What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2021-08-06 compared with 2020-08-11 · 241 added, 279 removed, 288 unchanged (64% of the section changed)

1 unchanged sentence

This Report contains forward-looking statements that involve risks and uncertainties.

The statements contained in this Report that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including but not limited to our statements about the anticipated growth and development of our businesses and revenues during and after the COVID-19 pandemic, the potential effects of the pandemic, the expected effects of the actions we are taking and intend to take to address the pandemic including cost savings, the size of our market and our ability to take advantage of the market opportunity, expectations with respect to the development and efficacy of our mass customization platform, the competitive landscape and our competitive position, the expected effects of the reorganization of our technology team, sufficiency of our liquidity position, legal proceedings, and sufficiency of our tax reserves.

The statements contained in this Report that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including but not limited to our statements about the anticipated growth and development of our businesses and revenues, the size of our market and opportunity, our expectations with respect to our business, markets, competitive position, and demand for our products post-pandemic, our expectations for economic recovery post-pandemic, our expectations for design services in the Vistaprint business and the success of the 99designs acquisition, the anticipated effects of our investments in our business including the hiring of talented personnel, sufficiency of our liquidity position, legal proceedings, and sufficiency of our tax reserves.

Without limiting the foregoing, the words “may,” “should,” “could,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “designed,” “potential,” “continue,” “target,” “seek” and similar expressions are intended to identify forward-looking statements.

1 unchanged sentence

Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various important factors, including but not limited to flaws in the assumptions and judgments upon which our forecasts and estimates are based;

the development, severity, and duration of the COVID-19 pandemic;

the development, severity, and duration of the COVID-19 pandemic and the timing and pace of economic recovery;

our failure to anticipate and react to the effects of the pandemic on our customers, supply chain, markets, team members, and business;

our inability to take the actions that we plan to take or the failure of those actions to achieve the results we expect;

our inability to make the investments that we plan to make or the failure of those investments to achieve the results we expect;

loss or unavailability of key personnel or our inability to recruit talented personnel to drive performance of our businesses;

the failure of businesses we acquire or invest in to perform as expected;

unanticipated changes in our markets, customers, or businesses;

1 unchanged sentence

our failure to manage the growth and complexity of our business and expand our operations;

the willingness of purchasers of customized products and services to shop online;

our failure to maintain compliance with the covenants in our debt documents or to pay our debts when due;

1 unchanged sentence

general economic conditions;

and other factors described in this Report.

You should carefully review those factors and also carefully review the risks outlined in other documents that we file from time to time with the United States Securities and Exchange Commission.

and other factors described in this Report and the other documents that we periodically file with the SEC.

Executive Overview

3 unchanged sentences

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

During the first quarter of fiscal 2020, we revised our internal organizational and reporting structure leading to changes in our Vistaprint and All Other Businesses reportable segments.

Our Vistaprint Corporate Solutions, Vistaprint India, and Vistaprint Japan businesses, which were previously aggregated based on materiality in our All Other Businesses, are now directly managed within the Vistaprint business.

These businesses are close derivatives or adjacencies of the Vistaprint business and leverage the Vistaprint brand, customers, technology, and/or other assets.

This change in reporting structure positions them closer to the Vistaprint operations, capabilities, and resources.

Additionally, during the fourth quarter of fiscal 2020, we reorganized technology teams that previously existed within our Vistaprint business and our central teams.

The reorganization resulted in some team member reductions in both organizations, and the net transfer of 177 team members from Vistaprint to our central Cimpress technology team.

This change is intended to free up resources to make more Vistaprint technologies available to other Cimpress businesses in the future, to accelerate Vistaprint's re-platforming efforts, and to reduce costs where no longer necessary.

We have revised our presentation of all prior periods presented to reflect our revised segment reporting.

As of June 30, 2021, we have numerous operating segments under our management reporting structure that are reported in the following five reportable segments:

1 unchanged sentence

Refer to Note 15 in our accompanying consolidated financial statements for additional information relating to our reportable segments and our segment financial measures.

Through the end of February 2020, Cimpress’ year-to-date revenue and adjusted EBITDA grew over the prior year.

However, the COVID-19 pandemic and related restrictions are impacting our small business customers around the world, which led to materially reduced demand for our products starting in March 2020, but month-over-month demand has been improving through June 2020, as consolidated bookings were down 19% in June, compared to a decline in consolidated bookings of 51% in April.

Our decentralized organizational structure has helped our pandemic response by allowing our decentralized businesses to move quickly to respond to local situations, whether that be related to the health and safety of our team members, reacting to government restrictions and guidelines, or serving our customers' needs.

At the same time, our leaders have shared best practices and approaches to pull on the strength of the collective whole.

Central teams have provided support, guidance, and a structure for coordination, and our businesses have focused on execution and innovation.

Cimpress moved quickly to respond along several dimensions, including team member health and safety, resiliency in continuing to serve our customers, financial flexibility to weather the effects of the pandemic, and innovation to provide customers and our communities the products they need during this pandemic.

All team members who have the ability to do so have been working from home and are doing so productively.

In cases where it is not possible for team members to work from home, such as in manufacturing or some customer service roles, Cimpress businesses are ensuring compliance with relevant laws and health guidelines and best practices, such as social distancing, temperature checks, mandatory face masks or face shields, and frequent deep cleaning of facilities.

While there have been improvements and some reductions to government restrictions in certain countries, the ultimate duration and scope of the pandemic remains unknown, so we have taken a series of decisive and proactive measures starting in March 2020 including the following:

Entered into an amendment to our senior secured credit agreement to provide a temporary suspension of prior maintenance covenants and raised new capital to provide a partial pay down to senior secured credit facility lenders;

Enacted significant cost-reduction and cash-preservation measures;

Maintained operational continuity to the greatest extent feasible while prioritizing the health and safety of our team members;

Protected key investments in technology, data infrastructure and customer value improvements.

We believe the actions we have taken or identified will create the time and financial flexibility to enable us to focus on execution through this pandemic, even if its negative effects were to be deeper and more prolonged than we currently anticipate.

Our near-term outlook has changed significantly in light of the COVID-19 pandemic and the impact it has had on our customers, and therefore, our results.

The timing of the initial impact on demand in March differed by business, with those having significant European exposure impacted earliest, while all segments realized improvements sequentially for the months of May and June 2020.

The improvements are the result of the start in many geographies of relaxed government restrictions that has driven more economic activity, in addition to our shift in focus to products and product templates that our customers need in the current environment.

Cost Reductions

We have reduced variable and semi-variable costs generally in line with the reduction in demand.

As demand fluctuates, the reduction happens naturally for many of these costs such as shipping costs, payment processing fees, and part of our performance advertising where costs are based on keyword searches and clicks.

For other of these costs, reduction requires us to take actions, such as temporarily reducing direct labor in production facilities or service locations or changing payback guidelines on advertising.

In addition, we have taken actions to reduce fixed costs, including, but not limited to, strict hiring limitations across all Cimpress businesses, elimination of discretionary spend such as travel, training and events, reduced work schedules where possible, deferral of all non-essential consulting projects, elimination of non-essential contractors and replacement of cash compensation during the fourth quarter with restricted share units (RSUs) for some team members.

Our goal with the fixed cost reductions made to date is to protect key growth investments and

as much full-time employment as possible so that when demand begins to recover, we are well positioned to regain momentum.

We anticipate that many of these lowered fixed costs will come back into the business when and if activity necessitates such costs including travel or hiring or as the recovery path becomes more certain such that team member benefits can be restored.

In fact, we have already resumed hiring in select areas like technology, data science and analytics.

While we believe it was appropriate to constrain costs in certain areas, we will continue to be disciplined in adding cost back where it makes sense to do so since we can't be certain of the shape and timing of demand recovery.

Throughout fiscal year 2021, the pandemic and related restrictions had a negative impact on most of our businesses, customers and the markets that we serve.

We've experienced improving trends in customer demand throughout the fiscal year, and we have experienced stronger recovery in demand in markets where pandemic restrictions have been lifted or are less severe.

During the second half of the fiscal year we've lapped the early periods of the pandemic which had the most severe impacts on customer demand.

The improving trends give us confidence that demand will continue to pick up as activity resumes in our markets around the world.

We continue to hire talent and make investments in technology, data, new product introduction, customer experience

improvements, and branding that are designed to build on our competitive advantages and drive growth in our businesses as we come out of the pandemic, although we can't forecast how long that will take.

We continue to maintain flexibility in our cost structure, while at the same time increasing investment in areas we believe will generate high return on investment beyond the pandemic.

Financial Summary

The primary financial metric by which we set quarterly and annual budgets both for individual businesses and Cimpress wide is our adjusted free cash flow before cash interest expense related to borrowing;

however, in evaluating the financial condition and operating performance of our business, management considers a number of metrics including revenue growth, constant-currency revenue growth, operating income, adjusted EBITDA, cash flow from operations and adjusted free cash flow.

however, in evaluating the financial condition and operating performance of our business, management considers a number of metrics including revenue growth, organic constant-currency revenue growth, operating income, adjusted EBITDA, cash flow from operations and adjusted free cash flow.

A summary of these key financial metrics for the year ended June 30, 2021 as compared to the year ended June 30, 2020 follows:

Fiscal Year 2021

Revenue decreased by 10% to $2,481.4 million .

Consolidated constant-currency revenue decreased by 9% and decreased by 11% when excluding acquisitions and divestitures completed in the last four quarters.

Operating income decreased by $107.6 million to $56.0 million .

Adjusted EBITDA (a non-GAAP financial measure) increased by $13.2 million to $399.8 million .

Cash provided by operating activities increased by $7.3 million to $338.4 million .

Adjusted free cash flow (a non-GAAP financial measure) increased by $32.2 million to $244.0 million .

For fiscal year 2020, the decrease in reported revenue is primarily due to a significant decline in order volumes starting in March, driven by the economic disruption associated with the COVID-19 pandemic lock downs and related restrictions.

Our year-to-date revenue results through February 2020, grew on a reported basis;

however we experienced a significant decline in demand starting in March 2020, which worsened in April 2020 before starting to recover in the last two months of fiscal 2020.

Currency exchange rate fluctuations negatively impacted revenue during the current fiscal year.

For the year ended June 30, 2020, operating income decreased by $107.6 million , due to the year over year increase in goodwill impairment charges of $93.3 million , as well as a decline in performance starting in March 2020 driven by the aforementioned impacts of COVID-19, which resulted in a decline in profitability for most of our businesses.

While we are not back to pre-pandemic levels of demand, we are steadily recovering, as consolidated bookings were down 19% in June, compared to a decline in consolidated bookings of 51% in April.

Prior to March 2020, profitability increased as a result of planned reductions in advertising spend for our Vistaprint and National Pen businesses combined with operational improvements in several of our businesses.

Our BuildASign business continued to grow and drive profit improvements even when the pandemic hit the U.S.

market as their home decor and pandemic-related signage products showed growth and resiliency, while net investments in our early-stage businesses decreased primarily due to pre-pandemic actions we have taken to improve the efficiency and focus of our Printi business compared to the prior year.

Adjusted EBITDA increased as compared to the year ended June 30, 2019, due to the pre-pandemic performance discussed above, but partially offset by the decline in profitability starting in March 2020 due to the impacts from the pandemic.

Adjusted EBITDA excludes the impact of the goodwill impairment discussed above, and includes the realized gains or losses on our currency derivatives intended to hedge adjusted EBITDA, and the net year-over-year impact of currency on consolidated adjusted EBITDA was not significant.

• Revenue increased by 4% to $2,592.5 million.

• Organic constant-currency revenue increased by 1% and decreased by 1% when excluding acquisitions completed in the last four quarters.

• Operating inco me increased by $67.5 million to $123.5 million.

• Adjusted EBITDA (a non-GAAP financial measure) decreased by $50.7 million to $349.1 million.

• Diluted net (loss) income per share attributable to Cimpress plc decreased to a loss per share in fiscal year 2021 of $2.99 from income per share of $3.00 in fiscal year 2020.

• Cash provided by operating activities decreased by $73.2 million to $265.2 million.

• Adjusted free cash flow (a non-GAAP financial measure) decreased by $78.2 million to $165.8 million.

For fiscal year 2021, the increase in reported revenue is primarily due to positive exchange rate fluctuations that benefited revenue, as well as the addition of the revenue of 99designs, which was acquired on October 1, 2020 and is included in our Vistaprint business.

Organic constant-currency revenue decreased as we continued to realize negative impacts from COVID-19, as pandemic-related restrictions in certain markets throughout the year reduced customer demand.

As restrictions started to ease in certain markets during the second half of the fiscal year, we began to see a strong correlation between markets with less pandemic-related restrictions and the recovery of customer demand.

Revenue from event-driven small business products were most impacted during the fiscal year, and were partially offset by continued growth in revenue from home decor and packaging products, as well as contributions from new products introduced in reaction to the pandemic such as face masks.

For fiscal year 2021, face masks contributed approximately 4% to total revenue, for which demand during the second half of fiscal year 2021 declined significantly due to increases in vaccination rates and reduction of mask requirements.

For the year ended June 30, 2021, operating income increased by $67.5 million, primarily driven by the non-recurrence of a $100.8 million goodwill impairment charge in the prior fiscal year, as well as variable cost controls, fixed cost savings and lower restructuring charges.

These items were partially offset by increased organic investments in hiring, technology, and upper-funnel brand and performance-based advertising spend primarily in Vistaprint.

Operating income was negatively impacted by $19.9 million of lease-related impairment and abandonment charges due to changes in our intended use of two leased locations, which we expect will deliver substantial cost savings in future periods.

Adjusted EBITDA decreased year over year, primarily due to the increased organic investments outlined above as well as the non-recurrence of of temporary cost reductions and the salary restructuring program that benefited the fourth quarter of fiscal 2020 by $9.0 million, which more than offset the gross profit increase from reported revenue growth.

Adjusted EBITDA excludes goodwill and other impairment charges, restructuring charges and share-based compensation expense, and includes the realized gains or losses on our currency derivatives intended to hedge adjusted EBITDA.

The net year-over-year impact of currency on consolidated adjusted EBITDA was unfavorable by approximately $14.7 million.

Diluted net (loss) income per share attributable to Cimpress plc decreased to a loss per share in fiscal year 2021 of $2.99 from income per share of $3.00 in fiscal year 2020.

The decrease is primarily due to the non-recurrence of a prior year tax benefit, the recognition in fiscal year 2021 of a loss on extinguishment of debt of $48.3

million, as well as increased interest expense and negative year-over-year realized and unrealized currency impacts.

Consolidated Results of Operations

1 unchanged sentence

Our businesses generate revenue primarily from the sale and shipment of customized manufactured products.

To a much lesser extent (and only in our Vistaprint business) we provide digital services, website design and hosting, and email marketing services, as well as generate a small percentage of revenue from order referral fees and other third-party offerings.

We also generate revenue, to a much lesser extent (and primarily in our Vistaprint business), from digital services, graphic design services, website design and hosting, and email marketing services, as well as generate a small percentage of revenue from order referral fees and other third-party offerings.

For additional discussion relating to segment revenue results, refer to the "Reportable Segment Results" section included below.

Total revenue and revenue growth by reportable segment for the years ended June 30, 2021 and 2020 are shown in the following table:

Year Ended June 30,

Impact of Acquisitions/Divestitures:

In thousands Year Ended June 30, Currency

Currency Impact of Acquisitions/Divestitures:

Constant- Currency Revenue Growth

(Favorable)/Unfavorable

Revenue Growth (1)

(Favorable)/Unfavorable

Excluding Acquisitions/Divestitures (2)

Change (Favorable)/Unfavorable Revenue Growth (1) (Favorable)/Unfavorable Excluding Acquisitions/Divestitures (2)

Vistaprint (3) $ 1,444,807 $ 1,337,291 8% (3)% 5% (4)% 1%

PrintBrothers 421,766 417,921 1% (7)% (6)% (1)% (7)%

The Print Group 275,534 275,214 —% (7)% (7)% —% (7)%

National Pen 313,528 299,474 5% (3)% 2% —% 2%

All Other Businesses 192,038 173,789 11% 1% 12% —% 12%

1 unchanged sentence

Total revenue $ 2,592,513 $ 2,481,358 4% (3)% 1% (2)% (1)%

Year Ended June 30,

Impact of Acquisitions/Divestitures:

In thousands Year Ended June 30, Currency

Currency Impact of Acquisitions:

Constant- Currency revenue growth

(Favorable)/Unfavorable

Revenue Growth (1)

(Favorable)/Unfavorable

Excluding Acquisitions/Divestitures (2)

Change (Favorable)/Unfavorable Revenue Growth (1) (Favorable)/Unfavorable Excluding Acquisitions (2)

Vistaprint $ 1,337,291 $ 1,508,322 (11)% 1% (10)% —% (10) %

PrintBrothers 417,921 443,987 (6)% 3% (3)% (2)% (5) %

The Print Group 275,214 325,872 (16)% 3% (13)% —% (13) %

National Pen 299,474 348,409 (14)% 1% (13)% —% (13) %

All Other Businesses 173,789 136,202 28% 1% 29% (25)% 4 %

6 unchanged sentences

(2) Constant-currency revenue growth excluding acquisitions/divestitures, a non-GAAP financial measure, excludes revenue results for businesses in the period in which there is no comparable year-over-year revenue.

Revenue from our fiscal year 2019 acquisitions is excluded from fiscal year 2020 revenue growth for quarters with no comparable year-over-year revenue.

For example, revenue from BuildASign, which we acquired on October 1, 2018 in Q2 2019, is excluded from revenue growth in Q1 of fiscal year 2019, with no Q1 results in the comparable period, but is included in organic revenue growth starting in Q2 of fiscal year 2020 and will be included in future quarters.

Our reportable segments-related growth is inclusive of inter-segment revenues, which are eliminated in our consolidated results.

(3) The All Other Businesses segment includes the revenue of the Albumprinter business until the sale completion date of August 31, 2017, VIDA revenue from its acquisition date of July 2, 2018 through its divestiture date of April 10, 2020, and BuildASign revenue from its acquisition date of October 1, 2018.

Constant-currency revenue growth excluding acquisitions/divestitures, excludes the revenue results for VIDA and BuildASign since their acquisition dates and Albumprinter and VIDA through their divestiture dates.

(3) The Vistaprint segment includes revenue from our 99designs business since its acquisition date of October 1, 2020.

We have provided these non-GAAP financial measures because we believe they provide meaningful information regarding our results on a consistent and comparable basis for the periods presented.

2 unchanged sentences

Consolidated Cost of Revenue

Cost of revenue includes materials used by our businesses to manufacture their products, payroll and related expenses for production and design services personnel, depreciation of assets used in the production process and in support of digital marketing service offerings, shipping, handling and processing costs, third-party production costs, costs of free products and other related costs of products our businesses sell.

Cost of revenue includes materials used by our businesses to manufacture their products, payroll and related expenses for production and design services personnel, depreciation of assets used in the production process and in support of digital marketing service offerings, shipping, handling and processing costs, third-party production and design costs, costs of free products and other related costs of products our businesses sell.

Year Ended June 30,

2021 2020 2019

Cost of revenue $ 1,316,441 $ 1,248,871 $ 1,401,344

For the year ended June 30, 2020 , consolidated cost of revenue decreased by $152.5 million , primarily due to demand-dependent cost of goods sold including third-party fulfillment, material, and shipping costs that have decreased across several of our segments that have been more significantly impacted by the COVID-19 pandemic lock downs and related restrictions.

Additionally, we realized approximately $11.6 million of wage offset benefit from government incentives in the fourth quarter.

This was partially offset by an increase in the cost of revenue from our BuildASign business, which was acquired on October 1, 2018 and is therefore not included for part of the comparable period, as well as an increase of costs for the remainder of the year, driven by BuildASign's continued revenue growth and resiliency through the pandemic.

A majority of our cost of revenue is variable with revenue demand, which contributed to flat year-over-year gross margins for the fourth quarter of fiscal 2020 despite pandemic-driven reductions in order volumes.

% of revenue 50.8 % 50.3 % 50.9 %

For the year ended June 30, 2021, consolidated cost of revenue increased by $67.6 million, primarily due to changes in currency that negatively impacted the current fiscal year, as well as the addition of cost of revenue from our 99designs business that is included from the acquisition date of October 1, 2020.

During the year ended June 30, 2021, we also recognized $12.2 million of losses associated with the decline in market demand and pricing for certain masks and related personal protective equipment (PPE) products, primarily in our National Pen and Vistaprint businesses.

These increases were partially offset by reductions in demand-dependent cost of goods sold including third-party fulfillment, material, and shipping costs in our segments that experienced year-over-year pandemic-related revenue declines.

For the years ended June 30, 2021 and 2020, we realized approximately $10.9 million and $11.6 million, respectively, of wage offset benefits from government incentives in locations where demand decreased materially but roles were maintained.

Consolidated Operating Expenses

1 unchanged sentence

Year Ended June 30,

2021 2020 2019

Technology and development expense $ 253,060 $ 253,252 $ 236,797

% of revenue 9.8 % 10.2 % 8.6 %

Marketing and selling expense $ 648,391 $ 574,041 $ 713,863

% of revenue 25.0 % 23.1 % 25.9 %

General and administrative expense (1) $ 195,652 $ 183,054 $ 162,652

% of revenue 7.5 % 7.4 % 5.9 %

Amortization of acquired intangible assets (2) $ 53,818 $ 51,786 $ 53,256

% of revenue 2.1 % 2.1 % 1.9 %

Restructuring expense (3) $ 1,641 $ 13,543 $ 12,054

% of revenue 0.1 % 0.5 % 0.4 %

Impairment of Goodwill (2) $ — $ 100,842 $ 7,503

(Gain) on sale of subsidiaries

% of revenue — % 4.1 % 0.3 %

_____________________

(1) General and administrative expense for the year ended June 30, 2021 includes lease impairment and abandonment charges for two leased locations totaling $19.9 million.

Refer to Note 16 for additional details.

(2) Refer to Note 8 in our accompanying consolidated financial statements for additional details related to the amortization of acquired intangibles and goodwill impairment charges.

(3) Refer to Note 18 in our accompanying consolidated financial statements for additional details relating to restructuring expense.

Technology and development expense

1 unchanged sentence

Depreciation expense for information technology equipment that directly supports the delivery of our digital marketing services products is included in cost of revenue.

During the year ended June 30, 2020 , technology and development expenses increased by $16.5 million , as compared to the prior year.

This was mainly driven by increased costs of $11.3 million in our central technology

teams, primarily due to an increase in headcount, as these teams continue to develop new technologies that are intended to support our businesses, combined with higher operating costs driven by our businesses' increased adoption and usage of our central technology capabilities, which was partially offset by a reduction in travel and training expenses during the fourth quarter of fiscal 2020.

Additionally, we had a $2.8 million increase of expense in our Vistaprint business, primarily related to the ongoing rebuild of its technology infrastructure.

The increase during the year ended June 30, 2020 , was also partially due to $5.2 million in the non-recurring reversal of share-based compensation expense for our supplemental PSUs in the comparative period.

Technology and development expenses decreased by $0.2 million for the year ended June 30, 2021, as compared to the prior comparative period.

Both periods benefited from decreases in costs from our fiscal year 2020 reorganization of our central and Vistaprint technology teams as well as reductions in discretionary spend including travel and training expenses.

These decreases were partially offset by increased investments during the second half of fiscal 2021, primarily in the Vistaprint business and our central technology group.

Marketing and selling expense

3 unchanged sentences

and third-party payment processing fees.

Our Vistaprint, National Pen and BuildASign businesses have higher marketing and selling costs as a percentage of revenue as compared to our PrintBrothers and The Print Group businesses.

Our marketing and selling expenses decreased by $139.8 million during the year ended June 30, 2020 , as compared to the prior year.

The decrease from the prior comparative period is primarily due to the reduction of advertising spend in our Vistaprint business of $104.3 million , which was driven by two factors.

The first was our reduction in advertising spend throughout the year as we continued our initiative to work to eliminate spend that does not meet our return thresholds.

This was combined with our response to the decline in order volumes that started in March 2020, whereby we further reduced our advertising spend by eliminating spend in certain marketing channels, while also tightening our required return thresholds.

We also recognized a decrease in marketing costs in our National Pen business of $28.8 million , primarily due to a planned reduction in direct mail prospecting activity as compared to last year's elevated levels, as well as pandemic-related initiatives to lower costs, which included the delay of direct mail marketing campaigns, lower online advertising spend and cost savings initiatives to reduce costs in service centers.

Our Vistaprint, National Pen and BuildASign businesses have higher marketing and selling costs as a percentage of revenue as compared to our PrintBrothers and The Print Group businesses due to differences in the customers that they serve.

For the year ended June 30, 2021, marketing and selling expenses increased by $74.4 million, as compared to the prior year.

The increase from the prior comparative period is primarily due to the increase of advertising and marketing spend in our Vistaprint business of $75.1 million.

The increase was driven by new investments in brand sponsorships and upper-funnel advertising, expansion of our required return thresholds on our advertising spend, as well as investment in hiring new talent, including for user experience and data and analytics roles that should help us continue to improve the effectiveness of our marketing, merchandising, and customer care activities.

The increase was also due to negative impacts from fluctuations in currency exchange rates.

These increases were partially offset by a decrease in marketing costs in our National Pen business of $9.2 million, primarily due to reductions to direct mail prospecting activities and savings from initiatives to reduce costs in service centers.

General and administrative expense

General and administrative expense consists primarily of transaction costs, including third-party professional fees, insurance and payroll and related expenses of employees involved in executive management, finance, legal, strategy, human resources and procurement.

For the year ended June 30, 2020 , general and administrative expenses increased by $20.4 million , as compared to the prior period, primarily due to an increase in consulting costs associated with strategic projects in our Vistaprint business, costs incurred centrally related to the cross-border Irish Merger, and professional fees and costs associated with our May 2020 financing activities.

Also included in the $20.4 million increase is additional share-based compensation expense of $8.1 million , primarily due to the reversal of supplemental PSU expense in the comparative period as well as a loss of $1.5 million associated with the sale of our VIDA business on April 10, 2020.

During the year ended June 30, 2020, we incurred additional costs from our BuildASign business as that business was only included for nine months of the comparable period.

Amortization of acquired intangible assets

Amortization of acquired intangible assets consists of amortization expense associated with separately identifiable intangible assets capitalized as part of our acquisitions, including customer relationships, trade names, developed technologies, print networks, and customer and referral networks.

Amortization of acquired intangible assets decreased by $1.5 million for the year ended June 30, 2020 , as compared to the year ended June 30, 2019 .

The reduction during the year ended June 30, 2020 is due to amortization within our PrintBrothers and The Print Group reportable segments as certain intangible assets became fully amortized during the prior fiscal year, partially offset by additional amortization for our BuildASign business caused by the prior year timing of the acquisition.

Restructuring expense

Restructuring expense consists of costs directly incurred as a result of restructuring initiatives, and includes employee-related termination costs, third party professional fees and facility exit costs.

During the year ended June 30, 2020 , we recognized restructuring expense of $13.5 million , primarily related to the reorganization of our Vistaprint and central technology teams that were intended to better align technology tribes and accelerate the Vistaprint re-platforming efforts, as well as cost savings actions taken by our National Pen business in response to the pandemic.

Comparatively, we recognized restructuring expense of $12.1 million during the year ended June 30, 2019 , primarily related to actions within our Vistaprint business.

Impairment of goodwill

For the year ended June 30, 2020 , we recognized goodwill impairment charges of $100.8 million .

We recognized a full goodwill impairment charge for our National Pen and VIDA reporting units, which amounted to $34.4 million and $26.0 million , respectively, as well as a partial goodwill impairment charge for our Exaprint reporting unit of $40.4 million .

These impairment charges were primarily due to lower cash flow expectations for each for these business as a result of the decline in demand caused by the COVID-19 pandemic lock down and related restrictions when compared to previous estimates.

Refer to Note 8 in our accompanying consolidated financial statements for additional details.

For the year ended June 30, 2021, general and administrative expenses increased by $12.6 million, as compared to the prior comparative period, due to $19.9 million of lease-related impairment and abandonment charges driven by changes in our office footprint at two leased locations.

The changes to our leased facility footprint are expected to result in substantial cost savings in future periods.

These increased expenses were partially offset by lower professional fees as a result of the non-recurrence of costs for strategic projects in our Vistaprint business, as well as the Cimpress cross-border merger to Ireland in fiscal year 2020.

We also realized lower discretionary spend due to cost control measures implemented in response to the pandemic.

Other Consolidated Results

Other income (expense), net

Other income (expense), net generally consists of gains and losses from currency exchange rate fluctuations on transactions or balances denominated in currencies other than the functional currency of our subsidiaries, as well as the realized and unrealized gains and losses on some of our derivative instruments.

Other (expense) income, net

Other (expense) income, net generally consists of gains and losses from currency exchange rate fluctuations on transactions or balances denominated in currencies other than the functional currency of our subsidiaries, as well as the realized and unrealized gains and losses on some of our derivative instruments.

In evaluating our currency hedging programs and ability to qualify for hedge accounting in light of our legal entity cash flows, we considered the benefits of hedge accounting relative to the additional economic cost of trade execution and administrative burden.

Based on this analysis, we execute certain currency derivative contracts that do not qualify for hedge accounting.

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

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

Year Ended June 30,

Gains (losses) on derivatives not designated as hedging instruments

Currency-related gains (losses), net

Total other income (expense), net

The decrease in other income (expense), net is primarily due to the currency exchange rate volatility impacting our derivatives that are not designated as hedging instruments, in which our Euro and British Pound contracts are the most significant exposures that we economically hedge.

2021 2020 2019

(Losses) gains on derivatives not designated as hedging instruments $ (20,728) $ 20,564 $ 23,494

Currency-related gains, net 8,523 2,309 2,506

Other gains 370 1 476

Total other (expense) income, net $ (11,835) $ 22,874 $ 26,476

The decrease in other (expense) income, net was primarily due to the currency exchange rate volatility impacting our derivatives that are not designated as hedging instruments, of which our Euro and British Pound contracts are the most significant exposures that we economically hedge.

We also recognize the impact from de-designated interest swap contracts that are no longer highly effective, which resulted in unrealized losses during the current period.

We expect volatility to continue in future periods, as we do not apply hedge accounting for most of our derivative currency contracts.

We also experienced currency-related gains due to currency exchange rate volatility on our non-functional currency intercompany relationships, which we may alter from time to time.

The impact of certain cross-currency swap contracts designated as cash flow hedges is included in our currency-related gains (losses), net, offsetting the impact of certain non-functional currency intercompany relationships.

We experienced currency-related losses due to currency exchange rate volatility on our non-functional currency intercompany relationships, which we may alter from time to time.

The impact of certain cross-currency swap contracts designated as cash flow hedges is included in our currency-related gains, net, offsetting the impact of certain non-functional currency intercompany relationships.

Interest expense, net

Interest expense, net primarily consists of interest paid on outstanding debt balances, amortization of debt issuance costs, debt discounts, interest related to finance lease obligations and realized gains (losses) on effective interest rate swap contracts and certain cross-currency swap contracts.

As part of interest expense, net, we also recognize changes to the estimated future redemption value of our mandatorily redeemable noncontrolling interests.

Interest expense, net increased by $12.7 million during the year ended June 30, 2020 , as compared to the prior comparable period.

This is due to additional interest expense associated with our senior secured credit facility as a result of our higher debt borrowing levels throughout the year, combined with the additional $200.0 million offering of our 7% senior unsecured notes in February 2020 and issuance of our $300.0 million 12% second lien notes in May 2020.

We expect interest expense to increase next fiscal year from the full year impact of the financing transactions described above.

Please refer to Note 10 in the accompanying consolidated financial statements for further detail.

Partially offsetting the increase in interest expense for the year ended June 30, 2020 , is a decrease in interest expense of $7.4 million related to the change in classification of our Waltham, Massachusetts lease upon adoption of ASC 842 in the first quarter of fiscal 2020.

Refer to Note 2 in the accompanying consolidated financial statements for additional details.

Income tax (benefit) expense

Interest expense, net increased by $43.5 million during the year ended June 30, 2021, as compared to the prior year.

This is primarily due to the additional $200.0 million offering of our 7.0% Senior Notes due 2026 (the "2026 Notes") in February 2020 and issuance of $300.0 million of our 12% Senior Secured Notes due 2025 (the "Second Lien Notes") in May 2020.

During the fourth quarter of fiscal year 2021, we amended and restated our senior secured credit agreement that resulted in borrowings under a Term Loan B and the early redemption of our Second Lien Notes in addition to paying down our Term Loan A due 2024 and the remaining amounts under our previous revolver due 2024.

We expect interest expense to decrease during the next fiscal year due to the refinancing.

Refer to Note 10 for additional details.

Loss on extinguishment of debt

As part of the amendment and restatement of our senior secured credit agreement described above, we redeemed all of the $300.0 million of our Second Lien Notes, which also required the payment of an early redemption premium of $9.0 million.

The loss on extinguishment of debt of $48.3 million included $39.4 million related to the early redemption of our Second Lien Notes.

This loss consisted of the early redemption premium, write-off of unamortized financing fees of $8.1 million and an accretion adjustment of $22.3 million to increase the carrying value of the Second Lien Notes to the principal amount.

The accretion adjustment is driven primarily by the previous allocation of proceeds to the warrants we issued in conjunction with the Second Lien notes, which reduced the carrying value of the Second Lien Notes.

As of June 30, 2021 the warrants remain outstanding.

In addition, we recognized a loss of $8.9 million for unamortized financing fees associated with the senior secured credit agreement.

Refer to Note 10 for additional details.

Income tax expense

Year Ended June 30,

Income tax (benefit) expense

2021 2020 2019

Income tax expense (benefit) $ 18,903 $ (80,992) $ 33,432

Effective tax rate (33.7) % (2,697.0) % 26.3 %

Income tax expense for the year ended June 30, 2020 decreased as compared to the prior year primarily due to Swiss Tax Reform, as discussed in more detail below.

Also, in addition to a more favorable mix of earnings year-over-year, we recognized tax benefits of $15.7 million related to excess tax benefits from share based compensation, as compared to $1.5 million in fiscal 2019, and $11.2 million for the re-measurement of U.S.

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

federal tax rates under the U.S.

Coronavirus Aid, Relief, and Economic Security Act ("US CARES Act").

We also recognized tax expense of $41.9 million to record a full valuation allowance against our U.S.

Income tax expense (benefit) for the year ended June 30, 2021 increased as compared to the prior year primarily due to significant Swiss Tax Reform benefits of $113.5 million recognized in the year ended June 30, 2020.

Also, in addition to decreased pre-tax profits and a less favorable mix of earnings year over year, we recognized tax benefits of $2.1 million related to excess tax benefits from share based compensation, as compared to $15.7 million in fiscal year 2020.

During the year ended June 30, 2021 we recognized a tax benefit of $6.7 million for the release of our valuation allowance in India as a result of increased profitability.

Additionally in fiscal year 2020, we recognized tax benefits of $11.2 million for the re-measurement of U.S.

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

federal tax rates under the US CARES Act and tax expense of $41.9 million to record a full valuation allowance against our U.S.

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

On October 25, 2019, the canton of Zurich enacted tax law changes by publishing the results of its referendum to adopt the Federal Act on Tax Reform and AHV Financing (TRAF), which we refer to as Swiss Tax Reform.

Swiss Tax Reform was effective as of January 1, 2020 and included the abolishment of various favorable federal and cantonal tax regimes.

Swiss Tax Reform provided transitional relief measures for companies that lost the tax benefit of a ruling, including a "step-up" for amortizable goodwill, equal to the amount of future tax benefit they would have received under their existing ruling, subject to certain limitations.

We recognized a tax benefit of $113.5 million to establish new Swiss deferred tax assets related to transitional relief measures and to remeasure our existing Swiss deferred tax assets and liabilities.

We don't expect to realize the majority of this benefit until fiscal 2025 through fiscal 2030.

The change in judgment to no longer recognize the deferred tax assets was driven by decreased profits due to impacts of the COVID-19 pandemic and goodwill impairments.

We believe that our income tax reserves are adequately maintained by taking into consideration both the technical merits of our tax return positions and ongoing developments in our income tax audits.

2 unchanged sentences

Reportable Segment Results

Our segment financial performance is measured based on segment EBITDA, which is defined as operating income plus depreciation and amortization (excluding depreciation and amortization related to our Waltham, Massachusetts office lease for prior periods presented);

Our segment financial performance is measured based on segment EBITDA, which is defined as operating income plus depreciation and amortization;

plus proceeds from insurance;

plus share-based compensation expense related to investment consideration;

2 unchanged sentences

plus restructuring related charges;

less interest expense related to our Waltham, Massachusetts office lease for prior periods presented;

less gain on purchase or sale of subsidiaries.

Year Ended June 30,

2021 2020 2019 2021 vs.

2020 2020 vs.

Reported Revenue $ 1,444,807 $ 1,337,291 $ 1,508,322 8% (11)%

Segment EBITDA 324,715 366,334 349,697 (11)% 5%

% of revenue 22 % 27 % 23 %

Segment Revenue

Vistaprint's reported revenue decline for the year ended June 30, 2020 was negatively affected by a currency impact of 1% for the year ended June 30, 2020 , resulting in constant-currency revenue decline of 10% .

The revenue decline was primarily driven by the pandemic, resulting in reduced demand starting in March 2020, which worsened in April, but started to recover during the months of May and June.

The improvements in May and June are the result of our shift in focus to products and product templates that our customers need in the current environment, but also the start in many geographies of relaxed government restrictions that has driven more economic activity.

While we have experienced improved demand in the last two months of the fiscal year, we expect there to be volatility in future demand, as social distancing measures and other restrictions continue to evolve and impact commerce for small businesses.

Additionally, prior to March 2020, reductions in advertising spend resulted in declines in revenue from new customers as a result of our targeted elimination of inefficient advertising spend, although we still experienced growth in repeat customer revenue.

Vistaprint's reported revenue growth for the year ended June 30, 2021 was positively affected by a currency impact of 3%.

When excluding the benefit from the recent acquisition of 99designs, Vistaprint's organic constant-currency revenue growth was 1%.

Vistaprint's revenue continued to be influenced by the severity of pandemic-related restrictions.

Our per-customer economics continued to improve, though our new and repeat customer count remain impacted by the pandemic.

Revenue grew significantly year over year during the months of March through June 2021 as restrictions loosened in some markets and we lapped the earliest periods impacted by the pandemic in fiscal year 2020.

Prior to March 2021, our revenue declined year over year because the prior-year comparable periods were not affected by the pandemic.

Revenue during the current year benefited from the sale of pandemic-related products such as masks, but we do not expect to have significant revenue from these products in fiscal year 2022.

Segment Profitability

For the year ended June 30, 2020 , the increase to Vistaprint's segment EBITDA was primarily due to a reduction to, and improved efficiency of, advertising spend.

Vistaprint also drove improvements to segment EBITDA through new offers, reduced discounting and other operational improvements.

Starting in March segment EBITDA was negatively impacted by lower gross profit driven by decreased demand offset by further reductions to advertising spend as well as other operating cost reduction measures.

Segment EBITDA for fiscal 2020 was also impacted by increases in technology investments to rebuild Vistaprint's technology infrastructure and consulting projects related to Vistaprint's transformation efforts.

Vistaprint's segment EBITDA was also negatively impacted by currency movements during the year.

For the year ended June 30, 2021, the decline in segment EBITDA was due to the pandemic impacts on revenue, as well as increased organic growth investments.

As our confidence in the recovery improved we expanded payback thresholds for performance based advertising and layered on upper-funnel advertising investment.

We also increased investment in hiring particularly in the second half of the fiscal year as we increase our capabilities to deliver against our mission of establishing Vistaprint as the expert marketing and design partner for small businesses.

These were partially offset by technology savings from our fiscal year 2020 restructuring, reduced spend for consulting projects compared to the prior year period, and year-over-year reductions in office-related costs as we reduced our office footprint in our move to a remote-first work approach.

Vistaprint's segment EBITDA was positively impacted by currency movements during the current year.

During each of the current and prior fiscal year, we received government incentives of more than $9.0 million to offset wages in locations where demand decreased materially but roles were maintained.

We expect these government incentives to decrease in fiscal year 2022 if the effects of the pandemic continue to be less significant.

PrintBrothers

Year Ended June 30,

2021 2020 2019 2021 vs.

2020 2020 vs.

Reported Revenue $ 421,766 $ 417,921 $ 443,987 1% (6)%

Segment EBITDA 43,144 39,373 43,474 10% (9)%

% of revenue 10 % 9 % 10 %

Segment Revenue

PrintBrothers ' reported revenue decline for the year ended June 30, 2020 was negatively affected by a currency impact of 3% , resulting in constant-currency revenue decline, excluding the impact of acquisitions, of 5% for the year ended June 30, 2020 .

The revenue decline was due to impacts from COVID-19 lock downs and related restrictions, which varied by country.

For each business in the group, revenue improved sequentially in May and June as economic activity started to reemerge in many European countries.

PrintBrothers' reported revenue growth for the year ended June 30, 2021 was positively affected by a currency impact of 7%, resulting in a constant-currency revenue decline of 6%.

The revenue decline was due to pandemic-related decreases in demand.

Throughout the year, segment revenue was strongly influenced by the changing severity of restrictions in most European countries.

The negative impacts of the pandemic were partially offset by a continued focus on new product introduction.

Revenue grew significantly year over year during the fourth quarter of fiscal year 2021 as restrictions loosened in some markets and we lapped the earliest periods impacted by the pandemic in fiscal year 2020.

Segment Profitability

PrintBrothers ' segment EBITDA decreased during the year ended June 30, 2020 as compared to the prior comparative period, due primarily to the revenue declines as described above.

The decrease was also impacted by increased investments in technology intended to improve the customer value proposition of each business and negative impacts from currency movements, partially offset by operating expense efficiencies earlier in the year as well as the vertical integration of a former supplier in one of our businesses during the first quarter of fiscal year 2020.

The increase in PrintBrothers' segment EBITDA during the year ended June 30, 2021, as compared to the prior period, was driven by variable and discretionary cost controls, production efficiencies and positive impacts from currency movements, which more than offset the decrease in gross profit that was driven by the constant-currency revenue decline described above.

The Print Group

Year Ended June 30,

2021 2020 2019 2021 vs.

2020 2020 vs.

Reported Revenue $ 275,534 $ 275,214 $ 325,872 —% (16)%

Segment EBITDA 43,126 51,606 63,997 (16)% (19)%

% of revenue 16 % 19 % 20 %

Segment Revenue

The Print Group 's reported revenue decline for the year ended June 30, 2020 was negatively affected by a currency impact of 3% , resulting in a decrease in revenue on a constant-currency basis of 13% .

The constant-currency revenue decrease was driven by a significant decline in order volumes during the fourth quarter, and in particular our Pixartprinting business that was more significantly impacted by tighter government restrictions in Italy and Spain, where the business has meaningful revenue.

For each business in the group, revenue improved sequentially in May and June as economic activity started to resume in many European countries.

The Print Group's reported revenue for the year ended June 30, 2021 was positively affected by a currency impact of 7%, resulting in a decrease in revenue on a constant-currency basis of 7% due to pandemic-related decreases in demand.

Despite these pressures, our businesses have found pockets of strength in demand and pivoted quickly over the last year to deliver quality offerings to help fill in some of the reduced demand in other areas, including the launch of new products for other Cimpress businesses.

During the fourth quarter of fiscal 2021, revenue grew significantly year over year as restrictions loosened in some markets and we lapped the earliest periods impacted by the pandemic in fiscal year 2020.

Segment Profitability

The Print Group 's segment EBITDA decreased during the year ended June 30, 2020 , as compared to the prior period, primarily driven by the revenue decline described above, as well as investments in technology and unfavorable currency impacts, partially offset by efficiency gains from better leveraging the assets of the group through the mass customization platform (MCP).

Year Ended June 30,

The decrease in Print Group's segment EBITDA during the year ended June 30, 2021, as compared to the prior year, was primarily driven by the revenue decline described above.

This was partially offset by discretionary cost controls and efficiency gains from leveraging our mass customization platform to shift production to lower-cost sources.

The Print Group's segment EBITDA was positively impacted by currency movements as compared to the prior fiscal year.

In thousands Year Ended June 30,

2021 2020 2019 2021 vs.

2020 2020 vs.

Reported Revenue $ 313,528 $ 299,474 $ 348,409 5% (14)%

Segment EBITDA 11,644 7,605 17,299 53% (56)%

Segment Revenue

National Pen's reported revenue decrease for the year ended June 30, 2020 was negatively affected by a currency impact of 1% as compared to the prior year, resulting in constant-currency revenue decline of 13% for the year ended June 30, 2020 .

Revenue was negatively impacted starting in March by the pandemic lock downs and related restrictions, as well as actions taken to defer direct mail advertising campaigns until economic activity improves.

Prior to the pandemic, the decline in revenue was also driven by lower direct mail volumes which were expected due to our reductions to our prospecting activity spend targeted at reducing inefficient mail order advertising.

% of revenue 4 % 3 % 5 %

Segme nt Revenue

National Pen's reported revenue growth for the year ended June 30, 2021 was positively affected by a currency impact of 3%, resulting in a constant-currency revenue growth of 2%.

Product sales to other Cimpress businesses continued to supplement some of the lost volume from lower demand, but to a lesser extent during the second half of the fiscal year as the demand for face masks has declined.

Revenue during the fourth quarter of fiscal year 2021 grew significantly year over year as we lapped the earliest periods impacted by the pandemic in fiscal year 2020, while also experiencing improving trends in customer demand as restrictions loosened in some markets.

Segment Profitability

The decrease in National Pen's segment EBITDA for the year ended June 30, 2020 , was due to the top-line revenue decline described above.

A portion of the revenue decline was mitigated by proactive measures to quickly remove variable costs as well as some fixed costs, while protecting key multi-year investments in technology.

In addition, we have realized operational improvements, which included the initial steps of migrating our European mail fulfillment from Mexico to Europe to reduce disruptions that occurred in transit during the prior year period.

Currency had a negative impact on segment EBITDA for the year ended June 30, 2020 .

The increase in National Pen's segment EBITDA for the year ended June 30, 2021 was due in part to the revenue increase described above, as well as reduced variable cost, advertising and other discretionary spend.

Segment EBITDA increased for the fiscal year ended June 30, 2021 as a result of a focused effort to improve efficiency across multiple areas, including telesales and customer service.

The improved profit was partially offset by a negative impact of $8.2 million of losses and reserves due to shifts in demand for masks and other PPE products, which led to us selling disposable masks at a loss and to record an inventory reserve to reduce the carrying value of certain PPE products.

National Pen's segment EBITDA was positively impacted by currency movements for the year ended June 30, 2021.

All Other Businesses

Year Ended June 30,

2021 2020 2019 2021 vs.

2020 2020 vs.

Reported Revenue (1) $ 192,038 $ 173,789 $ 136,202 11% 28%

Segment EBITDA (1) 31,707 17,474 (6,317) 81% 377%

% of revenue 17 % 10 % (5) %

___________________

(1) Our All Other Businesses segment includes the results of our fiscal 2019 acquisition, BuildASign, from October 1, 2018, and our VIDA acquisition from July 2, 2018 through the divestiture date of April 10, 2020.

With the exception of BuildASign which is a larger and profitable business, this segment consists of multiple small, rapidly evolving early-stage businesses through which Cimpress is expanding to new markets.

These businesses are subject to high degrees of risk and we expect that each of their business models will rapidly evolve in function of future trials and entrepreneurial pivoting.

These early-stage businesses continue to have operating losses as previously described and as planned.

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

This segment consists of BuildASign, which is a larger and profitable business, and smaller businesses through which Cimpress is expanding to new markets or new product categories, which continue to have operating losses as previously described and as planned.

Segment Revenue

Organic constant-currency revenue, excluding the year-over-year impact of the BuildASign acquisition during the first quarter of fiscal year 2020 during which there was no comparative revenue in the year-ago period, increased by 4% for the year ended June 30, 2020 .

This was primarily driven by growth throughout the year at BuildASign, even during the pandemic with strength in home decor and pandemic-related signage products.

All Other Businesses revenue was negatively impacted by a decrease in revenue in our Printi business as compared to the prior year period, primarily due to actions we have taken to improve the efficiency and focus of the business, which included foregoing certain revenue channels that we believe did not have a high probability of earning sufficient returns on the capital and focus they consumed.

All Other Businesses' constant-currency revenue excluding the impact of acquisitions increased by 12% during the year ended June 30, 2021.

This was primarily driven by continued growth at BuildASign, whose home décor and certain applications for signage products continued to generate strong results.

BuildASign's strong execution was aided by the business increasingly leveraging our mass customization platform to fulfill orders for other Cimpress businesses, avoid capacity constraints, drive new product introduction, and improve customer experience.

Segment Profitability

The improvement in the All Other Businesses segment EBITDA for the year ended June 30, 2020 , as compared to the prior period, was primarily due to EBITDA growth of BuildASign primarily driven by the revenue growth described above and the timing of the acquisition.

Additionally, we significantly reduced the losses of our Printi business, due to the fiscal 2019 restructuring of our Printi business, which included clarifying its focus and operating model.

Each business within the All Other Businesses segment improved its profitability for the year ended June 30, 2021 as compared to the prior year, with the overall improvement primarily driven by revenue growth and manufacturing efficiency in BuildASign.

Printi and YSD reduced losses through revenue growth and improved efficiency.

Our divestiture of loss-making VIDA in the fourth quarter of fiscal year 2020 also contributed to year-over-year profit improvements in fiscal year 2021.

Central and Corporate Costs

5 unchanged sentences

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

Central and corporate costs increased by $23.1 million during the year ended June 30, 2020 as compared to the prior year, driven by increases to share-based compensation of $13.2 million .

The increase to share-based compensation is driven by the prior year benefit recognized for the reversal of expense associated our supplemental PSUs, that did not recur in the current period.

We also recognized an increase in professional fees of $2.9 million , primarily due to the December 2019 Irish Merger and April 2020 financing activities, an additional $1.2 million of payroll taxes for option exercises, as well as an increase in central technology investments and operating costs driven by our businesses' increased adoption and usage of our central technology capabilities.

Central and corporate costs decreased by $5.0 million during the year ended June 30, 2021, as compared to the prior year, due to lower professional fees, share-based compensation expense and discretionary spend, including travel and training costs, as well as savings from the prior year reorganization of our central technology team.

Liquidity and Capital Resources

1 unchanged sentence

Year Ended June 30,

2021 2020 2019

Net cash provided by operating activities $ 265,221 $ 338,444 $ 331,095

Net cash used in investing activities (354,316) (66,864) (420,166)

Net cash (used in) provided by financing activities

At June 30, 2020 , we had $45.0 million of cash and cash equivalents and $1,482.2 million of debt, excluding debt issuance costs, and debt premiums and discounts.

Under the terms of our April 28, 2020 credit facility amendment, we are required to use cash balances in excess of $100.0 million , if any, to repay the revolving loans under our senior secured credit facility.

Net cash provided by (used in) financing activities 224,128 (258,255) 81,989

The cash flows during the year ended June 30, 2021 related primarily to the following items:

Cash inflows:

Net income of $84.0 million

Adjustments for non-cash items of $215.0 million primarily related to positive adjustments for depreciation and amortization of $167.9 million , goodwill impairment of $100.8 million , share-based compensation costs of $34.9 million and unrealized currency-related losses of $6.9 million , partially offset by non-cash tax related items of $106.9 million

Proceeds of debt and warrants of $426.1 million , net of repayments and debt issuance costs

Proceeds from the settlement of net investment hedges of $29.8 million

The change in operating assets and liabilities were a source of cash during the period, driven by actions taken in response to the pandemic, which included partnering with suppliers and leaseholders to defer payments, as well as receiving timing relief for indirect taxes and employer taxes in certain jurisdictions.

• Adjustments for non-cash items of $285.3 million primarily related to positive adjustments for depreciation and amortization of $173.2 million, loss on early extinguishment of debt of $48.3 million, share-based compensation costs of $37.0 million, $19.9 million of lease-related long-lived asset impairments and unrealized currency-related losses of $10.0 million

• Proceeds from borrowings and the issuance of our Term Loan B of $251.9 million, net of borrowings and repayment of our senior secured revolver, term loan A, and Second Lien Notes and inclusive of debt issuance costs due to our May 2021 refinancing;

a portion of these proceeds have resulted in an increase to our cash and marketable securities balances

• Total net working capital impacts of $54.9 million were a source of cash.

Inventory, accounts payable, and accrued expenses inflows were partially offset by accounts receivable and other asset outflows

Cash outflows:

Purchases of our ordinary shares for $627.1 million

Capital expenditures of $50.5 million of which the majority related to the purchase of manufacturing and automation equipment for our production facilities and computer and office equipment

Internal costs for software and website development that we have capitalized of $44.0 million

Payment of withholding taxes in connection with share awards of $41.7 million

• Net loss of $74.9 million

• Purchase of held to maturity securities of $203.6 million, driven by the additional liquidity provided by the May 2021 refinancing

• Internal and external costs of $60.9 million for software and website development that we have capitalized

• Purchase consideration for acquisitions of $53.4 million, net of cash acquired, which primarily relates to our acquisition of 99designs, excluding the deferred payment and post-closing adjustment that are payable February 15, 2022

• Capital expenditures of $38.5 million of which the majority related to the purchase of manufacturing and automation equipment for our production facilities

• Payments for finance lease arrangements of $8.0 million

Payments for acquisitions of $4.3 million , net of cash acquired

• Payment of withholding taxes in connection with share awards of $5.8 million

• Purchase of noncontrolling interest of $5.1 million and distribution to noncontrolling interest holders of $4.7 million

Additional Liquidity and Capital Resources Information.

At June 30, 2021, we had $183.0 million of cash and cash equivalents, $203.0 million of marketable securities and $1,764.9 million of debt, excluding debt issuance costs and debt premiums and discounts.

During the year ended June 30, 2021, we financed our operations and strategic investments through internally generated cash flows from operations and debt financing.

We expect to finance our future operations through our cash, investments, operating cash flow and borrowings under our debt arrangements.

As of June 30, 2021, a portion of our cash and cash equivalents were held by our subsidiaries, and undistributed earnings of our subsidiaries that are considered to be indefinitely reinvested were $43.4 million.

1 unchanged sentence

If there is a change in the future, the repatriation of undistributed earnings from certain subsidiaries, in the form of dividends or otherwise, could have tax consequences that could result in material cash outflows.

Due to the uncertainty created by the COVID-19 pandemic, we took proactive measures to maintain our financial strength and flexibility by raising $300.0 million of capital on May 1, 2020 by issuing second lien notes and warrants.

The net proceeds of this capital raise were used to pay down a portion of the term loans under our senior secured credit facility in order to secure the suspension of our quarterly maintenance covenants related to our leverage and interest coverage ratios until the quarter ending December 31, 2021.

Refer to Note 10 in our accompanying consolidated financial statements for additional details.

In response to the pandemic-related decrease in revenue, we have taken actions to reduce cash costs while protecting key investments we were making prior to the pandemic.

We have historically allocated a material amount of capital to purchases of our ordinary shares and corporate acquisitions.

The April 2020 amendment to our credit facility prohibits us from repurchasing our shares and substantially limits acquisitions for the period in which the financial maintenance covenants associated with our senior secured credit facility are suspended.

We evaluated our liquidity position as of the date of the issuance of our consolidated financial statements and we conclude our financial position, net cash provided by operations combined with our cash and cash equivalents, borrowing availability under our revolving credit facility, and the May 2020 temporary maintenance covenant suspension and capital raise as described in Note 10 will be sufficient to fund our current obligations, capital spending, debt service requirements and working capital requirements over at least the next twelve months.

As of June 30, 2020 , we had aggregate loan commitments from our senior secured credit facility totaling $998.1 million .

The loan commitments consisted of revolving loan borrowings of $422.4 million and term loans of $148.1 million .

We have other financial obligations that constitute additional indebtedness based on the definitions within the credit facility.

As of June 30, 2020 , the amount available for borrowing under our senior secured credit facility was as follows:

June 30, 2020

Maximum aggregate available for borrowing

Outstanding borrowings of senior secured credit facility

Remaining amount

Limitations to borrowing due to debt covenants and other obligations (1)

Amount available for borrowing as of June 30, 2020 (2)

_________________

(1) As of June 30, 2020 , our pre-existing financial maintenance covenants are suspended and we are in compliance with the new restrictions in place, with the primary maintenance covenant during the suspension period that we must maintain liquidity above $50.0 million .

Refer to Note 10 in our accompanying consolidated financial statements for further description of the restrictions in place during the covenant suspension period.

(2) Share purchases, dividend payments, and corporate acquisitions are subject to more restrictive covenants, and therefore we may not be able to use the full amount available for borrowing for these purposes.

As of June 30, 2021, we have borrowings under our amended and restated senior secured credit agreement dated as of May 17, 2021 (the "Restated Credit Agreement") of $1,152.0 million consisting of the Term Loan B, which amortizes over the loan period, with a final maturity date of May 17, 2028.

Our $250.0 million revolver under our Restated Credit Agreement has $244.4 million unused as of June 30, 2021.

There are no drawn amounts on the revolver that would trigger financial maintenance covenants, but our outstanding letters of credit reduce our unused balance.

Our unused balance can be drawn at any time so long as we are in compliance with our debt covenants.

Debt Covenants.

As part of the April 2020 amendment to our senior secured facility, we have suspended our pre-existing maintenance covenants, including the total and senior secured leverage covenants and interest coverage ratio covenant through December 31, 2021.

We used the proceeds of the Term Loan B under the Restated Credit Agreement to repay all outstanding borrowings under our previous credit facility, to redeem our Second Lien Notes and to bring our primary source of liquidity onto our balance sheet in the form of cash, cash equivalents and marketable securities.

The Restated Credit Agreement contains covenants that restrict or limit certain activities and transactions by Cimpress and our subsidiaries.

Refer to Note 10 in our accompanying consolidated financial statements for additional information.

As of June 30, 2020 , we are in compliance with the applicable restrictions under our credit agreement, senior unsecured notes indenture, and second lien notes indenture in place during the covenant suspension period.

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

As of June 30, 2020 , we had $11.7 million outstanding for other debt payable through March 2025 .

As of June 30, 2021, we had $12.8 million outstanding for other debt payable through January 2026.

Contractual Obligations

Contractual obligations at June 30, 2021 are as follows:

Payments Due by Period

In thousands Payments Due by Period

Operating leases, net of subleases (1) $ 99,398 $ 28,407 $ 44,425 $ 19,667 $ 6,899

1 unchanged sentence

Senior unsecured notes and interest payments 810,000 42,000 84,000 684,000 —

Second lien notes and interest payments

Other debt and interest payments (2)

Senior secured credit facility and interest payments (2) 1,495,424 66,821 126,690 119,850 1,182,063

Other debt 12,212 2,587 7,120 2,505 —

Finance leases, net of subleases (1) 46,668 31,570 9,643 4,463 992

Other 45,025 44,989 36 — —

Total (3) $ 2,753,876 $ 354,337 $ 352,976 $ 856,609 $ 1,189,954

___________________

(1) Operating and finance lease payments included above include only amounts which are fixed under lease agreements.

Our leases may also incur variable expenses.

Refer to our lease accounting policy in Note 2 in our accompanying consolidated financial statements for additional information.

(2) Other debt and interest payments include the effects of interest rate swaps, whether they are expected to be payments or receipts of cash.

We have excluded the effect of interest rate swaps of $2.0 million within the more than five years category above as that period extends beyond the term of our debt and the interest rate swaps do not yet offset contractual interest payments.

(1) Operating and finance lease payments above include only amounts which are fixed under lease agreements.

Our leases may also incur variable expenses which are not reflected in the contractual obligations above.

(2) Senior secured credit facility and interest payments include the effects of interest rate swaps, whether they are expected to be payments or receipts of cash.

(3) We may be required to make cash outlays related to our uncertain tax positions.

1 unchanged sentence

Accordingly, uncertain tax positions of $9.2 million as of June 30, 2021 have been excluded from the contractual obligations table above.

For further information on uncertain tax positions, see Note 13 in our accompanying consolidated financial statements.

See Note 13 in our accompanying consolidated financial statements for further information on uncertain tax positions.

Operating Leases .

We rent office space under operating leases expiring on various dates through 2034.

The terms of certain lease agreements require security deposits in the form of bank guarantees and letters of credit in the amount of $2.1 million .

The terms of certain lease agreements require security deposits in the form of bank guarantees and letters of credit in the amount of $0.9 million in the aggregate.

Purchase Commitments .

At June 30, 2021, we had unrecorded commitments under contract of $245.1 million.

Purchase commitments consisted of third-party web services of $61.7 million , inventory purchase commitments of $21.8 million , commitments for professional and consulting fees of $3.8 million , production and computer equipment purchases of approximately $0.9 million , commitments for advertising campaigns of $1.0 million , and other unrecorded purchase commitments of $20.5 million .

Purchase commitments consisted of third-party web services of $95.5 million, software of $47.7 million, inventory and third-party fulfillment purchase commitments of $55.5 million, advertising of $13.0 million, commitments for professional and consulting fees of $7.4 million, production and computer equipment purchases of $14.7 million and other unrecorded purchase commitments of $11.2 million.

Senior Unsecured Notes and Interest Payments.

Our 7.0% senior unsecured notes due 2026 bear interest at a rate of 7.0% per annum and mature on June 15, 2026.

Our $600.0 million of 2026 Notes bear interest at a rate of 7.0% per annum and mature on June 15, 2026.

Interest on the notes is payable semi-annually on June 15 and December 15 of each year and has been included in the table above.

Second Lien Notes and Interest Payments.

Our 12.0% senior secured notes due 2025 bear interest at a rate of 12.0% per annum and mature on May 15, 2025.

Interest on the notes is payable semi-annually on May 15 and November 15 of each year and has been included in the table above.

At our option, we may elect to pay interest on up to 50.0% of the then outstanding principal amount of the notes as paid-in-kind and applied to the outstanding principal balance of the notes.

Other Debt and Interest Payments.

At June 30, 2020 , the term loans of $148.1 million outstanding under our credit agreement had repayments due on various dates through November 15, 2024, with the revolving loans outstanding under our $422.4 million revolving credit facility due on November 15, 2024.

Interest payable included in this table is based on the interest rate as of June 30, 2020 , and assumes all LIBOR-based revolving loan amounts outstanding will not be paid until maturity, but that the term loan amortization payments will be made according to our defined schedule and all Prime rate based revolving loan amounts will be paid within a year.

Interest payable includes the estimated impact of our interest rate swap agreements.

In addition, we have other debt which consists primarily of term loans acquired through our various acquisitions or used to fund certain capital investments, and as of June 30, 2020 we had $11.7 million outstanding for those obligations that have repayments due on various dates through March 2025 .

Senior Secured Credit Facility and Interest Payments.

At June 30, 2021, the Term Loan B of $1,152.0 million outstanding under our Restated Credit Agreement had repayments due on various dates through May 17, 2028, and we did not have any amounts drawn under our revolving credit facility due on May 17, 2026.

Interest payable included in this table is based on the interest rate as of June 30, 2021, and assumes all LIBOR-based revolving loan amounts outstanding will not be paid until maturity, but that the term loan amortization payments will be made according to our defined schedule.

In addition, we have other debt which consists primarily of term loans acquired through our various acquisitions or used to fund certain capital investments, and as of June 30, 2021 we had $12.8 million outstanding for those obligations that have repayments due on various dates through January 2026.

Finance Leases.

4 unchanged sentences

Other obligations include deferred payments related to previous acquisitions of $45.0 million in the aggregate.

This balance includes the deferred payment related to the 99designs acquisition totaling $44.4 million.

Refer to Note 7 in our accompanying consolidated financial statements for additional details.

Additional Non-GAAP Financial Measures

Adjusted EBITDA and adjusted free cash flow presented below, and constant-currency revenue growth and constant-currency revenue growth excluding acquisitions/divestitures presented in the consolidated results of operations section above, are supplemental measures of our performance that are not required by, or presented in accordance with, GAAP.

Adjusted EBITDA is defined as GAAP operating income plus depreciation and amortization (excluding depreciation and amortization related to our Waltham, Massachusetts office lease) plus share-based compensation expense plus proceeds from insurance plus earn-out related charges plus certain impairments plus restructuring related charges plus realized gains or losses on currency derivatives less interest expense related to our Waltham, Massachusetts office lease less gain on purchase or sale of subsidiaries.

We note that with the adoption of ASC 842, the Waltham, Massachusetts office lease has been reclassified from a build-to-suit lease to an operating lease, and therefore the depreciation and interest expense adjustments that were made in comparative periods will no longer be made beginning in the first fiscal quarter of 2020, as any impact from the Waltham lease will be reflected in operating income.

Refer to Note 2 in our accompanying consolidated financial statements for additional details.

Adjusted EBITDA is defined as GAAP operating income plus depreciation and amortization plus share-based compensation expense plus proceeds from insurance plus earn-out related charges plus certain impairments plus restructuring related charges plus realized gains or losses on currency derivatives less interest expense related to our Waltham, Massachusetts office lease less gain on purchase or sale of subsidiaries.

Adjusted EBITDA is the primary profitability metric by which we measure our consolidated financial performance and is provided to enhance investors' understanding of our current operating results from the underlying and ongoing business for the same reasons it is used by management.

8 unchanged sentences

Additionally, the mix of property, plant and equipment purchases that we choose to finance may change over time.

We believe it is important to view our adjusted free cash flow measure

only as a complement to our entire consolidated statement of cash flows.

We believe it is important to view our adjusted free cash flow measure only as a complement to our entire consolidated statement of cash flows.

The table below sets forth operating income and adjusted EBITDA for the years ended June 30, 2021, 2020 and 2019:

Year Ended June 30,

In thousands Year Ended June 30,

2021 2020 2019

GAAP operating income $ 123,510 $ 55,969 $ 163,607

8 unchanged sentences

Interest expense for Waltham, MA lease (1) — — (7,236)

Gain on purchase or sale of subsidiaries

Realized gains on currency derivatives not included in operating income

Realized (losses) gains on currency derivatives not included in operating (loss) income (6,854) 24,533 20,289

Adjusted EBITDA $ 349,118 $ 399,779 $ 386,547

_________________

(1) Upon the adoption of the new leasing standard on July 1, 2019, our Waltham, MA lease, which was previously classified as build-to-suit, is now classified as an operating lease under the new standard.

Therefore, the Waltham depreciation and interest expense adjustments that were made in comparative periods are no longer adjusted beginning in the first fiscal quarter of 2020, as any impact from the Waltham lease will be reflected in operating income.

Refer to Note 2 in our accompanying consolidated financial statements for additional details.

(1) Upon the adoption of the new leasing standard on July 1, 2019, our Waltham, MA lease, which was previously classified as build-to-suit, was classified as an operating lease.

Therefore, the Waltham depreciation and interest expense adjustments that were made in fiscal year 2019 are no longer being made beginning in fiscal year 2020, as any impact from the Waltham lease is reflected in operating income.

(2) The adjustment for share-based compensation expense excludes the portion of share-based compensation expense included in restructuring related charges, if any, to avoid double counting.

(3) Includes the impact of certain impairments of goodwill and other long-lived assets as defined by ASC 350 - "Intangibles - Goodwill and Other", as well losses recognized for fair value adjustments to the disposal group associated with held for sale assets and liabilities as defined by ASC 360 - "Property, Plant, and Equipment" and reserves recognized for loans as defined by ASC 326 - "Financial Instruments - Credit Losses."

(3) During the year ended June 30, 2021, we recognized impairment and abandonment charges of $19.9 million for the change in nature of use for two of our leased locations.

These impairment and abandonment charges are classified within general and administrative expense in the consolidated statement of operations.

Refer to Note 16 in our accompanying financial statements for more information.

We also recognized $0.6 million of loss for the routine disposal of fixed assets and impairment of capitalized software during the year ended June 30, 2021.

The table below sets forth net cash provided by operating activities and adjusted free cash flow for the years ended June 30, 2021, 2020 and 2019:

Year Ended June 30,

In thousands Year Ended June 30,

2021 2020 2019

Net cash provided by operating activities $ 265,221 $ 338,444 $ 331,095

2 unchanged sentences

Capitalization of software and website development costs (60,937) (43,992) (48,652)

Payment of contingent consideration in excess of acquisition date fair value (1)

Adjusted free cash flow $ 165,760 $ 243,985 $ 211,816

_________________

(1) Includes a portion of the earn-out payment that is presented within net cash provided by operating activities as part of the change in accrued expenses and other liabilities for the year ended June 30, 2018.

This portion of the earn-out was deemed to be a compensation arrangement since it included an employment-related contingency.

We add back acquisition-related contingent consideration payments because we believe they are material payments directly associated with the acquisition of a business rather than a reflection of free cash flow generation of the underlying business.

Critical Accounting Policies and Estimates

2 unchanged sentences

To apply these principles, we must make estimates and judgments that affect our reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.

In some instances, we reasonably could have used different accounting estimates and, in other instances, changes in the

accounting estimates are reasonably likely to occur from period to period.

In some instances, we reasonably could have used different accounting estimates and, in other instances, changes in the accounting estimates are reasonably likely to occur from period to period.

Accordingly, actual results could differ significantly from our estimates.

5 unchanged sentences

To a much lesser extent (and only in our Vistaprint business) we provide digital services, website design and hosting, and email marketing services, as well as a small percentage from order referral fees and other third-party offerings.

Revenues are recognized when control of the promised products or services is transferred to the customer in an amount that reflects the consideration we expect to be entitled to in exchange for those products or services.

Revenues are recognized when control of the promised products or services is

transferred to the customer in an amount that reflects the consideration we expect to be entitled to in exchange for those products or services.

Under the terms of most of our arrangements with our customers we provide satisfaction guarantees, which give our customers an option for a refund or reprint over a specified period of time if the customer is not fully satisfied.

22 unchanged sentences

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

As the PSUs include both a service and market condition the related expense is recognized using the

accelerated expense attribution method over the requisite service period for each separately vesting portion of the award.

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

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

3 unchanged sentences

The compensation expense for these awards is estimated at fair value using a Monte Carlo simulation valuation model and compensation costs are recorded only if it is probable that the performance condition will be achieved.

We are required to reassess the probability each reporting period.

We are required to reassess the probability each

reporting period.

If we determine the awards are not probable at some point during the performance vesting period, we would reverse any expense recognized to date.

12 unchanged sentences

Interest and, if applicable, penalties related to unrecognized tax benefits are recorded in the provision for income taxes.

Stranded income tax effects in accumulated other comprehensive income or loss are released on an item-by-item basis based on when the applicable derivative is recognized in earnings.

Software and Website Development Costs .

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

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

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

6 unchanged sentences

The valuations are dependent upon a myriad of factors including historical financial results, forecasted revenue growth rates, estimated customer renewal rates, projected operating margins, royalty rates and discount rates.

We estimate the fair value of contingent consideration at the time of the acquisition using all pertinent information known to us at the time to assess the probability of payment of contingent amounts or through the use of a Monte Carlo simulation model.

We estimate the fair value of any contingent consideration at the time of the acquisition using all pertinent information known to us at the time to assess the probability of payment of contingent amounts or through the use of a Monte Carlo simulation model.

We allocate any excess purchase price over the fair value of the net tangible and intangible assets acquired and liabilities assumed to goodwill.

The assumptions used in the valuations for our acquisitions may differ materially

from actual results depending on performance of the acquired businesses and other factors.

The assumptions used in the valuations for our acquisitions may differ materially from actual results depending on performance of the acquired businesses and other factors.

While we believe the assumptions used were appropriate, different assumptions in the valuation of assets acquired and liabilities assumed could have a material impact on the timing and extent of impact on our statements of operations.

5 unchanged sentences

We have the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

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

We consider the timing of our most recent fair value assessment and associated headroom, the actual operating results as compared to the cash flow forecasts used in those fair value

assessments, the current long-term forecasts for each reporting unit, and the general market and economic environment of each reporting unit.

In addition to the specific factors mentioned above, we assess the following individual factors on an ongoing basis such as:

9 unchanged sentences

We are required to compare the fair value of the reporting unit with its carrying value and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value.

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

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

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

As part of our assessment, we recognized goodwill impairment charges of $100.8 million .

These impairment charges were due primarily to the deterioration of cash flow that we expect in the near-term for each of these businesses as a result of the decline in demand caused by the COVID-19 pandemic lock downs and related restrictions.

In addition to the declines we expect in near-term cash flows, the long-term profit outlook for each of these businesses has declined when compared to previous estimates, contributing to the recognition of these impairment charges

We are required to evaluate the estimated useful lives and recoverability of definite lived long-lived assets (for example, customer relationships, developed technology, property, and equipment) on an ongoing basis when indicators of impairment are present.

For purposes of the recoverability test, long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.

The test for recoverability compares the undiscounted future cash flows of the

long-lived asset group to its carrying value.

The test for recoverability compares the undiscounted future cash flows of the long-lived asset group to its carrying value.

If the carrying values of the long-lived asset group exceed the undiscounted future cash flows, the assets are considered to be potentially impaired.

3 unchanged sentences

The identification and evaluation of a potential impairment requires judgment and is subject to change if events or circumstances pertaining to our business change.

We evaluated our long-lived assets for impairment and during the year ended June 30, 2020, we recognized no impairments.

We evaluated our long-lived assets for impairment and during the year ended June 30, 2021, and we recognized no impairments.

Recently Issued or Adopted Accounting Pronouncements

1 unchanged sentence

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

What changed 10-K

Item 7. Management’s Discussion and Analysis