What changed in this filing

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Item 1. Financial Statements

2021-04-29 compared with 2021-01-28 · 282 added, 172 removed, 639 unchanged (42% of the section changed)

51 unchanged sentences

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

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

Three Months Ended March 31, Nine Months Ended March 31,

2021 2020 2021 2020

6 unchanged sentences

Restructuring expense (1) ( 382 ) 919 1,714 5,006

Income from operations 94,194 121,595 130,180 146,974

Other (expense) income, net ( 17,198 ) ( 9,040 ) ( 25,952 ) 6,634

Impairment of goodwill — 100,842 — 100,842

(Loss) income from operations ( 15,697 ) ( 87,736 ) 114,483 59,238

Other income (expense), net 9,785 22,537 ( 16,167 ) 29,171

Interest expense, net ( 29,002 ) ( 17,262 ) ( 89,659 ) ( 48,050 )

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

(Loss) income before income taxes ( 34,914 ) ( 82,461 ) 8,657 40,359

Income tax expense (benefit) 3,927 1,039 23,675 ( 86,641 )

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

Net (loss) income ( 38,841 ) ( 83,500 ) ( 15,018 ) 127,000

Net income attributable to noncontrolling interest ( 209 ) ( 1,384 ) ( 2,500 ) ( 1,630 )

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

Net (loss) income attributable to Cimpress plc $ ( 39,050 ) $ ( 84,884 ) $ ( 17,518 ) $ 125,370

Basic net (loss) income per share attributable to Cimpress plc $ ( 1.50 ) $ ( 3.26 ) $ ( 0.67 ) $ 4.54

Diluted net (loss) income per share attributable to Cimpress plc $ ( 1.50 ) $ ( 3.26 ) $ ( 0.67 ) $ 4.43

Weighted average shares outstanding — basic 26,003,675 26,024,229 25,984,300 27,608,387

2 unchanged sentences

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

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

Three Months Ended March 31, Nine Months Ended March 31,

2021 2020 2021 2020

7 unchanged sentences

(unaudited in thousands)

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

Three Months Ended March 31, Nine Months Ended March 31,

2021 2020 2021 2020

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

Other comprehensive income, net of tax:

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

Net (loss) income $ ( 38,841 ) $ ( 83,500 ) $ ( 15,018 ) $ 127,000

Other comprehensive (loss) income, net of tax:

Foreign currency translation (losses) gains, net of hedges ( 14,571 ) 1,490 192 3,110

Net unrealized gains (losses) on derivative instruments designated and qualifying as cash flow hedges 5,809 ( 21,201 ) 13,447 ( 22,258 )

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

Amounts reclassified from accumulated other comprehensive (loss) income to net (loss) income on derivative instruments ( 3,085 ) 2,531 ( 8,382 ) 5,537

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

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

Comprehensive (loss) income ( 50,688 ) ( 100,680 ) ( 10,097 ) 113,389

Comprehensive loss (income) attributable to noncontrolling interests 1,260 ( 1,515 ) ( 3,720 ) ( 967 )

Total comprehensive (loss) income attributable to Cimpress plc $ ( 49,428 ) $ ( 102,195 ) $ ( 13,817 ) $ 112,422

See accompanying notes.

42 unchanged sentences

Equity (Deficit)

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

Restricted share units vested, net of shares withheld for taxes — — — — 1 44 ( 88 ) — — ( 44 )

Issuance of ordinary shares due to share option exercises, net of shares withheld for taxes — — — — 431 ( 12,526 ) ( 28,386 ) — — ( 40,912 )

Share-based compensation expense — — — — — — 8,825 — — 8,825

Purchase of ordinary shares — — — — ( 759 ) ( 89,483 ) — — — ( 89,483 )

Net loss attributable to Cimpress plc — — — — — — — ( 84,884 ) — ( 84,884 )

Net unrealized loss on derivative instruments designated and qualifying as cash flow hedges — — — — — — — — ( 18,670 ) ( 18,670 )

Foreign currency translation, net of hedges — — — — — — — — 1,359 1,359

Balance at March 31, 2020 44,080 $ 615 25 $ 28 ( 18,202 ) $ ( 1,377,022 ) $ 404,409 $ 660,442 $ ( 92,805 ) $ ( 404,333 )

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 )

13 unchanged sentences

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

Restricted share units vested, net of shares withheld for taxes — — — — — 2 ( 3 ) — — ( 1 )

Share-based compensation expense — — — — — — 9,572 — — 9,572

Net loss attributable to Cimpress plc — — — — — — — ( 39,050 ) — ( 39,050 )

Net unrealized loss on derivative instruments designated and qualifying as cash flow hedges — — — — — — — — ( 13,102 ) ( 13,102 )

Foreign currency translation, net of hedges — — — — — — — — 2,724 2,724

Balance at March 31, 2021 44,080 $ 615 25 $ 28 ( 18,077 ) $ ( 1,368,721 ) $ 448,432 $ 599,833 $ ( 84,975 ) $ ( 404,788 )

See accompanying notes.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited in thousands)

Six Months Ended December 31,

Nine Months Ended March 31,

Operating activities

Net income $ 23,823 $ 210,500

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

Net (loss) income $ ( 15,018 ) $ 127,000

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

Depreciation and amortization 128,696 126,731

Impairment of goodwill — 100,842

Share-based compensation expense 23,071 22,739

Impairment of long-lived assets 19,882 —

Deferred taxes 2,513 ( 109,990 )

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

Unrealized loss (gain) on derivatives not designated as hedging instruments included in net (loss) income 18,280 ( 4,604 )

Effect of exchange rate changes on monetary assets and liabilities denominated in non-functional currency 2,537 ( 1,027 )

12 unchanged sentences

Proceeds from the sale of assets 3,574 1,633

Proceeds from settlement of derivatives designated as hedging instruments — 27,732

Other investing activities ( 269 ) 1,556

2 unchanged sentences

Proceeds from borrowings of debt 534,051 1,043,600

Proceeds from issuance of senior notes — 210,500

Payments of debt ( 639,519 ) ( 603,049 )

10 unchanged sentences

Effect of exchange rate changes on cash 3,727 ( 5,180 )

Net decrease in cash and cash equivalents ( 8,138 ) 1,638

Change in cash held for sale — ( 1,326 )

Net (decrease) increase in cash and cash equivalents ( 8,657 ) 192,986

Cash and cash equivalents at beginning of period 45,021 35,279

Cash and cash equivalents at end of period $ 36,364 $ 228,265

See accompanying notes.

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(unaudited in thousands)

Nine Months Ended March 31,

Supplemental disclosures of cash flow information

27 unchanged sentences

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 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 December 31, Six Months Ended December 31,

There have been no material changes to our significant accounting policies during the three and nine months ended March 31, 2021.

Other Income (Expense), Net

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

Three Months Ended March 31, Nine Months Ended March 31,

2021 2020 2021 2020

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

Currency-related gains (losses), net (2) 1,809 2,645 5,884 ( 767 )

Other gains (losses) 13 ( 19 ) 679 ( 290 )

Total other (expense) income, net $ ( 17,198 ) $ ( 9,040 ) $ ( 25,952 ) $ 6,634

Gains (losses) on derivatives not designated as hedging instruments (1) $ 18,724 $ 18,039 $ ( 13,791 ) $ 25,730

Currency-related (losses) gains, net (2) ( 8,841 ) 3,950 ( 2,957 ) 3,183

Other (losses) gains ( 98 ) 548 581 258

Total other income (expense), net $ 9,785 $ 22,537 $ ( 16,167 ) $ 29,171

_____________________

(1) Primarily relates to both realized and unrealized gains and losses 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.

(1) Primarily relates to both realized and unrealized gains and losses on derivative currency forward and option contracts and interest rate swaps not designated as hedging instruments, including gains of $ 6,394 and $ 6,759 for the three and nine months ended March 31, 2021, respectively, related to certain interest rate swap contracts that have been de-designated from hedge accounting due to their ineffectiveness, which had an immaterial impact in the comparative periods..

(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 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 $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.

The currency-related (losses) gains, net are primarily driven by this intercompany activity for the periods presented.

In addition, we have certain cross-currency swaps designated as cash flow hedges which hedge the remeasurement of certain intercompany loans;

both are presented in the same component above.

The unrealized gains related to cross-currency swaps for the three months ended March 31, 2021 were $ 6,288 , and the unrealized losses were $ 5,233 for the nine months ended March 31, 2021, as compared to unrealized gains of $ 1,807 and $ 3,627 for the three and nine months ended March 31, 2020, respectively.

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.

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 December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

2021 2020 2021 2020

1 unchanged sentence

Weighted average shares issuable upon exercise/vesting of outstanding share options/RSUs/warrants — — — 709,053

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 —

Shares used in computing diluted net (loss) income per share attributable to Cimpress plc 26,003,675 26,024,229 25,984,300 28,317,440

Weighted average anti-dilutive shares excluded from diluted net (loss) income per share attributable to Cimpress plc (1) (2) 621,172 464,638 485,067 —

_____________________

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

For the three and nine months ended March 31, 2021, the weighted average anti-dilutive effect of the warrants was 412,473 and 348,973 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, RSAs and warrants is not included as they are anti-dilutive.

Lease Impairment and Abandonment Charges

During the three months ended March 31, 2021, we recorded lease impairment and abandonment charges related to two leased facilities that we will no longer occupy.

The charges are described below.

These changes will result in a substantial reduction in costs in future periods.

Waltham Lease Amendment

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 for the space we will no longer lease.

As part of the agreement, we are required to pay a total termination penalty of $ 8,761 in two equal installments.

The first installment was paid in January 2021 and the remaining amount was paid in April 2021.

This termination penalty is inclusive of the rent that would have otherwise been paid through June 2021 when the office was not expected to be occupied.

The amendment is accounted for as a lease modification under ASC 842 - Leases.

Due to the partial termination of the lease, we recorded a decrease to the operating lease liabilities of $ 47,801 to reflect the reduced lease payments, including the termination penalties.

We also recorded a decrease to the operating lease asset of $ 46,645 based on the proportionate decrease in the right-of-use asset, which resulted in a gain of $ 1,156 , recognized in general and administrative expense on the consolidated statement of operations for the three months ended March 31, 2021.

Due to our plans to no longer occupy the remaining leased office space and instead market the space to be subleased, we identified a triggering event with regards to the modified right-of-use asset.

Therefore, we performed a discounted cash flow analysis that considered market-based rent assumptions, which resulted in an impairment of the right-of-use asset of $ 7,489 which was recognized in general and administrative expense on the consolidated statement of operations for the three months ended March 31, 2021.

Additionally, we recorded an impairment to general and administrative expense for abandoned assets related to the vacated space totaling $ 4,483 , which included $ 2,787 in subtenant allowances, $ 1,312 in leasehold improvements, and $ 384 in furniture and fixtures.

Other Lease Impairment

During the quarter ended March 31, 2021, we identified a triggering event due to a change in our intended use of the right-of-use asset of another one of our leased facilities, as we have committed to plans to exit the space and instead market it to be subleased or sold.

We assessed the lease for impairment and performed a discounted cash flow analysis using current market-based rent assumptions, which resulted in an impairment of $ 7,420 that was recognized in general and administrative expense on the consolidated statement of operations for the three months ended March 31, 2021.

This impairment resulted in a decrease to the right of use asset totaling $ 5,280 and to the related leasehold improvements included within property, plant and equipment totaling $ 2,140 .

Additionally, we recorded an impairment for abandoned equipment in the amount of $ 1,680 that was recognized in general and administrative expense for the three months ended March 31, 2021.

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.

Recently Issued or Adopted Accounting Pronouncements

4 unchanged sentences

We early adopted the standard on July 1, 2020.

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.

For the nine months ended March 31, 2021, adopting ASU 2019-12 resulted in a $ 2,545 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.

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.

5 unchanged sentences

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 adopted the standard on October 1, 2020.

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.

In addition, we elected to continue the method of assessing effectiveness as documented in the original hedge documentation and elected 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.

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

7 unchanged sentences

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:

December 31, 2020

March 31, 2021

Total Quoted Prices in

3 unchanged sentences

(Level 2) Significant

Cross-currency swap contracts $ 145 $ — $ 145 $ —

Currency forward contracts 1,184 — 1,184 —

Currency option contracts 80 — 80 —

Total assets recorded at fair value $ 1,409 $ — $ 1,409 $ —

19 unchanged sentences

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

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.

During the quarter ended March 31, 2021 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.

3 unchanged sentences

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 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.

However, as of March 31, 2021, 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 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.

As of March 31, 2021 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 March 31, 2021 and June 30, 2020, the carrying value of our debt, excluding debt issuance costs and debt premiums and discounts, was $ 1,384,129 and $ 1,482,177 , respectively, and the fair value was $ 1,426,307 and $ 1,450,719 , respectively.

Our debt at March 31, 2021 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.

4 unchanged sentences

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.

Additionally, any ineffectiveness associated with any effective and designated hedge is recognized within accumulated other comprehensive loss.

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

Additionally, any ineffectiveness associated with an effective and designated hedge is recognized within accumulated other comprehensive loss.

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

5 unchanged sentences

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 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.

As of March 31, 2021, we estimate that $ 10,439 will be reclassified from accumulated other comprehensive loss to interest expense during the twelve months ending March 31, 2022.

As of March 31, 2021, we had ten outstanding interest rate swap contracts indexed to USD LIBOR all of which are no longer highly effective and have therefore been de-designated.

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

Interest rate swap contracts outstanding:

Notional Amounts

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

Contracts accruing interest as of March 31, 2021 $ 500,000

Contracts with a future start date 50,000

7 unchanged sentences

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 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.

As of March 31, 2021, 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 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.

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 March 31, 2021, we estimate that $ 2,623 of income will be reclassified from accumulated other comprehensive loss to interest expense, net during the twelve months ending March 31, 2022.

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 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 .

As of March 31, 2021, 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.

2 unchanged sentences

We have elected to not apply hedge accounting for all other 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.

During the three and nine months ended March 31, 2021 and 2020, 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 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.

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, Swiss Franc and Swedish Krona:

As of March 31, 2021, 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, Japanese Yen, Mexican Peso, New Zealand Dollar, Norwegian Krone, Philippine Peso, Swiss Franc and Swedish Krona:

Notional Amount Effective Date Maturity Date Number of Instruments Index

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

$ 477,464 June 2019 through March 2021 Various dates through October 2024 608 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 December 31, 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 March 31, 2021 and June 30, 2020.

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

December 31, 2020

March 31, 2021

Asset Derivatives Liability Derivatives

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Derivatives in cash flow hedging relationships

Interest rate swaps Other current assets / other assets $ — $ — $ — Other liabilities $ ( 20,839 ) $ — $ ( 20,839 )

Cross-currency swaps Other assets $ 145 $ — $ 145 Other liabilities $ ( 7,978 ) $ — $ ( 7,978 )

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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 and six months ended December 31, 2020 and 2019:

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

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

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

Three Months Ended March 31, Nine Months Ended March 31,

2021 2020 2021 2020

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Total $ 13,873 $ ( 6,917 ) $ ( 3,321 ) $ 591

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

The following table presents reclassifications out of accumulated other comprehensive loss for the three and nine months ended March 31, 2021 and 2020:

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 December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

2021 2020 2021 2020

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Interest rate swaps $ ( 4,396 ) $ 691 $ 227 $ 1,146 Interest expense, net

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

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

Cross-currency swaps 661 2,665 ( 9,631 ) 6,203 Other income (expense), net

Total before income tax ( 3,735 ) 3,356 ( 9,404 ) 7,349 (Loss) income before income taxes

Income tax 650 ( 825 ) 1,022 ( 1,812 ) Income tax expense (benefit)

Total $ ( 3,085 ) $ 2,531 $ ( 8,382 ) $ 5,537

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

The following table presents the adjustment to fair value recorded within the consolidated statements of operations for the three and nine months ended March 31, 2021 and 2020 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

Statement of Operations

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

Three Months Ended March 31, Nine Months Ended March 31,

2021 2020 2021 2020

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

Interest rate swaps 476 — 449 — Other (expense) income, net

Currency contracts $ 12,329 $ 18,039 $ ( 20,635 ) $ 25,730 Other income (expense), net

Interest rate swaps 6,395 — 6,844 — Other income (expense), net

Total $ 18,724 $ 18,039 $ ( 13,791 ) $ 25,730

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 $ 500 for the six months ended December 31, 2020 :

The following table presents a roll forward of amounts recognized in accumulated other comprehensive income (loss) by component, net of tax of $ 643 for the nine months ended March 31, 2021 :

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

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Other comprehensive income (loss) before reclassifications 13,447 ( 336 ) ( 1,028 ) 12,083

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

Amounts reclassified from accumulated other comprehensive loss to net (loss) income ( 8,382 ) — — ( 8,382 )

Net current period other comprehensive income (loss) 5,065 ( 336 ) ( 1,028 ) 3,701

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

Balance as of March 31, 2021 $ ( 25,013 ) $ ( 1,735 ) $ ( 58,227 ) $ ( 84,975 )

________________________

(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 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:

(2) As of March 31, 2021 and June 30, 2020, the translation adjustment is inclusive of the effects of our net investment hedges, of which, unrealized gains of $ 3,741 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 March 31, 2021 and June 30, 2020 was as follows:

Vistaprint PrintBrothers The Print Group All Other Businesses Total

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Acquisitions (1) 71,401 — — — 71,401

Adjustments ( 609 ) — — — ( 609 )

Effect of currency translation adjustments (2) 1,862 5,495 6,573 — 13,930

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

Balance as of March 31, 2021 $ 223,500 $ 135,259 $ 161,770 $ 186,097 $ 706,626

_________________

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

Goodwill Recoverability Assessment

During the third quarter of fiscal 2021, we evaluated whether any triggering events exist across each of our reporting units to determine whether an impairment analysis is necessary.

We identified triggering events for our Druck, Easyflyer and Exaprint reporting units, due in part to the reemergence of new pandemic-related lockdowns and restrictions in certain European countries which has resulted in a more prolonged reduction to cash flows when compared to the cash flows forecasted in our most recent impairment analysis that was performed during the third quarter of fiscal 2020.

As required, prior to performing the quantitative goodwill impairment test, 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 three reporting units and concluded that no impairment of long-lived assets exists.

After performing the long-lived assets recoverability test, we performed a quantitative assessment of goodwill of the three reporting units and compared the carrying value to the estimated fair value.

For each reporting unit, the estimated fair value of the reporting unit exceeded the related carrying value and we concluded that no impairment exists.

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.

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.

Although some of our businesses are experiencing more prolonged impacts that we expect will have a negative impact on near-term cash flows, we believe that these negative impacts are temporary.

We did not identify triggering events for the reporting units that are performing better than previously estimated or maintained significant headroom in our most recent analysis.

During the third quarter of fiscal 2020, nearly all of our businesses had experienced significant declines in revenue during the month of March, due to the disruptions associated with the COVID-19 pandemic.

As a result, we concluded that a triggering event existed for all ten reporting units with goodwill, which required us to perform an impairment test in the current quarter.

We estimated the near-term financial impacts of this economic disruption and

utilized different scenarios that evaluate outcomes that would indicate more or less severe demand declines, as well as different time horizons for the post-pandemic recovery period.

For seven of our reporting units, a significant level of headroom existed between the estimated fair value and carrying value of the reporting units at our May 31, 2019 test date, and significant headroom remained after considering the deterioration in cash flow due to COVID-19 or the reporting unit was recently acquired, resulting in no indication of impairment.

For three of our reporting units, we identified triggering events that extend beyond the near-term impacts of the pandemic, which include reductions to the long-term profitability outlooks for our Exaprint, National Pen and VIDA reporting units.

As a result of the considerations noted, we concluded it was more likely than not that the fair value of each of these three reporting units are below each of their respective carrying amount.

Our 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.

Based on the goodwill impairment test performed, we recognized the following impairment charges during the three months ended March 31, 2020:

• A partial impairment of the goodwill of our Exaprint reporting unit of $ 40,391

• A full impairment of the goodwill of our National Pen reporting unit of $ 34,434

• A full impairment of the goodwill of our VIDA reporting unit of $ 26,017

Business Combinations

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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 acquisition is managed within 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:

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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 .

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 $ 19,667 .

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:

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Total purchase price $ 88,691 n/a

_________________

(1) During the third quarter of fiscal 2021 we recorded a measurement period adjustment totaling $ 609 to other liabilities which was offset against goodwill.

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.

The revenue and earnings of 99designs included in our consolidated financial statements for the three and nine months ended March 31, 2021 are not material, and therefore no proforma financial information is presented.

We used our credit facility to finance the acquisition.

In connection with the acquisition, we incurred $ 1,183 in general and administrative expenses during the nine months ended March 31, 2021, primarily related to legal, financial, and other professional services.

Other Balance Sheet Components

Accrued expenses included the following:

December 31, 2020 June 30, 2020

March 31, 2021 June 30, 2020

Compensation costs $ 74,170 $ 67,307

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_________________

(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.

(1 ) The increase in advertising costs is primarily due to expanded return thresholds for performance advertising channels in our Vistaprint business as compared to the fourth quarter of fiscal 2020, in addition to investment in upper-funnel advertising.

(2) The increase in interest payable as of March 31, 2021, is due to the interest on our 2026 Notes being payable se mi-annually on June 15 and December 15 of each year.

Refer to Note 9 for further detail.

Other current liabilities included the following:

December 31, 2020 June 30, 2020

March 31, 2021 June 30, 2020

Current portion of finance lease obligations $ 9,336 $ 8,055

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Total other current liabilities $ 77,669 $ 13,268

_____________________

( 1) The increase in other current liabilities is driven by the deferred payment related to the 99designs acquisition totaling $ 43,691 , which was included in other long-term liabilities as of December 31, 2020.

Refer to Note 7 for additional details .

Other liabilities included the following:

December 31, 2020 June 30, 2020

March 31, 2021 June 30, 2020

Long-term finance lease obligations $ 17,695 $ 18,617

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Total other liabilities $ 92,786 $ 88,187

_____________________

(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

March 31, 2021 June 30, 2020

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

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_____________________

(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.

(1) Balances as of March 31, 2021 and June 30, 2020 are inclusive of short-term debt issuance costs, debt premiums and discounts of $ 10,932 and $ 10,362 , respectively.

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

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.

As of March 31, 2021, we were in compliance with all financial and other covenants under the amended credit agreement (which have been reinstated with modified terms, as described below), the indenture governing our 2026 Notes, and the indenture governing our Second Lien Notes.

Senior Secured Credit Facility

On April 28, 2020, we entered into an amendment to our senior secured credit agreement to suspend our 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 covenant suspension period, we must comply with new maintenance covenants requiring EBITDA above zero in each of the quarters ending June 30, 2021 and September 30, 2021 and minimum liquidity (defined in the credit agreement as unrestricted cash plus unused revolver) of $ 50,000 .

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

On April 28, 2020, we entered into an amendment to our senior secured credit agreement to suspend our pre-existing maintenance covenants, including the total and senior secured leverage covenants and interest coverage ratio covenant, until the earlier of the date on which we published our financial results for the quarter ending December 31, 2021 and the date on which we elected to exit the Covenant Suspension Period.

On February 16, 2021, we elected to end the Covenant Suspension Period early, and amended our financial maintenance covenants through and including the quarter ending September 30, 2022.

A summary of these changes are as follows:

• Maximum Leverage Ratio of Consolidated Total Indebtedness to Consolidated EBITDA for the four trailing fiscal quarters of 5.25 to 1.00 during the period from February 16, 2021 through and including September 30, 2022 (the “Covenant Adjustment Period”) and 4.75 to 1.00 following the Covenant Adjustment Period

• Maximum Senior Secured Leverage Ratio of Consolidated Senior Secured Indebtedness to Consolidated EBITDA for the four trailing fiscal quarters of 3.00 to 1.00 during the Covenant Adjustment Period and 3.25 to 1.00 following the Covenant Adjustment Period

• Minimum Interest Coverage Ratio of Consolidated EBITDA to Consolidated Interest Expense to the extent paid in cash, in each case for the four trailing fiscal quarters, of 3.00 to 1.00 , but if Cimpress repays in full its 12.0% Senior Secured Notes Due 2025, then the calculation of Consolidated Interest Expense excludes all cash interest expense in respect of such Second Lien Notes incurred in the fiscal quarter during which the Second Lien Notes are repaid as well as the three preceding fiscal quarters

In addition, the February 2021 amendment modified several of the negative covenants that limit certain activities and actions of our business, including but not limited to removing most of the more restrictive limitations on investments, acquisitions, and restricted payments that were in place during the Covenant Suspension Period.

The maturity date was not changed as part of the February 2021 amendment and remains in November 2024, but will reset to February 2025 upon redemption of our senior secured notes.

Additionally, the capacity of our senior secured credit facility was not changed and includes an $ 850,000 revolver and $ 142,500 term loan.

As of March 31, 2021, we have drawn commitments under the credit facility of $ 471,500 as follows:

• Revolving loans of $ 329,000 with a maturity date of November 15, 2024

• Term loans of $ 142,500 amortizing over the loan period, with a final maturity date of November 15, 2024

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.

As of March 31, 2021, the weighted-average interest rate on outstanding borrowings was 5.41 %, 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.

We have pledged the assets and/or share capital of a number of our subsidiaries as collateral for our outstanding debt as of March 31, 2021.

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.

We intend to prepay the Second Lien Notes on the first call date in May 2021.

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

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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.

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.

We have issued $ 600,000 in aggregate principal of 7.0% senior unsecured notes due 2026 (the "2026 Notes").

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

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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 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.

As of March 31, 2021 and June 30, 2020, we had $ 12,629 and $ 11,694 , respectively, outstanding for those obligations that are payable through January 2026.

Our income tax expense was $ 3,927 and $ 23,675 for the three and nine months ended March 31, 2021, respectively, compared to income tax expense of $ 1,039 for the three months ended March 31, 2020, and income tax benefit of $ 86,641 for the nine months ended March 31, 2020.

For the period ended March 31, 2020, we calculated our year-to-date income tax on ordinary income based on the actual year-to-date effective tax rate rather than the estimated annual tax rate.

The increased tax expense for the three months ended March 31, 2021 was primarily due to a higher forecasted effective tax rate as compared to the actual effective tax rate for the same prior year period.

In the nine months ended March 31, 2020, 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 nine months ended March 31, 2021 as compared to the same prior year period.

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 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 .

During the nine months ended March 31, 2021, our unrecognized tax benefits increased by $ 8,264 , 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 March 31, 2021, we had unrecognized tax benefits of $ 14,495 , including accrued interest and penalties of $ 914 .

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

If recognized, $ 8,051 of unrecognized tax benefits would reduce our tax expense.

It is reasonably possible that a reduction in unrecognized tax benefits may occur within the next twelve months in the range of $ 165 to $ 670 related to the lapse of applicable statutes of limitations.

It is reasonably possible that a reduction in unrecognized tax benefits may occur within the next twelve months related to the lapse of applicable statutes of limitations, but we expect any such reduction to be immaterial.

We believe we have appropriately provided for all tax uncertainties.

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

As of March 31, 2021, 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 .

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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 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.

During the nine months ended March 31, 2021, 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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Foreign currency translation 1,220

Balance as of December 31, 2020 $ 65,510

Balance as of March 31, 2021 $ 64,250

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 December 31, 2020, we have numerous operating segments under our management reporting structure which are reported in the following five reportable segments:

As of March 31, 2021, 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, our 99designs business which was acquired on October 1, 2020, 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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◦ Printi is an online printing leader in Brazil, which offers a superior customer experience with transparent and attractive pricing, reliable service and quality.

WeChat and e-commerce platforms to enhance brand awareness and competitiveness and develop new markets.

◦ 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;

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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, 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.

We include insurance proceeds that are not recognized within operating income.

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

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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 December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

2021 2020 2021 2020

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(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

Three Months Ended March 31, 2021

Vistaprint PrintBrothers The Print Group National Pen All Other Total

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Total external revenue $ 326,843 $ 93,831 $ 57,536 $ 57,141 $ 43,500 $ 578,851

Six Months Ended December 31, 2020

Nine Months Ended March 31, 2021

Vistaprint PrintBrothers The Print Group National Pen All Other Total

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Total external revenue $ 1,091,358 $ 315,336 $ 187,257 $ 216,669 $ 140,876 $ 1,951,496

Three Months Ended December 31, 2019

Three Months Ended March 31, 2020

Vistaprint PrintBrothers The Print Group National Pen All Other Total

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Total external revenue $ 314,703 $ 109,246 $ 67,617 $ 67,381 $ 39,013 $ 597,960

Six Months Ended December 31, 2019

Nine Months Ended March 31, 2020

Vistaprint PrintBrothers The Print Group National Pen All Other Total

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Total external revenue $ 1,087,326 $ 344,581 $ 226,156 $ 263,582 $ 130,607 $ 2,052,252

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

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

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

Three Months Ended March 31, Nine Months Ended March 31,

2021 2020 2021 2020

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Depreciation and amortization ( 42,809 ) ( 41,840 ) ( 128,696 ) ( 126,731 )

Proceeds from insurance ( 122 ) — ( 122 ) —

Certain impairments and other adjustments ( 20,563 ) ( 101,976 ) ( 21,131 ) ( 102,736 )

Restructuring-related charges 382 ( 919 ) ( 1,714 ) ( 5,006 )

Total income from operations 94,194 121,595 130,180 146,974

Other (expense) income, net ( 17,198 ) ( 9,040 ) — ( 25,952 ) 6,634

Total (loss) income from operations ( 15,697 ) ( 87,736 ) 114,483 59,238

Other income (expense), net 9,785 22,537 ( 16,167 ) 29,171

Interest expense, net ( 29,002 ) ( 17,262 ) ( 89,659 ) ( 48,050 )

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

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

(Loss) income before income taxes $ ( 34,914 ) $ ( 82,461 ) $ 8,657 $ 40,359

Three Months Ended March 31, Nine Months Ended March 31,

2021 2020 2021 2020

7 unchanged sentences

Total depreciation and amortization $ 42,809 $ 41,840 $ 128,696 $ 126,731

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

Three Months Ended March 31, Nine Months Ended March 31,

2021 2020 2021 2020

7 unchanged sentences

Total purchases of property, plant and equipment $ 5,946 $ 10,544 $ 22,736 $ 38,638

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

Three Months Ended March 31, Nine Months Ended March 31,

2021 2020 2021 2020

8 unchanged sentences

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

December 31, 2020 June 30, 2020

March 31, 2021 June 30, 2020

Long-lived assets (1):

11 unchanged sentences

___________________

(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.

(1) Excludes goodwill of $ 706,626 and $ 621,904 , intangible assets, net of $ 194,502 and $ 209,228 , and deferred tax assets of $ 135,491 and $ 143,496 as of March 31, 2021 and June 30, 2020, respectively.

Commitments and Contingencies

Purchase Obligations

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 .

At March 31, 2021, we had unrecorded commitments under contract of $ 211,311 , including third-party web services of $ 96,741 , software of $ 54,548 , inventory and third-party fulfillment purchase commitments of $ 18,976 , advertising of $ 15,058 , professional and consulting fees of $ 7,405 , production and computer equipment purchases of $ 2,430 and other unrecorded purchase commitments of $ 16,153 .

Other Obligations

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.

We deferred payments for several of our acquisitions resulting in the recognition of a liability of $ 44,680 in aggregate as of March 31, 2021.

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

1 unchanged sentence

Modification of Lease Obligations

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.

As part of the agreement, we were required to pay a termination fee of $ 8,761 in two equal installments.

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

The termination fee is inclusive of the rent that would have otherwise been paid on the leased space through June 2021 while it remained vacant.

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 .

Prior to the amendment, the total remaining lease commitments through September 2026 were $ 64,811 .

Under the modified lease term, combined with the new lease arrangement, the total lease commitments through September 2026 will be $ 20,183 , excluding the termination penalties included above.

6 unchanged sentences

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 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:

During the three months ended March 31, 2021, we recognized restructuring benefits of $ 382 due to changes in prior estimates, while during the nine months ended March 31, 2021 we recognized costs of $ 1,714 , due to organizational changes within The Print Group segment intended to streamline certain activities.

During the three and nine months ended March 31, 2020, we recognized restructuring charges of $ 919 and $ 5,006 , respectively, related primarily to charges within our Vistaprint reportable segment.

The following table summarizes the restructuring activity during the nine months ended March 31, 2021:

Severance and Related Benefits Other Restructuring Costs Total

3 unchanged sentences

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

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

Accrued restructuring liability as of March 31, 2021 $ 2,935 $ 77 $ 3,012

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

Subsequent Event

On April 15, 2021, we announced plans to issue a senior secured Term Loan B to repay existing secured debt and bring additional liquidity onto our balance sheet.

We expect this transaction to close in the fourth quarter of fiscal year 2021.

The secured Term Loan B is expected to consist of a $ 795,000 tranche and a € 300,000 tranche,

both due 2028.

We plan to use the new debt to redeem all of our 12% Second Lien Notes due 2025, repay amounts drawn under our revolving credit facility and repay all borrowings in respect of our Term Loan A under our secured credit facility.

The transaction would be approximately net leverage neutral on a pro-forma basis.

The Second Lien notes would be redeemed at the first call date in mid-May 2021.

The Term Loan A would terminate and Cimpress would retain a $ 250,000 revolving credit facility maturing in 2026.

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