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Item 7. Management’s Discussion and Analysis

2022-08-05 compared with 2021-08-06 · 202 added, 190 removed, 339 unchanged (54% of the section changed)

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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, 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.

our expectations with respect to Vista's brand evolution and design service offerings;

our expectations with respect to National Pen's move from Ireland to the Czech Republic;

the planned divestiture of our YSD business;

our estimates and expectations with respect to our market opportunities, the size and development of our markets, and our market share;

our expectations with respect to our mass customization platform, including our competitive advantage;

our social and environmental goals;

sufficiency of our liquidity position;

legal proceedings;

and sufficiency of our tax reserves and the anticipated benefits of Swiss tax reform.

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.

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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 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;

the development, severity, and duration of supply chain constraints, inflation, and the ongoing COVID-19 pandemic;

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

our failure to execute on the transformation of the Vista business;

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;

the failure of businesses we acquire or invest in to perform as expected, including possible impacts of the war in Ukraine on Depositphotos' operations;

our failure to develop and deploy our mass customization platform or the failure of the platform to drive the efficiencies and competitive advantages we expect;

unanticipated changes in our markets, customers, or businesses;

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competitive pressures;

general economic conditions;

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

general economic conditions, including the possibility of an economic downturn in some or all of our markets;

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

Executive Overview

Cimpress is a strategically focused group of more than a dozen businesses that specialize in mass customization, via which we deliver large volumes of individually small-sized customized orders for a broad spectrum of print, signage, photo merchandise, invitations and announcements, writing instruments, packaging, apparel and other categories.

We invest in and build customer-focused, entrepreneurial mass customization businesses for the long term, which we manage in a decentralized, autonomous manner.

We drive competitive advantage across Cimpress through a select few shared strategic capabilities that have the greatest potential to create Cimpress-wide value.

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

Cimpress is a strategically focused group of more than a dozen businesses that specialize in mass customization of printing and related products, via which we deliver large volumes of individually small-sized customized orders.

Our products include a broad range of marketing materials, business cards, signage, promotional products, logo apparel, packaging, books and magazines, wall decor, photo merchandise, invitations and announcements, and other categories.

Mass customization is a core element of the business model of each Cimpress business and is a competitive strategy which seeks to produce goods and services to meet individual customer needs with near mass production efficiency.

As of June 30, 2022, we have numerous operating segments under our management reporting structure that are reported in the following five reportable segments:

Vistaprint, PrintBrothers, The Print Group, National Pen, and All Other Businesses.

Vista, PrintBrothers, The Print Group, National Pen, and All Other Businesses.

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

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.

During the fourth quarter of fiscal 2022, we revised our internal reporting to reallocate certain third-party technology costs that were previously held within our Central and corporate costs to our Vista business and reportable segment.

These include certain third-party costs that are variable in nature and the cost variability is primarily driven by decisions or volumes in the Vista business.

We have revised our presentation of all prior periods presented to reflect our revised segment reporting, which decreased Vista segment EBITDA and Central and corporate costs by $7.0 million, $6.0 million, and $3.7 million for the years ended June 30, 2022, 2021 and 2020, respectively.

Throughout fiscal year 2022, the effects of the pandemic on Cimpress have generally diminished in terms of its impact on demand, but we experienced volatility throughout the year as COVID-19 variants emerged and government restrictions were put in place, primarily during the third quarter of our current fiscal year.

Our businesses continue to experience supply chain challenges including rising input costs and some areas of

These challenges are a facet of lingering pandemic impacts, and, to a lesser extent, an indirect effect of the Russia-Ukraine conflict, which have created both difficulties and opportunities for Cimpress businesses.

Each of our reportable segments has seen material cost increases of product substrates like paper, production materials like aluminum plates, freight and shipping charges, energy costs and higher compensation costs due to a more competitive labor market.

Our scale-based shared strategic capabilities and supplier relationships provide competitive advantages for our businesses to weather these challenges.

Through data capabilities, our businesses are regularly testing new pricing approaches, and in all businesses there have been pricing increases that are partially offsetting the increased costs.

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;

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;

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.

Reconciliations of our non-GAAP financial measures are included within the "Consolidated Results of Operations" and "Additional Non-GAAP Financial Measures" sections of Management's Discussion and Analysis.

A summary of these key financial metrics for the year ended June 30, 2022 as compared to the year ended June 30, 2021 follows:

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• Revenue increased by 12% to $2,887.6 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.

• Constant-currency revenue increased by 15% and by 13% when excluding the revenue of acquired companies for the first twelve months after acquisition (both non-GAAP financial measures).

• Operating income decreased by $76.2 million to $47.3 million.

• Adjusted EBITDA (a non-GAAP financial measure) decreased by $68.1 million to $281.1 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.

• Diluted net loss per share attributable to Cimpress plc decreased to $(2.08) from $(3.28) in the comparative period.

• Cash provided by operating activities decreased by $45.7 million to $219.5 million.

• Adjusted free cash flow (a non-GAAP financial measure) decreased by $65.6 million to $100.2 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.

For fiscal year 2022, the increase in reported revenue was primarily due to the continued recovery of demand.

Reported revenue benefited from our recent acquisitions, with the majority of the additional revenue attributable to Depositphotos, which was acquired on October 1, 2021 and is included in our Vista business.

Recent new product introduction, strong growth of volume, and an uptick in orders due to supply chain constraints that turned new customers to our businesses all drove growth in our reported revenue year over year.

Pricing changes also improved our revenue, as these actions were one tool we used to mitigate inflationary cost pressures that have arisen from ongoing supply chain challenges.

These benefits were slightly offset by revenue for face masks decreasing $85.3 million compared to the prior year because demand for pandemic-related products has diminished.

Currency exchange fluctuations also had a negative effect during the current year.

For the year ended June 30, 2022, the decrease in operating income was primarily due to increased investments in our Vista business.

These investments include hiring across several strategic initiatives, as well as increased advertising spend driven by mid- and upper-funnel advertising and higher performance advertising driven by expanded payback thresholds compared to the prior year.

The current year was also negatively impacted by inflationary cost pressures, which were not fully mitigated through price increases.

We also recognized an increase in restructuring charges of $12.0 million, primarily relating to actions taken in our Vista business and central teams, as well as higher share based compensation expense primarily driven by increased headcount in areas in which we continue to invest.

These items were partially offset by an increase to gross profit driven by the revenue growth described above, as well as the non-recurrence of a $19.9 million lease-related impairment in the prior year.

Adjusted EBITDA decreased year over year, primarily for the same reasons operating income decreased.

Adjusted EBITDA excludes restructuring charges, share-based compensation expense, certain impairments, and non-cash gains on the sale of assets, 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 a benefit of approximately $5.9 million.

Diluted net loss per share attributable to Cimpress plc decreased for the year ended June 30, 2022 due to unrealized currency gains caused by exchange rate volatility, decreased interest expense driven by our fourth quarter fiscal year 2021 debt refinancing which also caused a non-recurring $48.3 million loss on debt extinguishment in the prior-year period.

This was partially offset by the decrease in operating income as described above and increased income tax expense that was impacted by the current year valuation allowance that related to Swiss tax reform benefits.

Cash from operations decreased $45.7 million year over year due to the decrease in operating income described above, partially offset by increased working capital inflows and $12.1 million of proceeds from the early settlement of certain derivatives.

Adjusted free cash flow decreased by $65.6 million, due to the operating cash flow decrease described above, as well as a $15.5 million increase in capital expenditures and a $4.4 million increase in capitalized software expenditures.

Information pertaining to fiscal year 2020 was included in our Annual Report on Form 10-K for the year ended June 30, 2020 under Part II, Item 7, “Management’s Discussion and Analysis of Financial Position and Results of Operations,” which was filed with the SEC on August 11, 2020.

Consolidated Results of Operations

Consolidated Revenue

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

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.

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

We also generate revenue, to a much lesser extent (and primarily in our Vista business), from digital services, graphic design services, website design and hosting, and email marketing services, as well as 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:

Total revenue and revenue growth by reportable segment for the year ended June 30, 2022 and 2021 are shown in the following table:

In thousands Year Ended June 30, Currency

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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%

Vista $ 1,514,909 $ 1,428,255 6% 1% 7% (2)% 5%

PrintBrothers 526,952 421,766 25% 8% 33% (1)% 32%

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In thousands Year Ended June 30, Currency

Currency Impact of Acquisitions:

Currency Impact of Acquisitions/Divestitures:

Constant- Currency Revenue Growth

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

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

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

Vista $ 1,428,255 $ 1,337,291 7% 1% 8% —% 8%

PrintBrothers 421,766 417,921 1% 3% 4% (2)% 2%

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

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

For example, revenue from 99designs, which we acquired on October 1, 2020 in Q2 2021, is excluded from revenue growth in Q1 of fiscal year 2022 since there are no full quarter results in the comparable period, but revenue is included in revenue growth for Q2 through Q4 of fiscal year 2022.

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

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.

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% of revenue 51.7 % 50.5 % 50.3 %

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.

For the year ended June 30, 2022, cost of revenue increased by $192.8 million, primarily due to demand-dependent cost of goods sold, including third-party fulfillment, material and shipping costs.

During the current fiscal year, we've experienced increasing impacts from global supply chain challenges that resulted in increased costs for product substrates like paper, production materials like aluminum plates, freight and shipping charges, and energy costs.

Compensation costs are also higher due to a more competitive labor market.

The overall impact of increased costs, net of pricing and manufacturing efficiencies, had varying impacts on our businesses during the year ended June 30, 2022.

It remains a challenging environment, and we expect higher input costs and supply constraints to persist, although we are unable to predict for how long.

We believe we are advantaged in this environment versus smaller competitors because our scale provides us with a stronger supplier negotiation position for both costs and availability of supply.

Consolidated Operating Expenses

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_____________________

(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.

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

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

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

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.

Technology and development expenses increased by $39.8 million for the year ended June 30, 2022, as compared to the prior year.

This increase is primarily driven by $28.5 million higher compensation costs due to increased investment from hiring, impacts of our annual merit cycle and prior-year delay of our share-based compensation grants to the middle of the third quarter of fiscal year 2021, mainly in the Vista business and our central technology group.

Other operating costs increased in part due to increases in demand, as well as higher travel and training costs as pandemic restrictions diminished in the current year.

Marketing and selling expense

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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 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.

Our Vista, 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, 2022, marketing and selling expenses increased $140.9 million as compared to the prior year.

The largest increase in marketing and selling expenses was in our Vista business which had increased internal marketing and customer service costs of $52.1 million and increased advertising costs of $51.1 million.

The increases to Vista spend were primarily driven by growth in headcount for areas such as user experience design, brand and data and analytics, higher performance advertising from increased customer demand and expanded payback thresholds as well as higher mid- and upper-funnel advertising.

Advertising expense also increased for our remaining businesses in total by $28.7 million for the year ended June 30, 2022, due to higher demand and more normalized payback thresholds in the current year.

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, 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.

For the year ended June 30, 2022, general and administrative expenses increased by $1.7 million as compared to the prior year, driven primarily by increases of $16.7 million to compensation costs from impacts of our annual merit cycle, increased expense for cash-based long-term incentive awards driven by additional vesting and business performance, as well as higher headcount year over year.

Share-based compensation costs also increased $3.6 million due to the prior year's delayed timing of the annual grant cycle, mainly in our Vista business and our central teams.

The current fiscal year benefited from a non-cash gain of $3.3 million recognized during the second fiscal quarter as a result of our purchase and sale of a previously leased facility.

The year-over-year increase was almost fully offset by the non-recurrence of lease-related impairment and abandonment charges that were recognized in the prior year of $19.9 million.

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

Other Consolidated Results

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.

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.

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 (expense) income, net:

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

Year Ended June 30,

2022 2021 2020

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

Gains (losses) on derivatives not designated as hedging instruments $ 58,148 $ (20,728) $ 20,564

Currency-related gains, net 244 1,005 2,309

Other gains 3,071 370 1

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.

Total other income (expense), net $ 61,463 $ (19,353) $ 22,874

The increase in other income (expense), 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 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.

We 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, net, offsetting the impact of certain non-functional currency intercompany relationships.

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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.

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

Interest expense, net decreased by $19.9 million during the year ended June 30, 2022, as compared to the prior year period.

This is primarily due to our Term Loan B refinancing during the fourth quarter of fiscal 2021 that resulted in a reduction to our weighted-average interest rate on our outstanding borrowings in the current year.

Loss on early extinguishment of debt

As part of the fourth quarter fiscal year 2021 amendment and restatement of our senior secured credit agreement, we redeemed $300.0 million of our 12% Senior Secured Notes due 2025.

The loss on extinguishment of debt of $48.3 million during the year ended June 30, 2021, consisted of a $22.3 million accretion adjustment to increase the debt's carrying value to the principal amount, a $17.0 million write-off of unamortized financing fees, and a $9.0 million early redemption fee payment.

Income tax expense (benefit)

Year Ended June 30,

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Effective tax rate 642.0 % (29.7) % (2,697.0) %

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.

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.

Income tax expense for the year ended June 30, 2022 increased versus the prior comparative period due to establishing a partial valuation allowance on Swiss deferred tax assets of $29.6 million primarily related to Swiss tax reform benefits recognized in fiscal year 2020 and Swiss tax loss carryforwards that we no longer expect to fully realize.

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.

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less gain on purchase or sale of subsidiaries.

These third-party costs are variable in nature and the cost variability is primarily driven by decisions or volumes in the Vista business.

We have revised our presentation of all prior periods presented to reflect our revised segment reporting, which decreased Vista segment EBITDA by $7.0 million, $6.0 million and $3.7 million for the years ended June 30, 2022, 2021 and 2020, respectively.

Year Ended June 30,

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Segment 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.

Vista's reported revenue growth for the year ended June 30, 2022 was negatively affected by a currency impact of 1%.

When excluding the benefit from the recent acquisitions of Depositphotos and 99designs, Vista's organic constant-currency revenue growth was 5%.

Vista's revenue growth accelerated in our European markets during the second half of the fiscal year, while the U.S.

market experienced lower growth driven in part by the decline in revenue from consumer products.

In addition, revenue related to face masks was $69.0 million less than the prior year as the demand for pandemic-related products declined.

From a category perspective, growth was primarily driven by business cards, signage, marketing materials, and promotional products.

Revenue from business cards and small format marketing materials improved year over year, but were still below pre-pandemic levels.

During the current fiscal year we executed on the migration of Vista's customer-facing website in most major markets, including in the United States, to a new platform.

Each launch in the current year created a short-term negative impact on revenue, but every successive launch benefited from the learnings of prior launches to mitigate the impact of migrating in our largest markets.

Segment Profitability

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.

For the year ended June 30, 2022, segment EBITDA declined by $123.4 million, largely driven by increased operating expenses related to growth investments including hiring of talent, especially in user experience, design, product management, and data and analytics.

These organic investments are in support of Vista's multi-year transformation journey to become the expert design and marketing partner to the world's small businesses.

Additionally, Vista's advertising expense increased by $57.1 million, driven by $48.1 million of incremental performance advertising from higher volumes and increased payback thresholds relative to last year and $9.0 million from higher mid- and upper-funnel advertising.

Advertising spend was more constrained during the prior year when the effects of the pandemic on this segment were more severe.

Gross profit was negatively impacted during fiscal year 2022 by significant inflationary cost pressures from higher material, inbound freight, shipping and energy costs.

A small portion of those inflationary pressures were offset by price increases.

These inflationary pressures were more pronounced during the second half of the current fiscal year.

The decline in profitability was also affected by government subsidy benefits in the prior year of $9.0 million that did not recur during the year ended June 30, 2022.

These decreases were partially offset by the profit improvement driven by the revenue growth described above.

PrintBrothers

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Segment Revenue

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.

PrintBrothers' reported revenue growth for the year ended June 30, 2022 was negatively affected by a currency impact of 8%, resulting in a constant-currency revenue growth of 33%.

This strong growth was driven by past new production introductions and growth in order volumes due in part to supply chain constraints that turned new customers to our businesses.

The PrintBrothers network and relative size allowed these businesses to address opportunities to meet customer demand when competition could not.

In addition, the current year benefited from less-intensive pandemic-related lockdowns than in the prior year, as well as price increases implemented to address inflationary cost increases.

Segment Profitability

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.

PrintBrothers' segment EBITDA during the year ended June 30, 2022, as compared to the prior period, increased despite increased input costs, driven by the constant-currency revenue growth described above, the higher margin impact of new products, and improved efficiencies as the businesses in this segment better leverage their combined capabilities.

Currency exchange rate fluctuations had a negative year-over-year impact.

The Print Group

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Segment Revenue

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.

The Print Group's reported revenue for the year ended June 30, 2022 was negatively affected by a currency impact of 7%, resulting in an increase to revenue on a constant-currency basis of 27% due to signs of overall economic recovery in many of the European countries in which we compete, leveraging new products introduced in recent years and growth in order volumes due in part to supply chain constraints that turned new customers to our businesses.

In addition, the current year benefited from less-intensive pandemic-related lockdowns than in the prior year, as well as price increases implemented to address inflationary cost increases.

Segment Profitability

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.

The increase in The Print Group's segment EBITDA during the year ended June 30, 2022, as compared to the prior year, was primarily driven by the constant-currency revenue growth described above.

In addition, The Print Group continues to benefit from the introduction of new products with higher margins, as well as improved efficiencies as the group better leverages its combined capabilities.

Currency exchange rate fluctuations had a negative year-over-year impact.

In thousands Year Ended June 30,

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% of revenue 8 % 4 % 3 %

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 Revenue

For the year ended June 30, 2022, National Pen's revenue growth was negatively affected by currency impacts of 2%, resulting in constant-currency revenue growth of 11%.

National Pen's revenue has improved across geographic markets and channels, including web and mail order channels.

This improvement is due to businesses reopening and a return of in-person events in some markets, despite a decline in revenue from pandemic-related products, including a $26.2 million decline of face mask revenue.

Segment Profitability

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.

The increase in National Pen's segment EBITDA for the year ended June 30, 2022 was due in part to the revenue increase described above, as well as improvements in gross profit driven by a normalized mix of products and decline in lower-margin pandemic-related products, partially offset by higher freight costs.

National Pen also made permanent cost reductions in the prior year that benefited segment EBITDA for the year ended June 30, 2022.

The increased profitability was also caused by the non-recurrence of the prior years' inventory reserve to reduce the carrying value of disposable masks held in inventory to market prices of $8.2 million.

Currency exchange rate fluctuations had a negative year-over-year impact.

All Other Businesses

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% of revenue 11 % 17 % 10 %

___________________

(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.

This segment consists of BuildASign, which is a larger and profitable business, and two early-stage businesses that we have managed at a relatively modest operating loss as previously described and planned.

During the fourth quarter of fiscal year 2022, we decided to exit our YSD business, which generated a loss of $5.5 million during fiscal year 2022, which we expect to complete in early fiscal year 2023.

Segment Revenue

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.

All Other Businesses' constant-currency revenue growth, excluding the impact of acquisitions, was 3% during the year ended June 30, 2022.

This growth was driven by recovery of demand for both our Printi business and signage products offered by BuildASign, partially offset by a decline in demand for home decor products that had benefited revenue during the pandemic period.

Segment Profitability

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.

The decrease in segment EBITDA for the year ended June 30, 2022 was due to a combination of factors including increased advertising spend and inflationary pressures on input costs including shipping, materials and labor during the current period.

Central and Corporate Costs

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

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.

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

Refer to Note 15 in our accompanying consolidated financial statements for additional details.

Central and corporate costs increased by $14.6 million during the year ended June 30, 2022, as compared to the prior year, due to the end of temporary cost-control measures from the year-ago period and, to a lesser extent, prior year timing of our annual share-based compensation grant which caused a higher expense rate for accelerated vesting in the first quarter of the current fiscal year than in the comparable period.

In addition, our continued investments in our mass customization platform through additional hiring in cost-efficient talent markets and increased volumes contributed to higher central operating costs year over year.

Liquidity and Capital Resources

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Net cash used in investing activities (3,997) (354,316) (66,864)

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

Net cash (used in) provided by financing activities (106,572) 224,128 (258,255)

The cash flows during the year ended June 30, 2022 related primarily to the following items:

Cash inflows:

• 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

• Adjustments for non-cash items of $194.8 million primarily related to adjustments for depreciation and amortization of $175.7 million, share-based compensation costs of $49.8 million, and deferred taxes of $22.9 million, which were partially offset by negative adjustments for unrealized currency-related gains of $39.9 million and gains on ineffective interest rate swaps of $6.4 million

• Proceeds from the maturity of held-to-maturity securities of $151.2 million

• Total net working capital impacts of $75.4 million were a source of cash.

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

Accounts payable and accrued expense inflows were partially offset by inventory, accounts receivable and other asset outflows

• The early termination and settlement of derivative contracts resulted in $19.7 million of cash proceeds.

$2.2 million of these cash proceeds was from the termination or settlement of net investment hedges and is presented in investing activities.

The remainder of the cash proceeds are presented in operating activities, a portion of which is included in net working capital

• Proceeds from the sale of assets in the normal course of business of $14.5 million, primarily the sale of land adjacent to one of our production facilities

Cash outflows:

• Net loss of $50.6 million

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

• Business acquisitions for $75.3 million, net of cash acquired, primarily related to the Depositphotos acquisition

• Internal and external costs of $65.3 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 $54.0 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

• $43.6 million for the payment of purchase consideration included in the 99designs acquisition's fair value

• Repayments of debt for $14.5 million

• Payments for finance lease arrangements, excluding the payment associated with the purchase option exercise included below, of $9.6 million

• Purchase and sale of a previously leased facility that resulted in a net payment of $4.7 million due to our exercise of the lease purchase option and subsequent sale

• A $4.0 million distribution to noncontrolling interest holders

• Payment of withholding taxes in connection with share awards of $3.2 million

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

• $1.8 million for the final settlement for the purchase of noncontrolling interests in our PrintBrothers businesses, for which an initial payment was made in fiscal year 2021

• Financing fees of $1.4 million from our fourth quarter fiscal year 2021 credit facility amendment that have been capitalized

Additional Liquidity and Capital Resources Information.

At June 30, 2022, we had $277.1 million of cash and cash equivalents, $50.0 million of marketable securities and $1,705.4 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.

During the year ended June 30, 2022, we financed our operations and strategic investments through internally generated cash flows from operations and cash on hand.

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

Noncontrolling Interests.

The put options for several of our noncontrolling interests are exercisable during the first half of fiscal year 2023.

Exercising a put option is at the discretion of each noncontrolling interest holder, which creates uncertainty around the timing of our cash outflow should an option be exercised.

The total estimated redemption value for these noncontrolling interests as of June 30, 2022 is $103.6 million.

Refer to Note 14 in our accompanying consolidated financial statements for additional details.

Indefinitely Reinvested Earnings.

As of June 30, 2022, 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 $49.0 million.

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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.

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.

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.

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

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

Contractual Obligations

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At June 30, 2022, we had unrecorded commitments under contract of $310.8 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.

Purchase commitments consisted of inventory, third-party fulfillment and digital service purchase commitments of $124.4 million;

third-party cloud services of $113.9 million;

advertising of $18.1 million;

$23.7 million;

commitments for professional and consulting fees of $6.4 million;

production and computer equipment purchases of $7.1 million;

and other unrecorded purchase commitments of $17.3 million.

Senior Secured Credit Facility and Interest Payments.

As of June 30, 2022, we have borrowings under our Restated Credit Agreement of $1,097.3 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 $243.6 million unused as of June 30, 2022.

There are no drawn amounts on the revolver, 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, and any amounts drawn under the revolver will be due on May 17, 2026.

Interest payable included in the above table is based on the interest rate as of June 30, 2022 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.

Senior Unsecured Notes and Interest Payments.

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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.

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.

Debt Covenants.

The Restated Credit Agreement and the indenture that governs our 7.0% Senior Notes due 2026 contain covenants that restrict or limit certain activities and transactions by Cimpress and our subsidiaries.

As of June 30, 2022, we were in compliance with all covenants under our Restated Credit Agreement and the indenture governing our 2026 Notes.

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

In addition, we have other debt which consists primarily of term loans acquired through our various acquisitions or used to fund certain capital investments.

As of June 30, 2022, we had $8.1 million outstanding for those obligations that have repayments due on various dates through March 2027.

Finance Leases.

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Other Obligations.

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.

Other obligations consist of deferred payments relating to previous acquisitions, including the deferred payment relating to our Depositphotos acquisition that is payable in October 2022 and small deferred acquisition liabilities for other, smaller acquisitions.

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

Additional Non-GAAP Financial Measures

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As another example, as we do not apply hedge accounting for certain derivative contracts, we believe inclusion of realized gains and losses on these contracts that are intended to be matched against operational currency fluctuations provides further insight into our operating performance in addition to that provided by our GAAP operating income.

We do not, nor do we suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.

We do not, nor do we suggest that investors should, consider such non-GAAP

financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.

Adjusted free cash flow is the primary financial metric by which we set quarterly and annual budgets both for individual businesses and Cimpress-wide.

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Depreciation and amortization 175,681 173,212 167,943

Waltham, MA lease depreciation adjustment (1) — — (4,120)

Proceeds from insurance — 122 —

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Restructuring-related charges 13,603 1,641 13,543

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

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

Realized gains (losses) on currency derivatives not included in operating income (1) 4,424 (6,854) 24,533

Adjusted EBITDA $ 281,063 $ 349,118 $ 399,779

_________________

(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) 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.

(1) These realized gains (losses) include only the impacts of currency derivative contracts that are intended to hedge our exposure to foreign currencies for which we do not apply hedge accounting.

See Note 4 in our accompanying consolidated financial statements for further information.

The table below sets forth net cash provided by operating activities and adjusted free cash flow for the years ended June 30, 2022, 2021 and 2020:

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Purchases of property, plant and equipment (54,040) (38,524) (50,467)

Purchases of intangible assets not related to acquisitions — — (64)

Capitalization of software and website development costs (65,297) (60,937) (43,992)

Adjusted free cash flow $ 100,199 $ 165,760 $ 243,985

_________________

(1) The decrease of net cash provided by operating activities was driven by the decrease in operating income as described earlier in this section.

Critical Accounting Policies and Estimates

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

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

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

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

To a much lesser extent (and only in our Vista 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.

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.

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We recognize the impact of forfeitures as they occur.

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

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

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

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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.

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

These awards with a discretionary performance condition are subject to mark-to-market accounting throughout the performance vesting period.

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.

Income Taxes .

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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:

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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, 2021, and we recognized no impairments.

We evaluated our long-lived assets for impairment during the year ended June 30, 2022, and we recognized no impairments.

Recently Issued or Adopted Accounting Pronouncements

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

What changed 10-K

Item 7. Management’s Discussion and Analysis