (typically 3-4 months) and now costs are recognized when the direct mail is sent to the customers.

(2) Includes expense recognized for the change in fair value of contingent consideration and compensation expense related to cash-based earn-out mechanisms dependent upon continued employment.

(3) Includes the impact of certain impairments of goodwill and other long-lived assets as defined by ASC 350 - "Intangibles - Goodwill and Other", as well as reserves recognized for loans as defined by ASC 326 - "Financial Instruments - Credit Losses."

(1) Upon the adoption of the new leasing standard on July 1, 2019, our Waltham, MA lease, which was previously classified as build-to-suit, is now classified as an operating lease under the new standard.

Therefore, the Waltham depreciation and interest expense adjustments that were made in comparative periods will no longer be made beginning in the first fiscal quarter of 2020, as any impact from the Waltham lease will be reflected in operating income.

Refer to Note 2 for additional details.

(2) Includes impairments of goodwill defined by ASC 350 - "Intangibles - Goodwill and Other" of $ 100,842 , as well as losses of $ 1,520 recognized for fair value adjustments to the disposal group related to our VIDA sale during the year ended June 30, 2020.

During fiscal year 2019 we recognized reserves for loans as defined by ASC 326 - "Financial Instruments - Credit Losses".

(3) Includes the impact of the gain on the sale of Albumprinter that was recognized in general and administrative expense in our consolidated statement of operations during the year ended June 30, 2018.

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Therefore, we have presented Germany as a significant geographic area.

(2) Our other revenue includes the Netherlands, our country of domicile.

(2) Our other revenue includes Ireland, our country of domicile.

(3) Other revenue includes miscellaneous items which account for less than 1% of revenue.

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(1) Excludes goodwill of $ 718,880 and $ 520,843 , intangible assets, net of $ 262,701 and $ 230,201 , build-to-suit lease assets of $ 124,408 and $ 111,926 , and deferred tax assets of $ 59,906 and $ 67,087 as of June 30, 2019 and June 30, 2018 , respectively.

(1) Excludes goodwill of $ 621,904 and $ 718,880 , intangible assets, net of $ 209,228 and $ 262,701 , and deferred tax assets of $ 143,496 and $ 59,906 as of June 30, 2020 and June 30, 2019 , respectively.

Build-to-suit lease assets of $ 124,408 are excluded for the year ended June 30, 2019, and upon our adoption of ASC 842 on July 1, 2019, our Waltham, MA and Dallas, TX build-to-suit lease asset balances were de-recognized.

As of June 30, 2020 , all operating lease assets are recognized within the balances above.

Refer to Note 2 for additional details.

We lease certain machinery and plant equipment, office space, and production and warehouse facilities under non-cancelable operating leases that expire on various dates through 2034 .

Our finance leases primarily relate to machinery and plant equipment.

The following table presents the classification of right-of-use assets and lease liabilities as of June 30, 2020 :

Consolidated Balance Sheet Classification

June 30, 2020

Operating right-of-use assets

Operating lease assets, net

Finance right-of-use assets

Property, plant, and equipment, net

Total lease assets

Operating lease liabilities

Operating lease liabilities, current

Finance lease liabilities

Other current liabilities

Operating lease liabilities

Operating lease liabilities, non-current

Finance lease liabilities

Other liabilities

Total lease liabilities

The following table represents the lease expenses for the year ended June 30, 2020 :

June 30, 2020

Operating lease expense

Finance lease expense:

Amortization of finance lease assets

Interest on lease liabilities

Variable lease expense

sublease income

Net operating and finance lease cost

Future minimum lease payments under non-cancelable leases as of June 30, 2020 were as follows:

Payments Due by Period

Operating lease obligations

Finance lease obligations

Total lease obligations

Less than 1 year

present value discount

Lease liability

As previously disclosed in our 2019 Annual Report on Form 10-K and under the previous lease accounting standard, the following is a summary of future minimum lease payments under non-cancelable leases and build-to-suit arrangements as of June 30, 2019:

Operating lease obligations

Build-to-suit lease obligations (1)

Finance lease obligations

Total lease obligations

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(1) Build-to-suit minimum payments at June 30, 2019 related to our Waltham, MA and Dallas, TX leases, refer to Note 2 for additional details.

Other information about leases is as follows:

Lease Term and Discount Rate

June 30, 2020

Weighted-average remaining lease term (years):

Operating leases

Finance leases

Weighted-average discount rate:

Operating leases

Finance leases

Our leases have remaining lease terms of 1 year to 15 years, inclusive of renewal or termination options that we are reasonably certain to exercise.

Supplemental Cash Flow Information

June 30, 2020

Cash paid for amounts included in measurement of lease liabilities:

Operating cash flows from operating leases (1)

Operating cash flows from finance leases

Financing cash flows from finance leases (1)

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(1) During the fourth quarter of fiscal 2020, we negotiated rent payment holidays with several leasing counterparties for both operating and finance leases as a lease concession in response to the COVID-19 pandemic.

Our cash flows from operating and finance leases in fiscal 2020 were higher by $ 6,385 and $ 1,833 , respectively, due to these deferrals of lease payments.

Commitments and Contingencies

Lease Commitments

We have commitments under operating leases for our facilities that expire on various dates through 2030.

Total lease expense, net of sublease income, for the years ended June 30, 2019, 2018 and 2017 was $ 18,159 , $ 14,231 , and $ 13,959 , respectively.

We lease certain machinery and plant equipment, as well as buildings, under both capital and operating lease agreements that expire at various dates through 2028.

The aggregate carrying value of the leased buildings and equipment under capital leases included in property, plant and equipment, net in our consolidated balance sheet at June 30, 2019 , is $ 29,211 , net of accumulated depreciation of $ 41,962 ;

the present value of lease installments not yet due included in other current liabilities and other liabilities in our consolidated balance sheet at June 30, 2019 amounts to $ 26,705 .

Operating lease

Build-to-suit lease

obligation (1)

Capital lease

(1) Minimum payments relate to our Waltham and Dallas lease obligations, refer to Note 2 for additional details.

Purchase Obligations

At June 30, 2019 , we had unrecorded commitments under contract of $ 71,600 , including inventory and third-party fulfillment purchase commitments of $ 46,355 and third-party web services of $ 8,066 .

In addition, we had purchase commitments for production and computer equipment purchases of approximately $ 3,352 , commitments for advertising campaigns of $ 603 , professional and consulting fees of $ 1,140 , and other unrecorded purchase commitments of $ 12,084 .

At June 30, 2020 , we had unrecorded commitments under contract of $ 109,728 , including third-party web services of $ 61,721 and inventory and third-party fulfillment purchase commitments of $ 21,817 .

In addition, we had purchase commitments for professional and consulting fees of $ 3,787 , production and computer equipment purchases of $ 859 , commitments for advertising campaigns of $ 999 , and other unrecorded purchase commitments of $ 20,545 .

The required principal payments due during the next five fiscal years and thereafter under our outstanding long-term debt obligations at June 30, 2020 are as follows:

On January 7, 2019, we amended the terms of our senior secured credit facility, and we expanded the total capacity to $ 1,613,172 in the aggregate, which included $ 1,087,257 of revolving loans and $ 525,915 of term loans.

The terms and covenants of the senior secured credit facility remain unchanged.

Refer to Note 10 for additional details related to the amendment.

On April 28, 2020, we executed an amendment to our senior secured credit facility, and we reduced the credit facility from $ 1,551,419 to $ 1,000,000 , made up of an $ 850,000 revolver and $ 150,000 term loan.

The amendment also changed the maturity date of the senior secured credit facility from February 2025 to November 2024.

Refer to Note 10 for additional details.

Other Obligations

We deferred payments for several of our acquisitions resulting in the recognition of a liability of $ 2,396 in aggregate for the year ended June 30, 2019 .

We deferred payments for several of our acquisitions resulting in the recognition of a liability of $ 2,289 in aggregate as of June 30, 2020 .

Legal Proceedings

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Although we cannot predict with certainty the results of litigation and claims to which we may be subject from time to time, we do not expect the resolution of any of our current matters to have a material adverse impact on our consolidated results of operations, cash flows or financial position.

In all cases, at each reporting period, we evaluate whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies.

For all legal matters, at each reporting period, we evaluate whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies.

We expense the costs relating to our legal proceedings as those costs are incurred.

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The restructuring charges included in our consolidated statement of operations for the years ended June 30, 2020, 2019 and 2018 were $ 13,543 , $ 12,054 and $ 15,236 , respectively.

During the year ended June 30, 2020 , we recognized restructuring charges of $ 13,543 consisting of charges of $ 5,734 within our Vistaprint reportable segment as we continue to evolve our organizational structure, including our recent reorganization of the technology team.

We also recognized $ 3,532 in charges within our central and corporate costs, due to the coordinated reorganization of technology teams with our Vistaprint business.

We also incurred charges of $ 3,211 , $ 535 and $ 475 in our National Pen, All Other Businesses and The Print Group reportable segments, respectively during the year ended June 30, 2020 , for various cost reduction measures primarily in response to the pandemic.

During the year ended June 30, 2019, we recognized restructuring charges of $ 12,054 , primarily related to a restructuring action within our Vistaprint business, resulting in $ 8,467 of charges.

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We also incurred individually immaterial restructuring charges in The Print Group and All Other Businesses reportable segments, and Central and Corporate cost center of $ 2,223 , $ 1,197 , and $ 167 , respectively.

We expect some of these restructuring actions to result in additional charges during fiscal 2020, due to the use of estimates in recognizing the expense.

During the year ended June 30, 2018, we recognized restructuring charges of $ 15,236 , which included $ 12,112 related to our Vistaprint reorganization for reductions in headcount and other operating costs.

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During the year ended June 30, 2018, we recognized changes in estimates of $ 56 from our January 2017 restructuring initiative.

During the year ended June 30, 2017, the Supervisory Board of Cimpress N.V.

approved a plan to restructure the company and implement organizational changes that decentralized the company’s operations in order to improve accountability for customer satisfaction and capital returns, simplify decision-making, and improve

the speed of execution.

This restructuring event resulted in additional costs, within our corporate and global functions cost center of $ 25,584 for the year ended June 30, 2017.

In addition, for the year ended June 30, 2017 we recognized $ 1,116 of restructuring costs within our National Pen business related to a separate initiative.

The following table summarizes the restructuring activity during the years ended June 30, 2020 and 2019 :

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Net income (loss)

Net income (loss) attributable to Cimpress N.V.

Net income (loss) per share attributable to Cimpress N.V.:

Net income (loss) attributable to Cimpress plc

Net income (loss) per share attributable to Cimpress plc:

Year Ended June 30, 2019

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Cost of revenue

Net income (loss)

Net income (loss) attributable to Cimpress N.V.

Net income (loss) per share attributable to Cimpress N.V.:

Basic and diluted net income (loss) per share attributable to Cimpress N.V.

are computed independently for each of the quarters presented.

Net (loss) income

Net (loss) income attributable to Cimpress plc

Net (loss) income per share attributable to Cimpress plc:

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(1) In the periods in which a net loss is recognized, the impact of share options, warrants, RSUs, and RSA's are anti-dilutive, and therefore our basic and diluted earnings per share are the same.

Basic and diluted net income (loss) per share attributable to Cimpress plc are computed independently for each of the quarters presented.

Therefore, the sum of quarterly basic and diluted per share information may not equal annual basic and diluted net income per share.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data