CIMPRESS plc 10-K

Item 8. Financial Statements and Supplementary Data CIMPRESS PLC INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm (PCAOB ID No. 238) 46 Consolidated Balance Sheets 48 Consolidated Statements of Operations 49 Consolidated Statements of Comprehensive (Loss) Income 50 Consolidated Statements of Shareholders’ Deficit 51 Consolidated Statements of Cash Flows 54 Notes to Consolidated Financial Statements 56 45 Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Cimpress plc Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Cimpress plc and its subsidiaries (the “Company”) as of June 30, 2022 and 2021, and the related consolidated statements of operations, of comprehensive income, of shareholders' deficit and of cash flows for each of the three years in the period ended June 30, 2022, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of June 30, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of June 30, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2022 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that 46 controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Goodwill - Quantitative Impairment Assessments As described in Note 8 to the consolidated financial statements, the Company’s goodwill balance was $767 million as of June 30, 2022. Management performed a quantitative assessment for all nine reporting units with goodwill as of the annual goodwill impairment test date of May 31. For each reporting unit, the estimated fair value of the reporting unit exceeded the related carrying value and management concluded that no impairment existed. Management used the income approach, specifically the discounted cash flow method, to derive the fair value of each reporting unit. This approach calculates fair value by estimating the after-tax cash flows attributable to a reporting unit and then discounting the after-tax cash flows to a present value using a risk-adjusted discount rate. The cash flow projections in the fair value analysis are considered Level 3 inputs, and consist of management's estimates of revenue growth rates and operating margins, taking into consideration historical results, as well as industry and market conditions. The discount rate used in the fair value analysis is based on a weighted average cost of capital. The principal considerations for our determination that performing procedures relating to the goodwill quantitative impairment assessments for certain reporting units is a critical audit matter are (i) the significant judgment by management when determining the fair value of certain reporting units, (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to the revenue growth rates, operating margins, and discount rates, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessments, including controls over the valuation of certain reporting units. These procedures also included, among others (i) testing management’s process for determining the fair value of certain reporting units; (ii) evaluating the appropriateness of the discounted cash flow method; (iii) testing the completeness and accuracy of underlying data used in the discounted cash flow method; and (iv) evaluating the reasonableness of the significant assumptions used by management related to the revenue growth rates, operating margins, and discount rates. Evaluating management’s assumptions related to the revenue growth rates and operating margins involved evaluating whether the assumptions used by management were reasonable considering the current and past performance of the reporting units, the consistency with external market and industry data, and whether these assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in the evaluation of (i) the appropriateness of the Company’s discounted cash flow method and (ii) the reasonableness of the discount rate significant assumption. /s/ PricewaterhouseCoopers LLP Boston, Massachusetts August 5, 2022 We have served as the Company’s auditor since 2014. 47 CIMPRESS PLC CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) June 30, 2022 June 30, 2021 Assets Current assets: Cash and cash equivalents $ 277,053 $ 183,023 Marketable securities 49,952 152,248 Accounts receivable, net of allowances of $6,140 and $9,404, respectively 63,885 50,679 Inventory 126,728 70,044 Prepaid expenses and other current assets 108,697 72,504 Total current assets 626,315 528,498 Property, plant and equipment, net 286,826 328,679 Operating lease assets, net 80,694 87,626 Software and website development costs, net 90,474 87,690 Deferred tax assets 113,088 149,618 Goodwill 766,600 726,979 Intangible assets, net 154,730 186,744 Marketable securities, non-current — 50,713 Other assets 48,945 35,951 Total assets $ 2,167,672 $ 2,182,498 Liabilities, noncontrolling interests and shareholders’ deficit Current liabilities: Accounts payable $ 313,710 $ 199,831 Accrued expenses 253,841 247,513 Deferred revenue 58,861 50,868 Short-term debt 10,386 9,895 Operating lease liabilities, current 27,706 26,551 Other current liabilities 28,035 103,515 Total current liabilities 692,539 638,173 Deferred tax liabilities 41,142 27,433 Long-term debt 1,675,562 1,732,511 Operating lease liabilities, non-current 57,474 66,222 Other liabilities 64,394 96,410 Total liabilities 2,531,111 2,560,749 Commitments and contingencies (Note 17) Redeemable noncontrolling interests 131,483 71,120 Shareholders’ deficit: Preferred shares, nominal value €0.01 per share, 100,000,000 shares authorized; none issued and outstanding — — Ordinary shares, nominal value €0.01 per share, 100,000,000 shares authorized; 44,083,569 and 44,080,627 shares issued, respectively; 26,112,322 and 26,035,910 shares outstanding, respectively 615 615 Deferred ordinary shares, nominal value €1.00 per share, 25,000 shares authorized, none and 25,000 issued and outstanding, respectively — 28 Treasury shares, at cost, 17,971,247 and 18,044,717 shares, respectively ( 1,363,550 ) ( 1,368,595 ) Additional paid-in capital 501,003 459,904 Retained earnings 414,138 530,159 Accumulated other comprehensive loss ( 47,128 ) ( 71,482 ) Total shareholders' deficit ( 494,922 ) ( 449,371 ) Total liabilities, noncontrolling interests and shareholders’ deficit $ 2,167,672 $ 2,182,498 See accompanying notes. 48 CIMPRESS PLC CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share data) Year Ended June 30, 2022 2021 2020 Revenue $ 2,887,555 $ 2,575,961 $ 2,481,358 Cost of revenue (1) 1,492,726 1,299,889 1,248,871 Technology and development expense (1) 292,845 253,060 253,252 Marketing and selling expense (1) 789,241 648,391 574,041 General and administrative expense (1) 197,345 195,652 183,054 Amortization of acquired intangible assets 54,497 53,818 51,786 Restructuring expense (1) 13,603 1,641 13,543 Impairment of goodwill — — 100,842 Income from operations 47,298 123,510 55,969 Other income (expense), net 61,463 ( 19,353 ) 22,874 Interest expense, net ( 99,430 ) ( 119,368 ) ( 75,840 ) Loss on early extinguishment of debt — ( 48,343 ) — Income (loss) before income taxes 9,331 ( 63,554 ) 3,003 Income tax expense (benefit) 59,901 18,903 ( 80,992 ) Net (loss) income ( 50,570 ) ( 82,457 ) 83,995 Add: Net (income) attributable to noncontrolling interests ( 3,761 ) ( 2,772 ) ( 630 ) Net (loss) income attributable to Cimpress plc $ ( 54,331 ) $ ( 85,229 ) $ 83,365 Basic net (loss) income per share attributable to Cimpress plc $ ( 2.08 ) $ ( 3.28 ) $ 3.07 Diluted net (loss) income per share attributable to Cimpress plc $ ( 2.08 ) $ ( 3.28 ) $ 3.00 Weighted average shares outstanding — basic 26,094,842 25,996,572 27,180,744 Weighted average shares outstanding — diluted 26,094,842 25,996,572 27,773,286 ____________________________________________ (1) Share-based compensation is allocated as follows: Year Ended June 30, 2022 2021 2020 Cost of revenue $ 538 $ 387 $ 486 Technology and development expense 13,582 9,063 9,003 Marketing and selling expense 11,382 6,947 2,703 General and administrative expense 24,264 20,637 21,061 Restructuring expense — — 1,621 See accompanying notes. 49 CIMPRESS PLC CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands) Year Ended June 30, 2022 2021 2020 Net (loss) income $ ( 50,570 ) $ ( 82,457 ) $ 83,995 Other comprehensive (loss) income, net of tax: Foreign currency translation (losses) gains, net of hedges ( 9,990 ) 12,915 10,933 Net unrealized gains (losses) on derivative instruments designated and qualifying as cash flow hedges 2,813 10,336 ( 24,570 ) Amounts reclassified from accumulated other comprehensive loss to net (loss) income on derivative instruments 26,197 ( 4,089 ) 5,774 Gain (loss) on pension benefit obligation, net 1,649 ( 336 ) ( 1,195 ) Comprehensive (loss) income ( 29,901 ) ( 63,631 ) 74,937 Add: Comprehensive (income) attributable to noncontrolling interests ( 76 ) ( 4,404 ) ( 391 ) Total comprehensive (loss) income attributable to Cimpress plc $ ( 29,977 ) $ ( 68,035 ) $ 74,546 See accompanying notes. 50 CIMPRESS PLC CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT (in thousands) Ordinary Shares Deferred Ordinary Shares Treasury Shares Number of Shares Issued Amount Number of Shares Issued Amount Number of Shares Amount Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Shareholders’ Deficit Balance at June 30, 2019 44,080 $ 615 — $ — ( 13,635 ) $ ( 737,447 ) $ 411,079 $ 537,422 $ ( 79,857 ) $ 131,812 Issuance of ordinary shares due to share option exercises, net of shares withheld for taxes — — — — 432 ( 12,518 ) ( 28,388 ) — — ( 40,906 ) Restricted share units vested, net of shares withheld for taxes — — — — 13 712 ( 1,317 ) — — ( 605 ) Issuance of deferred ordinary shares — — 25 28 — — — — — 28 Grant of restricted share awards — — — — ( 2 ) ( 187 ) — — — ( 187 ) Share-based compensation expense — — — — — — 34,810 — — 34,810 Purchase of ordinary shares — — — — ( 5,003 ) ( 627,056 ) — — — ( 627,056 ) Net income attributable to Cimpress plc — — — — — — — 83,365 — 83,365 Redeemable noncontrolling interest accretion to redemption value — — — — — — — ( 5,493 ) — ( 5,493 ) Adoption of new accounting standards — — — — — — — 3,143 — 3,143 Issuance of warrants — — — — — — 22,432 — — 22,432 Net unrealized loss on derivative instruments designated and qualifying as cash flow hedges — — — — — — — — ( 18,796 ) ( 18,796 ) Foreign currency translation, net of hedges — — — — — — — — 11,172 11,172 Unrealized loss on pension benefit obligation, net of tax — — — — — — — — ( 1,195 ) ( 1,195 ) Balance at June 30, 2020 44,080 $ 615 25 $ 28 ( 18,195 ) $ ( 1,376,496 ) $ 438,616 $ 618,437 $ ( 88,676 ) $ ( 407,476 ) See accompanying notes. 51 CIMPRESS PLC CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT (CONTINUED) (in thousands) Ordinary Shares Deferred Ordinary Shares Treasury Shares Number of Shares Issued Amount Number of Shares Issued Amount Number of Shares Amount Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Shareholders’ Deficit Balance at June 30, 2020 44,080 $ 615 25 $ 28 ( 18,195 ) $ ( 1,376,496 ) $ 438,616 $ 618,437 $ ( 88,676 ) $ ( 407,476 ) Issuance of ordinary shares due to share option exercises, net of shares withheld for taxes — — — — 30 3 ( 2,283 ) — — ( 2,280 ) Restricted share units vested, net of shares withheld for taxes — — — — 120 7,898 ( 13,655 ) — — ( 5,757 ) Share-based compensation expense — — — — — — 37,226 — — 37,226 Net loss attributable to Cimpress plc — — — — — — — ( 85,229 ) — ( 85,229 ) Redeemable noncontrolling interest accretion to redemption value — — — — — — — ( 3,049 ) — ( 3,049 ) Net unrealized gain on derivative instruments designated and qualifying as cash flow hedges — — — — — — — — 6,247 6,247 Foreign currency translation, net of hedges — — — — — — — — 11,283 11,283 Unrealized loss on pension benefit obligation, net of tax — — — — — — — — ( 336 ) ( 336 ) Balance at June 30, 2021 44,080 $ 615 25 $ 28 ( 18,045 ) $ ( 1,368,595 ) $ 459,904 $ 530,159 $ ( 71,482 ) $ ( 449,371 ) See accompanying notes. 52 CIMPRESS PLC CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT (CONTINUED) (in thousands) Ordinary Shares Deferred Ordinary Shares Treasury Shares Number of Shares Issued Amount Number of Shares Issued Amount Number of Shares Amount Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Shareholders’ Deficit Balance at June 30, 2021 44,080 $ 615 25 $ 28 ( 18,045 ) $ ( 1,368,595 ) $ 459,904 $ 530,159 $ ( 71,482 ) $ ( 449,371 ) Purchase and cancellation of deferred ordinary shares — — ( 25 ) ( 28 ) — — — — — ( 28 ) Restricted share units vested, net of shares withheld for taxes 4 — — — 74 5,045 ( 8,315 ) — — ( 3,270 ) Share-based compensation expense — — — — — — 49,686 — — 49,686 Net loss attributable to Cimpress plc — — — — — — — ( 54,331 ) — ( 54,331 ) Redeemable noncontrolling interest accretion to redemption value — — — — — — — ( 61,690 ) — ( 61,690 ) Decrease in noncontrolling interest due to share purchase — — — — — — ( 272 ) — — ( 272 ) Net unrealized gain on derivative instruments designated and qualifying as cash flow hedges — — — — — — — — 29,010 29,010 Foreign currency translation, net of hedges — — — — — — — — ( 6,305 ) ( 6,305 ) Unrealized gain on pension benefit obligation, net of tax — — — — — — — — 1,649 1,649 Balance at June 30, 2022 44,084 $ 615 — $ — ( 17,971 ) $ ( 1,363,550 ) $ 501,003 $ 414,138 $ ( 47,128 ) $ ( 494,922 ) See accompanying notes. 53 CIMPRESS PLC CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year Ended June 30, 2022 2021 2020 Operating activities Net (loss) income $ ( 50,570 ) $ ( 82,457 ) $ 83,995 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation and amortization 175,681 173,212 167,943 Impairment of goodwill — — 100,842 Share-based compensation expense 49,766 37,034 34,874 Impairment of long-lived assets — 19,882 — Deferred taxes 22,879 ( 10,284 ) ( 106,864 ) Loss on early extinguishment of debt — 48,343 — Unrealized (gain) loss on derivatives not designated as hedging instruments included in net (loss) income ( 40,408 ) 17,323 7,731 Effect of exchange rate changes on monetary assets and liabilities denominated in non-functional currency 537 240 ( 802 ) Other non-cash items ( 13,704 ) 7,041 11,229 Changes in operating assets and liabilities, net of effects of businesses acquired: Accounts receivable ( 18,119 ) ( 11,474 ) 26,659 Inventory ( 44,089 ) 16,382 ( 18,328 ) Prepaid expenses and other assets ( 5,989 ) ( 2,606 ) 11,946 Accounts payable 109,977 29,367 ( 17,547 ) Accrued expenses and other liabilities 33,575 23,218 36,766 Net cash provided by operating activities 219,536 265,221 338,444 Investing activities Purchases of property, plant and equipment ( 54,040 ) ( 38,524 ) ( 50,467 ) Proceeds from the sale of subsidiaries, net of transaction costs and cash divested — — ( 1,124 ) Business acquisitions, net of cash acquired ( 75,258 ) ( 53,410 ) ( 4,272 ) Capitalization of software and website development costs ( 65,297 ) ( 60,937 ) ( 43,992 ) Proceeds from the sale of assets 37,771 5,696 1,644 Proceeds from maturity of held-to-maturity investments 151,200 — — Payments for settlement of derivatives designated as hedging instruments 2,244 ( 3,291 ) 29,791 Other investing activities ( 617 ) ( 269 ) 1,556 Net cash used in investing activities ( 3,997 ) ( 354,316 ) ( 66,864 ) Financing activities Proceeds from borrowings of debt — 665,682 1,281,490 Proceeds from Term Loan B — 1,149,751 — Proceeds from issuance of senior notes — — 210,500 Proceeds from issuance of 12% Senior Secured Notes due 2025 — — 271,568 Proceeds from issuance of warrants — — 22,432 Payments of debt ( 14,510 ) ( 1,242,606 ) ( 1,337,334 ) Payments for early redemption of 12% Senior Secured Notes due 2025 — ( 309,000 ) — Payments of debt issuance costs ( 1,444 ) ( 11,963 ) ( 22,570 ) Payments of purchase consideration included in acquisition-date fair value ( 43,647 ) ( 1,205 ) ( 358 ) Payments of withholding taxes in connection with equity awards ( 3,219 ) ( 5,757 ) ( 41,709 ) Payments of finance lease obligations ( 37,512 ) ( 8,000 ) ( 9,511 ) Purchase of noncontrolling interests ( 2,165 ) ( 5,063 ) — Purchase of ordinary shares — — ( 627,056 ) Proceeds from issuance of ordinary shares — ( 2,280 ) 6 Distribution to noncontrolling interest ( 3,963 ) ( 4,747 ) ( 3,955 ) Other financing activities ( 112 ) ( 684 ) ( 1,758 ) Net cash (used in) provided by financing activities ( 106,572 ) 224,128 ( 258,255 ) See accompanying notes. 54 CIMPRESS PLC CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (in thousands) Year Ended June 30, 2022 2021 2020 Effect of exchange rate changes on cash ( 14,937 ) 2,969 ( 3,583 ) Net increase in cash and cash equivalents 94,030 138,002 9,742 Cash and cash equivalents at beginning of period 183,023 45,021 35,279 Cash and cash equivalents at end of period $ 277,053 $ 183,023 $ 45,021 Supplemental disclosures of cash flow information Cash paid during the period for: Interest $ 98,099 $ 116,977 $ 72,906 Income taxes 32,987 27,870 13,520 Non-cash investing and financing activities Property and equipment acquired under finance leases 7,033 6,996 1,605 Amounts accrued related to property, plant and equipment 12,810 4,462 8,371 Amounts accrued related to capitalized software development costs 124 2,830 — Amounts accrued related to business acquisitions 8,425 45,025 2,289 See accompanying notes. 55 CIMPRESS PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data) 1. Description of the Business Cimpress is a strategically focused group of more than a dozen businesses that specialize in mass customization 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. In October 2021 our Vista business and reportable segment began evolving its brand architecture to "Vista". Brands like "VistaPrint", "VistaCreate", "99designs by Vista", Vista x Wix, and "Vista Corporate Solutions" now operate within the "Vista" brand architecture. This move should help open customers' minds to allow us to serve a broader set of their needs across a wide range of products and solutions that includes design, social media and web presence as well as print. No changes were made to our internal organizational or reporting structure as a result of this rebranding, but we we now refer to this reportable segment as "Vista". Refer to Note 15 for additional details. 2. Summary of Significant Accounting Policies Basis of Presentation The consolidated financial statements include the accounts of Cimpress plc, its wholly owned subsidiaries, entities in which we maintain a controlling financial interest, and those entities in which we have a variable interest and are the primary beneficiary. Intercompany balances and transactions have been eliminated. Investments in entities in which we cannot exercise significant influence, and for which the related equity securities do not have a readily determinable fair value, are included in other assets on the consolidated balance sheets; otherwise the investments are recognized by applying equity method accounting. Our equity method investments are included in other assets on the consolidated balance sheets. Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We believe our most significant estimates are associated with the ongoing evaluation of the recoverability of our long-lived assets and goodwill, estimated useful lives of assets, share-based compensation, accounting for business combinations, and income taxes and related valuation allowances, among others. By their nature, estimates are subject to an inherent degree of uncertainty. Actual results could differ from those estimates. In light of the recent Russian invasion of Ukraine and the related sanctions that have been placed on certain Russian entities and activities, we have evaluated the impacts that these events have on our business and on our financial results. Currently, we have no material exposure to Ukraine and Russia in terms of revenue, supply and tangible assets. We also considered any triggering events for our intangibles assets and due to the limited exposure we have to both countries, we concluded that no triggering events have occurred. We do have employees in Ukraine from our recently acquired Depositphotos business, and we are providing financial and other assistance to those employees. The impact of these costs are not material to our financial results. 56 Revision of Prior Period Financial Statements Foreign Currency Gains Associated with Intercompany Loan Hedge During the second fiscal quarter of 2022, we identified an error related to the recognition of foreign currency gains that were included in other income (expense), net within our consolidated statements of operations, associated with a net investment hedge. In May 2021, we designated a €300,000 intercompany loan as a net investment hedge to hedge the risk of changes in the U.S. dollar equivalent value of a portion of our net investment in one of our consolidated subsidiaries that has the Euro as its functional currency. As this hedging instrument was designated as a net investment hedge, all foreign currency gains and losses should be recognized in accumulated other comprehensive loss as part of currency translation adjustment. For the year ended June 30, 2021, we incorrectly recognized $ 7,518 of gains in other income (expense), net. This error overstated other income (expense), net; income (loss) before income taxes; and net loss for the period but did not have an impact on cash provided by operating activities, since it is a non-cash currency item. Included below are the revisions made for each period presented. Consolidated Balance Sheets As of June 30, 2021 Reported Adjustments Revised Accumulated other comprehensive loss $ ( 79,000 ) $ 7,518 $ ( 71,482 ) Retained earnings 537,677 ( 7,518 ) 530,159 Consolidated Statements of Operations Year ended June 30, 2021 Reported Adjustments Revised Other income (expense), net $ ( 11,835 ) $ ( 7,518 ) $ ( 19,353 ) Loss before income taxes ( 56,036 ) ( 7,518 ) ( 63,554 ) Net loss ( 74,939 ) ( 7,518 ) ( 82,457 ) Net loss attributable to Cimpress plc ( 77,711 ) ( 7,518 ) ( 85,229 ) Net loss per share attributable to Cimpress plc: Basic $ ( 2.99 ) $ ( 0.29 ) $ ( 3.28 ) Diluted $ ( 2.99 ) $ ( 0.29 ) $ ( 3.28 ) Consolidated Statements of Comprehensive (Loss) Income Year ended June 30, 2021 Reported Adjustments Revised Net loss $ ( 74,939 ) $ ( 7,518 ) $ ( 82,457 ) Foreign currency translation losses, net of hedges 5,397 7,518 12,915 Consolidated Statements of Shareholders' Deficit Year ended June 30, 2021 Reported Adjustments Revised Net loss attributable to Cimpress plc $ ( 77,711 ) $ ( 7,518 ) $ ( 85,229 ) Foreign currency translation, net of hedges 3,765 7,518 11,283 Consolidated Statements of Cash Flows Year ended June 30, 2021 Reported Adjustments Revised Net loss $ ( 74,939 ) $ ( 7,518 ) $ ( 82,457 ) Effect of exchange rate changes on monetary assets and liabilities denominated in non-functional currency ( 7,278 ) 7,518 240 57 Presentation of Revenue and Cost of Revenue During the first quarter of fiscal 2022, we identified an immaterial error related to the presentation of revenue for one-to-one design service arrangements that overstated revenue and cost of revenue for the period from October 1, 2020 through June 30, 2021. On October 1, 2020 we acquired the 99designs business, which is presented as part of our Vista reportable segment, and after acquisition we recognized revenue on a gross basis as if we were the principal to the transactions. During the first quarter of fiscal 2022, we reconsidered the guidance of ASC 606-10-55-39 and confirmed we are the principal for contest arrangements; however, the one-to-one design service portion of 99designs revenue is governed by different terms and conditions. We evaluated whether we have control over these services before the design is transferred to the customer, as we leverage a network of third-party designers to fulfill this offering. The pricing and fulfillment responsibility aspects of the one-to-one design arrangements led us to conclude we are an agent to these specific transactions. The revision for the year ended June 30, 2021 is summarized in the table below. Consolidated Statements of Operations Year ended June 30, 2021 Reported Adjustments Revised Revenue $ 2,592,513 $ ( 16,552 ) $ 2,575,961 Cost of revenue 1,316,441 ( 16,552 ) 1,299,889 Management assessed the materiality of the misstatements described above on prior period financial statements in accordance with SEC Staff Accounting Bulletin (“SAB” No. 99, Materiality, codified in ASC 250-10, Accounting Changes and Error Corrections ("ASC 250") and ASC 250 (SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements) and concluded that these misstatements were not material to any prior annual or interim periods. Cash and Cash Equivalents We consider all highly liquid investments purchased with an original maturity of three months or less to be the equivalent of cash for the purpose of balance sheet and statement of cash flows presentation. Cash equivalents consist of depository accounts and money market funds. Cash and cash equivalents restricted for use were $ 543 and $ 537 as of June 30, 2022 and 2021, respectively, and are included in other assets in the accompanying consolidated balance sheets. For bank accounts that are overdrawn at the end of a reporting period, including any net negative balance in our notional cash pool, we reclassify these overdrafts to short-term debt on our consolidated balance sheets. Book overdrafts that result from outstanding checks in excess of our bank balance are reclassified to other current liabilities. We did not have a bank or book overdraft for any of the periods presented. Marketable Securities We hold certain investments that are classified as held-to-maturity (HTM) as we have the intent and ability to hold them to their maturity dates. Our policy is to invest in the following permitted classes of assets: overnight money market funds invested in U.S. Treasury securities and U.S. government agency securities, U.S. Treasury securities-specifically U.S. Treasury bills, notes, and bonds, U.S. government agency securities, bank time deposits, commercial paper, corporate notes and bonds, and medium term notes. We generally invest in securities with a maturity of two years or less. As the investments are classified as held-to-maturity they are recorded at amortized cost and interest income is recorded as it is earned within interest expense, net. 58 We will continue to assess our securities for impairment when the fair value is less than amortized cost to determine if any risk of credit loss exists. As our intent is to hold the securities to maturity, we must assess whether any credit losses related to our investments are recoverable and determine if it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis. We did not record an allowance for credit losses and we recognized no impairments for these marketable securities during the years ended June 30, 2022 and 2021, and we held no marketable securities during the year ended June 30, 2020. The following is a summary of the net carrying amount, unrealized gains, unrealized losses, and fair value of held-to-maturity securities by type and contractual maturity as of June 30, 2022 and June 30, 2021. June 30, 2022 Amortized cost Unrealized losses Fair value Due within one year or less: Corporate debt securities $ 49,952 $ ( 546 ) $ 49,406 Total held-to-maturity securities $ 49,952 $ ( 546 ) $ 49,406 June 30, 2021 Amortized cost Unrealized gains Fair value Due within one year or less: Commercial paper $ 74,463 $ ( 28 ) $ 74,407 Corporate debt securities 77,785 ( 57 ) 77,638 Total due within one year or less 152,248 ( 85 ) 152,045 Due after one year through two years: Corporate debt securities 50,713 ( 90 ) 50,721 Total held-to-maturity securities $ 202,961 $ ( 175 ) $ 202,766 Accounts Receivable Accounts receivable includes amounts due from customers. We offset gross trade accounts receivable with an allowance for doubtful accounts, which is our best estimate of the amount of probable credit losses in existing accounts receivable. Account balances are charged off against the allowance when the potential for recovery is no longer reasonably assured. Inventories Inventories consist primarily of raw materials and are recorded at the lower of cost or net realizable value using the first-in, first-out method. Costs to produce products are included in cost of revenues as incurred. Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciation and amortization. Additions and improvements that substantially extend the useful life of a particular asset are capitalized while repairs and maintenance costs are expensed as incurred. Assets that qualify for the capitalization of interest cost during their construction period are evaluated on a per project basis and, if material, the costs are capitalized. No interest costs associated with our construction projects were capitalized in any of the years presented as the amounts were not material. Depreciation of plant and equipment is recorded on a straight-line basis over the estimated useful lives of the assets. Software and Website Development Costs We capitalize eligible salaries and payroll-related costs of employees and third-party consultants who devote time to the development of 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. These costs are amortized on a straight-line basis over the estimated useful life of the software, which is generally over a three year period. Costs associated with preliminary stage software development, repair, maintenance or the development of website content are expensed as incurred. 59 Amortization of previously capitalized amounts in the years ended June 30, 2022, 2021 and 2020 was $ 54,646 , $ 47,560 , and $ 40,753 , respectively, resulting in accumulated amortization of $ 273,629 and $ 231,482 at June 30, 2022 and 2021, respectively. Intangible Assets We capitalize the costs of purchasing patents from unrelated third parties and amortize these costs over the estimated useful life of the patent. The costs related to patent applications, pursuing others who we believe infringe on our patents, and defending against patent-infringement claims are expensed as incurred. We record acquired intangible assets at fair value on the date of acquisition using the income approach to value the trade names, customer relationships and customer network and a replacement cost approach to value developed technology and our print network. The income approach calculates fair value by discounting the forecasted after-tax cash flows back to a present value using an appropriate discount rate. The baseline data for this analysis was the cash flow estimates used to price the transaction. We amortize such assets using the straight-line method over the expected useful life of the asset, unless another amortization method is deemed to be more appropriate. In estimating the useful life of the acquired assets, we reviewed the expected use of the assets acquired, factors that may limit the useful life of an acquired asset or may enable the extension of the useful life of an acquired asset without substantial cost, the effects of obsolescence, demand, competition and other economic factors, and the level of maintenance expenditures required to obtain the expected future cash flows from the asset. We evaluate the remaining useful life of intangible assets on a periodic basis to determine whether events and circumstances warrant a revision to the remaining useful life. If the estimate of an intangible asset’s remaining useful life is changed, we amortize the remaining carrying value of the intangible asset prospectively over the revised remaining useful life. Long-Lived Assets Long-lived assets with a finite life are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or any other significant adverse change that would indicate that the carrying amount of an asset or group of assets may not be recoverable. During the year ended June 30, 2021, our intent to occupy two leased spaces changed, and we performed the required impairment assessment for the right-of-use assets. The assessment resulted in a total impairment charge of $ 12,769 for both right-of-use assets as well as an $ 8,303 impairment charge for abandoned assets associated with the leased spaces. These charges were recognized in general and administrative expense. Refer to Note 16 for additional information about the lease changes in fiscal year 2021. Business Combinations We recognize the assets acquired and liabilities assumed in business combinations on the basis of their fair values at the date of acquisition. We assess the fair value of assets, including intangible assets, using a variety of methods and each asset is measured at fair value from the perspective of a market participant. The method used to estimate the fair values of intangible assets incorporates significant assumptions regarding the estimates a market participant would make in order to evaluate an asset, including a market participant’s use of the asset and the appropriate discount rates. Assets acquired that are determined to not have economic use for us are expensed immediately. Any excess purchase price over the fair value of the net tangible and intangible assets acquired is allocated to goodwill. Transaction costs and restructuring costs associated with a business combination are expensed as incurred. The consideration for our acquisitions often includes future payments that are contingent upon the occurrence of a particular event. For acquisitions that qualify as business combinations, we record an obligation for such contingent payments at fair value on the acquisition date. 60 Goodwill The evaluation of goodwill for impairment is performed at a level referred to as a reporting unit. A reporting unit is either the “operating segment level” or one level below, which is referred to as a “component.” The level at which the impairment test is performed requires an assessment as to whether the operations below the operating segment should be aggregated as one reporting unit due to their similarity or reviewed individually. Goodwill is evaluated for impairment on an annual basis or more frequently when an event occurs or circumstances change that indicate that the carrying value may not be recoverable. Goodwill is considered to be impaired when the carrying amount of a reporting unit exceeds its estimated fair value. We have the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If the results of this analysis indicate that the fair value of a reporting unit is less than its carrying value, the quantitative impairment test is required; otherwise, no further assessment is necessary. To perform the quantitative approach, we estimate the fair value of our reporting units using a discounted cash flow methodology. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, then we record an impairment loss equal to the difference. For the years ended June 30, 2022 and 2021, we recognized no goodwill impairment charges, and during the year ended June 30, 2020, we recognized a goodwill impairment charge of $ 100,842 . We recognized a partial impairment of the goodwill of our Exaprint reporting unit of $ 40,391 (a business within The Print Group reportable segment), a full impairment of the goodwill of our National Pen reporting unit of $ 34,434 and a full impairment of the goodwill of our VIDA reporting unit of $ 26,017 (a business previously reported within All Other Businesses reportable segment). Refer to Note 8 for additional details regarding the annual goodwill impairment test performed in the current fiscal year. Debt Issuance Costs Costs associated with the issuance of debt instruments are capitalized and amortized over the term of the respective financing arrangement on a straight-line basis through the maturity date of the related debt instrument. We evaluate all changes to our debt arrangements, to determine whether the changes represent a modification or extinguishment to the old debt arrangement. If a debt instrument is deemed to be modified, we capitalize all new lenders fees and expense all third-party fees. If we determine that an extinguishment of one of our debt instruments has occurred, the unamortized financing fees associated with the extinguished instrument are expensed. For the revolving loans associated with our senior secured credit facility, all lender and third-party fees are capitalized, and in the event an amendment reduces the committed capacity under the revolving loans, we expense a portion of any unamortized fees on a pro-rata basis in proportion to the decrease in the committed capacity. Derivative Financial Instruments We record all derivatives on the consolidated balance sheet at fair value. We apply hedge accounting to arrangements that qualify and are designated for hedge accounting treatment, which includes cash flow and net investment hedges. Hedge accounting is discontinued prospectively if the hedging relationship ceases to be effective or the hedging or hedged items cease to exist as a result of maturity, sale, termination or cancellation. Derivatives designated and qualifying as hedges of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges which could include interest rate swap contracts and cross-currency swap contracts. In a cash flow hedging relationship, the effective and ineffective portion of the change in the fair value of the hedging derivative is initially recorded in accumulated other comprehensive (loss) income. The portion of gain or loss on the derivative instrument previously recorded in accumulated other comprehensive (loss) income remains in accumulated other comprehensive (loss) income until the forecasted transaction is recognized in earnings. For derivatives designated as cash flow hedges, we present the settlement amount of these contracts within cash from operating activities in our consolidated statement of cash flows, if the hedged item continues after contract settlement. Derivatives designated and qualifying as hedges of currency exposure of a net investment in a foreign operation are considered net investment hedges which could include cross-currency swap and currency forward contracts as well as intercompany loans. In hedging the currency exposure of a net investment in a foreign 61 operation, the effective and ineffective portion of gains and losses on the hedging instruments is recognized in accumulated other comprehensive (loss) income as part of currency translation adjustment. The portion of gain or loss on the derivative instrument previously recorded in accumulated other comprehensive (loss) income remains in accumulated other comprehensive (loss) income until we reduce our investment in the hedged foreign operation through a sale or substantial liquidation. We also enter into derivative contracts that are intended to economically hedge certain of our risks, even though we may not elect to apply hedge accounting or the instrument may not qualify for hedge accounting. When hedge accounting is not applied, the changes in the fair value of the derivatives are recorded directly in earnings as a component of other (expense) income, net. In accordance with the fair value measurement guidance, our accounting policy is to measure the credit risk of our derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio. We execute our derivative instruments with financial institutions that we judge to be credit-worthy, defined as institutions that hold an investment grade credit rating. Shareholders' Deficit Comprehensive (Loss) Income Comprehensive (loss) income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. Comprehensive (loss) income is composed of net (loss) income, unrealized gains and losses on derivatives, unrealized loss on pension benefit obligation, and cumulative foreign currency translation adjustments, which are included in the accompanying consolidated statements of comprehensive income. Treasury Shares Treasury shares are accounted for using the cost method and are included as a component of shareholders' equity. Prior to June 2022, we reissued treasury shares as part of our share-based compensation programs and as consideration for some of our acquisition transactions. Upon issuance of treasury shares we determine the cost using the average cost method. Warrants We bifurcate and separately account for a detachable warrant as a separate equity instrument. The value assigned to the warrants was determined based on a relative fair value allocation between the warrants and related debt. The fair value of the warrants was determined using a Monte Carlo valuation and applying a discount for the lack of marketability for the warrants. We present the allocated value for the warrants within additional paid-in capital in our consolidated balance sheet. Refer to Note 11 for additional details. Revenue Recognition We 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 Vista business) from digital services, website design and hosting, professional design services, and email marketing services, as well as a small percentage from order referral fees and other third-party offerings. Revenues are recognized when control of the promised products or services is transferred to the customer in an amount that reflects the consideration we expect to be entitled to in exchange for those products or services. Shipping revenues are recognized when control of the related products is transferred to the customer. For design service arrangements, we recognize revenue when the services are complete. A portion of this revenue relates to design contests in which we have determined that we are the principal in the arrangement as we satisfy our contractual performance obligation to provide the customer with the benefit of our platform and network of designers. Under the terms of most of our arrangements with our customers we provide satisfaction guarantees, which give our customers an option for a refund or reprint over a specified period of time if the customer is not fully satisfied. As such, we record a reserve for estimated sales returns and allowances as a reduction of revenue, based on historical experience or the specific identification of an event necessitating a reserve. Actual sales returns have historically not been significant. 62 We have elected to recognize shipping and handling activities that occur after transfer of control of the products as fulfillment activities and not as a separate performance obligation. Accordingly, we recognize revenue for our single performance obligation upon the transfer of control of the fulfilled orders, which generally occurs upon delivery to the shipping carrier. If revenue is recognized prior to completion of the shipping and handling activities, we accrue the costs of those activities. We do have some arrangements whereby the transfer of control, and thus revenue recognition, occurs upon delivery to the customer. If multiple products are ordered together, each product is considered a separate performance obligation, and the transaction price is allocated to each performance obligation based on the standalone selling price. Revenue is recognized upon satisfaction of each performance obligation. We generally determine the standalone selling prices based on the prices charged to our customers. Our products are customized for each individual customer with no alternative use except to be delivered to that specific customer; however, we do not have an enforceable right to payment prior to delivering the items to the customer based on the terms and conditions of our arrangements with customers and therefore we recognize revenue at a point in time. We record deferred revenue when cash payments are received in advance of our satisfaction of the related performance obligation. The satisfaction of performance obligations generally occurs shortly after cash payment and we expect to recognize our deferred revenue balance as revenue within three months subsequent to June 30, 2022. We periodically provide marketing materials and promotional offers to new customers and existing customers that are intended to improve customer retention. These incentive offers are generally available to all customers and, therefore, do not represent a performance obligation as customers are not required to enter into a contractual commitment to receive the offer. These discounts are recognized as a reduction to the transaction price when used by the customer. Costs related to free products are included within cost of revenue and sample products are included within marketing and selling expense. We have elected to expense incremental direct costs as incurred, which primarily includes sales commissions, since our contract periods generally are less than one year and the related performance obligations are satisfied within a short period of time. Restructuring Restructuring costs are recorded in connection with initiatives designed to improve efficiency or enhance competitiveness. Restructuring initiatives require us to make estimates in several areas, including expenses for severance and other employee separation costs and our ability to generate sublease income to enable us to terminate lease obligations at the estimated amounts. For jurisdictions in which there are statutorily required minimum benefits for involuntary terminations, severance benefits are documented in an employee manual or labor contract, or are consistent with prior restructuring plan benefits, we evaluate these benefits as ongoing benefit arrangements. We recognize the liability for these arrangements when it is probable that the employee would be entitled to the benefits and the amounts can be reasonably estimated. The expense timing generally occurs when management has committed to and approved the restructuring plan. Involuntary termination benefits that are in excess of statutory minimum requirements and prior restructuring plan benefits are recognized as one-time termination benefits and expensed at the date we notify the employee, unless the employee must provide future service beyond the statutory minimum retention period, in which case the benefits are expensed ratably over the future service period. Liabilities for costs associated with a facility exit or disposal activity are recognized when the liability is incurred, as opposed to when management commits to an exit plan, and are measured at fair value. Restructuring costs are presented as a separate financial statement line within our consolidated statement of operations. Advertising Expense Our advertising costs are primarily expensed as incurred and included in marketing and selling expense. Advertising expense for the years ended June 30, 2022, 2021 and 2020 was $ 408,566 , $ 333,665 , and $ 302,449 , respectively, which consisted of external costs related to customer acquisition and retention marketing campaigns. 63 Research and Development Expense Research and development costs are expensed as incurred and included in technology and development expense. Research and development expense for the years ended June 30, 2022, 2021 and 2020 was $ 56,996 , $ 49,254 , and $ 49,201 , respectively, which consisted of costs related to enhancing our manufacturing engineering and technology capabilities. Income Taxes As part of the process of preparing our consolidated financial statements, we calculate our income taxes in each of the jurisdictions in which we operate. This process involves estimating our current tax expense and deferred tax expense based on assessing temporary and permanent differences resulting from differing treatment of items for tax and financial reporting purposes. We recognize deferred tax assets and liabilities for the temporary differences using the enacted tax rates and laws that will be in effect when we expect temporary differences to reverse. We assess the ability to realize our deferred tax assets based upon the weight of available evidence both positive and negative. To the extent we believe that it is more likely than not that some portion or all of the deferred tax assets will not be realized, we establish a valuation allowance. In the event that actual results differ from our estimates or we adjust our estimates in the future, we may need to increase or decrease income tax expense, which could have a material impact on our financial position and results of operations. We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the tax position. The tax benefits recognized in our financial statements from such positions are measured as the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. The unrecognized tax benefits will reduce our effective tax rate if recognized. Interest and, if applicable, penalties related to unrecognized tax benefits are recorded in the provision for income taxes. 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. We account for investment tax credits using the “deferral” method, under which the tax benefit from an investment tax credit is deferred and amortized over the book life of the related property. During the three months ended December 31, 2020, the tax on Global Intangible Low-Taxed Income (“GILTI”) provision of the Tax Cuts and Jobs Act became applicable to our operations. Companies subject to GILTI have the option to account for the GILTI tax as a period cost if and when incurred, or to recognize deferred taxes for temporary differences, including outside basis differences, expected to reverse as GILTI. We elected to account for GILTI as a period cost, as incurred. We do not expect GILTI to have a material impact on our consolidated financial statements. Foreign Currency Translation Our non-U.S. dollar functional currency subsidiaries translate their assets and liabilities denominated in their functional currency to U.S. dollars at current rates of exchange in effect at the balance sheet date, and revenues and expenses are translated at average rates prevailing throughout the period. The resulting gains and losses from translation are included as a component of accumulated other comprehensive loss. Transaction gains and losses and remeasurement of assets and liabilities denominated in currencies other than an entity’s functional currency are included in other income (expense), net in our consolidated statements of operations. Other Income (Expense), Net The following table summarizes the components of other income (expense), net: Year Ended June 30, 2022 2021 2020 Gains (losses) on derivatives not designated as hedging instruments (1) $ 58,148 $ ( 20,728 ) $ 20,564 Currency-related gains, net (2) 244 1,005 2,309 Other gains 3,071 370 1 Total other income (expense), net (3) $ 61,463 $ ( 19,353 ) $ 22,874 _____________________ (1) Includes realized and unrealized gains and losses on derivative currency forward and option contracts not designated as hedging instruments,as well as the ineffective portion of certain interest rate swap contracts that have been de-designated from hedge accounting. For contracts not designated as hedging instruments, we realized gains of $ 9,955 and $ 28,902 , respectively, for the years ended June 30, 2022 64 and 2020, and losses of $ 6,854 for the year ended June 30, 2021. Refer to Note 4 for additional details relating to our derivative contracts. (2) Currency-related (losses) gains, net primarily relates to significant non-functional currency intercompany financing relationships that we may change at times and are subject to currency exchange rate volatility. In addition, we have certain cross-currency swaps designated as cash flow hedges which hedge the remeasurement of certain intercompany loans; refer to Note 4 for additional details relating to these cash flow hedges. (3) During fiscal year 2022, we identified an immaterial error and revised our previously reported results to reduce the gain presented above by $ 7,518 for the year ended June 30, 2021. Refer to the "Revision of Prior Period Financial Statements" section above for additional details. Net (Loss) Income Per Share Attributable to Cimpress plc Basic net (loss) income per share attributable to Cimpress plc is computed by dividing net (loss) income attributable to Cimpress plc by the weighted-average number of ordinary shares outstanding for the respective period. Diluted net (loss) income per share attributable to Cimpress plc gives effect to all potentially dilutive securities, including share options, restricted share units (“RSUs”), warrants, and performance share units ("PSUs"), if the effect of the securities is dilutive using the treasury stock method. Awards with performance or market conditions are included using the treasury stock method only if the conditions would have been met as of the end of the reporting period and their effect is dilutive. The following table sets forth the reconciliation of the weighted-average number of ordinary shares: Year Ended June 30, 2022 2021 2020 Weighted average shares outstanding, basic 26,094,842 25,996,572 27,180,744 Weighted average shares issuable upon exercise/vesting of outstanding share options/RSUs/warrants (1) — — 592,542 Shares used in computing diluted net (loss) income per share attributable to Cimpress plc 26,094,842 25,996,572 27,773,286 Weighted average anti-dilutive shares excluded from diluted net (loss) income per share attributable to Cimpress plc (1)(2) 762,086 494,329 1,325 ___________________ (1) In the periods in which a net loss is recognized, the impact of share options, RSUs, RSAs and warrants is not included as they are anti-dilutive. (2) On May 1, 2020, we entered into a financing arrangement with Apollo Global Management, Inc., which included 7-year warrants with a strike price of $ 60 that have a potentially dilutive impact on our weighted average shares outstanding. For the years ended June 30, 2022 and 2021, the weighted average anti-dilutive effect of the warrants were 138,088 and 368,933 shares, respectively. For the year ended June 30, 2020, the weighted average dilutive effect of the warrants was 73,719 shares, respectively. Share-based Compensation Compensation expense for all share-based awards is measured at fair value on the date of grant and recognized over the requisite service period. We recognize the impact of forfeitures as they occur. The fair value of share options is determined using the Black-Scholes valuation model, or lattice model for share options with a market condition or subsidiary share options. The fair value of RSUs is determined based on the quoted price of our ordinary shares on the date of the grant. Such value is recognized ratably as expense over the requisite service period, or on an accelerated method for awards with a performance or market condition. For awards that are ultimately settleable in cash, we treat them as liability awards and mark the award to market each reporting period recognizing any gain or loss in our statements of operations. For awards with a performance condition vesting feature, compensation cost is recorded if it is probable that the performance condition will be achieved. We have issued PSUs, and we calculate the fair value at grant which is fixed throughout the vesting period. The fair value is determined using a Monte Carlo simulation valuation model. As the PSUs include both a service and market condition the related expense is recognized using the accelerated expense attribution method over the requisite service period for each separately vesting portion of the award. For PSUs that meet the service vesting condition, the expense recognized over the requisite service period will not be reversed if the market condition is not achieved. 65 Sabbatical Leave Compensation expense associated with a sabbatical leave, or other similar benefit arrangements, is accrued over the requisite service period during which an employee earns the benefit, net of estimated forfeitures, and is included in other liabilities on our consolidated balance sheets. Concentrations of Credit Risk We monitor the creditworthiness of our customers to which we grant credit terms in the normal course of business. We do not have any customers that accounted for greater than 10% of our accounts receivable as of June 30, 2022 and 2021. We do not have any customers that accounted for greater than 10% of our revenue for the years ended June 30, 2022, 2021 and 2020. We maintain an allowance for doubtful accounts for potential credit losses based upon specific customer accounts and historical trends, and such losses to date in the aggregate have not materially exceeded our expectations. Lease Accounting We determine if an arrangement contains a lease at contract inception. We consider an arrangement to be a lease if it conveys the right to control an identifiable asset for a period of time. Costs for operating leases that include incentives such as payment escalations or rent abatement are recognized on a straight-line basis over the term of the lease. Additionally, inducements received are treated as a reduction of our costs over the term of the agreement. Leasehold improvements are capitalized at cost and amortized over the shorter of their expected useful life or the lease term, excluding renewal periods. Lease right-of-use ("ROU") assets and liabilities for operating and finance leases are recognized based on the present value of the future lease payments over the lease term at lease commencement date. As most of our leases do not provide an implicit interest rate, we use our incremental borrowing rate based on the information available at the lease commencement date. Our incremental borrowing rate approximates the interest rate on a collateralized basis for the economic environments where our leased assets are located, and is established by considering the credit spread associated with our existing debt arrangements, as well as observed market rates for instruments with a similar term to that of the lease payments. ROU assets also include any lease payments made at or before the lease commencement, as well as any initial direct costs incurred. Lease incentives received from the lessor are recognized as a reduction to the ROU asset. Our initial determination of the lease term is based on the facts and circumstances that exist at lease commencement. The lease term may include the effect of options to extend or terminate the lease when it is reasonably certain that those options will be exercised. We consider these options reasonably certain to be exercised based on our assessment of economic incentives, including the fair market rent for equivalent properties under similar terms and conditions, costs of relocating, availability of comparable replacement assets, and any related disruption to operations that would be experienced by not renewing the lease. Finance leases are accounted for as an acquisition of an asset and incurrence of an obligation. Assets held under finance leases are recorded at the lower of the present value of the minimum lease payments or the fair value of the leased asset at the inception of the lease, and amortized over the useful life of the asset. The corresponding finance lease obligation is recorded at the present value of the minimum lease payments at inception of the lease. Operating leases are included in operating lease assets and current and non-current operating lease liabilities in the consolidated balance sheets. Finance lease assets are included in property, plant, and equipment, net, and the related liabilities are included in other current liabilities and other liabilities in the consolidated balance sheets. Variable lease payments are excluded from the operating lease assets and liabilities and are recognized as expense in the period in which the obligation is incurred. Variable lease payments primarily include index-based rent escalation associated with some of our real estate leases, as well as property taxes and common area maintenance payments for most real estate leases, which are determined based on the costs incurred by the lessor. We also make variable lease payments for certain print equipment leases that are determined based on production volumes. 66 For lease arrangements where we are deemed to be involved in the construction of structural improvements prior to the commencement of the lease or take some level of construction risk, we are considered the owner of the assets during the construction period. Accordingly, as the lessor incurs the construction project costs, the assets and corresponding financial obligation are recorded in our consolidated balance sheet. Once the construction is completed, if the lease meets certain “sale-leaseback” criteria, we will remove the asset and related financial obligation from the balance sheet and treat the building lease as either an operating or finance lease based on our assessment of the guidance. If, upon completion of construction, the project does not meet the “sale-leaseback” criteria, the lease will be treated as a financing obligation and we will depreciate the asset over its estimated useful life for financial reporting purposes. We have subleased a small amount of our equipment and real estate lease portfolio to third parties, making us the lessor. Most of these subleases meet the criteria for operating lease classification and the related sublease income is recognized on a straight-line basis over the lease term within the consolidated statement of operations. To a lesser extent, where we have leases in which we are the lessees, we classify the leases as finance leases and have subleased the asset under similar terms, resulting in their classification as direct financing leases. For direct financing leases, we recognize a sublease receivable within prepaid expenses and other current assets and other assets in the consolidated balance sheets. Recently Issued or Adopted Accounting Pronouncements Adopted Accounting Standards In October 2021, the FASB issued Accounting Standards Update No. 2021-08 "Business Combinations (Topic 805) — Accounting for Contract Assets and Contract Liabilities from Contracts with Customers" (ASU 2021-08), which provides authoritative guidance for the accounting of acquired contract assets and liabilities when an acquired company has applied ASC 606 - Revenue from Contracts with Customers. We early adopted the standard in the second quarter of fiscal year 2022, which allowed us to record the deferred revenue contract liability as it relates to our acquisition of Depositphotos at carrying value. Refer to Note 7 for additional information relating to our Depositphotos acquisition . The impact of this adoption did not have a material effect on our consolidated financial statements. In July 2021, the FASB issued Accounting Standards Update No. 2021-05 "Leases (Topic 842): Lessors – Certain Leases with Variable Lease Payments". We early adopted the standard in the second quarter of fiscal year 2022, which provides the option for lessors to classify direct-financing or sales-type leases as operating leases if a loss would have been incurred at lease commencement when considering non-indexed variable lease payments in the classification test. We sublease a small number of equipment assets which are classified as direct-financing leases; the variable lease payments associated with these leases would not have created a loss on day one. Therefore, the impact of this adoption had no effect on our consolidated financial statements. Issued Accounting Standards to be Adopted In May 2021, the FASB issued Accounting Standards Update No. 2021-04 "Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)" (ASU 2021-04), which provides authoritative guidance for the accounting treatment of contracts in an entity's own equity when calculating earnings per share. The standard is effective for us on July 1, 2022. We recognize freestanding equity-classified warrants on our consolidated balance sheet and the effect of those warrants on earnings per share is currently calculated under the treasury stock method. After adopting the standard, we will be required to prospectively apply the weighted average method when calculating the effect of warrants on our earnings per share. We do not expect the adoption of this standard to have a material impact on our consolidated financial statements. 3. Fair Value Measurements We use a three-level valuation hierarchy for measuring fair value and include detailed financial statement disclosures about fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows: • Level 1: Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. 67 • Level 2: Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in markets that are not active and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. • Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The following tables summarize our assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy: June 30, 2022 Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets Interest rate swap contracts $ 14,336 $ — $ 14,336 $ — Currency forward contracts 20,638 — 20,638 — Currency option contracts 10,611 — 10,611 — Total assets recorded at fair value $ 45,585 $ — $ 45,585 $ — Liabilities Cross-currency swap contracts ( 446 ) — ( 446 ) — Currency forward contracts ( 505 ) — ( 505 ) — Currency option contracts ( 9 ) — ( 9 ) — Total liabilities recorded at fair value $ ( 960 ) $ — $ ( 960 ) $ — June 30, 2021 Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets Currency forward contracts $ 1,679 $ — $ 1,679 $ — Total assets recorded at fair value $ 1,679 $ — $ 1,679 $ — Liabilities Interest rate swap contracts $ ( 25,193 ) $ — $ ( 25,193 ) $ — Cross-currency swap contracts ( 9,914 ) — ( 9,914 ) — Currency forward contracts ( 19,651 ) — ( 19,651 ) — Currency option contracts ( 3,080 ) — ( 3,080 ) — Total liabilities recorded at fair value $ ( 57,838 ) $ — $ ( 57,838 ) $ — During the years ended June 30, 2022 and 2021, there were no significant transfers in or out of Level 1, Level 2 and Level 3 classifications. The valuations of the derivatives intended to mitigate our interest rate and currency risk are determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each instrument. This analysis utilizes observable market-based inputs, including interest rate curves, interest rate volatility, or spot and forward exchange rates, and reflects the contractual terms of these instruments, including the period to maturity. We incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparties' nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements. 68 Although we have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to appropriately reflect both our own nonperformance risk and the respective counterparties' nonperformance risk in the fair value measurement. However, as of June 30, 2022 , we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives. As a result, we have determined that our derivative valuations in their entirety are classified in Level 2 in the fair value hierarchy. As of June 30, 2022 and June 30, 2021, the carrying amounts of our cash and cash equivalents, accounts receivable, accounts payable and other current liabilities approximated their estimated fair values. As of June 30, 2022 and June 30, 2021, the carrying value of our debt, excluding debt issuance costs and debt premiums and discounts, was $ 1,705,365 and $ 1,764,856 , respectively, and the fair value was $ 1,600,627 and $ 1,767,209 , respectively. Our debt at June 30, 2022 includes variable-rate debt instruments indexed to LIBOR that resets periodically, as well as fixed-rate debt instruments. The estimated fair value of our debt was determined using available market information based on recent trades or activity of debt instruments with substantially similar risks, terms and maturities, which fall within Level 2 under the fair value hierarchy. As of June 30, 2022 and June 30, 2021 our held-to-maturity marketable securities were held at an amortized cost of $ 49,952 and $ 202,961 , respectively, while the fair value was $ 49,406 and $ 202,766 , respectively. The securities were valued using quoted prices for identical assets in active markets, which fall into Level 1 under the fair value hierarchy. The estimated fair value of assets and liabilities disclosed above may not be representative of actual values that could have been or will be realized in the future. 4. Derivative Financial Instruments We use derivative financial instruments, such as interest rate swap contracts, cross-currency swap contracts, and currency forward and option contracts, to manage interest rate and foreign currency exposures. Derivatives are recorded in the consolidated balance sheets at fair value. If the derivative is designated as a cash flow hedge or net investment hedge, then the change in the fair value of the derivative is recorded in accumulated other comprehensive loss and subsequently reclassified into earnings in the period the hedged forecasted transaction affects earnings. Additionally, any ineffectiveness associated with an effective and designated hedge is recognized within accumulated other comprehensive loss. The change in the fair value of derivatives not designated as hedges is recognized directly in earnings as a component of other income (expense), net. Hedges of Interest Rate Risk We enter into interest rate swap contracts to manage variability in the amount of our known or expected cash payments related to a portion of our debt. Our objective in using interest rate swaps is to add stability to interest expense and to manage our exposure to interest rate movements. We designate our interest rate swaps as cash flow hedges. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for us making fixed-rate payments over the life of the contract agreements without exchange of the underlying notional amount. Realized gains or losses from interest rate swaps are recorded in earnings as a component of interest expense, net. Amounts reported in accumulated other comprehensive loss related to interest rate swap contracts will be reclassified to interest expense, net as interest payments are accrued or made on our variable-rate debt. 69 As of June 30, 2022 , we estimate that $ 1,970 will be reclassified from accumulated other comprehensive loss to interest expense, net during the twelve months ending June 30, 2023. As of June 30, 2022 , we had fourteen effective outstanding interest rate swap contracts indexed to USD LIBOR. These hedges have varying start dates and maturity dates through April 2028. Interest rate swap contracts outstanding: Notional Amounts Contracts accruing interest as of June 30, 2022 $ 400,000 Contracts with a future start date 430,000 Total $ 830,000 Hedges of Currency Risk Cross-Currency Swap Contracts From time to time, we execute cross-currency swap contracts designated as cash flow hedges or net investment hedges. Cross-currency swaps involve an initial receipt of the notional amount in the hedge currency in exchange for our reporting currency based on a contracted exchange rate. Subsequently, we receive fixed rate payments in our reporting currency in exchange for fixed rate payments in the hedged currency over the life of the contract. At maturity, the final exchange involves the receipt of our reporting currency in exchange for the notional amount in the hedged currency. Cross-currency swap contracts designated as cash flow hedges are executed to mitigate our currency exposure to the interest receipts as well as the principal remeasurement and repayment associated with certain intercompany loans denominated in a currency other than our reporting currency, the U.S. dollar. As of June 30, 2022 , we had one outstanding cross-currency swap contract designated as a cash flow hedge with a total notional amount of $ 58,478 , maturing during June 2024. We entered into the cross-currency swap contract to hedge the risk of changes in one Euro-denominated intercompany loan entered into with one of our consolidated subsidiaries that has the Euro as its functional currency. Amounts reported in accumulated other comprehensive loss will be reclassified to other income (expense), net as interest payments are accrued or paid and upon remeasuring the intercompany loan. As of June 30, 2022 , we estimate that $ 1,892 of income will be reclassified from accumulated other comprehensive loss to interest expense, net during the twelve months ending June 30, 2023. Other Currency Hedges We execute currency forward and option contracts in order to mitigate our exposure to fluctuations in various currencies against our reporting currency, the U.S. dollar. These contracts or intercompany loans may be designated as hedges to mitigate the risk of changes in the U.S. dollar equivalent value of a portion of our net investment in consolidated subsidiaries that have the Euro as their functional currency. Amounts reported in accumulated other comprehensive loss are recognized as a component of our cumulative translation adjustment. In April 2022 we early terminated all of our currency forward contracts designated as net investment hedges, and as of June 30, 2022 we had no currency forward contracts designated as net investment hedges. We have one intercompany loan designated as a net investment hedge with a total notional amount of $ 364,524 that matures in May 2028. We have elected to not apply hedge accounting for all other currency forward and option contracts. During the years ended June 30, 2022 and 2021, we experienced volatility within other income (expense), net, in our consolidated statements of operations from unrealized gains and losses on the mark-to-market of outstanding currency forward and option contracts. We expect this volatility to continue in future periods for contracts for which we do not apply hedge accounting. Additionally, since our hedging objectives may be targeted at non-GAAP financial metrics that exclude non-cash items such as depreciation and amortization, we may experience increased, not decreased, volatility in our GAAP results as a result of our currency hedging program. 70 As of June 30, 2022 , we had the following outstanding currency derivative contracts that were not designated for hedge accounting and were used to hedge fluctuations in the U.S. dollar value of forecasted transactions or balances denominated in Australian Dollar, British Pound, Canadian Dollar, Danish Krone, Euro, Indian Rupee, Japanese Yen, Mexican Peso, New Zealand Dollar, Norwegian Krone, Philippine Peso, Swiss Franc and Swedish Krona: Notional Amount Effective Date Maturity Date Number of Instruments Index $ 437,323 June 2020 through June 2022 Various dates through October 2024 621 Various Financial Instrument Presentation The table below presents the fair value of our derivative financial instruments as well as their classification on the balance sheet as of June 30, 2022 and June 30, 2021. Our derivative asset and liability balances fluctuate with interest rate and currency exchange rate volatility. June 30, 2022 Asset Derivatives Liability Derivatives Balance Sheet line item Gross amounts of recognized assets Gross amount offset in Consolidated Balance Sheet Net amount Balance Sheet line item Gross amounts of recognized liabilities Gross amount offset in Consolidated Balance Sheet Net amount Derivatives designated as hedging instruments Derivatives in cash flow hedging relationships Interest rate swaps Other assets $ 14,336 $ — $ 14,336 Other current liabilities / other liabilities $ — $ — $ — Cross-currency swaps Other assets — — — Other liabilities ( 446 ) — ( 446 ) Total derivatives designated as hedging instruments $ 14,336 $ — $ 14,336 $ ( 446 ) $ — $ ( 446 ) Derivatives not designated as hedging instruments Currency forward contracts Other current assets / other assets 24,440 ( 3,802 ) 20,638 Other current liabilities / other liabilities ( 505 ) — ( 505 ) Currency option contracts Other current assets / other assets 10,612 ( 1 ) 10,611 Other liabilities ( 9 ) — ( 9 ) Total derivatives not designated as hedging instruments $ 35,052 $ ( 3,803 ) $ 31,249 $ ( 514 ) $ — $ ( 514 ) 71 June 30, 2021 Asset Derivatives Liability Derivatives Balance Sheet line item Gross amounts of recognized assets Gross amount offset in Consolidated Balance Sheet Net amount Balance Sheet line item Gross amounts of recognized liabilities Gross amount offset in Consolidated Balance Sheet Net amount Derivatives designated as hedging instruments Derivatives in cash flow hedging relationships Interest rate swaps Other current assets / other assets $ — $ — $ — Other current liabilities / other liabilities $ ( 23,527 ) $ 176 $ ( 23,351 ) Cross-currency swaps Other assets — — — Other liabilities ( 9,914 ) — ( 9,914 ) Derivatives in Net Investment Hedging Relationships Currency forward contracts Other assets — — — Other current liabilities / other liabilities ( 11,379 ) — ( 11,379 ) Total derivatives designated as hedging instruments $ — $ — $ — $ ( 44,820 ) $ 176 $ ( 44,644 ) Derivatives not designated as hedging instruments Interest rate swaps Other assets $ — $ — $ — Other liabilities $ ( 1,842 ) $ — $ ( 1,842 ) Currency forward contracts Other current assets / other assets 1,796 ( 117 ) 1,679 Other current liabilities / other liabilities ( 11,510 ) 3,238 ( 8,272 ) Currency option contracts Other current assets / other assets — — — Other current liabilities / other liabilities ( 3,315 ) 235 ( 3,080 ) Total derivatives not designated as hedging instruments $ 1,796 $ ( 117 ) $ 1,679 $ ( 16,667 ) $ 3,473 $ ( 13,194 ) 72 The following table presents the effect of our derivative financial instruments designated as hedging instruments and their classification within comprehensive income (loss) for the years ended June 30, 2022, 2021 and 2020 : Year Ended June 30, 2022 2021 2020 Derivatives in cash flow hedging relationships Interest rate swaps $ 25,511 $ 3,340 $ ( 28,259 ) Cross-currency swaps ( 22,698 ) 6,996 3,689 Derivatives in net investment hedging relationships Intercompany loan 49,225 7,518 — Currency forward contracts 13,622 ( 19,052 ) 21,240 Total $ 65,660 $ ( 1,198 ) $ ( 3,330 ) The following table presents reclassifications out of accumulated other comprehensive loss for the years ended June 30, 2022, 2021 and 2020: Amount of Net Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income Affected line item in the Statement of Operations Year Ended June 30, 2022 2021 2020 Derivatives in cash flow hedging relationships Interest rate swaps $ 9,998 $ 6,967 $ 3,041 Interest expense, net Cross-currency swaps 18,286 ( 10,950 ) 4,583 Other income (expense), net Total before income tax 28,284 ( 3,983 ) 7,624 Income (loss) before income taxes Income tax ( 2,087 ) ( 106 ) ( 1,850 ) Income tax expense (benefit) Total $ 26,197 $ ( 4,089 ) $ 5,774 The following table presents the adjustment to fair value recorded within the consolidated statements of operations for the years ended June 30, 2022, 2021 and 2020 for derivative instruments for which we did not elect hedge accounting and de-designated derivative financial instruments that no longer qualify as hedging instruments. Affected line item in the Statement of Operations Year Ended June 30, 2022 2021 2020 Currency contracts $ 51,784 $ ( 24,235 ) $ 20,882 Other income (expense), net Interest rate swaps 6,364 3,507 ( 318 ) Other income (expense), net Total $ 58,148 $ ( 20,728 ) $ 20,564 73 5. Accumulated Other Comprehensive Loss The following table presents a roll forward of amounts recognized in accumulated other comprehensive loss by component, net of tax of $ 16,722 , $ 764 , and $ 1,709 for the years ended June 30, 2022, 2021 and 2020 : (Losses) gains on cash flow hedges (1) (Losses) gains on pension benefit obligation Translation adjustments, net of hedges (2) Total Balance as of June 30, 2019 $ ( 11,282 ) $ ( 204 ) $ ( 68,371 ) $ ( 79,857 ) Other comprehensive (loss) income before reclassifications ( 24,570 ) ( 1,195 ) 11,172 ( 14,593 ) Amounts reclassified from accumulated other comprehensive loss to net (loss) income 5,774 — — 5,774 Net current period other comprehensive (loss) income ( 18,796 ) ( 1,195 ) 11,172 ( 8,819 ) Balance as of June 30, 2020 ( 30,078 ) ( 1,399 ) ( 57,199 ) ( 88,676 ) Other comprehensive (loss) income before reclassifications 10,336 ( 336 ) 11,283 21,283 Amounts reclassified from accumulated other comprehensive loss to net (loss) income ( 4,089 ) — — ( 4,089 ) Net current period other comprehensive (loss) income 6,247 ( 336 ) 11,283 17,194 Balance as of June 30, 2021 ( 23,831 ) ( 1,735 ) ( 45,916 ) ( 71,482 ) Other comprehensive income before reclassifications 2,813 1,649 ( 6,305 ) ( 1,843 ) Amounts reclassified from accumulated other comprehensive loss to net (loss) income 26,197 — — 26,197 Net current period other comprehensive income 29,010 1,649 ( 6,305 ) 24,354 Balance as of June 30, 2022 $ 5,179 $ ( 86 ) $ ( 52,221 ) $ ( 47,128 ) ________________________ (1) (Losses) gains on cash flow hedges include our interest rate swap and cross-currency swap contracts designated in cash flow hedging relationships. (2) As of June 30, 2022 and June 30, 2021, the translation adjustment is inclusive of both the unrealized and realized effects of our net investment hedges. Gains on currency forward and swap contracts, net of tax, of $ 15,079 and $ 1,457 have been included in accumulated other comprehensive loss as of June 30, 2022 and 2021, respectively. Intercompany loan hedge gains of $ 56,743 and $ 7,518 , net of tax, have been included in accumulated other comprehensive loss as of June 30, 2022 and 2021, respectively. . 6. Property, Plant and Equipment, Net Property, plant, and equipment, net consists of the following: June 30, Estimated useful lives 2022 2021 Land improvements 10 years $ 4,899 $ 5,053 Building and building improvements 10 - 30 years 180,295 191,653 Machinery and production equipment 4 - 10 years 366,647 380,013 Machinery and production equipment under finance lease 4 - 10 years 57,669 73,321 Computer software and equipment 3 - 5 years 105,778 119,742 Furniture, fixtures and office equipment 5 - 7 years 35,681 38,357 Leasehold improvements Shorter of lease term or expected life of the asset 52,671 64,060 Construction in progress 13,117 7,242 816,757 879,441 Less accumulated depreciation, inclusive of assets under finance lease ( 557,981 ) ( 583,752 ) 258,776 295,689 Land 28,050 32,990 Property, plant, and equipment, net $ 286,826 $ 328,679 Depreciation expense, inclusive of assets under finance leases, totaled $ 67,513 , $ 71,057 , and $ 74,665 for the years ended June 30, 2022, 2021 and 2020, respectively. 74 7. Business Combinations Fiscal 2022 Acquisitions Acquisition of Depositphotos Inc. On October 1, 2021, we acquired Depositphotos Inc. and its subsidiaries ("Depositphotos"), a global creative platform for digital design. We acquired all outstanding shares of the company for a purchase price of $ 84,900 , which included a post-closing adjustment based on acquired cash, debt, and working capital as of the closing date. We paid $ 76,119 in cash at closing, and the remaining purchase consideration, including the post-closing adjustment but net of any indemnifiable losses recoverable against the deferred amount, is payable in two separate deferred payments. The first payment of $ 609 was made in January 2022 and the $ 8,172 remaining deferred amount is due in October 2022. Depositphotos is managed within our Vista business and includes VistaCreate (formerly Crello), a rapidly growing leader in do-it-yourself (DIY) digital design, and the separately branded Depositphotos business, a platform for creators that includes images, videos and music that are developed by a large group of content contributors. We expect synergies to provide significant benefits to our Vista business as this represents another integral step toward providing a compelling, full-spectrum design offering to our customers, and also provides another vehicle for the acquisition of new customers, to whom we plan to cross-sell our other products and services. The table below details the consideration transferred to acquire Depositphotos: Cash consideration (paid at closing) $ 76,119 Deferred payment 8,781 Total purchase price $ 84,900 We recognized the assets and liabilities on the basis of their fair values at the date of the acquisition with any excess of the purchase price paid over the fair value of the net assets recorded as goodwill, which is primarily attributable to the synergies that we expect to achieve through the acquisition. The goodwill balance has been attributed to the Vista reporting unit and none of the goodwill balance is deductible for tax purposes. Additionally, we identified and valued Depositphotos intangible assets, which include its trade name, customer relationships, owned content and developed technology. 75 The fair value of the assets acquired and liabilities assumed was: Amount Weighted Average Useful Life in Years Tangible assets acquired and liabilities assumed: Cash and cash equivalents $ 7,173 n/a Accounts receivable, net 329 n/a Prepaid expenses and other current assets 448 n/a Property, plant and equipment, net 611 n/a Operating lease assets, net 383 n/a Other assets 324 n/a Accounts payable ( 843 ) n/a Accrued expenses ( 5,009 ) n/a Deferred revenue ( 10,999 ) n/a Operating lease liabilities, current ( 152 ) n/a Deferred tax liabilities ( 4,402 ) n/a Operating lease liabilities, non-current ( 231 ) n/a Identifiable intangible assets: Customer relationships 11,600 4 years Trade name 2,500 10 years Developed technology 2,300 2 years Owned content 7,700 10 years Goodwill 73,168 n/a Total purchase price $ 84,900 n/a Depositphotos has been included in our consolidated financial statements starting on its acquisition date. The revenue and earnings of Depositphotos included in our consolidated financial statements for the year ended June 30, 2022 are not material, and therefore no proforma financial information is presented. We used our cash on hand to fund the acquisition. In connection with the acquisition, we incurred $ 887 in general and administrative expenses, as part of our central and corporate costs during the year ended June 30, 2022, primarily related to legal, financial, and other professional services. Other Acquisition On January 21, 2022, we completed an investment in a European company that is intended to support certain strategic initiatives within our PrintBrothers reportable segment. After giving effect to this investment, we have acquired approximately 75% of the company's shares for total cash and noncash consideration of $ 11,218 . We recognized the assets, liabilities and noncontrolling interest on the basis of their fair values at the date of the acquisition, resulting in goodwill of $ 10,484 which is not deductible for tax purposes. The net assets recognized largely consist of the cash and deferred tax liability balances acquired. The revenue and earnings included in our consolidated financial statements for the year ended June 30, 2022 are not material. We utilized our available cash balance to finance the acquisition. 76 Fiscal 2021 Acquisitions Acquisition of 99designs, Inc. On October 1, 2020, we acquired 99designs, Inc. and its subsidiaries ("99designs"), a global creative platform for graphic design. We acquired all outstanding shares of the company for a purchase price of $ 90,000 , subject to a post-closing adjustment based on acquired cash, debt, and working capital as of the closing date. We paid $ 45,000 in cash at closing and paid the remaining purchase consideration, including the post-closing adjustment, on February 15, 2022. The acquisition is managed within our Vista business and provides a global platform that connects designers and clients, making it easier for small businesses to access both professional design services and marketing products in one place. We expect the synergies achieved through integration with the 99designs designer network to provide significant benefits to our Vista business. The table below details the consideration transferred to acquire 99designs: Cash consideration (paid at closing) $ 45,000 Fair value of deferred payment 43,381 Final post closing adjustment 310 Total purchase price $ 88,691 We recognized the assets and liabilities on the basis of their fair values at the date of the acquisition with any excess of the purchase price paid over the fair value of the net assets recorded as goodwill, which is primarily attributable to the synergies that we expect to achieve through the acquisition. The goodwill balance has been attributed to the Vista reporting unit and a portion of such goodwill balance is deductible for tax purposes. Additionally, we identified and valued 99designs intangible assets which include their trade name, designer network, and developed technology. The fair value of the assets acquired and liabilities assumed was: Amount Weighted Average Useful Life in Years Tangible assets acquired and liabilities assumed: Cash and cash equivalents $ 8,603 n/a Accounts receivable, net 494 n/a Prepaid expenses and other current assets 787 n/a Property, plant and equipment, net 73 n/a Other assets 142 n/a Accounts payable ( 220 ) n/a Accrued expenses ( 6,299 ) n/a Deferred revenue ( 5,806 ) n/a Other liabilities ( 625 ) n/a Identifiable intangible assets: Trade name 1,550 2 years Developed technology 13,400 3 years Designer network 5,800 7 years Goodwill 70,792 n/a Total purchase price $ 88,691 n/a We used our senior secured credit facility to finance the acquisition. In connection with the acquisition, we incurred $ 1,183 in general and administrative expenses during the year ended June 30, 2021, primarily related to legal, financial, and other professional services. 77 Other Acquisition On April 23, 2021 we completed an acquisition of a fast growing company with an attractive product capability as part of our BuildASign business, acquiring approximately 81 % of the company's shares for total consideration of $ 18,535 . We recognized the assets, liabilities and noncontrolling interest on the basis of their fair values at the date of the acquisition, resulting in goodwill of $ 14,208 which is not deductible for tax purposes. This acquisition is presented within our All Other Businesses segment. We utilized proceeds from our senior secured credit facility to finance the acquisition. 8. Goodwill and Acquired Intangible Assets The carrying amount of goodwill by reportable segment as of June 30, 2022 and June 30, 2021 was as follows: Vista PrintBrothers The Print Group All Other Businesses Total Balance as of June 30, 2020 $ 150,846 $ 129,764 $ 155,197 $ 186,097 $ 621,904 Acquisitions (1) 70,792 — — 14,208 85,000 Effect of currency translation adjustments (2) 3,509 7,543 9,023 — 20,075 Balance as of June 30, 2021 225,147 137,307 164,220 200,305 726,979 Acquisitions (1) 73,168 10,484 — — 83,652 Adjustments ( 821 ) — — — ( 821 ) Effect of currency translation adjustments (2) ( 5,996 ) ( 16,963 ) ( 20,251 ) — ( 43,210 ) Balance as of June 30, 2022 $ 291,498 $ 130,828 $ 143,969 $ 200,305 $ 766,600 ________________________ (1) On October 1, 2021, we acquired Depositphotos Inc., which is included in our Vista reportable segment. In the third quarter of fiscal 2022, we recognized goodwill related to an immaterial acquisition within our PrintBrothers reportable segment. In fiscal year 2021, we acquired 99designs, which is included in our Vista reportable segment, and a small business included within our All Other Businesses reportable segment. Refer to Note 7 for additional details. (2) Related to goodwill held by subsidiaries whose functional currency is not the U.S. dollar. Annual Impairment Review Our goodwill accounting policy establishes an annual goodwill impairment test date of May 31. For our fiscal year 2022 annual impairment assessment, we bypassed the qualitative test and performed a quantitative test for all nine reporting units with goodwill. To perform our quantitative goodwill test, we used the income approach, specifically the discounted cash flow method, to derive the fair value of each reporting unit. This approach calculates fair value by estimating the after-tax cash flows attributable to a reporting unit and then discounting the after-tax cash flows to a present value using a risk-adjusted discount rate. We selected this method as being the most meaningful in preparing our goodwill assessment as we believe the income approach most appropriately measures our income-producing assets. We considered using the market approach but concluded it was not appropriate in valuing these particular reporting units given the lack of relevant market comparisons available. The cash flow projections in the fair value analysis are considered Level 3 inputs, and consist of management's estimates of revenue growth rates and operating margins, taking into consideration historical results, as well as industry and market conditions. The discount rate used in the fair value analysis is based on a weighted average cost of capital (“WACC”), which represents the average rate a business must pay its providers of debt and equity, plus a risk premium. The respective WACC percentages used for each reporting unit within our goodwill impairment test were derived from a group of comparable companies for each respective reporting unit and adjusted for the risk premium associated with each reporting unit. Based on the results of this test, the fair values of each of our reporting units exceeded their carrying values and no goodwill impairment was recognized. 78 Acquired Intangible Assets June 30, 2022 June 30, 2021 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Trade name $ 144,916 $ ( 65,203 ) $ 79,713 $ 152,347 $ ( 59,432 ) $ 92,915 Developed technology 96,120 ( 75,585 ) 20,535 99,905 ( 71,255 ) 28,650 Customer relationships 195,766 ( 160,247 ) 35,519 199,294 ( 152,410 ) 46,884 Customer network and other 23,946 ( 11,580 ) 12,366 22,301 ( 14,431 ) 7,870 Print network 22,982 ( 16,385 ) 6,597 26,182 ( 15,757 ) 10,425 Total intangible assets $ 483,730 $ ( 329,000 ) $ 154,730 $ 500,029 $ ( 313,285 ) $ 186,744 Acquired intangible assets amortization expense for the years ended June 30 2022, 2021, and 2020 was $ 54,497 , $ 53,818 , and $ 51,786 respectively. Estimated intangible assets amortization expense for each of the five succeeding fiscal years and thereafter is as follows: 2023 $ 47,332 2024 31,785 2025 18,405 2026 12,235 2027 10,744 Thereafter 34,229 $ 154,730 9. Other Balance Sheet Components Accrued expenses included the following: June 30, 2022 June 30, 2021 Compensation costs $ 78,521 $ 73,861 Income and indirect taxes 41,886 46,074 Advertising costs 25,925 35,093 Shipping costs 10,228 9,401 Third party manufacturing and digital content costs (1) 15,790 6,881 Sales returns 6,286 5,636 Purchases of property, plant and equipment 642 1,110 Professional fees 2,394 4,210 Interest payable 2,477 2,399 Other 69,692 62,848 Total accrued expenses $ 253,841 $ 247,513 _______________________ (1) The increase in third party manufacturing and digital content costs from June 30, 2021 to June 30, 2022 is primarily due to increased revenue causing higher third party fulfillment costs as well as the impact from our recent acquisition of Depositphotos on October 1, 2021. Refer to Note 7 for additional information about the acquisition. 79 Other current liabilities included the following: June 30, 2022 June 30, 2021 Current portion of finance lease obligations (1) $ 6,684 $ 32,314 Short-term derivative liabilities (2) 4,299 20,530 Other (3) 17,052 50,671 Total other current liabilities $ 28,035 $ 103,515 ________________________ (1) The decrease in the current portion of our finance lease obligations is primarily due to the exercise of a purchase option for a previously leased facility that decreased our finance lease liability by $ 23,534 . We immediately sold this facility to a third party and recognized a $ 3,324 gain on the sale of the asset during the year ended June 30, 2022. Refer to Note 16 for additional details. (2) The decrease in short-term derivative liabilities is due to volatility in interest and foreign currency rates. Refer to Note 4 for additional details. (3) Other current liabilities decreased primarily due to the $ 43,647 payment made in February 2022 for our prior year acquisition of 99designs. Refer to Note 7 for additional details. Other liabilities included the following: June 30, 2022 June 30, 2021 Long-term finance lease obligations $ 14,699 $ 18,528 Long-term derivative liabilities (1) 463 41,074 Long-term compensation incentives (2) 19,934 10,298 Other 29,298 26,510 Total other liabilities $ 64,394 $ 96,410 ________________________ (1) The decrease in long-term derivative liabilities is due to volatility in interest and currency rates. Refer to Note 4 for additional details about our derivative financial instruments. (2) Includes cash-based employee bonus incentives, which are variable based on the performance of each individual business and vest over four years. 10. Debt June 30, 2022 June 30, 2021 7.0% Senior notes due 2026 $ 600,000 $ 600,000 Senior secured credit facility 1,097,302 1,152,021 Other 8,063 12,835 Debt issuance costs and debt premiums (discounts) ( 19,417 ) ( 22,450 ) Total debt outstanding, net 1,685,948 1,742,406 Less: short-term debt (1) 10,386 9,895 Long-term debt $ 1,675,562 $ 1,732,511 _____________________ (1) Balances as of June 30, 2022 and June 30, 2021 are inclusive of short-term debt issuance costs, debt premiums and discounts of $ 3,498 and $ 3,435 , respectively. Our various debt arrangements described below contain customary representations, warranties and events of default. As of June 30, 2022 , we were in compliance with all covenants in our debt contracts, including those under our amended and restated senior secured credit agreement ("Restated Credit Agreement") and the indenture governing our 2026 Notes (as defined below). Senior Secured Credit Facility On May 17, 2021, we entered into a Restated Credit Agreement consisting of the following: • A senior secured Term Loan B with a maturity date of May 17, 2028 (the “Term Loan B”), consisting of: ◦ a $ 795,000 tranche that bears interest at LIBOR (with a LIBOR floor of 0.50 %) plus 3.50 %, and ◦ a € 300,000 tranche that bears interest at EURIBOR (with a EURIBOR floor of 0 %) plus 3.50 %; and 80 • A $ 250,000 senior secured revolving credit facility with a maturity date of May 17, 2026 (the “Revolving Credit Facility”). Borrowings under the Revolving Credit Facility bear interest at LIBOR (with a LIBOR floor of 0 %) plus 2.50 % to 3.00 % depending on the Company’s First Lien Leverage Ratio, a net leverage calculation, as defined in the Restated Credit Agreement. The Restated Credit Agreement contains covenants that restrict or limit certain activities and transactions by Cimpress and our subsidiaries, including, but not limited to, the incurrence of additional indebtedness and liens; certain fundamental organizational changes; asset sales; certain intercompany activities; and certain investments and restricted payments, including purchases of Cimpress plc’s ordinary shares and payment of dividends. In addition, if any loans made under the Revolving Credit Facility are outstanding on the last day of any fiscal quarter, then we are subject to a financial maintenance covenant that the First Lien Leverage Ratio calculated as of the last day of such quarter does not exceed 3.25 to 1.00 . As of June 30, 2022 , we have borrowings under the Restated Credit Agreement of $ 1,097,302 consisting of the Term Loan B, which amortizes over the loan period, with a final maturity date of May 17, 2028. We have no outstanding borrowings under our Revolving Credit Facility as of June 30, 2022 . As of June 30, 2022 , the weighted-average interest rate on outstanding borrowings under the Restated Credit Agreement was 4.98 %, inclusive of interest rate swap rates. We are also required to pay a commitment fee for our Revolving Credit Facility on unused balances of 0.35 % to 0.45 % depending on our First Lien Leverage Ratio. We have pledged the assets and/or share capital of a number of our subsidiaries as collateral for our debt as of June 30, 2022 . Senior Unsecured Notes We have issued $ 600,000 in aggregate principal of 7.0% Senior Notes due 2026 (the "2026 Notes"), which are unsecured. We can redeem some or all of the 2026 Notes at the redemption prices specified in the indenture that governs the 2026 Notes, plus accrued and unpaid interest to, but not including, the redemption date. As of June 30, 2022 , we have not redeemed any of the 2026 Notes. Other Debt Other debt consists primarily of term loans acquired through our various acquisitions or used to fund certain capital investments. As of June 30, 2022 and June 30, 2021, we had $ 8,063 and $ 12,835 , respectively, outstanding for those obligations that are payable through March 2027. 11. Shareholders' Deficit Warrants In conjunction with our issuance of our 12% Senior Secured Notes due 2025 in fiscal year 2020, we also issued 7-year warrants, to purchase 1,055,377 ordinary shares of Cimpress, representing approximately 3.875 % of our outstanding diluted ordinary shares. The warrants are accounted for as equity, as they are redeemable only in our own shares, with an exercise price of $ 60 per share. The warrants may be exercised by cash payment or through cashless exercise by the surrender of warrant shares having a value equal to the exercise price of the portion of the warrant being exercised. The fair value used for the warrants in this allocation was calculated using the Monte Carlo valuation model. The valuation of the notes and warrants resulted in a carrying value allocated to the warrants of $ 22,432 , which, in addition to be being accounted for as an equity instrument recorded in additional paid in capital, was included as a discount to the 12% Senior Secured Notes. As of June 30, 2022 the warrants remain outstanding. Share-based awards On November 25, 2020, our shareholders approved our 2020 Equity Incentive Plan, or the 2020 Plan. Upon approval, we ceased granting any new awards under any of our prior equity plans that had shares available for future grant, consisting of our 2016 Performance Equity Plan, 2011 Equity Incentive Plan, and 2005 Non-Employee Directors' Share Option Plan, and we now grant all equity awards under the 2020 Plan. The maximum number of ordinary shares to be issued under the 2020 Plan is 3,500,000 plus an additional number of ordinary shares equal to the number of PSUs currently outstanding under the 2016 Performance Equity Plan that expire, terminate or are 81 otherwise surrendered, canceled or forfeited. The 2020 Plan allows us to grant share options, share appreciation rights, restricted shares, restricted share units, other share-based awards, and dividend equivalent rights to our employees, officers, non-employee directors, consultants, and advisors. As noted above, we currently grant equity awards under our 2020 Plan. Our 2016 Performance Equity Plan previously allowed us to grant PSUs to our employees, officers, non-employee directors, consultants, and advisors. The 2011 Equity Incentive Plan previously allowed us to grant share options, share appreciation rights, restricted shares, restricted share units and other awards based on our ordinary shares to our employees, officers, non-employee directors, consultants and advisors. Our 2005 Non-Employee Directors’ Share Option Plan previously allowed us to grant share options to our non-employee directors upon initial appointment as a director and annually thereafter in connection with our annual general meeting of shareholders if they continued to serve as a director at such time. As of June 30, 2022, 1,480,926 ordinary shares were available for future awards under our 2020 Plan. For PSUs, we assumed that we would issue ordinary shares equal to 250 % of the outstanding PSUs, which is the maximum potential share issuance. Treasury shares and newly issued shares have both historically been used in fulfillment of our share-based awards. Performance share units ("PSUs") PSU awards entitle the recipient to receive Cimpress ordinary shares between 0 % and 250 % of the number of units, based upon continued service to Cimpress and the achievement of a compounded annual growth rate target based on Cimpress' three-year moving average share price. Awards with a grant date prior to fiscal year 2020 and all awards granted to our Chief Executive Officer and Board of Directors will be assessed annually in years 6 - 10 following the grant date and awards with a grant date in or after fiscal year 2020 (other than to the CEO and Board) will be assessed annually in years 4 - 8 following the grant date. The fair value of the PSUs is based on a Monte Carlo simulation, and the resulting expense is recognized on an accelerated basis over the requisite service period. A summary of our PSU activity and related information for the fiscal year ended June 30, 2022 is as follows: PSUs Weighted- Average Grant Date Fair Value Aggregate Intrinsic Value Outstanding at the beginning of the period 1,158,716 $ 134.45 Granted 215,899 110.28 Vested and distributed — — Forfeited ( 15,373 ) 134.98 Outstanding at the end of the period 1,359,242 $ 130.61 $ 52,875 The weighted average fair value of PSUs granted during the fiscal years ended June 30, 2022, 2021, and 2020 was $ 110.28 , $ 129.25 , and $ 142.90 , respectively. The total intrinsic value of PSUs outstanding at the fiscal years ended June 30, 2022, 2021, and 2020 was $ 52,875 , $ 125,616 , and $ 78,951 , respectively. As of June 30, 2022, the number of shares subject to PSUs included in the table above assumes the issuance of one share for each PSU, but based on actual performance that amount delivered can range from zero shares to a maximum of 3,398,105 shares. Restricted share units The fair value of an RSU award is equal to the fair market value of our ordinary shares on the date of grant and the expense is recognized on a straight-line basis over the requisite service period. RSUs generally vest over 4 years. 82 A summary of our RSU activity and related information for the fiscal year ended June 30, 2022 is as follows: RSUs Weighted- Average Grant Date Fair Value Aggregate Intrinsic Value Unvested at the beginning of the period 434,389 $ 93.54 Granted 771,671 80.26 Vested and distributed ( 113,207 ) 93.92 Forfeited ( 54,619 ) 92.91 Unvested at the end of the period 1,038,234 $ 83.66 $ 40,387 The weighted average fair value of RSUs granted during the fiscal years ended June 30, 2022, 2021, and 2020 was $ 80.26 , $ 93.64 , and $ 46.94 , respectively. The total intrinsic value of RSUs vested during the fiscal years ended June 30, 2022, 2021, 2020 was $ 10,123 , $ 17,231 , and $ 1,905 , respectively. Share options We have previously granted options to purchase ordinary shares at prices that are at least equal to the fair market value of the shares on the date the option is granted and that generally vest over 4 years with a contractual term of ten years. The fair value of each option award subject only to service period vesting is estimated on the date of grant using the Black-Scholes option pricing model and recognized as expense on a straight-line basis over the requisite service period. Use of a valuation model requires management to make certain assumptions with respect to inputs. The expected volatility assumption is based upon historical volatility of our share price. The expected term assumption is based on the contractual and vesting term of the option and historical experience. The risk-free interest rate is based on the U.S. Treasury yield curve with a maturity equal to the expected life assumed at the grant date. The fair value of share options with a market condition is determined using a lattice model with compensation expense recorded on an accelerated basis over the requisite service period. We did not grant any share options in fiscal year 2022. A summary of our share option activity and related information for the year ended June 30, 2022 is as follows: Shares Pursuant to Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (years) Aggregate Intrinsic Value Outstanding at the beginning of the period 5,298 $ 80.01 3.8 Granted — — Exercised — — Forfeited/expired — — Outstanding at the end of the period 5,298 80.01 2.8 $ — Exercisable at the end of the period 5,298 $ 80.01 2.8 $ — The intrinsic value in the table above represents the total pre-tax amount, net of exercise price, which would have been received if all option holders exercised in-the-money options on June 30, 2022. No options were exercised during the fiscal year ended June 30, 2022. The total intrinsic value of options exercised during the fiscal years ended June 30, 2021 and 2020 was $ 5,460 , and $ 92,582 , respectively. Share-based compensation Total share-based compensation costs were $ 49,766 , $ 37,034 , and $ 34,874 for the years ended June 30, 2022, 2021, and 2020, respectively, and we elected to recognize the impact of forfeitures as they occur. Share-based compensation costs capitalized as part of software and website development costs were $ 1,221 , $ 1,338 , and $ 1,157 for the years ended June 30 2022, 2021, and 2020, respectively. As of June 30, 2022, there was $ 89,977 of total unrecognized compensation cost related to non-vested, share-based compensation arrangements. This cost is expected to be recognized over a weighted average period of 2.5 years. 83 12. Employees' Savings Plans Defined contribution plans We maintain certain government-mandated and defined contribution plans throughout the world. Our most significant defined contribution retirement plans are in the U.S. and comply with Section 401(k) of the Internal Revenue Code. We offer eligible employees in the U.S. the opportunity to participate in one of these plans and match most employees' eligible contributions at various rates subject to service vesting as specified in each of the related plan documents. This matching program was temporarily suspended from March 2020 through December 31, 2020 and was reinstated on January 1, 2021. We expensed $ 16,157 , $ 12,228 , and $ 10,710 for our government-mandated and defined contribution plans in the years ended June 30, 2022, 2021 and 2020, respectively. Defined benefit plan We currently have a defined benefit plan that covers substantially all of our employees in Switzerland. Our Swiss plan is a government-mandated retirement fund with benefits generally earned based on years of service and compensation during active employment; however, the level of benefits varies within the plan. Eligibility is determined in accordance with local statutory requirements. Under this plan, both we and certain of our employees with annual earnings in excess of government determined amounts are required to make contributions into a fund managed by an independent investment fiduciary. Employer contributions must be in an amount at least equal to the employee’s contribution. Minimum employee contributions are based on the respective employee’s age, salary, and gender. As of June 30 2022 and 2021, the plan had an unfunded net pension obligation of approximately $ 1,173 and $ 2,883 , respectively, and plan assets which totaled approximately $ 4,754 and $ 4,128 , respectively. For the years ended June 30, 2022, 2021 and 2020 we recognized expense totaling $ 537 , $ 667 , and $ 399 , respectively, related to our Swiss plan. 13. Income Taxes The income tax disclosures for the year ended June 30, 2021 have been updated to reflect the prior period revision, as described in Note 2. The following is a summary of our income (loss) before income taxes by geography: Year Ended June 30, 2022 2021 2020 U.S. $ ( 7,299 ) $ 2,689 $ ( 58,844 ) Non-U.S. 16,630 ( 66,243 ) 61,846 Total $ 9,331 $ ( 63,554 ) $ 3,003 The components of the provision (benefit) for income taxes are as follows: Year Ended June 30, 2022 2021 2020 Current: U.S. Federal $ 526 $ ( 93 ) $ ( 16,269 ) U.S. State 568 546 213 Non-U.S. 36,932 28,205 22,361 Total current 38,026 28,658 6,305 Deferred: U.S. Federal ( 3,566 ) ( 1,573 ) 12,980 U.S. State 12 ( 31 ) 3,213 Non-U.S. 25,429 ( 8,151 ) ( 103,490 ) Total deferred 21,875 ( 9,755 ) ( 87,297 ) Total $ 59,901 $ 18,903 $ ( 80,992 ) 84 The following is a reconciliation of the standard U.S. federal statutory tax rate and our effective tax rate: Year Ended June 30, 2022 2021 2020 U.S. federal statutory income tax rate 21.0 % 21.0 % 21.0 % State taxes, net of federal effect ( 11.1 ) 3.1 ( 130.1 ) Tax rate differential on non-U.S. earnings 97.1 ( 20.3 ) ( 408.4 ) Swiss tax reform — — ( 3,779.0 ) Compensation related items 21.9 0.2 ( 420.7 ) U.S. tax reform — — ( 372.6 ) Goodwill impairment — — 759.1 Change in valuation allowance 363.7 ( 27.2 ) 1,277.5 Irish foreign tax credit ( 46.8 ) 8.8 262.3 Tax on repatriated earnings 39.2 ( 3.9 ) 154.1 Gain/loss on sale of subsidiary — — ( 189.2 ) Notional interest deduction (Italy) ( 8.8 ) 1.4 ( 47.9 ) Patent box (Italy) ( 12.0 ) — ( 24.2 ) Tax credits and incentives ( 23.7 ) 4.2 ( 88.3 ) Non-US tax rate changes 57.6 1.2 81.7 Irish tax restructuring ( 13.4 ) — — U.S. global intangible low-taxed income (GILTI) 10.2 ( 0.3 ) — U.S. foreign-derived intangible income (FDII) ( 6.8 ) — — Net tax (benefit) expense on intellectual property transfer ( 10.4 ) — 16.4 Tax loss carryforward expirations 4.8 ( 0.5 ) 7.4 Business and withholding taxes 5.1 ( 0.4 ) 28.7 Uncertain tax positions 35.9 ( 1.0 ) 28.8 Nondeductible interest expense 52.7 ( 18.6 ) 157.4 Other non-deductible expenses 7.1 0.5 47.5 Tax on unremitted earnings 0.1 ( 0.9 ) 31.4 Changes to derivative instruments 73.5 0.1 — Other ( 14.9 ) 2.9 ( 109.9 ) Effective income tax rate 642.0 % ( 29.7 ) % ( 2,697.0 ) % For the year ended June 30, 2022, our effective tax rate was above our U.S. federal statutory tax rate primarily due to establishing a partial valuation allowance on Swiss deferred tax assets of $ 29,600 related to Swiss tax reform benefits recognized in fiscal 2020 and Swiss tax loss carryforwards that we no longer expect to fully realize. The jurisdictions that have the most significant impact to our non-U.S. tax provision include Australia, Canada, France, Germany, India, Ireland, Italy, the Netherlands, Spain and Switzerland. The applicable tax rates in these jurisdictions range from 10 % to 30 %. The total tax rate impact from operating in non-U.S. jurisdictions is included in the line “Tax rate differential on non-U.S. earnings” in the above tax rate reconciliation table. For the year ended June 30, 2022, our effective tax rate was 642.0 % as compared to the prior year effective tax rate of ( 29.7 )%. The increase in our effective tax rate as compared to the prior year is primarily due to the Swiss partial valuation allowance in addition to a less favorable mix of earnings year over year. Our fiscal year 2021 effective tax rate was higher than fiscal year 2020 primarily due to Swiss Tax Reform benefits of $ 113,482 recognized in the year ended June 30, 2020. 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 85 $ 113,482 , gross of $ 29,600 valuation allowance recorded as of June 30, 2022, to establish Swiss deferred tax assets related to transitional relief measures and to remeasure our existing Swiss deferred tax assets and liabilities. We do not expect to realize the majority of this benefit until fiscal year 2025 through fiscal year 2030. During the year ended June 30, 2022, the Swiss tax reform amortizable goodwill deferred tax asset decreased $ 4,676 due to currency exchange rate changes and $ 5,310 due to Cantonal tax rate changes. Significant components of our deferred income tax assets and liabilities consisted of the following at June 30, 2022 and 2021: June 30, 2022 June 30, 2021 Deferred tax assets: Swiss tax reform amortizable goodwill $ 123,893 $ 133,879 Net operating loss carryforwards 71,820 73,574 Leases 24,952 31,363 Depreciation and amortization 3,736 9,136 Accrued expenses 12,244 9,538 Share-based compensation 16,090 11,192 Credit and other carryforwards 47,405 41,222 Derivative financial instruments — 5,745 Other 1,120 3,661 Subtotal 301,260 319,310 Valuation allowance ( 134,660 ) ( 111,476 ) Total deferred tax assets 166,600 207,834 Deferred tax liabilities: Depreciation and amortization ( 32,595 ) ( 37,694 ) Leases ( 21,049 ) ( 24,920 ) Investment in flow-through entity ( 7,031 ) ( 5,003 ) Tax on unremitted earnings ( 6,692 ) ( 6,877 ) Derivative financial instruments ( 19,703 ) — Italy tax suspension reserve — ( 4,528 ) Other ( 7,584 ) ( 6,627 ) Total deferred tax liabilities ( 94,654 ) ( 85,649 ) Net deferred tax assets $ 71,946 $ 122,185 In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some or all of the deferred tax assets will not be realized. The increase in the valuation allowance from the prior year relates primarily to the Swiss partial valuation allowance and losses in certain jurisdictions (mainly Brazil, China, Cyprus, Japan, the Netherlands and the United Kingdom) for which management has determined we cannot recognize the related deferred tax assets. Also, we generated $ 303 of Irish foreign tax credit carryforwards and increased interest limitation carryforwards of $ 3,440 in various jurisdictions, neither of which expire, but for which management has determined it is more likely than not that these will not be utilized. Other increases in our valuation allowance include increased U.S. research and development credit carryforwards of $ 2,469 and U.S. share-based compensation deferred tax assets of $ 4,225 . The increase in valuation allowance was offset by the release of valuation allowances related to tax losses in France and Ireland of $ 3,313 and $ 3,331 , respectively, which management has determined can be realized; the release of valuation allowances related to derivative financial instruments of $ 5,745 recorded in accumulated other comprehensive loss on the balance sheet; and a partial release in the U.S. of $ 4,402 related to acquired deferred tax liabilities. We have recorded valuation allowances of $ 27,858 , $ 4,783 and $ 14,300 against deferred tax assets related to U.S. research and development credits, U.S. capital loss carryforwards, and U.S. share-based compensation, respectively, for which management has determined that it is more likely than not that these will not be realized. 86 We have not recorded a valuation allowance against deferred tax assets of $ 10,561 and $ 102,098 related to Swiss tax losses and the Swiss amortizable goodwill, respectively, as the portions we do expect to realize in the future. Management believes there is sufficient positive evidence in the form of historical and future projected profitability to conclude that it is more likely than not that these benefits in Switzerland will be utilized against future taxable profits within the available carryforward periods. Our assessments are reliant on the attainment of our future operating profit goals. Failure to achieve these operating profit goals may change our assessment of these deferred tax assets, and such change would result in additional valuation allowance and an increase in income tax expense to be recorded in the period of the change in assessment. We will continue to review our forecasts and profitability trends on a quarterly basis. Based on the weight of available evidence at June 30, 2022, management believes that it is more likely than not that all other net deferred tax assets will be realized in the foreseeable future. We will continue to assess the realization of the deferred tax assets based on operating results on a quarterly basis. A reconciliation of the beginning and ending amount of the valuation allowance for the year ended June 30, 2022 is as follows: Balance at June 30, 2021 $ 111,476 Charges to earnings (1) 33,859 Charges to other accounts (2) ( 10,676 ) Balance at June 30, 2022 $ 134,659 _________________ (1) Amount is primarily related to partial Swiss valuation allowance, increased non-U.S. net operating losses, increased U.S. research and development credits and share-based compensation, increased Irish foreign tax credits, increased interest limitation carryforwards and release of valuation allowances in France, Ireland and the U.S. (2) Amount is primarily related to decreases in deferred tax assets on non-U.S. net operating losses due to currency exchange rate changes and unrealized gains on derivative financial instruments included in Accumulated Other Comprehensive Loss. As of June 30, 2022, we had gross U.S. federal and apportioned state net operating losses of $ 3,136 and $ 22,975 , respectively, that expire on various dates from fiscal year 2024 through fiscal year 2040 or with unlimited carryforward. We also had gross non-U.S. net operating loss carryforwards of $ 477,144 , a significant amount of which begin to expire in fiscal year 2024, with the remaining amounts expiring on various dates from fiscal year 2023 through fiscal year 2032 or with unlimited carryforward. In addition, we had $ 32,767 of tax credit carryforwards primarily related to U.S. federal and state research and development credits, which expire on various dates beginning in fiscal year 2030 or with unlimited carryforward. We also had $ 22,778 , $ 5,225 and $ 1,048 of U.S. federal, apportioned state, and non-U.S. capital loss carryforwards, respectively. The U.S. capital losses expire in fiscal years 2025 through 2027 and the non-U.S. capital losses have unlimited carryforward. Lastly, we had $ 8,332 of Irish foreign tax credits with unlimited carryforward. The benefits of these carryforwards are dependent upon the generation of taxable income in the jurisdictions where they arose. We consider the following factors, among others, in evaluating our plans for indefinite reinvestment of our subsidiaries’ earnings: (i) the forecasts, budgets and financial requirements of both our parent company and its subsidiaries, both for the long term and for the short term; (ii) the ability of Cimpress plc to fund its operations and obligations with earnings from other businesses within the global group without incurring substantial tax costs; and (iii) the tax consequences of any decision to reinvest earnings of any subsidiary. As of June 30, 2022, no tax provision has been made for $ 48,966 of undistributed earnings of certain of our subsidiaries as these earnings are considered indefinitely reinvested. If, in the future, we decide to repatriate the undistributed earnings from these subsidiaries in the form of dividends or otherwise, we could be subject to withholding taxes payable in the range of $ 11,300 to $ 12,300 at that time. A cumulative deferred tax liability of $ 6,692 has been recorded attributable to undistributed earnings that we have deemed are not indefinitely reinvested. The remaining undistributed earnings of our subsidiaries are not deemed to be indefinitely reinvested and can be repatriated with no tax cost. Accordingly, there has been no provision for income or withholding taxes on these earnings. We currently benefit from various income tax holidays in certain jurisdictions. The tax holidays expire on various dates through August 2022. When the tax holidays expire, we will be subject to tax at rates ranging from 15 % to 25 %. As a result of the tax holidays, our net income was higher by $ 266 for fiscal year 2022. 87 A reconciliation of the gross beginning and ending amount of unrecognized tax benefits is as follows: Balance June 30, 2019 $ 4,721 Additions based on tax positions related to the current tax year 586 Additions based on tax positions related to prior tax years 769 Reductions based on tax positions related to prior tax years ( 102 ) Reductions due to audit settlements ( 52 ) Reductions due to lapse of statute of limitations ( 71 ) Cumulative translation adjustment ( 4 ) Balance June 30, 2020 5,847 Additions based on tax positions related to the current tax year 448 Additions based on tax positions related to prior tax years 7,448 Reductions based on tax positions related to prior tax years ( 51 ) Reductions due to audit settlements ( 83 ) Reductions due to lapse of statute of limitations ( 229 ) Cumulative translation adjustment 19 Balance June 30, 2021 13,399 Additions based on tax positions related to the current tax year 448 Additions based on tax positions related to prior tax years 2,958 Reductions based on tax positions related to prior tax years ( 23 ) Reductions due to audit settlements ( 2,958 ) Reductions due to lapse of statute of limitations ( 799 ) Cumulative translation adjustment ( 29 ) Balance June 30, 2022 $ 12,996 For the year ended June 30, 2022, the amount of unrecognized tax benefits (exclusive of interest) that, if recognized, would impact the effective tax rate is $ 7,790 . We recognize interest and, if applicable, penalties related to unrecognized tax benefits in income tax expense. The accrued interest and penalties recognized as of June 30, 2022, 2021 and 2020 were $ 1,383 , $ 1,014 and $ 384 , respectively. It is reasonably possible that a further change in unrecognized tax benefits in the range of $ 320 to $ 370 may occur within the next twelve months related to the settlement of one or more audits or the lapse of applicable statutes of limitations. We believe we have appropriately provided for all tax uncertainties. We conduct business in a number of tax jurisdictions and, as such, are required to file income tax returns in multiple jurisdictions globally. The years 2016 through 2022 remain open for examination by the United States Internal Revenue Service ("IRS") and the years 2015 through 2022 remain open for examination in the various states and non-US tax jurisdictions in which we file tax returns. We are currently under income tax audit in certain jurisdictions globally. We believe that our income tax reserves are adequately maintained taking into consideration both the technical merits of our tax return positions and ongoing developments in our income tax audits. However, the final determination of our tax return positions, if audited, is uncertain and therefore there is a possibility that final resolution of these matters could have a material impact on our results of operations or cash flows. 88 14. Noncontrolling Interests Redeemable Noncontrolling Interests For some of our subsidiaries, we own a controlling equity stake, and a third party or key members of the businesses' management team owns a minority portion of the equity, which includes those described below, as well as several immaterial noncontrolling interests. The put options for several of our noncontrolling interests are exercisable in 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. As of June 30, 2022, the total estimated redemption value is $ 103,572 for those noncontrolling interests with exercise windows in fiscal year 2023. PrintBrothers Members of the PrintBrothers management team hold minority equity interests ranging from 11 % to 12 % in each of the three businesses within the segment. The put options associated with the redeemable noncontrolling interests have annual exercise windows for 90% of their minority equity interest to Cimpress in each quarter ending in December. The first window occurred in the second quarter of fiscal 2022 and no options were exercised. The next exercise window, which occurs in the second quarter of fiscal 2023, is based on actual results through June 30, 2022, and the estimated redemption value for the collective noncontrolling interests is $ 99,724 . If the put options are exercised, then Cimpress may redeem the remaining 10% minority equity interest concurrently with the put option exercise or on the first, second, or third anniversary of the put option exercise. Cimpress has call options for the full amount of the minority equity interests with the first exercise window occurring during the second quarter of fiscal year 2027. During the year ended June 30, 2022, the redemption value of two PrintBrothers businesses increased above their carrying value due to strong financial performance during the current fiscal year as well as the lapping of a period where performance was more severely impacted by the pandemic. The increased redemption value resulted in an adjustment to redeemable noncontrolling interest of $ 61,691 . The offsetting amount was recognized within retained earnings as the redemption values for these noncontrolling interests were below each estimated fair value. The following table presents the reconciliation of changes in our redeemable noncontrolling interests: Redeemable Noncontrolling Interest Balance as of June 30, 2020 $ 69,106 Acquisition of noncontrolling interest (1) 4,370 Accretion to redemption value recognized in retained earnings (2) 3,049 Net income attributable to noncontrolling interests 2,772 Distribution to noncontrolling interests (3) ( 4,746 ) Purchase of noncontrolling interest (4) ( 5,063 ) Foreign currency translation 1,632 Balance as of June 30, 2021 71,120 Acquisition of noncontrolling interest (1) 4,453 Accretion to redemption value (2) 61,962 Net income attributable to noncontrolling interests 3,761 Distribution to noncontrolling interests (3) ( 3,963 ) Purchase of noncontrolling interest (4) ( 2,165 ) Foreign currency translation ( 3,685 ) Balance as of June 30, 2022 $ 131,483 _________________ (1) During fiscal year 2021, we acquired the majority equity interest in an immaterial business within our All Other reportable segment. On January 21, 2022, we completed a transaction that resulted in our acquisition of a 75 % interest in a company that is included in the PrintBrothers reportable segment. The remaining 25 % is considered a redeemable noncontrolling interest which was recognized at fair value as of the acquisition date. 89 (2) Accretion of redeemable noncontrolling interests to redemption value recognized in retained earnings or additional paid in capital is the result of the estimated redemption amount being greater than carrying value but less than fair value. Refer above for additional details included above. (3) Distributions to noncontrolling interests include contractually required profit sharing payments made annually to the minority interest holders in one of the PrintBrothers businesses. (4) During fiscal year 2021, a PrintBrothers noncontrolling interest holder sold their shares to Cimpress and in fiscal year 2022 the final redemption amount associated with this share purchase was paid. 15. Segment Information Our operating segments are based upon the manner in which our operations are managed and the availability of separate financial information reported internally to the Chief Executive Officer, who is our Chief Operating Decision Maker (“CODM”) for purposes of making decisions about how to allocate resources and assess performance. As of June 30, 2022 , we have numerous operating segments under our management reporting structure which are reported in the following five reportable segments: • Vista - Vista is the parent brand of multiple offerings including VistaPrint, VistaCreate, 99designs by Vista, and Vista Corporate Solutions, which together represent a full-service design, digital and print solution, elevating small businesses’ presence in physical and digital spaces and empowering them to achieve success. This segment also includes our recently acquired Depositphotos business, whose subsidiary, Crello, was rebranded to VistaCreate soon after the acquisition. • PrintBrothers - Includes the results of our druck.at, Printdeal, and WIRmachenDRUCK businesses. • The Print Group - Includes the results of our Easyflyer, Exaprint, Pixartprinting, and Tradeprint businesses. • National Pen - Includes the global operations of our National Pen business, which manufactures and markets custom writing instruments and promotional products, apparel and gifts. • All Other Businesses - Includes a collection of businesses grouped together based on materiality. In addition to BuildASign, which is a larger and profitable business, the All Other Businesses reportable segment consists of two smaller businesses that we continue to manage at a relatively modest operating loss and a recently acquired company that provides production expertise and sells into a growing product category. ◦ BuildASign is an internet-based provider of canvas-print wall décor, business signage and other large-format printed products, based in Austin, Texas. ◦ Printi is an online printing leader in Brazil, which offers a superior customer experience with transparent and attractive pricing, reliable service and quality. ◦ YSD is a startup operation that provides end-to-end mass customization solutions to brands and intellectual property owners in China. During the fourth quarter of fiscal 2022, we decided to exit our YSD business, which we expect to complete at the beginning of fiscal 2023. Central and corporate costs consist primarily of the team of software engineers that is building our mass customization platform; shared service organizations such as global procurement; technology services such as hosting and security; administrative costs of our Cimpress India offices where numerous Cimpress businesses have dedicated business-specific team members; and corporate functions including our Board of Directors, CEO, and the team members necessary for managing corporate activities, such as treasury, tax, capital allocation, financial consolidation, internal audit and legal. These costs also include certain unallocated share-based compensation costs. During the 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, decreasing Vista EBITDA and Central and corporate costs by $ 7,044 , $ 6,031 , and $ 3,745 for the years ended June 30, 2022, 2021 and 2020, respectively. 90 The expense value of our PSU awards is based on a Monte Carlo fair value analysis and is required to be expensed on an accelerated basis. In order to ensure comparability in measuring our businesses' results, we allocate the straight-line portion of the fixed grant value to our businesses. Any expense in excess of the amount as a result of the fair value measurement of the PSUs and the accelerated expense profile of the awards is recognized within central and corporate costs. Our definition of segment EBITDA is GAAP operating income excluding certain items, such as depreciation and amortization, expense recognized for contingent earn-out related charges including the changes in fair value of contingent consideration and compensation expense related to cash-based earn-out mechanisms dependent upon continued employment, share-based compensation related to investment consideration, certain impairment expense, and restructuring charges. We include insurance proceeds that are not recognized within operating income. We do not allocate non-operating income, including realized gains and losses on currency hedges, to our segment results. Our balance sheet information is not presented to the CODM on an allocated basis, and therefore we do not present asset information by segment. We do present other segment information to the CODM, which includes purchases of property, plant and equipment and capitalization of software and website development costs, and therefore include that information in the tables below. Revenue by segment is based on the business-specific websites or sales channel through which the customer’s order was transacted. The following tables set forth revenue by reportable segment, as well as disaggregation of revenue by major geographic region and reportable segment. Year Ended June 30, 2022 2021 2020 Revenue: Vista (1) $ 1,514,909 $ 1,428,255 $ 1,337,291 PrintBrothers 526,952 421,766 417,921 The Print Group 329,590 275,534 275,214 National Pen 341,832 313,528 299,474 All Other Businesses 205,862 192,038 173,789 Total segment revenue 2,919,145 2,631,121 2,503,689 Inter-segment eliminations (2) ( 31,590 ) ( 55,160 ) ( 22,331 ) Total consolidated revenue $ 2,887,555 $ 2,575,961 $ 2,481,358 _____________________ (1) During the first quarter of fiscal year 2022, we identified an immaterial error and revised our previously reported results to decrease Vista segment revenue by $ 16,552 for the year ended June 30, 2022. Refer to Note 2 for additional details. (2) Refer to the "Revenue by Geographic Region" tables below for detail of the inter-segment revenue within each respective segment. The decrease of inter-segment eliminations is the result of significant cross-business transactions during the three and nine months ended June 30, 2022 associated with the fulfillment of masks in response to the pandemic. Demand for this product was far lower in the current periods. Year Ended June 30, 2022 Vista PrintBrothers The Print Group National Pen All Other Total Revenue by Geographic Region: North America $ 1,031,298 $ — $ — $ 193,056 $ 177,868 $ 1,402,222 Europe 342,816 525,224 322,315 113,820 — 1,304,175 Other 137,425 — — 20,058 23,675 181,158 Inter-segment 3,370 1,728 7,275 14,898 4,319 31,590 Total segment revenue 1,514,909 526,952 329,590 341,832 205,862 2,919,145 Less: inter-segment elimination ( 3,370 ) ( 1,728 ) ( 7,275 ) ( 14,898 ) ( 4,319 ) ( 31,590 ) Total external revenue $ 1,511,539 $ 525,224 $ 322,315 $ 326,934 $ 201,543 $ 2,887,555 91 Year Ended June 30, 2021 Vista PrintBrothers The Print Group National Pen All Other Total Revenue by Geographic Region: North America $ 955,280 $ — $ — $ 154,857 $ 171,398 $ 1,281,535 Europe 350,270 420,946 258,230 106,004 — 1,135,450 Other 120,367 — — 20,762 17,847 158,976 Inter-segment 2,338 820 17,304 31,905 2,793 55,160 Total segment revenue 1,428,255 421,766 275,534 313,528 192,038 2,631,121 Less: inter-segment elimination ( 2,338 ) ( 820 ) ( 17,304 ) ( 31,905 ) ( 2,793 ) ( 55,160 ) Total external revenue $ 1,425,917 $ 420,946 $ 258,230 $ 281,623 $ 189,245 $ 2,575,961 Year Ended June 30, 2020 Vista PrintBrothers The Print Group National Pen All Other Total Revenue by Geographic Region: North America $ 928,668 $ — $ — $ 154,632 $ 153,795 $ 1,237,095 Europe 325,239 416,987 269,220 112,046 — 1,123,492 Other 77,204 — — 24,990 18,577 120,771 Inter-segment 6,180 934 5,994 7,806 1,417 22,331 Total segment revenue 1,337,291 417,921 275,214 299,474 173,789 2,503,689 Less: inter-segment elimination ( 6,180 ) ( 934 ) ( 5,994 ) ( 7,806 ) ( 1,417 ) ( 22,331 ) Total external revenue $ 1,331,111 $ 416,987 $ 269,220 $ 291,668 $ 172,372 $ 2,481,358 The following table includes segment EBITDA by reportable segment, total income from operations and total income (loss) before income taxes: Year Ended June 30, 2022 2021 2020 Segment EBITDA: Vista $ 195,321 $ 318,684 $ 362,589 PrintBrothers 66,774 43,144 39,373 The Print Group 58,664 43,126 51,606 National Pen 26,845 11,644 7,605 All Other Businesses 23,227 31,707 17,474 Total segment EBITDA 370,831 448,305 478,647 Central and corporate costs ( 143,958 ) ( 129,367 ) ( 136,653 ) Depreciation and amortization ( 175,681 ) ( 173,212 ) ( 167,943 ) Proceeds from insurance — ( 122 ) — Earn-out related charges — — 54 Certain impairments and other adjustments 9,709 ( 20,453 ) ( 104,593 ) Restructuring-related charges ( 13,603 ) ( 1,641 ) ( 13,543 ) Total income from operations 47,298 123,510 55,969 Other income (expense), net 61,463 ( 19,353 ) 22,874 Interest expense, net ( 99,430 ) ( 119,368 ) ( 75,840 ) Loss on early extinguishment of debt — ( 48,343 ) — Income (loss) before income taxes $ 9,331 $ ( 63,554 ) $ 3,003 92 Year Ended June 30, 2022 2021 2020 Depreciation and amortization: Vista $ 65,489 $ 58,513 $ 59,029 PrintBrothers 20,790 22,089 21,010 The Print Group 25,657 27,066 24,769 National Pen 24,261 25,123 23,654 All Other Businesses 18,536 19,811 23,755 Central and corporate costs 20,948 20,610 15,726 Total depreciation and amortization $ 175,681 $ 173,212 $ 167,943 Year Ended June 30, 2022 2021 2020 Purchases of property, plant and equipment: Vista $ 17,198 $ 12,332 $ 15,986 PrintBrothers 3,788 3,609 4,315 The Print Group 19,877 11,847 17,136 National Pen 4,332 3,603 5,016 All Other Businesses 7,027 5,466 4,242 Central and corporate costs 1,818 1,667 3,772 Total purchases of property, plant and equipment $ 54,040 $ 38,524 $ 50,467 Year Ended June 30, 2022 2021 2020 Capitalization of software and website development costs: Vista $ 30,994 $ 28,297 $ 18,381 PrintBrothers 1,139 1,465 990 The Print Group 2,419 1,603 1,484 National Pen 3,390 3,115 3,290 All Other Businesses 4,097 3,746 3,684 Central and corporate costs 23,258 22,711 16,163 Total capitalization of software and website development costs $ 65,297 $ 60,937 $ 43,992 Enterprise Wide Disclosures: The following tables set forth revenues by geographic area and groups of similar products and services: Year Ended June 30, 2022 2021 2020 United States $ 1,092,096 $ 1,199,436 $ 1,251,531 Germany (1) 358,384 350,281 351,348 Other (2) 1,437,075 1,026,244 878,479 Total revenue $ 2,887,555 $ 2,575,961 $ 2,481,358 93 Year Ended June 30, 2022 2021 2020 Physical printed products and other (3) $ 2,789,600 $ 2,477,158 $ 2,431,367 Digital products/services (4) 97,955 98,803 49,991 Total revenue $ 2,887,555 $ 2,575,961 $ 2,481,358 __________________ (1) Our revenues within the German market exceeded 10% of our total consolidated revenue. Therefore we have presented Germany as a significant geographic area. (2) Our other revenue includes Ireland, our country of domicile. (3) Other revenue includes miscellaneous items which account for less than 1% of revenue. (4) Digital products/service revenue includes revenue associated with design services includes revenue from our Depositphotos and 99designs businesses since their acquisition dates of October 1, 2021 and October 1, 2020, respectively. Refer to Note 7 for additional details. The following table sets forth long-lived assets by geographic area: June 30, 2022 June 30, 2021 Long-lived assets (1): United States $ 95,589 $ 107,868 Netherlands 67,240 75,996 Canada 58,498 60,779 Switzerland 72,394 68,880 Italy 48,262 47,776 France 25,383 20,550 Jamaica 18,744 21,298 Australia 17,751 25,417 Japan 11,392 14,891 Other 90,677 96,063 Total $ 505,930 $ 539,518 ___________________ (1) Excludes goodwill of $ 766,600 and $ 726,979 , intangible assets, net of $ 154,730 and $ 186,744 , deferred tax assets of $ 113,088 and $ 149,618 , and marketable securities, non-current of zero and $ 50,713 as of June 30, 2022 and June 30, 2021, respectively. 16. Leases We lease certain machinery and plant equipment, office space, and production and warehouse facilities under non-cancelable operating leases that expire on various dates through 2037. Our finance leases primarily relate to machinery and plant equipment. The following table presents the classification of right-of-use assets and lease liabilities as of June 30, 2022 and 2021: Leases Consolidated Balance Sheet Classification June 30, 2022 June 30, 2021 Assets: Operating right-of-use assets Operating lease assets, net $ 80,694 $ 87,626 Finance right-of-use assets Property, plant, and equipment, net (1) 19,181 35,384 Total lease assets $ 99,875 $ 123,010 Liabilities: Current: Operating lease liabilities Operating lease liabilities, current $ 27,706 $ 26,551 Finance lease liabilities Other current liabilities (1) 6,684 32,314 Non-current: Operating lease liabilities Operating lease liabilities, non-current 57,474 66,222 Finance lease liabilities Other liabilities 14,699 18,528 Total lease liabilities $ 106,563 $ 143,615 __________________ 94 (1) The decrease in finance lease assets and current liabilities is due primarily to the lease modification described below within the "Purchase and Sale of Leased Facilities" section. The following table represents the lease expenses for the years ended June 30, 2022 and 2021: Year Ended June 30, 2022 June 30, 2021 Operating lease expense (1) $ 26,975 $ 36,803 Finance lease expense: Amortization of finance lease assets 5,892 5,557 Interest on lease liabilities 305 211 Variable lease expense 7,550 7,846 Less: sublease income ( 86 ) ( 2,309 ) Net operating and finance lease cost $ 40,636 $ 48,108 __________________ (1) The decrease in operating lease expense from fiscal year 2021 to fiscal year 2022 is mainly driven by prior year decisions to exit certain leased facilities as some of our businesses have shifted to a remote-first operating model. Future minimum lease payments under non-cancelable leases as of June 30, 2022 were as follows: Payments Due by Period Operating lease obligations Finance lease obligations Total lease obligations Less than 1 year $ 29,361 $ 6,148 $ 35,509 2 years 23,698 5,343 29,041 3 years 16,308 4,853 21,161 4 years 8,951 3,424 12,375 5 years 4,703 2,213 6,916 Thereafter 9,301 832 10,133 Total 92,322 22,813 115,135 Less: present value discount ( 7,142 ) ( 1,430 ) ( 8,572 ) Lease liability $ 85,180 $ 21,383 $ 106,563 Other information about leases is as follows: Lease Term and Discount Rate June 30, 2022 June 30, 2021 Weighted-average remaining lease term (years): Operating leases 4.32 4.28 Finance leases (1) 3.89 10.71 Weighted-average discount rate: Operating leases 3.71 % 3.17 % Finance leases (1) 2.79 % 3.93 % (1) The decrease in finance lease weighted-average remaining lease term and discount rate is due primarily to the lease modification described below within the "Purchase and Sale of Leased Facilities" section. Our leases have remaining lease terms of 1 year to 15 years, inclusive of renewal or termination options that we are reasonably certain to exercise. Year Ended Supplemental Cash Flow Information June 30, 2022 June 30, 2021 Cash paid for amounts included in measurement of lease liabilities: Operating cash flows from operating leases $ 26,641 $ 47,327 Operating cash flows from finance leases 305 211 Financing cash flows from finance leases (1) 37,512 8,001 ________________ (1) The current fiscal year financing cash outflows include the payment to purchase the leased facility discussed below. 95 Purchase and Sale of a Leased Facility During the second quarter of fiscal year 2022, we paid $ 27,885 to exercise the purchase option available for one of our leased facilities, resulting in a $ 23,534 decrease in the current portion of our finance lease obligations. We immediately sold this facility to a separate third party for $ 23,226 . We previously identified a triggering event for this leased facility in fiscal year 2021 due to a change in our intended use of the right-of-use asset, as we had committed to plans to exit the space and instead market it to be subleased or sold. At that time, we assessed the lease for impairment and performed a discounted cash flow analysis using current market-based rent assumptions, which resulted in an impairment of $ 7,420 that was recognized in general and administrative expense on the consolidated statement of operations for the year ended June 30, 2021. Additionally, we recorded an impairment for abandoned equipment in the amount of $ 1,680 that was recognized in general and administrative expense for the year ended June 30, 2021. Due to the fiscal year 2021 impairment charge taken, we recognized a $ 3,324 gain on the sale of the asset within general and administrative expense on our consolidated statement of operations during the year ended June 30, 2022. For the year ended June 30, 2022, our consolidated statement of cash flows includes a $ 23,226 cash inflow for the sale of the facility presented as an investing activity as part of proceeds from the sale of assets and a $ 27,885 cash outflow for the exercise of the purchase option presented as a financing activity as part of payments of finance lease obligations. Waltham Lease Modification On January 6, 2021, we modified the lease agreement for our Waltham, Massachusetts office location, which resulted in us retaining a small portion of the previously leased office space in exchange for a reduction to our monthly rent payments for the space we no longer lease and the payment of an early termination fee of $ 8,761 . Due to the partial termination of the lease, we recorded a decrease to the operating lease liabilities of $ 47,801 to reflect the reduced lease payments, including the termination penalties. We also recorded a decrease to the operating lease asset of $ 46,645 based on the proportionate decrease in the right-of-use asset, which resulted in a gain of $ 1,156 , recognized in general and administrative expense on the consolidated statement of operations for the year ended June 30, 2021. Due to our plans to no longer occupy the remaining leased office space and instead market the space to be subleased, we identified a triggering event with regards to the modified right-of-use asset. Therefore, we performed a discounted cash flow analysis that considered market-based rent assumptions, which resulted in an impairment of the right-of-use asset of $ 7,489 which was recognized in general and administrative expense on the consolidated statement of operations for the year ended June 30, 2021. Additionally, we recorded an impairment to general and administrative expense for abandoned assets related to the vacated space totaling $ 4,483 , which included $ 2,787 in subtenant allowances, $ 1,312 in leasehold improvements, and $ 384 in furniture and fixtures. 17. Commitments and Contingencies Purchase Obligations At June 30, 2022 , we had unrecorded commitments under contract of $ 310,797 , including inventory, third-party fulfillment and digital service purchase commitments of $ 124,383 ; third-party cloud services of $ 113,888 ; software of $ 23,650 ; advertising of $ 18,112 ; production and computer equipment purchases of $ 7,092 ; professional and consulting fees of $ 6,372 , and other unrecorded purchase commitments of $ 17,300 . 96 Debt The required principal payments due during the next five fiscal years and thereafter under our outstanding long-term debt obligations at June 30, 2022 are as follows: 2023 $ 13,884 2024 13,448 2025 13,454 2026 11,530 2027 611,166 Thereafter 1,041,883 Total $ 1,705,365 Other Obligations We deferred payments for several of our acquisitions resulting in the recognition of a liability of $ 8,425 as of June 30, 2022 , which primarily relates to a deferred payment for our acquisition of Depositphotos that is payable in October 2022. Refer to Note 7 for additional details. Legal Proceedings We are not currently party to any material legal proceedings. Although we cannot predict with certainty the results of litigation and claims to which we may be subject from time to time, we do not expect the resolution of any of our current matters to have a material adverse impact on our consolidated results of operations, cash flows or financial position. For all legal matters, at each reporting period, we evaluate whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. We expense the costs relating to our legal proceedings as those costs are incurred. 18. Restructuring Charges Restructuring costs include one-time employee termination benefits, acceleration of share-based compensation, write-off of assets and other related costs including third-party professional and outplacement services. During the years ended June 30, 2022, 2021 and 2020, we recognized restructuring charges of $ 13,603 , $ 1,641 , and $ 13,543 , respectively. Fiscal Year 2022 During the fourth quarter of fiscal year 2022, we made decisions in light of a more uncertain macro economic environment and our focus to improve profitability, which resulted in the prioritization of investments that we expect to have a nearer-term return, and deprioritization of some investments that we expect to have a longer path to returns. This resulted in decisions to reduce costs in certain areas including exiting our operations in Japan and China, while also taking additional headcount actions in our Vista business and in our central technology team. During the year ended June 30, 2022, we recognized restructuring expense related to these actions of $ 7,492 in our Vista segment, $ 1,093 in our All Other Businesses reportable segment and $ 854 in our central and corporate costs. We expect to recognize additional non-cash charges in the first quarter of fiscal year 2023 upon approval and modification to accelerate vest share-based compensation awards. Additionally, our National Pen business recognized restructuring expense of $ 4,178 during the year ended June 30, 2022, incurred for both the decision to move its European production operations from Ireland to the Czech Republic and the decision to exit the Japan market. When the Czech move is complete, we anticipate improved speed and delivery cost efficiencies for the business's European customers. We expect to recognize additional charges associated with these actions during the next fiscal year as impacted employees continue to vest in additional termination benefits, but we do not expect those additional costs to be material. 97 There were also immaterial adjustments to restructuring expense during this fiscal year due to changes in prior period estimates within The Print Group reportable segment. Fiscal Year 2021 During the year ended June 30, 2021 we recognized restructuring charges of $ 1,641 , primarily due to organizational changes within The Print Group segment totaling $ 1,966 intended to streamline certain activities. This was partially offset by changes in estimate related to prior period actions of $ 325 . This action was completed during fiscal year 2021. Fiscal Year 2020 During the year ended June 30, 2020, we recognized restructuring charges of $ 13,543 , consisting of charges of $ 5,734 within our Vista reportable segment as we evolved our organizational structure, including our reorganization of the technology team. We also recognized $ 3,532 in charges within our central and corporate costs, due to the coordinated reorganization of technology teams with our Vista business. We also incurred charges of $ 3,211 , $ 535 , and $ 475 in our National Pen, All Other Businesses and The Print Group reportable segments, respectively, during the year ended June 30, 2020, for various cost reduction measures primarily in response to the pandemic. These restructuring actions were completed during fiscal year 2020. The following table summarizes the restructuring activity during the years ended June 30, 2022 and 2021. Severance and Related Benefits Other Restructuring Costs Accrued restructuring liability Balance as of June 30, 2020 $ 5,969 $ 77 $ 6,046 Restructuring charges 998 643 1,641 Cash payments ( 6,565 ) — ( 6,565 ) Non-cash charges (1) — ( 720 ) ( 720 ) Balance as of June 30, 2021 402 — 402 Restructuring charges 13,312 291 13,603 Cash payments ( 265 ) — ( 265 ) Non-cash charges (1) — ( 291 ) ( 291 ) Balance as of June 30, 2022 $ 13,449 $ — $ 13,449 ________________ (1) During the fiscal year ended June 30, 2022, non-cash restructuring charges primarily include the National Pen segment's write-off of direct mail inventory for the Japan market which has no alternative use. During the fiscal year ended June 30, 2021, non-cash restructuring charges were the write-off of property, plant and equipment, net, which was recognized as part of the actions taken in The Print Group segment . 98 Item 9. Changes in and Disagreement with Accountants on Accounting and Financial Disclosure None.