What changed in this filing

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Item 1. Financial Statements

2021-01-28 compared with 2020-10-29 · 259 added, 135 removed, 552 unchanged (42% of the section changed)

2 unchanged sentences

(unaudited in thousands, except share and per share data)

September 30,

2020 June 30,

47 unchanged sentences

(unaudited in thousands, except share and per share data)

Three Months Ended September 30,

Three Months Ended December 31, Six Months Ended December 31,

2020 2019 2020 2019

Revenue $ 786,145 $ 820,333 $ 1,372,645 $ 1,454,292

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Interest expense, net ( 30,141 ) ( 15,701 ) ( 60,657 ) ( 30,788 )

(Loss) income before income taxes ( 3,284 ) 25,966

Income tax expense 6,794 6,115

Net (loss) income ( 10,078 ) 19,851

Net (income) loss attributable to noncontrolling interest ( 677 ) 180

Net (loss) income attributable to Cimpress plc $ ( 10,755 ) $ 20,031

Basic net (loss) income per share attributable to Cimpress plc $ ( 0.41 ) $ 0.67

Diluted net (loss) income per share attributable to Cimpress plc $ ( 0.41 ) $ 0.66

Income before income taxes 46,855 96,854 43,571 122,820

Income tax expense (benefit) 12,954 ( 93,795 ) 19,748 ( 87,680 )

Net income 33,901 190,649 23,823 210,500

Net income attributable to noncontrolling interest ( 1,614 ) ( 426 ) ( 2,291 ) ( 246 )

Net income attributable to Cimpress plc $ 32,287 $ 190,223 $ 21,532 $ 210,254

Basic net income per share attributable to Cimpress plc $ 1.24 $ 7.04 $ 0.83 $ 7.41

Diluted net income per share attributable to Cimpress plc $ 1.22 $ 6.81 $ 0.82 $ 7.19

Weighted average shares outstanding — basic 26,003,649 27,036,675 25,974,823 28,391,855

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(1) Share-based compensation is allocated as follows:

Three Months Ended September 30,

Three Months Ended December 31, Six Months Ended December 31,

2020 2019 2020 2019

Cost of revenue $ 34 $ 97 $ 134 $ 185

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See accompanying notes.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited in thousands)

Three Months Ended September 30,

Net (loss) income $ ( 10,078 ) $ 19,851

Three Months Ended December 31, Six Months Ended December 31,

2020 2019 2020 2019

Net income $ 33,901 $ 190,649 $ 23,823 $ 210,500

Other comprehensive income, net of tax:

Foreign currency translation gains (losses), net of hedges 817 ( 1,560 )

Foreign currency translation gains, net of hedges 13,946 3,180 14,763 1,620

Net unrealized gains (losses) on derivative instruments designated and qualifying as cash flow hedges 3,802 6,131 7,638 ( 1,057 )

Amounts reclassified from accumulated other comprehensive (loss) income to net (loss) income on derivative instruments ( 2,071 ) 4,151

Amounts reclassified from accumulated other comprehensive (loss) income to net income on derivative instruments ( 3,226 ) ( 1,145 ) ( 5,297 ) 3,006

Loss on pension benefit obligation, net — — ( 336 ) —

Comprehensive (loss) income ( 7,832 ) 15,254

Comprehensive income 48,423 198,815 40,591 214,069

Comprehensive (income) loss attributable to noncontrolling interests ( 2,877 ) ( 1,122 ) ( 4,980 ) 548

Total comprehensive (loss) income attributable to Cimpress plc $ ( 9,935 ) $ 16,924

Total comprehensive income attributable to Cimpress plc $ 45,546 $ 197,693 $ 35,611 $ 214,617

See accompanying notes.

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Balance at September 30, 2019 44,080 $ 615 — $ — ( 15,597 ) $ ( 969,833 ) $ 415,984 $ 560,596 $ ( 82,964 ) $ ( 75,602 )

Restricted share units vested, net of shares withheld for taxes — — — — 1 55 ( 152 ) — — ( 97 )

Issuance of ordinary shares due to share option exercises, net of shares withheld for taxes — — — — 1 8 ( 2 ) — — 6

Issuance of deferred ordinary shares — — 25 28 — — — — — 28

Share-based compensation expense — — — — — — 8,228 — — 8,228

Purchase of ordinary shares — — — — ( 2,280 ) ( 305,287 ) — — — ( 305,287 )

Net income attributable to Cimpress plc — — — — — — — 190,223 — 190,223

Redeemable noncontrolling interest accretion to redemption value — — — — — — — ( 5,493 ) — ( 5,493 )

Net unrealized gain on derivative instruments designated and qualifying as cash flow hedges — — — — — — — — 4,986 4,986

Foreign currency translation, net of hedges — — — — — — — — 2,484 2,484

Balance at December 31, 2019 44,080 $ 615 25 $ 28 ( 17,875 ) $ ( 1,275,057 ) $ 424,058 $ 745,326 $ ( 75,494 ) $ ( 180,524 )

See accompanying notes.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) (CONTINUED)

(unaudited in thousands)

Ordinary Shares Deferred Ordinary Shares Treasury Shares

Issued Amount Number of

Issued Amount Number

Shares Amount Additional

Capital Retained

Earnings Accumulated Other

Comprehensive

Shareholders’

Equity (Deficit)

Balance at June 30, 2020 44,080 $ 615 25 $ 28 ( 18,195 ) $ ( 1,376,496 ) $ 438,616 $ 618,437 $ ( 88,676 ) $ ( 407,476 )

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Balance at September 30, 2020 44,080 $ 615 25 $ 28 ( 18,077 ) $ ( 1,368,723 ) $ 433,827 $ 607,682 $ ( 87,856 ) $ ( 414,427 )

Share-based compensation expense — — — — — — 5,036 — — 5,036

Net income attributable to Cimpress plc — — — — — — — 32,287 — 32,287

Redeemable noncontrolling interest accretion to redemption value — — — — — — — ( 1,086 ) — ( 1,086 )

Net unrealized gain on derivative instruments designated and qualifying as cash flow hedges — — — — — — — — 576 576

Foreign currency translation, net of hedges — — — — — — — — 12,683 12,683

Balance at December 31, 2020 44,080 $ 615 25 $ 28 ( 18,077 ) $ ( 1,368,723 ) $ 438,863 $ 638,883 $ ( 74,597 ) $ ( 364,931 )

See accompanying notes.

1 unchanged sentence

(unaudited in thousands)

Three Months Ended September 30,

Six Months Ended December 31,

Operating activities

Net (loss) income $ ( 10,078 ) $ 19,851

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

Net income $ 23,823 $ 210,500

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

Depreciation and amortization 85,887 84,891

1 unchanged sentence

Deferred taxes 2,681 ( 105,575 )

Unrealized loss (gain) on derivatives not designated as hedging instruments included in net (loss) income 14,628 ( 14,527 )

Unrealized loss on derivatives not designated as hedging instruments included in net income 32,545 7,548

Effect of exchange rate changes on monetary assets and liabilities denominated in non-functional currency ( 3,132 ) 1,359

21 unchanged sentences

Payments of finance lease obligations ( 3,275 ) ( 5,364 )

Purchase of noncontrolling interests ( 5,063 ) —

Purchase of ordinary shares — ( 537,573 )

Proceeds from issuance of ordinary shares — 6

Distribution to noncontrolling interest ( 4,599 ) ( 3,921 )

Other financing activities ( 57 ) ( 1,715 )

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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 8, will be sufficient to fund our current obligations, capital spending, debt service requirements and working capital requirements over at least the next twelve months.

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 and borrowing availability under our revolving credit facility, will be sufficient to fund our current obligations, capital spending, debt service requirements and working capital requirements over at least the next twelve months.

For the debt covenants that have been temporarily suspended under the amendment and capital raise as described in Note 9, these covenants will be reinstated no later than the quarter ending December 31, 2021.

Based on our current financial results and forecasted performance, we believe we will remain in compliance with these covenants upon reinstatement.

Significant Accounting Policies

Our significant accounting policies are described in Note 2 in our consolidated financial statements included in the Form 10-K for our year ended June 30, 2020.

There have been no material changes to our significant accounting policies during the three months ended September 30, 2020.

There have been no material changes to our significant accounting policies during the three and six months ended December 31, 2020.

Other (Expense) Income, Net

The following table summarizes the components of other (expense) income, net:

Three Months Ended September 30,

Three Months Ended December 31, Six Months Ended December 31,

2020 2019 2020 2019

(Losses) gains on derivatives not designated as hedging instruments (1) $ ( 19,020 ) $ ( 11,666 ) $ ( 32,515 ) $ 7,691

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(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 three months ended September 30, 2020 and 2019 are primarily driven by this intercompany activity.

The currency-related gains (losses), net for the three and six months ended December 31, 2020 and 2019 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 losses related to cross-currency swaps were $5,437 for the three months ended September 30, 2020, as compared to unrealized gains of $4,678 for the three months ended September 30, 2019.

Net (Loss) Income Per Share Attributable to Cimpress plc

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

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

The unrealized losses related to cross-currency swaps were $6,085 and $11,522 for the three and six months ended December 31, 2020, respectively, as compared to unrealized losses of $2,858 and $1,820 for the three and six months ended December 31, 2019, respectively.

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”), 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.

The following table sets forth the reconciliation of the weighted-average number of ordinary shares:

Three Months Ended September 30,

Three Months Ended December 31, Six Months Ended December 31,

2020 2019 2020 2019

Weighted average shares outstanding, basic 26,003,649 27,036,675 25,974,823 28,391,855

Weighted average shares issuable upon exercise/vesting of outstanding share options/RSUs/warrants 380,811 880,084 415,450 831,261

Shares used in computing diluted net (loss) income per share attributable to Cimpress plc 25,945,998 30,529,472

Weighted average anti-dilutive shares excluded from diluted net (loss) income per share attributable to Cimpress plc (1)(2) 450,089 —

Shares used in computing diluted net income per share attributable to Cimpress plc 26,384,460 27,916,759 26,390,273 29,223,116

Weighted average anti-dilutive shares excluded from diluted net income per share attributable to Cimpress plc (1) 3,129 — 1,565 —

_____________________

(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 three months ended September 30, 2020, the weighted average anti-dilutive effect of the warrants was 316,257 shares.

For the three and six months ended December 31, 2020, the weighted average anti-dilutive effect of the warrants was 318,191 and 317,224 shares, respectively.

Refer to Note 9 for additional details about the arrangement.

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

Recently Issued or Adopted Accounting Pronouncements

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We early adopted the standard on July 1, 2020.

For the period ended September 30, 2020, adopting ASU 2019-12 resulted in a $2,468 increased tax expense in our consolidated financial statements, related to the intraperiod allocation rules.

Under the intraperiod allocation rules, an entity generally allocates total income tax expense or benefit by first determining the amount attributable to continuing operations and then allocating the

remaining tax expense or benefit to items other than continuing operations.

An exception existed that required an entity with a loss from continuing operations to consider all components when determining the benefit from continuing operations.

For the six months ended December 31, 2020, adopting ASU 2019-12 resulted in a $ 2,771 increased tax expense in our consolidated financial statements, related to the intraperiod allocation rules.

Under the intraperiod allocation rules, an entity generally allocates total income tax expense or benefit by first determining the amount attributable to continuing operations and then allocating the remaining tax expense or benefit to items other than continuing operations.

An exception existed that required an

entity with a loss from continuing operations to consider all components when determining the benefit from continuing operations.

ASU 2019-12 removes this exception.

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

In March 2020, the FASB issued ASU 2020-04 "Reference Rate Reform ("ASC 848"):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting", which contains optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform.

We elected to amend our hedge documentation, without dedesignating and redesignating, for all outstanding cash flow hedges by applying two practical expedients.

We elected the expedient in ASC 848-50-25-2 to assert probability of the hedged interest payments regardless of any expected modification in terms related to reference rate reform.

In addition, we elected to continue the method of assessing effectiveness as documented in the original hedge documentation and elect to apply the expedient in ASC 848-50-35-17, so that the reference rate on the hypothetical derivative matches the reference rate on the hedging instrument.

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

During the three months ended December 31, 2020, the tax on Global Intangible Low-Taxed Income (“GILTI”) provision of the Tax Cuts and Jobs Act became applicable to our operations.

The FASB has provided that companies subject to GILTI have the option to account for the GILTI tax as a period cost if and when incurred, or to recognize deferred taxes for temporary differences, including outside basis differences, expected to reverse as GILTI.

We elected to account for GILTI as a period cost, as incurred.

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

Fair Value Measurements

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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:

September 30, 2020

December 31, 2020

Total Quoted Prices in

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(Level 2) Significant

Cross-currency swap contracts $ 948 $ — $ 948 $ —

Currency forward contracts $ 692 $ — $ 692 $ —

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Total liabilities recorded at fair value $ ( 52,823 ) $ — $ ( 52,823 ) $ —

During the quarter ended September 30, 2020 and year ended June 30, 2020, there were no significant transfers in or out of Level 1, Level 2 and Level 3 classifications.

During the quarter ended December 31, 2020 and year ended June 30, 2020, 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.

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

However, as of September 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.

However, as of December 31, 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 September 30, 2020 and June 30, 2020, the carrying amounts of our cash and cash equivalents, accounts receivable, accounts payable and other current liabilities approximated their estimated fair values.

As of September 30, 2020 and June 30, 2020, the carrying value of our debt, excluding debt issuance costs and debt premiums and discounts, was $ 1,400,787 and $ 1,482,177 , respectively, and the fair value was $ 1,377,987 and $ 1,450,719 , respectively.

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

As of December 31, 2020 and June 30, 2020, the carrying amounts of our cash and cash equivalents, accounts receivable, accounts payable and other current liabilities approximated their estimated fair values.

As of December 31, 2020 and June 30, 2020, the carrying value of our debt, excluding debt issuance costs and debt premiums and discounts, was $ 1,315,372 and $ 1,482,177 , respectively, and the fair value was $ 1,358,180 and $ 1,450,719 , respectively.

Our debt at December 31, 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.

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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 September 30, 2020, we estimate that $ 10,324 will be reclassified from accumulated other comprehensive loss to interest expense during the twelve months ending September 30, 2021.

As of September 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.

As of September 30, 2020, we have determined that three of our hedges are no longer highly effective.

As of December 31, 2020, we estimate that $ 10,446 will be reclassified from accumulated other comprehensive loss to interest expense during the twelve months ending December 31, 2021.

As of December 31, 2020, we had ten outstanding interest rate swap contracts indexed to USD LIBOR, of which six of these instruments were designated as cash flow hedges of interest rate risk and have varying start dates and maturity dates through September 2025.

As of December 31, 2020, we have determined that four of our hedges are no longer highly effective.

These de-designated hedges have varying start dates and maturity dates through December 2025.

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Notional Amounts

Contracts accruing interest as of September 30, 2020 $ 500,000

Contracts accruing interest as of December 31, 2020 $ 500,000

Contracts with a future start date 50,000

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

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

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

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.

As of September 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.

As of December 31, 2020, we had two outstanding cross-currency swap contracts designated as cash flow hedges with a total notional amount of $ 120,874 , both maturing during June 2024.

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

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

As of September 30,

2020, we estimate that $ 2,610 of income will be reclassified from accumulated other comprehensive loss to interest expense, net during the twelve months ending September 30, 2021.

As of December 31, 2020, we estimate that $ 2,176 of income will be reclassified from accumulated other comprehensive loss to interest expense, net during the twelve months ending December 31, 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.

As of September 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 .

As of December 31, 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.

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We have elected to not apply hedge accounting for all other currency forward and option contracts.

During the three months ended September 30, 2020 and 2019, we have experienced volatility within other (expense) income, net in our consolidated statements of operations from unrealized gains and losses on the mark-to-market of outstanding currency forward and option contracts.

During the three and six months ended December 31, 2020 and 2019, we have experienced volatility within other (expense) income, 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 September 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:

As of December 31, 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.

Notional Amount Effective Date Maturity Date Number of Instruments Index

$ 466,969 December 2018 through September 2020 Various dates through October 2024 586 Various

$ 484,660 March 2019 through December 2020 Various dates through October 2024 602 Various

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 September 30, 2020 and June 30, 2020.

The table below presents the fair value of our derivative financial instruments as well as their classification on the balance sheet as of December 31, 2020 and June 30, 2020.

Our derivative asset and liability balances will fluctuate with interest rate and currency exchange rate volatility.

September 30, 2020

December 31, 2020

Asset Derivatives Liability Derivatives

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Total derivatives not designated as hedging instruments $ 11,401 $ ( 2,023 ) $ 9,378 $ ( 10,533 ) $ 446 $ ( 10,087 )

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

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

Three Months Ended September 30,

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

Three Months Ended December 31, Six Months Ended December 31,

2020 2019 2020 2019

Derivatives in cash flow hedging relationships

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Total $ ( 3,492 ) $ 1,978 $ ( 17,194 ) $ 7,508

The following table presents reclassifications out of accumulated other comprehensive loss for the three months ended September 30, 2020 and 2019:

The following table presents reclassifications out of accumulated other comprehensive loss for the three and six months ended December 31, 2020 and 2019:

Amount of Net Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income Affected line item in the

Statement of Operations

Three Months Ended September 30,

Three Months Ended December 31, Six Months Ended December 31,

2020 2019 2020 2019

Derivatives in cash flow hedging relationships

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Cross-currency swaps ( 5,525 ) ( 2,026 ) ( 10,292 ) 3,538 Other (expense) income, net

Total before income tax ( 2,145 ) 5,534 (Loss) income before income taxes

Income tax 74 ( 1,383 ) Income tax expense

Total before income tax ( 3,524 ) ( 1,541 ) ( 5,669 ) 3,993 Income before income taxes

Income tax 298 396 372 ( 987 ) Income tax expense (benefit)

Total $ ( 3,226 ) $ ( 1,145 ) $ ( 5,297 ) $ 3,006

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

Amount of Gain (Loss) Recognized in Net (Loss) Income Affected line item in the

The following table presents the adjustment to fair value recorded within the consolidated statements of operations for the three and six months ended December 31, 2020 and 2019 for derivative instruments for which we did not elect hedge accounting and de-designated derivative financial instruments that no longer qualify as hedging instruments.

Amount of Gain (Loss) Recognized in Net Income Affected line item in the

Statement of Operations

Three Months Ended September 30,

Three Months Ended December 31, Six Months Ended December 31,

2020 2019 2020 2019

Currency contracts $ ( 19,496 ) $ ( 11,666 ) $ ( 32,964 ) $ 7,691 Other (expense) income, net

2 unchanged sentences

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 $ 105 for the three months ended September 30, 2020 :

Gains (losses) on cash flow hedges (1) Gains (losses) on pension benefit obligation Translation adjustments, net of hedges (2) Total

The following table presents a roll forward of amounts recognized in accumulated other comprehensive income (loss) by component, net of tax of $ 500 for the six months ended December 31, 2020 :

Gains (losses) on cash flow hedges (1) Losses on pension benefit obligation Translation adjustments, net of hedges (2) Total

Balance as of June 30, 2020 $ ( 30,078 ) $ ( 1,399 ) $ ( 57,199 ) $ ( 88,676 )

Other comprehensive income (loss) before reclassifications 7,638 ( 336 ) 12,074 19,376

Amounts reclassified from accumulated other comprehensive loss to net (loss) income ( 2,071 ) — — ( 2,071 )

Amounts reclassified from accumulated other comprehensive loss to net income ( 5,297 ) — — ( 5,297 )

Net current period other comprehensive income (loss) 2,341 ( 336 ) 12,074 14,079

Balance as of September 30, 2020 $ ( 28,313 ) $ ( 1,735 ) $ ( 57,808 ) $ ( 87,856 )

Balance as of December 31, 2020 $ ( 27,737 ) $ ( 1,735 ) $ ( 45,125 ) $ ( 74,597 )

________________________

(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 September 30, 2020 and June 30, 2020, the translation adjustment is inclusive of the effects of our net investment hedges, of which, unrealized gains of $ 2,971 and $ 20,509 respectively, net of tax, have been included in accumulated other comprehensive loss.

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

(2) As of December 31, 2020 and June 30, 2020, the translation adjustment is inclusive of the effects of our net investment hedges, of which, unrealized losses of $ 4,323 and unrealized gains of $ 20,509 , respectively, net of tax, have been included in accumulated other comprehensive loss.

The carrying amount of goodwill by reportable segment as of December 31, 2020 and June 30, 2020 was as follows:

Vistaprint PrintBrothers The Print Group All Other Businesses Total

Balance as of June 30, 2020 $ 150,846 $ 129,764 $ 155,197 $ 186,097 $ 621,904

Acquisitions (1) 71,401 — — — 71,401

Effect of currency translation adjustments (2) 6,939 12,098 14,471 — 33,508

Balance as of September 30, 2020 $ 153,974 $ 135,472 $ 162,025 $ 186,097 $ 637,568

Balance as of December 31, 2020 $ 229,186 $ 141,862 $ 169,668 $ 186,097 $ 726,813

_________________

(1) On October 1, 2020, we acquired 99designs which is included in our Vistaprint reportable segment.

Refer to Note 7 for additional details.

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

Business Combinations

On October 1, 2020, we acquired 99designs, Inc.

and its subsidiaries ("99designs"), a global creative platform for graphic design.

We acquired all outstanding shares of the company for a purchase price of $ 90,000 , subject to a post-closing adjustment based on acquired cash, debt, and working capital as of the closing date.

We paid $ 45,000 in cash at closing and will pay the remaining purchase consideration, including the post-closing adjustment, on February 15, 2022.

The acquisition will be integrated into our Vistaprint business and provides a global platform that connects designers and clients, making it easier for small businesses to access both professional design services and marketing products in one place.

The table below details the consideration transferred to acquire 99designs:

Cash consideration (paid at closing) $ 45,000

Fair value of deferred payment 43,381

Final post closing adjustment 310

Total purchase price $ 88,691

We recognized the assets and liabilities on the basis of their fair values at the date of the acquisition with any excess of the purchase price paid over the fair value of the net assets recorded as goodwill, which is primarily attributable to the synergies that we expect to achieve through the acquisition.

The goodwill balance has been attributed to the Vistaprint reportable segment and the portion of such goodwill balance that is deductible for tax

purposes is $ 20,257 .

Additionally, we identified and valued 99designs intangible assets which include their trade name, designer network, and developed technology.

Our preliminary estimate of the fair value of specifically identifiable assets acquired and liabilities assumed as of the date of acquisition is subject to change upon finalizing our valuation analysis, including certain valuation assumptions and tax matters.

The final determination may result in changes in the fair value of certain assets and liabilities as compared to our preliminary estimates, which are expected to be finalized prior to the end of fiscal 2021.

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

Amount Weighted Average Useful Life in Years

Tangible assets acquired and liabilities assumed:

Cash and cash equivalents $ 8,603 n/a

Accounts receivable, net 494 n/a

Prepaid expenses and other current assets 1,167 n/a

Property, plant and equipment, net 73 n/a

Other assets 142 n/a

Accounts payable ( 220 ) n/a

Accrued expenses ( 6,679 ) n/a

Deferred revenue ( 5,806 ) n/a

Other liabilities ( 1,234 ) n/a

Identifiable intangible assets

Trade name 1,550 2 years

Developed technology 13,400 3 years

Designer network 5,800 7 years

Goodwill 71,401 n/a

Total purchase price $ 88,691 n/a

99designs has been included in our consolidated financial statements starting on its acquisition date.

The revenue and earnings of 99designs included in our consolidated financial statements for the three and six months ended December 31, 2020 are not material, and therefore no proforma financial information is presented.

We utilized our credit facility to finance the acquisition.

In connection with the acquisition, we incurred $ 682 and $ 1,183 in general and administrative expenses during the three and six months ended December 31, 2020, primarily related to legal, financial, and other professional services.

Other Balance Sheet Components

Accrued expenses included the following:

September 30, 2020 June 30, 2020

December 31, 2020 June 30, 2020

Compensation costs $ 68,179 $ 67,307

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(1) The increase in accrued advertising costs is primarily due to the expansion beyond first-order profitability targets used during the fourth quarter of fiscal 2020 for several of our businesses, as well as modest investment in upper-funnel advertising in our Vistaprint business.

(2) The increase in interest payable is due to the additional offering of $200,000 of our 2026 Notes in the third quarter and $300,000 in Second Lien Notes issued during the fourth quarter of fiscal 2020.

The interest on our 2026 Notes is payable semi-annually on June 15 and December 15 of each year and the interest on our Second Lien Notes is payable semi-annually on May 15 and November 15 of each year, with the first interest payment on November 15, 2020.

Refer to Note 8 for further detail.

(1) The increase in income and indirect taxes, advertising, production, and shipping costs is due to increased sales volumes during our peak holiday season in the second quarter of our fiscal year.

Advertising cost accruals are also driven by increased investment in upper-funnel advertising in Vistaprint.

Other current liabilities included the following:

September 30, 2020 June 30, 2020

December 31, 2020 June 30, 2020

Current portion of finance lease obligations $ 8,815 $ 8,055

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Other liabilities included the following:

September 30, 2020 June 30, 2020

December 31, 2020 June 30, 2020

Long-term finance lease obligations $ 16,132 $ 18,617

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Total other liabilities $ 157,076 $ 88,187

September 30, 2020 June 30, 2020

_____________________

(1) The increase in other long term liabilities is driven by the deferred payment related to the 99designs acquisition totaling $ 43,691 .

Refer to Note 7 for additional details .

December 31, 2020 June 30, 2020

7.0% Senior unsecured notes due 2026 $ 600,000 $ 600,000

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(1) Balances as of September 30, 2020 and June 30, 2020 are inclusive of short-term debt issuance costs, debt premiums and discounts of $ 10,549 and $ 10,362 , respectively.

(1) Balances as of December 31, 2020 and June 30, 2020 are inclusive of short-term debt issuance costs, debt premiums and discounts of $ 10,567 and $ 10,362 , respectivel y.

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

As of September 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, the indenture governing our 2026 Notes, and the indenture governing our Second Lien Notes.

As of December 31, 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, the indenture governing our 2026 Notes, and the indenture governing our Second Lien Notes.

Senior Secured Credit Facility

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

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.

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:

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

As of September 30, 2020, we have drawn commitments under the credit facility of $ 489,767 as follows:

As of December 31, 2020, we have drawn commitments under the credit facility of $ 404,375 as follows:

• Revolving loans of $ 260,000 with a maturity date of November 15, 2024

• Term loans of $ 144,375 amortizing over the loan period, with a final maturity date of November 15, 2024

As of September 30, 2020, the weighted-average interest rate on outstanding borrowings was 5.65 %, inclusive of interest rate swap rates.

We are also required to pay a commitment fee on unused balances of 0.35 % to 0.5 % depending on our total leverage ratio, and 0.5 % during the covenant suspension period.

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

As of December 31, 2020, the weighted-average interest rate on outstanding borrowings was 5.94 %, inclusive of interest rate swap rates.

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

0.50 % depending on our total leverage ratio, and 0.50 % 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 December 31, 2020.

Second Lien Notes

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We may prepay the Second Lien 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.

Each of Cimpress' subsidiaries that guarantees our obligations under our senior secured credit agreement will guarantee the Second Lien Notes.

The Second Lien Notes and the guarantees thereof rank equal in right of payment with existing and future senior indebtedness of Cimpress, including Cimpress' and the subsidiary guarantors' obligations under the senior secured credit agreement, and will be secured by the same assets securing Cimpress' and the subsidiary guarantors' obligations under the senior secured credit agreement on a second lien basis subject to limited exceptions and the terms of the intercreditor agreement among Cimpress, the subsidiary guarantors, JPMorgan Chase Bank, N.A.

Each of Cimpress' subsidiaries that guarantees our obligations under our senior secured credit agreement guarantees the Second Lien Notes.

The Second Lien Notes and the guarantees thereof rank equal in right of payment with existing and future senior indebtedness of Cimpress, including Cimpress' and the subsidiary guarantors' obligations under the senior secured credit agreement, and are secured by the same assets securing Cimpress' and the subsidiary guarantors' obligations under the senior secured credit agreement on a second lien basis subject to limited exceptions and the terms of the intercreditor agreement among Cimpress, the subsidiary guarantors, JPMorgan Chase Bank, N.A.

as administrative agent under the senior secured credit agreement, and U.S.

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

As of September 30, 2020 and June 30, 2020, we had $ 11,020 and $11,694, respectively, outstanding for those obligations that are payable through March 2025.

Our income tax expense was $ 6,794 and $ 6,115 for the three months ended September 30, 2020 and 2019, respectively.

As of December 31, 2020 and June 30, 2020, we had $ 10,997 and $ 11,694 , respectively, outstanding for those obligations that are payable through March 2025.

Our income tax expense was $ 12,954 and $ 19,748 for the three and six months ended December 31, 2020, respectively, compared to a benefit of $ 93,795 and $ 87,680 for the three and six months ended December 31, 2019, respectively.

In the three months ended December 31, 2019, we recognized a discrete tax benefit of $ 114,114 related to Swiss Tax Reform.

Excluding this benefit, tax expense would have decreased, primarily attributable to decreased pre-tax income for the three and six months ended December 31, 2020 as compared to the same prior year periods.

Excluding the effect of discrete tax adjustments, our estimated annual effective tax rate is higher for fiscal 2021 as compared to fiscal 2020, primarily due to increased non-deductible interest expense.

Our effective tax rate continues to be negatively impacted by losses in certain jurisdictions where we are unable to recognize a tax benefit in the current period.

During the three months ended September 30, 2020, our unrecognized tax benefits increased by $ 7,133 , primarily due to tax positions taken in prior periods for which we have determined it is more likely than not that they will not be sustained upon audit.

As of September 30, 2020, we had unrecognized tax benefits of $ 13,364 , including accrued interest and penalties of $ 495 .

During the six months ended December 31, 2020, our unrecognized tax benefits increased by $ 8,145 , primarily due to tax positions taken in prior periods for which we have determined it is more likely than not that they will not be sustained upon audit.

As of December 31, 2020, we had unrecognized tax benefits of $ 14,376 , including accrued interest and penalties of $ 811 .

We recognize interest and, if applicable, penalties related to unrecognized tax benefits in the provision for income taxes.

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For some of our subsidiaries, we own a controlling equity stake, and a third party or key member of the business' management team owns a minority portion of the equity.

The balance sheet and operating activity of these entities are included in our consolidated financial statements and we adjust the net (loss) income in our consolidated statement of operations to exclude the noncontrolling interests' proportionate share of results.

The balance sheet and operating activity of these entities are included in our consolidated financial statements and we adjust the net income in our consolidated statement of operations to exclude the noncontrolling interests' proportionate share of results.

We present the proportionate share of equity attributable to the redeemable noncontrolling interests as temporary equity within our consolidated balance sheet and the proportionate share of noncontrolling interests not subject to a redemption provision that is outside of our control as equity.

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The put options associated with the redeemable noncontrolling interest are exercisable beginning in 2021, while the associated call options become exercisable in 2026.

As of September 30, 2020, the redemption value was less than the carrying value, and therefore no adjustment was required.

As of December 31, 2020, the redemption value was less than the carrying value, and therefore no adjustment was required.

During the second quarter of fiscal 2021, we repurchased equity interests ranging from 0.56 % to 1.15 % in each of the three businesses for a total of $ 5,063 .

All Other Businesses

On October 1, 2018, we acquired approximately 99 % of the outstanding equity interests of Build A Sign LLC.

On October 1, 2018, we acquired approximately 99 % of the outstanding equity interests of BuildASign 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.

As of September 30, 2020, the redemption value was less than the carrying value, and therefore no adjustment was required.

As of December 31, 2020, the redemption value increased above the carrying value due to continued strong financial performance, resulting in an adjustment to the redeemable noncontrolling interest of $ 966 , which was recognized as an adjustment to retained earnings.

The following table presents the reconciliation of changes in our redeemable noncontrolling interests:

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Balance as of June 30, 2020 $ 69,106

Accretion to redemption value recognized in retained earnings 1,086

Net income attributable to noncontrolling interest 2,291

Distribution to noncontrolling interest ( 4,599 )

Purchase of noncontrolling interest ( 5,063 )

Foreign currency translation 2,689

Balance as of September 30, 2020 $ 71,209

Balance as of December 31, 2020 $ 65,510

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.

As of September 30, 2020, we have numerous operating segments under our management reporting structure which are reported in the following five reportable segments:

As of December 31, 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

Also included is our Vistaprint Corporate Solutions business which serves medium-sized businesses and large corporations, our 99designs business which was acquired on October 1, 2020, 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

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• All Other Businesses - Includes a collection of businesses grouped together based on materiality.

With the exception of BuildASign, which is a larger and profitable business, the All Other Businesses reportable segment consists of two early-stage businesses that we continue to manage at a relatively modest operating loss.

◦ 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.

◦ 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.

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;

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These costs also include certain unallocated share-based compensation costs.

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.

The expense value of our PSU awards 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.

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We do not allocate non-operating income, including realized gains and losses on currency hedges, to our segment results.

Our balance sheet information is not presented to the CODM on an allocated basis, and therefore we do not present asset information by segment.

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The following tables set forth revenue by reportable segment, as well as disaggregation of revenue by major geographic region and reportable segment.

Three Months Ended September 30,

Three Months Ended December 31, Six Months Ended December 31,

2020 2019 2020 2019

Vistaprint $ 436,317 $ 433,305 $ 765,608 $ 776,476

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(1) Vistaprint segment revenues include inter-segment revenue of $ 422 and $1,328 for the three months ended September 30, 2020 and 2019, respectively.

(2) PrintBrothers segment revenues include inter-segment revenue of $ 171 and $243 for the three months ended September 30, 2020 and 2019, respectively.

(3) The Print Group segment revenues include inter-segment revenue of $ 6,059 and $432 for the three months ended September 30, 2020 and 2019, respectively.

(4) National Pen segment revenues include inter-segment revenue of $ 13,076 and $981 for the three months ended September 30, 2020 and 2019, respectively.

(5) All Other Businesses segment revenues include inter-segment revenue of $ 739 and $215 for the three months ended September 30, 2020 and 2019, respectively.

Our All Other Businesses segment includes the revenue from our VIDA acquisition from July 2, 2018 through the divestiture date of April 10, 2020.

Three Months Ended September 30, 2020

(1) Refer to the "Revenue by Geographic Region" tables below for detail of the inter-segment revenue within each respective segment.

Three Months Ended December 31, 2020

Vistaprint PrintBrothers The Print Group National Pen All Other Total

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Total external revenue $ 435,646 $ 121,564 $ 69,343 $ 104,955 $ 54,637 $ 786,145

Three Months Ended September 30, 2019

Six Months Ended December 31, 2020

Vistaprint PrintBrothers The Print Group National Pen All Other Total

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Total external revenue $ 764,515 $ 221,505 $ 129,721 $ 159,528 $ 97,376 $ 1,372,645

Three Months Ended December 31, 2019

Vistaprint PrintBrothers The Print Group National Pen All Other Total

Revenue by Geographic Region:

North America $ 284,345 $ — $ — $ 54,400 $ 44,221 $ 382,966

Europe 121,143 126,288 86,713 60,887 — 395,031

Other 25,292 — — 11,732 5,312 42,336

Inter-segment 2,525 329 986 966 241 5,047

Total segment revenue 433,305 126,617 87,699 127,985 49,774 825,380

inter-segment elimination ( 2,525 ) ( 329 ) ( 986 ) ( 966 ) ( 241 ) ( 5,047 )

Total external revenue $ 430,780 $ 126,288 $ 86,713 $ 127,019 $ 49,533 $ 820,333

Six Months Ended December 31, 2019

Vistaprint PrintBrothers The Print Group National Pen All Other Total

Revenue by Geographic Region:

North America $ 531,430 $ — $ — $ 95,942 $ 79,627 $ 706,999

Europe 195,601 235,335 158,539 83,200 — 672,675

Other 45,592 — — 17,059 11,967 74,618

Inter-segment 3,853 572 1,418 1,947 456 8,246

Total segment revenue 776,476 235,907 159,957 198,148 92,050 1,462,538

inter-segment elimination ( 3,853 ) ( 572 ) ( 1,418 ) ( 1,947 ) ( 456 ) ( 8,246 )

Total external revenue $ 772,623 $ 235,335 $ 158,539 $ 196,201 $ 91,594 $ 1,454,292

The following table includes segment EBITDA by reportable segment, total income from operations and total income before income taxes.

Three Months Ended September 30,

Three Months Ended December 31, Six Months Ended December 31,

2020 2019 2020 2019

Segment EBITDA:

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Interest expense, net ( 30,141 ) ( 15,701 ) — ( 60,657 ) ( 30,788 )

(Loss) income before income taxes $ ( 3,284 ) $ 25,966

Three Months Ended September 30,

Income before income taxes $ 46,855 $ 96,854 $ 43,571 $ 122,820

Three Months Ended December 31, Six Months Ended December 31,

2020 2019 2020 2019

Depreciation and amortization:

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Total depreciation and amortization $ 43,597 $ 42,356 $ 85,887 $ 84,891

Three Months Ended September 30,

Three Months Ended December 31, Six Months Ended December 31,

2020 2019 2020 2019

Purchases of property, plant and equipment:

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Total purchases of property, plant and equipment $ 8,407 $ 13,901 $ 16,790 $ 28,094

Three Months Ended September 30,

Three Months Ended December 31, Six Months Ended December 31,

2020 2019 2020 2019

Capitalization of software and website development costs:

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The following table sets forth long-lived assets by geographic area:

September 30, 2020 June 30, 2020

December 31, 2020 June 30, 2020

Long-lived assets (1):

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___________________

(1) Excludes goodwill of $ 637,568 and $ 621,904 , intangible assets, net of $ 200,493 and $ 209,228 , and deferred tax assets of $ 146,807 and $ 143,496 as of September 30, 2020 and June 30, 2020, respectively.

(1) Excludes goodwill of $ 726,813 and $ 621,904 , intangible assets, net of $ 212,078 and $ 209,228 , and deferred tax assets of $ 146,814 and $ 143,496 as of December 31, 2020 and June 30, 2020, respectively.

Commitments and Contingencies

Purchase Obligations

At September 30, 2020, we had unrecorded commitments under contract of $ 193,650 , including third-party web services of $ 114,533 and inventory and third-party fulfillment purchase commitments of $ 29,288 .

In addition, we had purchase commitments for professional and consulting fees of $ 19,153 , production and computer equipment purchases of $ 3,800 , and other unrecorded purchase commitments of $ 26,876 .

At December 31, 2020, we had unrecorded commitments under contract of $ 226,290 , including third-party web services of $ 97,609 , production and computer equipment purchases of $ 24,942 , inventory and third-party fulfillment purchase commitments of $ 18,422 , advertising of $ 17,750 , professional and consulting fees of $ 8,374 and other unrecorded purchase commitments of $ 59,193 .

Other Obligations

We deferred payments for several of our acquisitions resulting in the recognition of a liability of $ 1,676 in aggregate as of September 30, 2020.

We deferred payments for several of our acquisitions resulting in the recognition of a liability of $ 45,369 in aggregate as of December 31, 2020.

This balance includes the deferred payment related to the 99designs acquisition totaling $ 43,691 .

Refer to Note 7 for additional details.

Modification of Lease Obligations

On January 6, 2021, we entered into an arrangement that modifies the lease agreement for our Waltham, Massachusetts office location, which results in us retaining a small portion of the previously leased office space in exchange for a reduction to our monthly rent payments.

As part of the agreement, we will pay $ 8,761 in two equal installments, which includes both an early termination penalty and the rent we would have otherwise paid for the terminated space through June 30, 2021.

The first payment was made on January 6, 2021, and the remaining amount is due on April 1, 2021.

We separately entered into a lease agreement for a new office location in Waltham, Massachusetts which will commence on June 1, 2021.

As of December 31, 2020, the total remaining lease commitments through September 2026 were $ 67,953 .

Under the modified lease term, combined with the new lease arrangement, the total lease commitments through September 2026 will be $ 20,501 , excluding the termination penalties included above.

Legal Proceedings

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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.

During the three months ended September 30, 2020, we recognized a restructuring benefit of $ 86 due to a change in estimate from actions taken in the fourth quarter of fiscal 2020 in our Vistaprint segment.

The following table summarizes the restructuring activity during the three months ended September 30, 2020

During the three and six months ended December 31, 2020, we recognized restructuring costs of $ 2,182 and $ 2,096 , respectively, due to organizational changes within our The Print Group segment intended to streamline certain activities.

During the three and six months ended December 31, 2019, we recognized restructuring charges of $ 1,897 and $ 4,087 , respectively, related primarily to charges within our Vistaprint reportable segment.

The following table summarizes the restructuring activity during the six months ended December 31, 2020:

Severance and Related Benefits Other Restructuring Costs Total

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Cash payments ( 3,961 ) — ( 3,961 )

Accrued restructuring liability as of September 30, 2020 $ 3,368 $ 77 $ 3,445

Subsequent Events

On October 1, 2020, under the terms of the Agreement and Plan of Merger dated as of September 28, 2020 among Cimpress USA Incorporated, a Delaware corporation ("Parent"), Cactus Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent, 99designs, Inc., a Delaware corporation ("99designs"), and Shareholders Representative Services, as the security holders' representative, Cimpress acquired 99designs for $ 90,000 , subject to post-closing adjustment based on acquired cash, debt, and working capital as of the closing date.

$ 45,000 of the purchase price was paid at closing and remainder will be paid on February 15, 2022.

Cimpress used its existing credit facility to fund the transaction.

99designs provides a global platform that connects designers and clients, and the acquisition will make it easier for small businesses to access both professional design services and great marketing products in one place.

Non-cash charges (1) — ( 643 ) ( 643 )

Accrued restructuring liability as of December 31, 2020 $ 3,461 $ 77 $ 3,538

(1) Non-cash charges primarily include the write-off of property, plant and equipment, net in The Print Group segment to streamline certain activities.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements