CIMPRESS plc 10-K

Item 8. Financial Statements and Supplementary Data CIMPRESS PLC INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm 54 Consolidated Balance Sheets 57 Consolidated Statements of Operations 58 Consolidated Statements of Comprehensive Income (Loss) 59 Consolidated Statements of Shareholders’ Equity 60 Consolidated Statements of Cash Flows 62 Notes to Consolidated Financial Statements 64 53 Report of Independent Registered Public Accounting Firm 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 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, 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 The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. 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 54 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; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters 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 management’s goodwill impairment assessment, including controls over the significant assumptions used in the valuation of the Exaprint and National Pen reporting units. 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 55 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 Boston, Massachusetts August 11, 2020 We have served as the Company’s auditor since 2014. 56 CIMPRESS PLC CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) June 30, 2020 June 30, 2019 Assets Current assets: Cash and cash equivalents $ 45,021 $ 35,279 Accounts receivable, net of allowances of $9,651 and $7,313, respectively 34,596 60,646 Inventory 80,179 66,310 Prepaid expenses and other current assets 88,608 78,065 Total current assets 248,404 240,300 Property, plant and equipment, net (1) 338,659 490,755 Operating lease assets, net (1) 156,258 — Software and website development costs, net 71,465 69,840 Deferred tax assets 143,496 59,906 Goodwill 621,904 718,880 Intangible assets, net 209,228 262,701 Other assets 25,592 25,994 Total assets $ 1,815,006 $ 1,868,376 Liabilities, noncontrolling interests and shareholders’ (deficit) equity Current liabilities: Accounts payable $ 163,891 $ 185,096 Accrued expenses 210,764 194,715 Deferred revenue 39,130 31,780 Short-term debt 17,933 81,277 Operating lease liabilities, current (1) 41,772 — Other current liabilities 13,268 27,881 Total current liabilities 486,758 520,749 Deferred tax liabilities 33,811 44,531 Long-term debt 1,415,657 942,290 Lease financing obligation (1) — 112,096 Operating lease liabilities, non-current (1) 128,963 — Other liabilities 88,187 53,716 Total liabilities 2,153,376 1,673,382 Commitments and contingencies (Note 18) Redeemable noncontrolling interests 69,106 63,182 Shareholders’ (deficit) equity: Preferred shares, nominal value €0.01 per share, 100,000,000 shares authorized; none issued and outstanding — — 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 615 615 Deferred ordinary shares, nominal value €1.00 per share, 25,000 shares authorized, issued and outstanding 28 — Treasury shares, at cost, 18,194,952 and 13,634,958 shares, respectively ( 1,376,496 ) ( 737,447 ) Additional paid-in capital 438,616 411,079 Retained earnings 618,437 537,422 Accumulated other comprehensive loss ( 88,676 ) ( 79,857 ) Total shareholders' (deficit) equity ( 407,476 ) 131,812 Total liabilities, noncontrolling interests and shareholders’ (deficit) equity $ 1,815,006 $ 1,868,376 ____________________ (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. 57 CIMPRESS PLC CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share data) Year Ended June 30, 2020 2019 2018 Revenue $ 2,481,358 $ 2,751,076 $ 2,592,541 Cost of revenue (1) 1,248,871 1,401,344 1,279,799 Technology and development expense (1) 253,252 236,797 245,758 Marketing and selling expense (1) 574,041 713,863 714,654 General and administrative expense (1) 183,054 162,652 176,958 Amortization of acquired intangible assets 51,786 53,256 49,881 Restructuring expense (1) 13,543 12,054 15,236 Impairment of goodwill 100,842 7,503 — (Gain) on sale of subsidiaries — — ( 47,545 ) Income from operations 55,969 163,607 157,800 Other income (expense), net 22,874 26,476 ( 21,032 ) Interest expense, net ( 75,840 ) ( 63,171 ) ( 53,043 ) Loss on early extinguishment of debt — — ( 17,359 ) Income before income taxes 3,003 126,912 66,366 Income tax (benefit) expense ( 80,992 ) 33,432 19,578 Net income 83,995 93,480 46,788 Add: Net (income) loss attributable to noncontrolling interest ( 630 ) 1,572 ( 3,055 ) Net income attributable to Cimpress plc $ 83,365 $ 95,052 $ 43,733 Basic net income per share attributable to Cimpress plc $ 3.07 $ 3.09 $ 1.41 Diluted net income per share attributable to Cimpress plc $ 3.00 $ 3.00 $ 1.36 Weighted average shares outstanding — basic 27,180,744 30,786,349 30,948,081 Weighted average shares outstanding — diluted 27,773,286 31,662,705 32,220,401 ____________________________________________ (1) Share-based compensation is allocated as follows: Year Ended June 30, 2020 2019 2018 Cost of revenue $ 486 $ 455 $ 361 Technology and development expense 9,003 3,765 10,580 Marketing and selling expense 2,703 1,193 6,683 General and administrative expense 21,061 12,882 31,515 Restructuring expense 1,621 3,421 1,327 See accompanying notes. 58 CIMPRESS PLC CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands) Year Ended June 30, 2020 2019 2018 Net income $ 83,995 $ 93,480 $ 46,788 Other comprehensive income, net of tax: Foreign currency translation gains, net of hedges 10,933 6,667 35,148 Net unrealized (losses) gains on derivative instruments designated and qualifying as cash flow hedges ( 24,570 ) ( 23,409 ) 11,521 Amounts reclassified from accumulated other comprehensive loss to net income on derivative instruments 5,774 3,932 ( 960 ) (Loss) gain on pension benefit obligation, net ( 1,195 ) ( 204 ) 357 Comprehensive income 74,937 80,466 92,854 Add: Comprehensive (income) loss attributable to noncontrolling interests ( 391 ) 4,537 ( 5,421 ) Total comprehensive income attributable to Cimpress plc $ 74,546 $ 85,003 $ 87,433 See accompanying notes. 59 CIMPRESS PLC CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (in thousands) Ordinary Shares Treasury Shares Number of Shares Issued Amount Number of Shares Amount Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Shareholders’ Equity Balance at June 30, 2017 44,080 $ 615 ( 12,665 ) $ ( 588,365 ) $ 361,376 $ 414,771 $ ( 113,398 ) $ 74,999 Issuance of ordinary shares due to share option exercises, net of shares withheld for taxes — — 293 ( 3,174 ) ( 4,999 ) — — ( 8,173 ) Restricted share units vested, net of shares withheld for taxes — — 63 840 ( 4,784 ) — — ( 3,944 ) Grant of restricted share awards — — ( 2 ) ( 168 ) — — — ( 168 ) Share-based compensation expense — — — — 44,089 — — 44,089 Purchase of ordinary shares — — ( 895 ) ( 94,710 ) — — — ( 94,710 ) Net income attributable to Cimpress plc — — — — — 43,733 — 43,733 Adoption of new accounting standard — — — — — ( 5,864 ) — ( 5,864 ) Amounts reclassified from accumulated other comprehensive loss to retained earnings — — — — — 116 ( 116 ) — Net unrealized gain on derivative instruments designated and qualifying as cash flow hedges — — — — — — 10,561 10,561 Foreign currency translation, net of hedges — — — — — — 32,782 32,782 Unrealized gain on pension benefit obligation, net of tax — — — — — — 357 357 Balance at June 30, 2018 44,080 $ 615 ( 13,206 ) $ ( 685,577 ) $ 395,682 $ 452,756 $ ( 69,814 ) $ 93,662 Issuance of ordinary shares due to share option exercises, net of shares withheld for taxes — — 123 3,100 ( 3,106 ) — — ( 6 ) Restricted share units vested, net of shares withheld for taxes — — 38 573 ( 2,866 ) — — ( 2,293 ) Grant of restricted share awards — — 4 24 — — 24 Share-based compensation expense — — — — 18,064 — — 18,064 Purchase of ordinary shares — — ( 594 ) ( 55,567 ) — — — ( 55,567 ) Net income attributable to Cimpress plc — — — — — 95,052 95,052 Adjustment for purchase of noncontrolling interest — — — — 2,714 — — 2,714 Adjustment to noncontrolling interest for share forfeiture — — — — 591 — — 591 Adoption of new accounting standard — — — — — ( 3,246 ) — ( 3,246 ) Noncontrolling interest accretion to redemption value — — — — — ( 7,140 ) — ( 7,140 ) Net unrealized loss on derivative instruments designated and qualifying as cash flow hedges — — — — — — ( 19,477 ) ( 19,477 ) Foreign currency translation, net of hedges — — — — — — 9,638 9,638 Unrealized loss on pension benefit obligation, net of tax — — — — — — ( 204 ) ( 204 ) Balance at June 30, 2019 44,080 $ 615 ( 13,635 ) $ ( 737,447 ) $ 411,079 $ 537,422 $ ( 79,857 ) $ 131,812 See accompanying notes. 60 CIMPRESS PLC CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (CONTINUED) (in thousands) Ordinary Shares Deferred Ordinary Shares Treasury Shares Number of Shares Issued Amount Number of Shares Issued Amount Number of Shares Amount Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Shareholders’ Equity (Deficit) Balance at June 30, 2019 44,080 $ 615 — $ — ( 13,635 ) $ ( 737,447 ) $ 411,079 $ 537,422 $ ( 79,857 ) $ 131,812 Issuance of ordinary shares due to share option exercises, net of shares withheld for taxes — — — — 432 ( 12,518 ) ( 28,388 ) — — ( 40,906 ) Restricted share units vested, net of shares withheld for taxes — — — — 13 712 ( 1,317 ) — — ( 605 ) Issuance of deferred ordinary shares — — 25 28 — — — — — 28 Grant of restricted share awards — — — — ( 2 ) ( 187 ) — — — ( 187 ) Share-based compensation expense — — — — — — 34,810 — — 34,810 Purchase of ordinary shares — — — — ( 5,003 ) ( 627,056 ) — — — ( 627,056 ) Net income attributable to Cimpress plc — — — — — — — 83,365 — 83,365 Redeemable noncontrolling interest accretion to redemption value — — — — — — — ( 5,493 ) — ( 5,493 ) Adoption of new accounting standards — — — — — — — 3,143 — 3,143 Issuance of warrants — — — — — — 22,432 — — 22,432 Net unrealized loss on derivative instruments designated and qualifying as cash flow hedges — — — — — — — — ( 18,796 ) ( 18,796 ) Foreign currency translation, net of hedges — — — — — — — — 11,172 11,172 Unrealized loss on pension benefit obligation, net of tax — — — — — — — — ( 1,195 ) ( 1,195 ) Balance at June 30, 2020 44,080 $ 615 25 $ 28 ( 18,195 ) $ ( 1,376,496 ) $ 438,616 $ 618,437 $ ( 88,676 ) $ ( 407,476 ) See accompanying notes. 61 CIMPRESS PLC CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year Ended June 30, 2020 2019 2018 Operating activities Net income $ 83,995 $ 93,480 $ 46,788 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 167,943 173,771 169,005 Impairment of goodwill 100,842 7,503 — Share-based compensation expense 34,874 21,716 50,466 Deferred taxes ( 106,864 ) 6,838 ( 14,039 ) Gain on sale of subsidiaries — — ( 47,545 ) Loss on early extinguishment of debt — — 17,359 Change in contingent earn-out liability ( 54 ) — 1,774 Unrealized (loss) gain on derivatives not designated as hedging instruments included in net income 7,731 ( 5,358 ) ( 15,540 ) Effect of exchange rate changes on monetary assets and liabilities denominated in non-functional currency ( 802 ) ( 4,364 ) 19,460 Payments of contingent consideration in excess of acquisition date fair value — — ( 4,639 ) Other non-cash items 11,283 9,209 4,668 Changes in operating assets and liabilities: Accounts receivable 26,659 ( 4,186 ) ( 5,123 ) Inventory ( 18,328 ) ( 3,627 ) ( 7,068 ) Prepaid expenses and other assets 11,946 4,475 ( 2,472 ) Accounts payable ( 17,547 ) 19,835 21,782 Accrued expenses and other liabilities 36,766 11,803 ( 42,544 ) Net cash provided by operating activities 338,444 331,095 192,332 Investing activities Purchases of property, plant and equipment ( 50,467 ) ( 70,563 ) ( 60,930 ) Proceeds from the sale of subsidiaries, net of transaction costs and cash divested ( 1,124 ) — 93,779 Business acquisitions, net of cash acquired ( 4,272 ) ( 289,920 ) ( 110 ) Purchases of intangible assets — ( 64 ) ( 308 ) Capitalization of software and website development costs ( 43,992 ) ( 48,652 ) ( 40,847 ) Proceeds from the sale of assets 1,644 640 886 Proceeds from (payments for) settlement of derivatives designated as hedging instruments 29,791 ( 12,016 ) — Other investing activities 1,556 409 ( 3,064 ) Net cash used in investing activities ( 66,864 ) ( 420,166 ) ( 10,594 ) Financing activities Proceeds from borrowings of debt 1,281,490 1,140,607 805,995 Proceeds from issuance of senior notes 210,500 — 400,000 Proceeds from issuance of second lien notes 271,568 — — Proceeds from issuance of warrants 22,432 — — Payments of debt ( 1,337,334 ) ( 947,696 ) ( 974,781 ) Payments for early redemption of senior notes — — ( 275,000 ) Payments of early redemption fees for senior notes — — ( 14,438 ) Payments of debt issuance costs ( 22,570 ) ( 2,729 ) ( 10,629 ) Payments of purchase consideration included in acquisition-date fair value — ( 3,282 ) ( 2,105 ) Payments of withholding taxes in connection with equity awards ( 41,709 ) ( 5,979 ) ( 19,698 ) Payments of finance lease obligations ( 9,511 ) ( 17,063 ) ( 17,618 ) See accompanying notes. 62 CIMPRESS PLC CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (in thousands) Year Ended June 30, 2020 2019 2018 Purchase of noncontrolling interests — ( 85,520 ) ( 1,144 ) Proceeds from sale of noncontrolling interest — 57,046 35,390 Purchase of ordinary shares ( 627,056 ) ( 55,567 ) ( 94,710 ) Proceeds from issuance of ordinary shares 6 3,403 11,981 Issuance of loans — — ( 21,000 ) Distribution to noncontrolling interest ( 3,955 ) ( 3,375 ) — Other financing activities ( 2,116 ) 2,144 — Net cash (used in) provided by financing activities ( 258,255 ) 81,989 ( 177,757 ) Effect of exchange rate changes on cash ( 3,583 ) ( 1,866 ) 2,507 Change in cash held for sale — — 12,042 Net increase (decrease) in cash and cash equivalents 9,742 ( 8,948 ) 18,530 Cash and cash equivalents at beginning of period 35,279 44,227 25,697 Cash and cash equivalents at end of period $ 45,021 $ 35,279 $ 44,227 Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 72,906 $ 63,940 $ 56,614 Income taxes 13,520 26,369 32,278 Non-cash investing and financing activities: Capitalization of construction costs related to financing lease obligation (1) — 13,448 19,264 Property and equipment acquired under finance leases 1,605 11,871 7,535 Amounts accrued related to business acquisitions 2,289 5,564 5,868 ____________________ (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. 63 CIMPRESS PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended June 30, 2020, 2019 and 2018 (in thousands, except share and per share data) 1. Description of the Business Cimpress is a strategically focused group of more than a dozen businesses that specialize in mass customization, via which we deliver large volumes of individually small-sized customized orders for a broad spectrum of print, signage, photo merchandise, invitations and announcements, writing instruments, packaging, apparel and other categories. We invest in and build customer-focused, entrepreneurial mass customization businesses for the long term, which we manage in a decentralized, autonomous manner. Mass customization is a core element of the business model of each Cimpress business. We drive competitive advantage across Cimpress through a select few shared strategic capabilities that have the greatest potential to create Cimpress-wide value. We limit all other central activities to only those which absolutely must be performed centrally. Irish Merger 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. 2. Summary of Significant Accounting Policies Basis of Presentation 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. 64 Use of Estimates 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. By their nature, estimates are subject to an inherent degree of uncertainty. 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 We consider all highly liquid investments purchased with an original maturity of three months or less to be the equivalent of cash for the purpose of balance sheet and statement of cash flows presentation. Cash equivalents consist of depository accounts and money market funds. 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. 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 Accounts receivable includes amounts due from customers. We offset gross trade accounts receivable with an allowance for doubtful accounts, which is our best estimate of the amount of probable credit losses in existing accounts receivable. Account balances are charged off against the allowance when the potential for recovery is no longer reasonably assured. Inventories Inventories consist primarily of raw materials and are recorded at the lower of cost or net realizable value using the first-in, first-out method. Costs to produce free products are included in cost of revenues as incurred. Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciation and amortization. Additions and improvements that substantially extend the useful life of a particular asset are capitalized while repairs and maintenance costs are expensed as incurred. Assets that qualify for the capitalization of interest cost during their construction period are evaluated on a per project basis and, if material, the costs are capitalized. No interest costs associated with our construction projects were capitalized in any of the years presented as the amounts were not material. Depreciation of plant and equipment is recorded on a straight-line basis over the estimated useful lives of the assets. Software and Web Site Development Costs 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 65 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. Costs associated with preliminary stage software development, repair, maintenance or the development of website content are expensed as incurred. 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. Intangible Assets We capitalize the costs of purchasing patents from unrelated third parties and amortize these costs over the estimated useful life of the patent. The costs related to patent applications, pursuing others who we believe infringe on our patents, and defending against patent-infringement claims are expensed as incurred. We record acquired intangible assets at fair value on the date of acquisition using the income approach to value the trade names, customer relationships and customer network and a replacement cost approach to value developed technology and our print network. The income approach calculates fair value by discounting the forecasted after-tax cash flows back to a present value using an appropriate discount rate. The baseline data for this analysis was the cash flow estimates used to price the transaction. We amortize such assets using the straight-line method over the expected useful life of the asset, unless another amortization method is deemed to be more appropriate. In estimating the useful life of the acquired assets, we reviewed the expected use of the assets acquired, factors that may limit the useful life of an acquired asset or may enable the extension of the useful life of an acquired asset without substantial cost, the effects of obsolescence, demand, competition and other economic factors, and the level of maintenance expenditures required to obtain the expected future cash flows from the asset. We evaluate the remaining useful life of intangible assets on a periodic basis to determine whether events and circumstances warrant a revision to the remaining useful life. If the estimate of an intangible asset’s remaining useful life is changed, we amortize the remaining carrying value of the intangible asset prospectively over the revised remaining useful life. Long-Lived Assets Long-lived assets with a finite life are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. 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. We did not recognize any impairment or abandonment charges for acquired intangible assets in any of the periods presented. Business Combinations We recognize the assets acquired and liabilities assumed in business combinations on the basis of their fair values at the date of acquisition. We assess the fair value of assets, including intangible assets, using a variety of methods and each asset is measured at fair value from the perspective of a market participant. The method used to estimate the fair values of intangible assets incorporates 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 and the appropriate discount rates. Assets acquired that are determined to not have economic use for us are expensed immediately. Any excess purchase price over the fair value of the net tangible and intangible assets acquired is allocated to goodwill. Transaction costs and restructuring costs associated with a business combination are expensed as incurred. The consideration for our acquisitions often includes future payments that are contingent upon the occurrence of a particular event. For acquisitions that qualify as business combinations, we record an obligation for such contingent payments at fair value on the acquisition date. 66 Goodwill The evaluation of goodwill for impairment is performed at a level referred to as a reporting unit. A reporting unit is either the “operating segment level” or one level below, which is referred to as a “component.” The level at which the impairment test is performed requires an assessment as to whether the operations below the operating segment should be aggregated as one reporting unit due to their similarity or reviewed individually. Goodwill is evaluated for impairment on an annual basis or more frequently when an event occurs or circumstances change that indicate that the carrying value may not be recoverable. Goodwill is considered to be impaired when the carrying amount of a reporting unit exceeds its estimated fair value. We have the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If the results of this analysis indicate that the fair value of a reporting unit is less than its carrying value, the quantitative impairment test is required; otherwise, no further assessment is necessary. 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 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 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 We record all derivatives on the consolidated balance sheet at fair value. We apply hedge accounting to arrangements that qualify and are designated for hedge accounting treatment, which includes cash flow and net investment hedges. Hedge accounting is discontinued prospectively if the hedging relationship ceases to be effective or the hedging or hedged items cease to exist as a result of maturity, sale, termination or cancellation. 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 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. For derivatives designated as cash flow hedges, we present the settlement amount of these contracts within cash from investing activities in our consolidated statement of cash flows, if the hedged item continues after contract settlement. 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 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 (expense) income, net. 67 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. We execute our derivative instruments with financial institutions that we judge to be credit-worthy, defined as institutions that hold an investment grade credit rating. Mandatorily Redeemable Noncontrolling Interest Noncontrolling interests held by third parties in consolidated subsidiaries are considered mandatorily redeemable when they are subject to an unconditional obligation to be redeemed by both parties. The redeemable noncontrolling interest must be required to be repurchased on a specified date or on the occurrence of a specified event that is certain to occur and are to be redeemed via the transfer of assets. Mandatorily redeemable noncontrolling interests are presented as liability-based financial instruments and are re-measured on a recurring basis to the expected redemption value. 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, 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 Treasury shares are accounted for using the cost method and are included as a component of shareholders' equity. We reissue treasury shares as part of our share-based compensation programs and as consideration for some of our acquisition transactions. Upon issuance of treasury shares we determine the cost using the average cost method. Warrants 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 We generate revenue primarily from the sale and shipment of customized manufactured products. To a much lesser extent (and only in our Vistaprint business) we provide digital services, website design and hosting, and email marketing services, as well as a small percentage from order referral fees and other third-party offerings. Revenues are recognized when control of the promised products or services is transferred to the customer in an amount that reflects the consideration we expect to be entitled to in exchange for those products or services. Shipping revenues are recognized when control of the related products is transferred to the customer. Under the terms of most of our arrangements with our customers we provide satisfaction guarantees, which give our customers an option for a refund or reprint over a specified period of time if the customer is not fully satisfied. As such, we record a reserve for estimated sales returns and allowances as a reduction of revenue, based on historical experience or the specific identification of an event necessitating a reserve. Actual sales returns have historically not been significant. 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 68 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. We do have some arrangements whereby the transfer of control, and thus revenue recognition, occurs upon delivery to the customer. If multiple products are ordered together, each product is considered a separate performance obligation, and the transaction price is allocated to each performance obligation based on the standalone selling price. Revenue is recognized upon satisfaction of each performance obligation. We generally determine the standalone selling prices based on the prices charged to our customers. Our products are customized for each individual customer with no alternative use except to be delivered to that specific customer; however, we do not have an enforceable right to payment prior to delivering the items to the customer based on the terms and conditions of our arrangements with customers and therefore we recognize revenue at a point in time. 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 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. These incentive offers are generally available to all customers and, therefore, do not represent a performance obligation as customers are not required to enter into a contractual commitment to receive the offer. These discounts are recognized as a reduction to the transaction price when used by the customer. 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 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. Restructuring Restructuring costs are recorded in connection with initiatives designed to improve efficiency or enhance competitiveness. 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 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 Our advertising costs are primarily expensed as incurred and included in marketing and selling expense. Advertising expense for the years ended June 30, 2020, 2019 and 2018 was $ 302,449 , $ 427,673 , and $ 432,546 , respectively, which consisted of external costs related to customer acquisition and retention marketing campaigns. Research and Development Expense Research and development costs are expensed as incurred and included in technology and development expense. Research and development expense for the years ended June 30, 2020, 2019 and 2018 was $ 49,201 , $ 40,976 , and $ 41,451 , respectively, which consisted of costs related to enhancing our manufacturing engineering and technology capabilities. 69 Income Taxes As part of the process of preparing our consolidated financial statements, we calculate our income taxes in each of the jurisdictions in which we operate. This process involves estimating our current tax expense and deferred tax expense based on assessing temporary and permanent differences resulting from differing treatment of items for tax and financial reporting purposes. We recognize deferred tax assets and liabilities for the temporary differences using the enacted tax rates and laws that will be in effect when we expect temporary differences to reverse. We assess the ability to realize our deferred tax assets based upon the weight of available evidence both positive and negative. To the extent we believe that it is more likely than not that some portion or all of the deferred tax assets will not be realized, we establish a valuation allowance. 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. 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. The tax benefits recognized in our financial statements from such positions are measured as the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. The unrecognized tax benefits will reduce our effective tax rate if recognized. Interest and, if applicable, penalties related to unrecognized tax benefits are recorded in the provision for income taxes. Foreign Currency Translation Our non-U.S. dollar functional currency subsidiaries translate their assets and liabilities denominated in their functional currency to U.S. dollars at current rates of exchange in effect at the balance sheet date, and revenues and expenses are translated at average rates prevailing throughout the period. The resulting gains and losses from translation are included as a component of accumulated other comprehensive loss. Transaction gains and losses and remeasurement of assets and liabilities denominated in currencies other than an entity’s functional currency are included in other income (expense), net in our consolidated statements of operations. Other Income (Expense), Net The following table summarizes the components of other income (expense), net: Year Ended June 30, 2020 2019 2018 Gains on derivatives not designated as hedging instruments (1) $ 20,564 $ 23,494 $ ( 2,687 ) Currency-related gains (losses), net (2) 2,309 2,506 ( 19,500 ) Other gains 1 476 1,155 Total other income (expense), net $ 22,874 $ 26,476 $ ( 21,032 ) _____________________ (1) 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. (2) 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 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. 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. 70 The following table sets forth the reconciliation of the weighted-average number of ordinary shares: Year Ended June 30, 2020 2019 2018 Weighted average shares outstanding, basic 27,180,744 30,786,349 30,948,081 Weighted average shares issuable upon exercise/vesting of outstanding share options/PSUs/RSUs/RSAs/warrants (1) 592,542 876,356 1,272,320 Shares used in computing diluted net income per share attributable to Cimpress plc 27,773,286 31,662,705 32,220,401 Weighted average anti-dilutive shares excluded from diluted net income per share attributable to Cimpress plc 1,325 — 2,291 _____________________ (1) 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 Share-based Compensation Compensation expense for all share-based awards is measured at fair value on the date of grant and recognized over the requisite service period. We recognize the impact of forfeitures as they occur. The fair value of share options is determined using the Black-Scholes valuation model, or lattice model for share options with a market condition or subsidiary share options. The fair value of RSUs and RSAs is determined based on the quoted price of our ordinary shares on the date of the grant. Such value is recognized ratably as expense over the requisite service period, or on an accelerated method for awards with a performance or market condition. For awards that are ultimately settleable in cash, we treat them as liability awards and mark the award to market each reporting period recognizing any gain or loss in our statements of operations. 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. These awards with a discretionary performance condition are subject to mark-to-market accounting throughout the performance vesting period. The compensation expense for these awards is estimated at fair value using a Monte Carlo simulation valuation model and compensation costs are recorded only if it is probable that the performance condition will be achieved. We are required to reassess the probability each reporting period. If we determine the awards are not probable at some point during the performance vesting period we would reverse any expense recognized to date. Total share-based compensation expense was $ 34,874 , $ 21,716 and $ 50,466 for the years ended June 30, 2020, 2019 and 2018 , respectively. Sabbatical Leave Compensation expense associated with a sabbatical leave, or other similar benefit arrangements, is accrued over the requisite service period during which an employee earns the benefit, net of estimated forfeitures, and is included in other liabilities on our consolidated balance sheets. 71 Concentrations of Credit Risk We monitor the creditworthiness of our customers to which we grant credit terms in the normal course of business. We do not have any customers that accounted for greater than 10% of our accounts receivable as of June 30, 2020 and 2019. We do not have any customers that accounted for greater than 10% of our revenue for the years ended June 30, 2020, 2019 and 2018. 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. 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; and • 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 July 1, 2019 Assets Prepaid expenses and other current assets $ 78,065 $ ( 59 ) $ 78,006 Property, plant and equipment, net 490,755 ( 121,254 ) 369,501 Operating lease assets, net — 169,668 169,668 Deferred tax assets 59,906 ( 817 ) 59,089 Liabilities and shareholders' equity Operating lease liabilities, current $ — $ 37,342 $ 37,342 Other current liabilities 27,881 ( 12,569 ) 15,312 Lease financing obligation 112,096 ( 112,096 ) — Operating lease liabilities, non-current — 139,041 139,041 Other liabilities 53,716 ( 7,169 ) 46,547 Retained earnings 537,422 2,989 540,411 72 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 73 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. 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 finance 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. 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 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 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. 2017-12, "Derivatives and Hedging: 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. 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. 2016-02, "Leases (Topic 842)" (ASU 2016-02), which requires the recognition of lease assets and lease liabilities by lessees for those leases currently classified as operating leases. The standard also retains a distinction between finance leases and operating leases. We adopted the standard on its effective date of July 1, 2019. Refer to the information above for additional details of the adoption. 74 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. 3. Fair Value Measurements We use a three-level valuation hierarchy for measuring fair value and include detailed financial statement disclosures about fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows: • Level 1: Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. • Level 2: Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in markets that are not active and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. • Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The following tables summarize our assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy: June 30, 2020 Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets Cross-currency swap contracts $ 4,462 $ — $ 4,462 $ — Currency forward contracts 7,949 — 7,949 — Currency option contracts 1,429 — 1,429 — Total assets recorded at fair value $ 13,840 $ — $ 13,840 $ — Liabilities Interest rate swap contracts $ ( 39,520 ) $ — $ ( 39,520 ) $ — Cross-currency swap contracts ( 4,746 ) — ( 4,746 ) — Currency forward contracts ( 8,519 ) — ( 8,519 ) — Currency option contracts ( 38 ) — ( 38 ) — Total liabilities recorded at fair value $ ( 52,823 ) $ — $ ( 52,823 ) $ — 75 June 30, 2019 Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets Interest rate swap contracts $ 144 $ — $ 144 $ — Currency forward contracts 15,268 — 15,268 — Currency option contracts 4,765 — 4,765 — Total assets recorded at fair value $ 20,177 $ — $ 20,177 $ — Liabilities Interest rate swap contracts $ ( 12,895 ) $ — $ ( 12,895 ) $ — Cross-currency swap contracts ( 915 ) — ( 915 ) — Currency forward contracts ( 2,486 ) — ( 2,486 ) — Currency option contracts ( 42 ) — ( 42 ) — Total liabilities recorded at fair value $ ( 16,338 ) $ — $ ( 16,338 ) $ — During the years ended June 30, 2020, 2019 and 2018 , there were no significant transfers in or out of Level 1, Level 2 and Level 3 classifications. The valuations of the derivatives intended to mitigate our interest rate and currency risk are determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each instrument. This analysis utilizes observable market-based inputs, including interest rate curves, interest rate volatility, or spot and forward exchange rates, and reflects the contractual terms of these instruments, including the period to maturity. We incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparties' nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements. 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, 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, 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. The estimated fair value of our debt was determined using available market information based on recent trades or activity of debt instruments with substantially similar risks, terms and maturities, which fall within Level 2 under the fair value hierarchy. The estimated fair value of assets and liabilities disclosed above may not be representative of actual values that could have been or will be realized in the future. 76 4. Derivative Financial Instruments We use derivative financial instruments, such as interest rate swap contracts, cross-currency swap contracts, and currency forward and option contracts, to manage interest rate and foreign currency exposures. 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 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. Hedges of Interest Rate Risk We enter into interest rate swap contracts to manage variability in the amount of our known or expected cash payments related to a portion of our debt. Our objective in using interest rate swaps is to add stability to interest expense and to manage our exposure to interest rate movements. We designate our interest rate swaps as cash flow hedges. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for us making fixed-rate payments over the life of the contract agreements without exchange of the underlying notional amount. Realized gains or losses from interest rate swaps are recorded in earnings as a component of interest expense, net. 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, 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: Notional Amounts Contracts accruing interest as of June 30, 2020 $ 500,000 Contracts with a future start date 50,000 Total $ 550,000 Hedges of Currency Risk Cross-Currency Swap Contracts From time to time, we execute cross-currency swap contracts designated as cash flow hedges or net investment hedges. 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. 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. dollar. 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 77 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 . 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. dollar. 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 the Euro as their functional currency. Amounts reported in accumulated other comprehensive loss are recognized as a component of our cumulative translation adjustment. We have elected to not apply hedge accounting for all other currency forward and option contracts. During the years ended June 30, 2020, 2019 and 2018 , we have experienced volatility within other income (expense), net in our consolidated statements of operations from unrealized gains and losses on the mark-to-market of outstanding currency forward and option contracts. We expect this volatility to continue in future periods for contracts for which we do not apply hedge accounting. Additionally, since our hedging objectives may be targeted at non-GAAP financial metrics that exclude non-cash items such as depreciation and amortization, we may experience increased, not decreased, volatility in our GAAP results as a result of our currency hedging program. As of June 30, 2020 , we had the following outstanding currency derivative contracts that were not designated for hedge accounting and were used to hedge fluctuations in the U.S. dollar value of forecasted transactions or balances denominated in Australian Dollar, British Pound, Canadian Dollar, Danish Krone, Euro, Indian Rupee, Mexican Peso, New Zealand Dollar, Norwegian Krone, Philippine Peso and Swedish Krona: Notional Amount Effective Date Maturity Date Number of Instruments Index $ 587,993 September 2018 through June 2020 Various dates through October 2024 574 Various 78 Financial Instrument Presentation The table below presents the fair value of our derivative financial instruments as well as their classification on the balance sheet as of June 30, 2020 and June 30, 2019 . Our derivative asset and liability balances will fluctuate with interest rate and currency exchange rate volatility. June 30, 2020 Asset Derivatives Liability Derivatives Balance Sheet line item Gross amounts of recognized assets Gross amount offset in Consolidated Balance Sheet Net amount Balance Sheet line item Gross amounts of recognized liabilities Gross amount offset in Consolidated Balance Sheet Net amount Derivatives designated as hedging instruments Derivatives in cash flow hedging relationships Interest rate swaps Other current assets / other assets $ — $ — $ — Other liabilities $ ( 31,161 ) $ — $ ( 31,161 ) Cross-currency swaps Other assets 4,462 — 4,462 Other liabilities ( 4,746 ) — ( 4,746 ) Derivatives in net investment hedging relationships Currency forward contracts Other assets — — — Other current liabilities / other liabilities ( 6,829 ) — ( 6,829 ) Total derivatives designated as hedging instruments $ 4,462 $ — $ 4,462 $ ( 42,736 ) $ — $ ( 42,736 ) Derivatives not designated as hedging instruments Interest rate swaps Other assets $ — $ — $ — Other liabilities $ ( 8,359 ) $ — $ ( 8,359 ) Currency forward contracts Other current assets / other assets 9,702 ( 1,753 ) 7,949 Other current liabilities / other liabilities ( 2,136 ) 446 ( 1,690 ) Currency option contracts Other current assets / other assets 1,699 ( 270 ) 1,429 Other current liabilities / other liabilities ( 38 ) — ( 38 ) Total derivatives not designated as hedging instruments $ 11,401 $ ( 2,023 ) $ 9,378 $ ( 10,533 ) $ 446 $ ( 10,087 ) 79 June 30, 2019 Asset Derivatives Liability Derivatives Derivatives designated as hedging instruments Balance Sheet line item Gross amounts of recognized assets Gross amount offset in Consolidated Balance Sheet Net amount Balance Sheet line item Gross amounts of recognized liabilities Gross amount offset in Consolidated Balance Sheet Net amount Derivatives in cash flow hedging relationships Interest rate swaps Other assets $ 144 $ — $ 144 Other current liabilities / other liabilities $ ( 12,895 ) $ — $ ( 12,895 ) Cross-currency swaps Other assets — — — Other liabilities ( 915 ) — ( 915 ) Derivatives in net investment hedging relationships Currency forward contracts Other assets 4,514 — 4,514 Other liabilities ( 2,397 ) — ( 2,397 ) Total derivatives designated as hedging instruments $ 4,658 $ — $ 4,658 $ ( 16,207 ) $ — $ ( 16,207 ) Derivatives not designated as hedging instruments Currency forward contracts Other current assets / other assets $ 11,865 $ ( 1,111 ) $ 10,754 Other current liabilities / other liabilities $ ( 127 ) $ 38 $ ( 89 ) Currency option contracts Other current assets / other assets 4,793 ( 28 ) 4,765 Other current liabilities / other liabilities ( 42 ) — ( 42 ) Total derivatives not designated as hedging instruments $ 16,658 $ ( 1,139 ) $ 15,519 $ ( 169 ) $ 38 $ ( 131 ) 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, 2020 2019 2018 Derivatives in cash flow hedging relationships Interest rate swaps (1) $ ( 28,259 ) $ ( 20,400 ) $ 8,545 Cross-currency swaps 3,689 ( 3,009 ) 2,976 Derivatives in net investment hedging relationships Cross-currency swaps — 6,557 ( 1,476 ) Currency forward contracts 21,240 14,726 ( 3,490 ) Total $ ( 3,330 ) $ ( 2,126 ) $ 6,555 ________________ (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 . 80 The following table presents reclassifications out of accumulated other comprehensive loss for the years ended June 30, 2020, 2019 and 2018 : Amount of Net Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income Affected line item in the Statement of Operations Year Ended June 30, 2020 2019 2018 Derivatives in cash flow hedging relationships Interest rate swaps $ 3,041 $ 144 $ 70 Interest expense, net Cross-currency swaps 4,583 5,098 ( 1,379 ) Other income (expense), net Total before income tax 7,624 5,242 ( 1,309 ) Income before income taxes Income tax ( 1,850 ) ( 1,310 ) 349 Income tax (benefit) expense Total $ 5,774 $ 3,932 $ ( 960 ) 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 Statement of Operations Year Ended June 30, 2020 2019 2018 Currency contracts $ 20,882 $ 24,215 $ ( 2,942 ) Other income (expense), net Interest rate swaps (1) ( 318 ) ( 721 ) 255 Other income (expense), net Total $ 20,564 $ 23,494 $ ( 2,687 ) _____________________ (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. 81 5. 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 pension benefit obligation Translation adjustments, net of hedges (2) Total Balance as of June 30, 2017 $ ( 2,250 ) $ ( 357 ) $ ( 110,791 ) $ ( 113,398 ) Amounts reclassified from accumulated other comprehensive loss to retained earnings ( 116 ) — — ( 116 ) Other comprehensive income before reclassifications 11,521 59 32,782 44,362 Amounts reclassified from accumulated other comprehensive loss to net income ( 960 ) 298 — ( 662 ) Net current period other comprehensive income 10,561 357 32,782 43,700 Balance as of June 30, 2018 8,195 — ( 78,009 ) ( 69,814 ) Other comprehensive (loss) income before reclassifications ( 23,409 ) ( 204 ) 9,638 ( 13,975 ) Amounts reclassified from accumulated other comprehensive loss to net income 3,932 — — 3,932 Net current period other comprehensive (loss) income ( 19,477 ) ( 204 ) 9,638 ( 10,043 ) Balance as of June 30, 2019 ( 11,282 ) ( 204 ) ( 68,371 ) ( 79,857 ) Other comprehensive (loss) income before reclassifications ( 24,570 ) ( 1,195 ) 11,172 ( 14,593 ) Amounts reclassified from accumulated other comprehensive loss to net income 5,774 — — 5,774 Net current period other comprehensive (loss) income ( 18,796 ) ( 1,195 ) 11,172 ( 8,819 ) Balance as of June 30, 2020 $ ( 30,078 ) $ ( 1,399 ) $ ( 57,199 ) $ ( 88,676 ) ________________________ (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, 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. 82 6. Property, Plant, and Equipment, Net Property, plant, and equipment, net consists of the following: June 30, Estimated useful lives 2020 2019 Land improvements 10 years $ 4,975 $ 4,804 Building and building improvements (1) 10 - 30 years 186,873 323,516 Machinery and production equipment 4 - 10 years 362,341 346,089 Machinery and production equipment under finance lease 4 - 10 years 64,337 71,173 Computer software and equipment 3 - 5 years 160,728 158,223 Furniture, fixtures and office equipment 5 - 7 years 47,823 46,237 Leasehold improvements Shorter of lease term or expected life of the asset 73,072 64,092 Construction in progress 10,752 11,970 910,901 1,026,104 Less accumulated depreciation, inclusive of assets under finance lease ( 604,061 ) ( 567,407 ) 306,840 458,697 Land 31,819 32,058 Property, plant, and equipment, net $ 338,659 $ 490,755 _________________ (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. 7. Business Combinations and Divestitures Fiscal 2019 Acquisitions Acquisition of Build A Sign LLC On October 1, 2018, we completed the acquisition of Build A Sign LLC ("BuildASign"), a vertically integrated U.S. web-to-print canvas wall décor and signage company. We acquired approximately 99 % of the outstanding equity interests of BuildASign for a purchase price of $ 275,079 in cash, which includes a post-closing adjustment paid during the second quarter of fiscal 2019 and was based on BuildASign's cash, debt and working capital position as of the acquisition date. The acquisition supports our strategy of investing in and building customer-focused, entrepreneurial, mass customization businesses for the long term, which we manage in a decentralized and autonomous manner. BuildASign brings strong talent, a customer-centric culture, low-cost production operations and strong e-commerce capabilities that work seamlessly together to serve customers with market-leading prices, fast delivery and great customer service. Noncontrolling Interest At the closing, Build A Sign Management Pool, LLC (the "Management Pool"), one of the sellers, retained approximately 1% of the outstanding equity interests of BuildASign for the benefit of certain BuildASign employees who hold equity interests in the Management Pool. We entered into a put and call option agreement with respect to the retained BuildASign equity interests, which provides the holders of the Management Pool the right to sell to us all or any portion of their shares, beginning with our fiscal year ending June 30, 2022 and for each fiscal year thereafter. We have the right to buy all (but not less than all) of the retained equity interest of any holder that is no longer an active employee of the company, beginning with our fiscal year ending June 30, 2022. 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 83 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. Goodwill is deductible for tax purposes and has been attributed to the All Other Businesses reportable segment. The fair value of the assets acquired and liabilities assumed was as follows: Amount Weighted Average Useful Life in Years Tangible assets acquired and liabilities assumed: Cash and cash equivalents $ 4,093 n/a Accounts receivable, net 510 n/a Inventory 1,107 n/a Other current assets (1) 6,937 n/a Property, plant and equipment, net 12,080 n/a Accounts payable ( 3,369 ) n/a Accrued expenses (1) ( 11,334 ) n/a Other current liabilities ( 2,658 ) n/a Long-term liabilities ( 3,949 ) n/a Identifiable intangible assets: Trade name 47,600 15 years Developed technology 28,900 3 - 7 years Customer relationships 12,430 2 - 5 years Noncontrolling interest ( 3,356 ) n/a Goodwill 186,088 n/a Total purchase price $ 275,079 _________________ (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 BuildASign has been included in our consolidated financial statements starting on its acquisition date. The following unaudited pro forma financial information presents our results as if the BuildASign acquisition had occurred on July 1, 2017 . The pro forma financial information for all periods presented adjusts for the effects of material business combination items, including estimated amortization of acquired intangible assets, interest associated with debt used to finance the acquisition, and transaction related costs. Year Ended June 30, 2019 2018 Pro forma revenue $ 2,783,205 $ 2,717,785 Pro forma net income attributable to Cimpress plc 93,399 31,571 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. 84 Fiscal 2018 Divestiture Divestiture of Albumprinter On August 31, 2017 we sold our Albumprinter business, including FotoKnudsen AS, for a total of € 78,382 ( $ 93,071 based on the exchange rate as of the date of sale) in cash, net of transaction costs and cash divested (after $ 11,874 in pre-closing dividends). As a result of the sale, we recognized a gain of $ 47,545 , net of transaction costs, within our consolidated statement of operations for the year ended June 30, 2018. In connection with the divestiture, we entered into an agreement with Albumprinter under which Albumprinter will continue to fulfill photo book orders for our Vistaprint business. 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. 8. Goodwill and Acquired Intangibles The carrying amount of goodwill by reportable segment as of June 30, 2020 and June 30, 2019 was as follows: Vistaprint PrintBrothers The Print Group National Pen All Other Businesses Total Balance as of June 30, 2018 $ 146,207 $ 127,571 $ 201,200 $ 34,434 $ 11,431 $ 520,843 Acquisitions (1) — — 2,686 — 212,286 214,972 Impairments (2) — — — — ( 7,503 ) ( 7,503 ) Adjustments — — — — ( 181 ) ( 181 ) Effect of currency translation adjustments (3) ( 246 ) ( 3,482 ) ( 5,523 ) — — ( 9,251 ) Balance as of June 30, 2019 145,961 124,089 198,363 34,434 216,033 718,880 Acquisitions (1) — 6,879 — — — 6,879 Impairments (2) — — ( 40,391 ) ( 34,434 ) ( 26,017 ) ( 100,842 ) Adjustments (4) 3,919 — — — ( 3,919 ) — Effect of currency translation adjustments (3) 966 ( 1,204 ) ( 2,775 ) — — ( 3,013 ) Balance as of June 30, 2020 $ 150,846 $ 129,764 $ 155,197 $ — $ 186,097 $ 621,904 _________________ (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. dollar. (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 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 85 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. 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. 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 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 (“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 86 Fiscal 2019 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. That said, investment in capacity and other fixed costs was far too high in fiscal year 2019 relative to the scale of the business and the mid-term outlook. 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. 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 June 30, 2020 June 30, 2019 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Trade name $ 144,168 $ ( 45,570 ) $ 98,598 $ 145,908 $ ( 35,199 ) $ 110,709 Developed technology 84,171 ( 56,763 ) 27,408 84,980 ( 48,653 ) 36,327 Customer relationships 190,329 ( 123,857 ) 66,472 191,719 ( 97,392 ) 94,327 Customer network and other 15,847 ( 11,696 ) 4,151 15,970 ( 10,150 ) 5,820 Print network 24,743 ( 12,144 ) 12,599 25,014 ( 9,496 ) 15,518 Total intangible assets $ 459,258 $ ( 250,030 ) $ 209,228 $ 463,591 $ ( 200,890 ) $ 262,701 Acquired intangible assets amortization expense for the years ended June 30, 2020, 2019 and 2018 was $ 51,786 , $ 53,256 and $ 49,881 , respectively. Estimated intangible assets amortization expense for each of the five succeeding fiscal years and thereafter is as follows: 2021 $ 47,583 2022 42,534 2023 34,166 2024 23,935 2025 13,701 Thereafter 47,309 $ 209,228 87 9. Other Balance Sheet Components Accrued expenses included the following: June 30, 2020 June 30, 2019 Compensation costs $ 67,307 $ 58,864 Income and indirect taxes (1) 53,161 40,102 Advertising costs (2) 14,746 22,289 Interest payable (3) 8,359 2,271 Production costs (2) 7,012 9,261 Sales returns 5,166 5,413 Shipping costs (2) 5,080 7,275 Professional fees 3,452 2,786 Purchases of property, plant and equipment 1,685 2,358 Other 44,796 44,096 Total accrued expenses $ 210,764 $ 194,715 ___________________ (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: June 30, 2020 June 30, 2019 Current portion of finance lease obligations $ 8,055 $ 10,668 Current portion of lease financing obligation (1) — 12,569 Short-term derivative liabilities 3,521 1,628 Other 1,692 3,016 Total other current liabilities $ 13,268 $ 27,881 ___________________ (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: June 30, 2020 June 30, 2019 Long-term finance lease obligations $ 18,617 $ 16,036 Long-term derivative liabilities (1) 51,800 15,886 Other 17,770 21,794 Total other liabilities $ 88,187 $ 53,716 ___________________ (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. 88 10. Debt June 30, 2020 June 30, 2019 7.0% Senior unsecured notes due 2026 $ 600,000 $ 400,000 Senior secured credit facility 570,483 621,224 12.0% Second lien notes due 2025 300,000 — Other 11,694 14,361 Debt issuance costs and debt premiums (discounts) (1) ( 48,587 ) ( 12,018 ) Total debt outstanding, net 1,433,590 1,023,567 Less: short-term debt (2) 17,933 81,277 Long-term debt $ 1,415,657 $ 942,290 _____________________ (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 Debt Our various debt arrangements described below contain customary representations, warranties and events of default. 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 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 0.35 % to 0.5 % 89 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 . 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 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 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 also guarantees the 2026 Notes. 90 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. Other Debt 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 . 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. 11. Shareholders’ Equity (Deficit) Treasury shares 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"). 91 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. Warrants 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. 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. Share-based awards The 2016 Performance Equity Plan (the "2016 Plan") became effective upon shareholder approval on May 27, 2016 and allows us to grant PSUs, entitling the recipient to receive Cimpress ordinary shares based upon continued service to Cimpress and the achievement of objective, predetermined appreciation of Cimpress' three-year moving average share price. We may grant PSUs under the 2016 Plan to our employees, officers, non-employee directors, consultants, and advisors. Subject to adjustment in the event of stock splits, stock dividends and other similar events, we may make awards under the 2016 Plan for up to 6,000,000 of our ordinary shares. The 2011 Equity Incentive Plan (the “2011 Plan”) became effective upon shareholder approval on June 30, 2011 and allows us to grant share options, share appreciation rights, restricted shares, restricted share units and other awards based on our ordinary shares to our employees, officers, non-employee directors, consultants and advisors. Among other terms, the 2011 Plan requires that the exercise price of any share option or share appreciation right granted under the 2011 Plan be at least 100 % of the fair market value of the ordinary shares on the date of grant; limits the term of any share option or share appreciation right to a maximum period of 10 years ; provides that shares underlying outstanding awards under the Amended and Restated 2005 Equity Incentive Plan that are canceled, forfeited, expired or otherwise terminated without having been issued in full will become available for the grant of new awards under the 2011 Plan; and prohibits the repricing of any share options or share appreciation rights without shareholder approval. In addition, the 2011 Plan provides that the number of ordinary shares available for issuance under the plan will be reduced by (i) 1.56 ordinary shares for each share subject to a restricted share or other share-based award with a per share or per unit purchase price lower than 100 % of the fair market value of the ordinary shares on the date of grant and (ii) one ordinary share for each share subject to any other award under the 2011 Plan. 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. 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 92 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 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. Use of a valuation model requires management to make certain assumptions with respect to inputs. The expected volatility assumption is based upon historical volatility of our share price. The expected term assumption is based on the contractual and vesting term of the option and historical experience. The risk-free interest rate is based on the U.S. Treasury yield curve with a maturity equal to the expected life assumed at the grant date. 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 2020. A summary of our share option activity and related information for the year ended June 30, 2020 is as follows: Shares Pursuant to Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (years) Aggregate Intrinsic Value Outstanding at the beginning of the period 1,431,914 $ 50.27 0.9 Granted — — Exercised ( 1,321,376 ) 49.85 Forfeited/expired — — Outstanding at the end of the period 110,538 $ 55.27 1.0 $ 2,348,957 Exercisable at the end of the period 110,538 $ 55.27 1.0 $ 2,348,957 The intrinsic value in the table above represents the total pre-tax amount, net of exercise price, which would have been received if all option holders exercised in-the-money options on June 30, 2020 . The total intrinsic value of options exercised during the fiscal years ended June 30, 2020, 2019 and 2018 was $ 92,582 , $ 12,498 and $ 46,853 , respectively. 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. 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. 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. 93 A summary of our PSU activity and related information for the fiscal year ended June 30, 2020 is as follows: PSUs Weighted- Average Grant Date Fair Value Aggregate Intrinsic Value Outstanding at the beginning of the period 821,745 $ 132.55 Granted 295,239 142.90 Vested and distributed — — Forfeited ( 82,787 ) 152.71 Outstanding at the end of the period 1,034,197 $ 133.89 $ 78,951 The weighted average fair value of PSUs granted during the fiscal years ended June 30, 2020, 2019 and 2018 was $ 142.90 , $ 176.16 , and $ 115.02 , respectively. The total intrinsic value of PSUs outstanding at the fiscal years ended June 30, 2020, 2019 and 2018 was $78,951 , $ 74,688 and $ 98,683 , respectively. As of June 30, 2020 , the number of shares subject to PSUs included in the table above assumes the issuance of one share for each PSU, but based on actual performance that amount delivered can range from zero shares to a maximum of 2,585,493 shares. Restricted share units 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, 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: RSUs Weighted- Average Grant Date Fair Value Aggregate Intrinsic Value Unvested at the beginning of the period 10,196 $ 86.37 Granted 193,365 46.94 Vested and distributed ( 19,177 ) 65.01 Forfeited ( 7,151 ) 51.49 Unvested at the end of the period 177,233 $ 47.06 $ 13,530 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. Restricted share awards 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 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 Total share-based compensation costs were $ 34,874 , $ 21,716 and $ 50,466 for the years ended June 30, 2020, 2019 and 2018 , respectively, and we elected to recognize the impact of forfeitures as they occur. 94 From time to time we issue awards that are considered liability-based awards as they are settleable in cash. 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. As of June 30, 2020 , there was $ 29,165 of total unrecognized compensation cost related to non-vested, share-based compensation arrangements. This cost is expected to be recognized over a weighted average period of 1.5 years. 12. Employees’ Savings Plans Defined contribution plans We maintain certain government-mandated and defined contribution plans throughout the world. Our most significant defined contribution retirement plans are in the U.S. and comply with Section 401(k) of the Internal Revenue Code. We offer eligible employees in the U.S. 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. Defined benefit plan We currently have a defined benefit plan that covers substantially all of our employees in Switzerland. Our Swiss plan is a government-mandated retirement fund with benefits generally earned based on years of service and compensation during active employment; however, the level of benefits varies within the plan. Eligibility is determined in accordance with local statutory requirements. Under this plan, both we and certain of our employees with annual earnings in excess of government determined amounts are required to make contributions into a fund managed by an independent investment fiduciary. Employer contributions must be in an amount at least equal to the employee’s contribution. Minimum employee contributions are based on the respective employee’s age, salary, and gender. As of June 30, 2020 and 2019 , the plan had an unfunded net pension obligation of approximately $ 2,743 , and $ 1,525 , respectively, and plan assets which totaled approximately $ 3,403 and $ 2,849 , respectively. For the years ended June 30, 2020, 2019 and 2018 we recognized expense totaling $ 399 , $ 424 and $ 55 , respectively, related to our Swiss plan. 13. Income Taxes The following is a summary of our income (loss) before income taxes by geography: Year Ended June 30, 2020 2019 2018 U.S. $ ( 58,765 ) $ ( 10,879 ) $ 9,183 Non-U.S. 61,768 137,791 57,183 Total $ 3,003 $ 126,912 $ 66,366 95 The components of the provision (benefit) for income taxes are as follows: Year Ended June 30, 2020 2019 2018 Current: U.S. Federal $ ( 16,269 ) $ 84 $ 446 U.S. State 213 1,130 ( 117 ) Non-U.S. 22,361 26,862 33,065 Total current 6,305 28,076 33,394 Deferred: U.S. Federal 12,980 ( 1,347 ) ( 6,673 ) U.S. State 3,213 ( 183 ) 2,306 Non-U.S. ( 103,490 ) 6,886 ( 9,449 ) Total deferred ( 87,297 ) 5,356 ( 13,816 ) Total $ ( 80,992 ) $ 33,432 $ 19,578 The following is a reconciliation of the standard U.S. federal statutory tax rate and our effective tax rate: Year Ended June 30, 2020 2019 2018 U.S. federal statutory income tax rate 21.0 % 21.0 % 28.0 % State taxes, net of federal effect ( 130.1 ) ( 1.0 ) ( 2.4 ) Tax rate differential on non-U.S. earnings ( 408.4 ) ( 7.2 ) ( 1.3 ) Swiss tax reform ( 3,779.0 ) — — Compensation related items ( 420.7 ) 0.7 ( 15.1 ) U.S. tax reform ( 372.6 ) 3.7 10.4 Goodwill impairment 759.1 2.0 — Change in valuation allowance 1,277.5 ( 1.7 ) 6.7 Irish foreign tax credit 262.3 ( 19.1 ) — Tax on repatriated earnings 154.1 8.0 — Gain/loss on sale of subsidiary ( 189.2 ) — 4.0 Notional interest deduction (Italy) ( 47.9 ) ( 0.8 ) ( 1.9 ) Patent box (Italy) ( 24.2 ) ( 3.4 ) — Tax credits and incentives ( 88.3 ) ( 3.6 ) ( 4.8 ) Non-US tax rate changes 81.7 0.1 ( 0.1 ) Business and withholding taxes 28.7 0.8 0.8 Uncertain Tax Positions 28.8 ( 0.1 ) ( 1.1 ) Nondeductible interest expense 157.4 1.3 2.9 Other non-deductible expenses 47.5 1.5 ( 0.1 ) Tax on unremitted earnings 31.4 8.0 0.7 Change in tax residence — 20.5 — Nondeductible acquisition-related payments — 0.6 3.6 Changes to variable interest entities — ( 2.5 ) — Changes to derivative instruments — 4.5 — Other ( 86.1 ) ( 7.0 ) ( 0.8 ) Effective income tax rate ( 2,697.0 )% 26.3 % 29.5 % 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 96 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 % to 32 % . The total tax rate benefit from operating in non-U.S. jurisdictions is included in the line “Tax rate differential on non-U.S. earnings” in the above tax rate reconciliation table. 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 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. 97 Significant components of our deferred income tax assets and liabilities consisted of the following at June 30, 2020 and 2019: June 30, 2020 June 30, 2019 Deferred tax assets: Swiss tax reform amortizable goodwill $ 127,965 $ — Net operating loss carryforwards 62,374 80,832 Capital leases 33,078 31,010 Depreciation and amortization 4,308 3,315 Accrued expenses 6,253 6,441 Share-based compensation 9,482 11,241 Credit and other carryforwards 29,216 24,714 Derivative financial instruments 6,739 2,924 Other 7,551 3,167 Subtotal 286,966 163,644 Valuation allowance ( 91,575 ) ( 59,410 ) Total deferred tax assets 195,391 104,234 Deferred tax liabilities: Depreciation and amortization ( 41,017 ) ( 50,091 ) Capital leases ( 30,433 ) ( 27,694 ) Investment in flow-through entity ( 3,550 ) ( 3,078 ) Tax on unremitted earnings ( 6,203 ) ( 5,145 ) Other ( 4,502 ) ( 2,851 ) Total deferred tax liabilities ( 85,705 ) ( 88,859 ) Net deferred tax assets $ 109,686 $ 15,375 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 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 assessments are reliant on the 98 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. 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. We will continue to assess the realization of the deferred tax assets based on operating results on a quarterly basis. A reconciliation of the beginning and ending amount of the valuation allowance for the year ended June 30, 2020 is as follows: Balance at June 30, 2019 $ 59,410 Charges to earnings (1) 36,833 Charges to other accounts (2) ( 6,198 ) Balance at June 30, 2020 $ 90,045 _________________ (1) Amount is primarily related to U.S. research and development credits and capital loss carryforwards, U.S. and non-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 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. We consider the following factors, among others, in evaluating our plans for indefinite reinvestment of our subsidiaries’ earnings: (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; (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. If, in the future, we decide to repatriate the undistributed earnings from these subsidiaries in the form of dividends or otherwise, we could be subject to withholding taxes payable in the range of $ 9,000 to $ 10,000 at that time. 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 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 October 2020 through August 2022. When the tax holidays expire, we will be subject to tax at rates ranging from 10 % to 30 % . As a result of the tax holidays, our net income was higher by $ 457 for fiscal 2020. 99 A reconciliation of the gross beginning and ending amount of unrecognized tax benefits is as follows: Balance June 30, 2017 $ 5,383 Additions based on tax positions related to the current tax year 612 Additions based on tax positions related to prior tax years 93 Reductions based on tax positions related to prior tax years ( 261 ) Reductions due to audit settlements ( 31 ) Reductions due to lapse of statute of limitations ( 1,105 ) Cumulative translation adjustment 14 Balance June 30, 2018 4,705 Additions based on tax positions related to the current tax year 702 Additions based on tax positions related to prior tax years 201 Reductions based on tax positions related to prior tax years ( 117 ) Reductions due to lapse of statute of limitations ( 763 ) Cumulative translation adjustment ( 7 ) Balance June 30, 2019 4,721 Additions based on tax positions related to the current tax year 586 Additions based on tax positions related to prior tax years 769 Reductions based on tax positions related to prior tax years ( 102 ) Reductions due to audit settlements ( 52 ) Reductions due to lapse of statute of limitations ( 71 ) Cumulative translation adjustment ( 4 ) Balance June 30, 2020 $ 5,847 For the year ended June 30, 2020 , the amount of unrecognized tax benefits (exclusive of interest) that, if recognized, would impact the effective tax rate is $ 912 . We recognize interest and, if applicable, penalties related to unrecognized tax benefits in income tax expense. The accrued interest and penalties recognized as of June 30, 2020, 2019 and 2018 were $ 384 , $ 515 and $ 448 , respectively. It is reasonably possible that a further change in unrecognized tax benefits in the range of $ 165 to $ 450 may occur within the next twelve months related to the settlement of one or more audits or the lapse of applicable statutes of limitations. We believe we have appropriately provided for all tax uncertainties. We conduct business in a number of tax jurisdictions and, as such, are required to file income tax returns in multiple jurisdictions globally. The years 2014 through 2019 remain open for examination by the United States Internal Revenue Service (“IRS”) and the years 2014 through 2019 remain open for examination in the various states and non-US tax jurisdictions in which we file tax returns. We are currently under income tax audit in certain jurisdictions globally. We believe that our income tax reserves are adequately maintained taking into consideration both the technical merits of our tax return positions and ongoing developments in our income tax audits. However, the final determination of our tax return positions, if audited, is uncertain and therefore there is a possibility that final resolution of these matters could have a material impact on our results of operations or cash flows. 100 14. Noncontrolling Interests 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 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 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. Redeemable Noncontrolling Interests PrintBrothers 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. We received proceeds of € 50,173 ( $ 57,046 based on the exchange rate on the date we received the proceeds) in exchange for an equity interest in each of the businesses ranging from 12 % to 13 % . As of June 30, 2019, we recognized the redeemable noncontrolling interest at fair value of $ 57,046 . The put options associated with the redeemable noncontrolling interest are exercisable beginning in 2021, while the associated call options become exercisable in 2026. 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 On October 1, 2018, we acquired approximately 99 % of the outstanding equity interests of Build A Sign LLC. The remaining 1 % is considered a redeemable noncontrolling equity interest, as it is redeemable for cash based on future financial results through put and call rights and not solely within our control. On the acquisition date, we recognized the redeemable noncontrolling interest at fair value of $ 3,356 . As of June 30, 2020 , the redemption value was less than the carrying value, and therefore no adjustment was required. On July 2, 2018, we acquired approximately 73 % of the shares of VIDA Group Co. 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. 101 The following table presents the reconciliation of changes in our redeemable noncontrolling interests: Balance as of June 30, 2018 $ 86,151 Proceeds from sale of noncontrolling interest 57,046 Acquisition of noncontrolling interest 9,061 Accretion to redemption value recognized in retained earnings 7,133 Net loss attributable to noncontrolling interest ( 1,566 ) Distribution to noncontrolling interest ( 3,375 ) Purchase of noncontrolling interests ( 85,520 ) Adjustment to additional-paid in capital for purchase of noncontrolling interest ( 2,714 ) Other adjustments ( 40 ) Foreign currency translation ( 2,994 ) Balance as of June 30, 2019 63,182 Acquisition of noncontrolling interest (1) 3,995 Accretion to redemption value recognized in retained earnings (2) 5,493 Net income attributable to noncontrolling interest 630 Distribution to noncontrolling interest ( 3,955 ) Foreign currency translation ( 239 ) Balance as of June 30, 2020 $ 69,106 ___________________ (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. Refer above for additional details. 15. Variable Interest Entity ("VIE") Investment in Printi LLC 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. 16. 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 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 102 assets. 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 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, 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 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 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; administrative costs of our Cimpress India offices where numerous Cimpress businesses have dedicated business-specific team members; and corporate functions including our Board of Directors, CEO, and the team members necessary for managing corporate activities, such as treasury, tax, capital allocation, financial consolidation, internal audit and legal. 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. 103 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. In order to ensure comparability in measuring our businesses' results, we allocate the straight-line portion of the fixed grant value to our businesses. Any expense in excess of the amount as a result of the fair value measurement of the PSUs and the accelerated expense profile of the awards is recognized within central and corporate costs. All expense or benefit associated with our supplemental PSUs is recognized within central and corporate costs. 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. 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 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 segment EBITDA. Our balance sheet information is not presented to the CODM on an allocated basis, and therefore we do not present asset information by segment. We do present other segment information to the CODM, which includes purchases of property, plant and equipment and capitalization of software and website development costs, and therefore include that information in the tables below. 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 segment, as well as disaggregation of revenue by major geographic region and reportable segment. Year Ended June 30, 2020 2019 2018 Revenue: Vistaprint (1) $ 1,337,291 $ 1,508,322 $ 1,499,141 PrintBrothers (2) 417,921 443,987 410,776 The Print Group (3) 275,214 325,872 320,473 National Pen (4) 299,474 348,409 333,266 All Other Businesses (5) 173,789 136,202 40,230 Total segment revenue 2,503,689 2,762,792 2,603,886 Inter-segment eliminations ( 22,331 ) ( 11,716 ) ( 11,345 ) Total consolidated revenue $ 2,481,358 $ 2,751,076 $ 2,592,541 _____________________ (1) Vistaprint segment revenues include inter-segment revenue of $ 6,180 , $ 5,851 and $ 5,631 for the years ended June 30, 2020, 2019 and 2018 , respectively. (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. (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. (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. (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. 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. 104 Year Ended June 30, 2020 Vistaprint PrintBrothers The Print Group National Pen All Other Total Revenue by Geographic Region: North America $ 928,668 $ — $ — $ 154,632 $ 153,795 $ 1,237,095 Europe 325,239 416,987 269,220 112,046 — 1,123,492 Other 77,204 — — 24,990 18,577 120,771 Inter-segment 6,180 934 5,994 7,806 1,417 22,331 Total segment revenue 1,337,291 417,921 275,214 299,474 173,789 2,503,689 Less: inter-segment elimination ( 6,180 ) ( 934 ) ( 5,994 ) ( 7,806 ) ( 1,417 ) ( 22,331 ) Total external revenue $ 1,331,111 $ 416,987 $ 269,220 $ 291,668 $ 172,372 $ 2,481,358 Year Ended June 30, 2019 Vistaprint PrintBrothers The Print Group National Pen All Other Total Revenue by Geographic Region: North America $ 1,040,928 $ — $ — $ 179,425 $ 112,216 $ 1,332,569 Europe 373,768 442,760 325,076 134,381 — 1,275,985 Other 87,775 — — 30,874 23,873 142,522 Inter-segment 5,851 1,227 796 3,729 113 11,716 Total segment revenue 1,508,322 443,987 325,872 348,409 136,202 2,762,792 Less: inter-segment elimination ( 5,851 ) ( 1,227 ) ( 796 ) ( 3,729 ) ( 113 ) ( 11,716 ) Total external revenue $ 1,502,471 $ 442,760 $ 325,076 $ 344,680 $ 136,089 $ 2,751,076 Year Ended June 30, 2018 Vistaprint PrintBrothers The Print Group National Pen All Other Total Revenue by Geographic Region: North America $ 1,013,775 $ — $ 2,136 $ 170,745 $ 1,717 $ 1,188,373 Europe 386,142 408,708 317,647 132,352 12,677 1,257,526 Other 93,593 — — 27,213 25,836 146,642 Inter-segment 5,631 2,068 690 2,956 — 11,345 Total segment revenue 1,499,141 410,776 320,473 333,266 40,230 2,603,886 Less: inter-segment elimination ( 5,631 ) ( 2,068 ) ( 690 ) ( 2,956 ) — ( 11,345 ) Total external revenue $ 1,493,510 $ 408,708 $ 319,783 $ 330,310 $ 40,230 $ 2,592,541 105 The following table includes segment EBITDA by reportable segment, total income from operations and total income before income taxes. Year Ended June 30, 2020 2019 2018 Segment EBITDA: Vistaprint $ 366,334 $ 349,697 $ 309,783 PrintBrothers 39,373 43,474 41,129 The Print Group 51,606 63,997 63,529 National Pen 7,605 17,299 29,438 All Other Businesses 17,474 ( 6,317 ) ( 10,603 ) Total segment EBITDA 482,392 468,150 433,276 Central and corporate costs ( 140,398 ) ( 117,295 ) ( 138,037 ) Depreciation and amortization ( 167,943 ) ( 172,957 ) ( 169,005 ) Waltham, MA lease depreciation adjustment (1) — 4,120 4,120 Proceeds from insurance — — ( 676 ) Earn-out related charges 54 — ( 2,391 ) Share-based compensation related to investment consideration — ( 2,893 ) ( 6,792 ) Certain impairments and other adjustments (2) ( 104,593 ) ( 10,700 ) ( 2,893 ) Restructuring-related charges ( 13,543 ) ( 12,054 ) ( 15,236 ) Interest expense for Waltham, MA lease (1) — 7,236 7,489 Gain on the purchase or sale of subsidiaries (3) — — 47,945 Total income from operations 55,969 163,607 157,800 Other income (expense), net 22,874 26,476 ( 21,032 ) Interest expense, net ( 75,840 ) ( 63,171 ) ( 53,043 ) Loss on early extinguishment of debt — — ( 17,359 ) Income before income taxes $ 3,003 $ 126,912 $ 66,366 ___________________ (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. Year Ended June 30, 2020 2019 2018 Depreciation and amortization: Vistaprint $ 59,029 $ 67,317 $ 70,498 PrintBrothers 21,010 22,108 25,005 The Print Group 24,769 29,437 34,594 National Pen 23,654 21,642 21,546 All Other Businesses 23,755 17,068 3,929 Central and corporate costs 15,726 16,199 13,433 Total depreciation and amortization $ 167,943 $ 173,771 $ 169,005 106 Year Ended June 30, 2020 2019 2018 Purchases of property, plant and equipment: Vistaprint $ 15,986 $ 32,820 $ 35,998 PrintBrothers 4,315 3,521 6,469 The Print Group 17,136 7,908 9,743 National Pen 5,016 8,346 6,565 All Other Businesses 4,242 16,996 947 Central and corporate costs 3,772 972 1,208 Total purchases of property, plant and equipment $ 50,467 $ 70,563 $ 60,930 Year Ended June 30, 2020 2019 2018 Capitalization of software and website development costs: Vistaprint $ 18,381 $ 23,369 $ 23,457 PrintBrothers 990 1,787 1,836 The Print Group 1,484 2,327 2,174 National Pen 3,290 3,624 1,482 All Other Businesses 3,684 2,948 445 Central and corporate costs 16,163 14,597 11,453 Total capitalization of software and website development costs $ 43,992 $ 48,652 $ 40,847 Enterprise Wide Disclosures: The following tables set forth revenues by geographic area and groups of similar products and services: Year Ended June 30, 2020 2019 2018 United States $ 1,251,531 $ 1,361,438 $ 1,078,544 Germany (1) 351,348 367,375 340,881 Other (2) 878,479 1,022,263 1,173,116 Total revenue $ 2,481,358 $ 2,751,076 $ 2,592,541 Year Ended June 30, 2020 2019 2018 Physical printed products and other (3) $ 2,431,367 $ 2,700,167 $ 2,537,201 Digital products/services 49,991 50,909 55,340 Total revenue $ 2,481,358 $ 2,751,076 $ 2,592,541 __________________ (1) Our revenues within the German market exceeded 10% of our total consolidated revenue. Therefore, we have presented Germany as a significant geographic area. (2) Our other revenue includes Ireland, our country of domicile. (3) Other revenue includes miscellaneous items which account for less than 1% of revenue. 107 The following table sets forth long-lived assets by geographic area: June 30, 2020 June 30, 2019 Long-lived assets (1): United States $ 161,853 $ 57,118 Netherlands 82,897 73,601 Canada 67,367 73,447 Switzerland 58,013 57,488 Italy 46,317 43,203 Jamaica 21,563 21,267 Australia 19,695 20,749 France 23,917 18,533 Japan 15,430 17,768 Other 94,922 79,006 Total $ 591,974 $ 462,180 ___________________ (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. 17. Leases 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 : Leases Consolidated Balance Sheet Classification June 30, 2020 Assets: Operating right-of-use assets Operating lease assets, net $ 156,258 Finance right-of-use assets Property, plant, and equipment, net 20,842 Total lease assets $ 177,100 Liabilities: Current: Operating lease liabilities Operating lease liabilities, current $ 41,772 Finance lease liabilities Other current liabilities 8,055 Non-current: Operating lease liabilities Operating lease liabilities, non-current 128,963 Finance lease liabilities Other liabilities 18,617 Total lease liabilities $ 197,407 108 The following table represents the lease expenses for the year ended June 30, 2020 : Year Ended June 30, 2020 Operating lease expense $ 43,058 Finance lease expense: Amortization of finance lease assets 5,766 Interest on lease liabilities 698 Variable lease expense 10,775 Less: sublease income ( 3,545 ) Net operating and finance lease cost $ 56,752 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 $ 42,320 $ 8,031 $ 50,351 2 years 34,306 7,606 41,912 3 years 27,663 5,142 32,805 4 years 22,606 3,277 25,883 5 years 16,511 1,921 18,432 Thereafter 43,089 1,796 44,885 Total 186,495 27,773 214,268 Less: present value discount ( 15,760 ) ( 1,101 ) ( 16,861 ) Lease liability $ 170,735 $ 26,672 $ 197,407 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 2020 $ 30,269 $ 13,482 $ 11,468 $ 55,219 2021 22,849 13,836 6,414 43,099 2022 16,592 13,877 3,724 34,193 2023 12,553 12,426 2,544 27,523 2024 9,032 12,163 1,565 22,760 Thereafter 8,338 40,656 2,403 51,397 Total $ 99,633 $ 106,440 $ 28,118 $ 234,191 ___________________ (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 6.18 Finance leases 4.61 Weighted-average discount rate: Operating leases 2.83 % Finance leases 2.62 % 109 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. Year Ended Supplemental Cash Flow Information June 30, 2020 Cash paid for amounts included in measurement of lease liabilities: Operating cash flows from operating leases (1) $ 40,777 Operating cash flows from finance leases 698 Financing cash flows from finance leases (1) 9,511 ___________________ (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. 18. Commitments and Contingencies Purchase Obligations 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 . Debt 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: 2021 $ 28,295 2022 15,618 2023 18,696 2024 20,567 2025 799,001 Thereafter 600,000 Total $ 1,482,177 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 $ 2,289 in aggregate as of June 30, 2020 . Legal Proceedings We are not currently party to any material legal proceedings. 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. 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. 110 19. Restructuring Charges Restructuring costs include one-time employee termination benefits, acceleration of share-based compensation, write-off of assets and other related costs including third-party professional and outplacement services. 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. The Vistaprint action included changes to the leadership team, as well as other reductions in headcount and associated costs. 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. 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. These changes simplified operations and more closely aligned functions to increase the speed of execution. We also recognized $ 2,249 of restructuring charges within the central and corporate group, as well as $ 819 of expense for an initiative within our All Other Businesses reportable segment. During the year ended June 30, 2018, we recognized changes in estimates of $ 56 from our January 2017 restructuring initiative. The following table summarizes the restructuring activity during the years ended June 30, 2020 and 2019 : Severance and Related Benefits Other Restructuring Costs Total Accrued restructuring liability as of June 30, 2018 $ 1,385 $ 2 $ 1,387 Restructuring charges 11,057 997 12,054 Cash payments ( 5,976 ) ( 56 ) ( 6,032 ) Non-cash charges (1) ( 3,421 ) ( 776 ) ( 4,197 ) Accrued restructuring liability as of June 30, 2019 3,045 167 3,212 Restructuring charges 13,193 350 13,543 Cash payments ( 8,647 ) ( 440 ) ( 9,087 ) Non-cash charges (1) ( 1,622 ) — ( 1,622 ) Accrued restructuring liability as of June 30, 2020 $ 5,969 $ 77 $ 6,046 ___________________ (1) Non-cash charges primarily include acceleration of share-based compensation expenses. 111 20. Quarterly Financial Data (unaudited) Year Ended June 30, 2020 First Quarter Second Quarter Third Quarter Fourth Quarter Revenue $ 633,959 $ 820,333 $ 597,960 $ 429,106 Cost of revenue 325,665 394,018 309,598 219,590 Net income (loss) 19,851 190,649 ( 83,500 ) ( 43,005 ) Net income (loss) attributable to Cimpress plc 20,031 190,223 ( 84,884 ) ( 42,005 ) Net income (loss) per share attributable to Cimpress plc: Basic $ 0.67 $ 7.04 $ ( 3.26 ) $ ( 1.62 ) Diluted (1) $ 0.66 $ 6.81 $ ( 3.26 ) $ ( 1.62 ) Year Ended June 30, 2019 First Quarter Second Quarter Third Quarter Fourth Quarter Revenue $ 588,981 $ 825,567 $ 661,814 $ 674,714 Cost of revenue 302,471 411,496 342,700 344,677 Net (loss) income ( 14,994 ) 69,037 6,242 33,195 Net (loss) income attributable to Cimpress plc ( 14,639 ) 69,014 6,530 34,147 Net (loss) income per share attributable to Cimpress plc: Basic $ ( 0.47 ) $ 2.24 $ 0.21 $ 1.11 Diluted (1) $ ( 0.47 ) $ 2.17 $ 0.21 $ 1.09 ___________________ (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. Item 9. Changes in and Disagreement with Accountants on Accounting and Financial Disclosure None.