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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________________
Form 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period endedSeptember 30, 2021
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from               to               
Commission file number 000-51539
_________________________________
Cimpress plc

(Exact Name of Registrant as Specified in Its Charter)
_________________________________
Ireland98-0417483
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)
Building D, Xerox Technology Park A91 H9N9,
Dundalk, Co. Louth
Ireland
(Address of Principal Executive Offices)
Registrant’s telephone number, including area code: 353 42 938 8500
Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s) Name of Exchange on Which Registered
Ordinary Shares, nominal value of €0.01 per shareCMPR NASDAQ Global Select Market
______________________________
    Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange     Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ     No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes þ     No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
  þ
Accelerated filerNon-accelerated filer
 Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o 
Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2).  Yes      No þ
As of October 25, 2021, there were 26,094,869 Cimpress plc ordinary shares outstanding.




CIMPRESS PLC
QUARTERLY REPORT ON FORM 10-Q
For the Three Months Ended September 30, 2021

TABLE OF CONTENTS
Page
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets as of September 30, 2021 and June 30, 2021
Consolidated Statements of Operations for the three months ended September 30, 2021 and 2020
Consolidated Statements of Comprehensive Loss for the three months ended September 30, 2021 and 2020
Consolidated Statements of Shareholders' Deficit for the three months ended September 30, 2021 and 2020
Consolidated Statements of Cash Flows for the three months ended September 30, 2021 and 2020
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
PART II OTHER INFORMATION
Item 1A. Risk Factors
Item 6. Exhibits
Signatures




PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CIMPRESS PLC
CONSOLIDATED BALANCE SHEETS
(unaudited in thousands, except share and per share data)
September 30,
2021
June 30,
2021
Assets  
Current assets:  
Cash and cash equivalents$193,231 $183,023 
Marketable securities152,028 152,248 
Accounts receivable, net of allowances of $9,222 and $9,404, respectively
56,624 50,679 
Inventory90,737 70,044 
Prepaid expenses and other current assets81,431 72,504 
Total current assets574,051 528,498 
Property, plant and equipment, net321,773 328,679 
Operating lease assets, net82,271 87,626 
Software and website development costs, net88,432 87,690 
Deferred tax assets146,431 149,618 
Goodwill717,970 726,979 
Intangible assets, net171,944 186,744 
Marketable securities, non-current40,400 50,713 
Other assets41,416 35,951 
Total assets$2,184,688 $2,182,498 
Liabilities, noncontrolling interests and shareholders’ deficit  
Current liabilities:  
Accounts payable$219,769 $199,831 
Accrued expenses261,161 247,513 
Deferred revenue49,071 50,868 
Short-term debt11,373 9,895 
Operating lease liabilities, current26,340 26,551 
Other current liabilities95,441 103,515 
Total current liabilities663,155 638,173 
Deferred tax liabilities24,707 27,433 
Long-term debt1,718,311 1,732,511 
Operating lease liabilities, non-current61,459 66,222 
Other liabilities88,279 96,410 
Total liabilities2,555,911 2,560,749 
Commitments and contingencies (Note 12)
Redeemable noncontrolling interests79,593 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; 44,080,627 shares issued; 26,090,016 and 26,035,910 shares outstanding, respectively
615 615 
Deferred ordinary shares, nominal value €1.00 per share, 25,000 shares authorized, issued and outstanding28 28 
Treasury shares, at cost, 17,990,611 and 18,044,717 shares, respectively
(1,365,079)(1,368,595)
Additional paid-in capital464,938 459,904 
Retained earnings532,414 537,677 
Accumulated other comprehensive loss(83,732)(79,000)
Total shareholders' deficit(450,816)(449,371)
Total liabilities, noncontrolling interests and shareholders’ deficit$2,184,688 $2,182,498 
See accompanying notes.
1


CIMPRESS PLC
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited in thousands, except share and per share data)
 Three Months Ended September 30,
 20212020
Revenue$657,599 $586,500 
Cost of revenue (1)338,989 298,844 
Technology and development expense (1)67,277 58,489 
Marketing and selling expense (1)174,697 138,150 
General and administrative expense (1)46,548 41,812 
Amortization of acquired intangible assets13,458 13,305 
Restructuring expense(309)(86)
Income from operations16,939 35,986 
Other income (expense), net22,197 (8,754)
Interest expense, net(25,688)(30,516)
Income (loss) before income taxes13,448 (3,284)
Income tax expense9,381 6,794 
Net income (loss)4,067 (10,078)
Add: Net (income) attributable to noncontrolling interest(1,738)(677)
Net income (loss) attributable to Cimpress plc$2,329 $(10,755)
Basic net income (loss) per share attributable to Cimpress plc$0.09 $(0.41)
Diluted net income (loss) per share attributable to Cimpress plc$0.09 $(0.41)
Weighted average shares outstanding — basic26,072,249 25,945,998 
Weighted average shares outstanding — diluted26,583,813 25,945,998 
____________________________________________
(1) Share-based compensation is allocated as follows:
 Three Months Ended September 30,
 20212020
Cost of revenue$116 $100 
Technology and development expense2,903 2,191 
Marketing and selling expense2,677 1,685 
General and administrative expense5,310 4,307 

See accompanying notes.
2


CIMPRESS PLC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(unaudited in thousands)
Three Months Ended September 30,
20212020
Net income (loss)$4,067 $(10,078)
Other comprehensive income (loss), net of tax:
Foreign currency translation (losses) gains, net of hedges(9,210)817 
Net unrealized (losses) gains on derivative instruments designated and qualifying as cash flow hedges(1,925)3,836 
Amounts reclassified from accumulated other comprehensive loss to net income (loss) on derivative instruments5,546 (2,071)
Loss on pension benefit obligation, net— (336)
Comprehensive loss(1,522)(7,832)
Add: Comprehensive (income) attributable to noncontrolling interests(881)(2,103)
Total comprehensive loss attributable to Cimpress plc$(2,403)$(9,935)
See accompanying notes.
3


CIMPRESS PLC
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
(unaudited in thousands)
Ordinary SharesDeferred Ordinary SharesTreasury Shares
Number of
Shares
Issued
AmountNumber of
Shares
Issued
AmountNumber
of
Shares
AmountAdditional
Paid-in
Capital
Retained
Earnings
Accumulated Other
Comprehensive
Loss
Total
Shareholders’
Deficit
Balance at June 30, 202044,080 $615 25 $28 (18,195)$(1,376,496)$438,616 $618,437 $(88,676)$(407,476)
Restricted share units vested, net of shares withheld for taxes— — — — 118 7,773 (13,366)— — (5,593)
Share-based compensation expense— — — — — — 8,577 — — 8,577 
Net loss attributable to Cimpress plc— — — — — — — (10,755)— (10,755)
Net unrealized gain on derivative instruments designated and qualifying as cash flow hedges— — — — — — — — 1,765 1,765 
Foreign currency translation, net of hedges— — — — — — — — (609)(609)
Unrealized loss on pension benefit obligation, net of tax— — — — — — — — (336)(336)
Balance at September 30, 202044,080 $615 25 $28 (18,077)$(1,368,723)$433,827 $607,682 $(87,856)$(414,427)
Balance at June 30, 202144,080 $615 25 $28 (18,045)$(1,368,595)$459,904 $537,677 $(79,000)$(449,371)
Restricted share units vested, net of shares withheld for taxes— — — — 54 3,516 (6,095)— — (2,579)
Share-based compensation expense— — — — — — 11,129 — — 11,129 
Net income attributable to Cimpress plc— — — — — — — 2,329 — 2,329 
Redeemable noncontrolling interest accretion to redemption value— — — — — — — (7,592)— (7,592)
Net unrealized gain on derivative instruments designated and qualifying as cash flow hedges— — — — — — — — 3,621 3,621 
Foreign currency translation, net of hedges— — — — — — — — (8,353)(8,353)
Balance at September 30, 202144,080 $615 25 $28 (17,991)$(1,365,079)$464,938 $532,414 $(83,732)$(450,816)
See accompanying notes.



4


CIMPRESS PLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited in thousands)

Three Months Ended September 30,
 20212020
Operating activities  
Net income (loss)$4,067 $(10,078)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:  
Depreciation and amortization44,432 42,290 
Share-based compensation expense11,006 8,283 
Deferred taxes(1,138)(32)
Unrealized (gain) loss on derivatives not designated as hedging instruments included in net income (loss)(16,534)14,628 
Effect of exchange rate changes on monetary assets and liabilities denominated in non-functional currency(8,853)(4,958)
Other non-cash items(471)3,192 
Changes in operating assets and liabilities:
Accounts receivable(7,149)(12,448)
Inventory(11,744)(3,111)
Prepaid expenses and other assets(4,832)2,523 
Accounts payable10,290 38,684 
Accrued expenses and other liabilities17,493 26,708 
Net cash provided by operating activities36,567 105,681 
Investing activities  
Purchases of property, plant and equipment(8,624)(8,383)
Capitalization of software and website development costs(15,639)(14,804)
Proceeds from the sale of assets1,699 2,103 
Proceeds from maturity of held-to-maturity investments10,000 — 
Other investing activities(617) 
Net cash used in investing activities(13,181)(21,084)
Financing activities
Proceeds from borrowings of debt  99,000 
Payments of debt(4,111)(182,726)
Payments of debt issuance costs(1,137)(410)
Payments of purchase consideration included in acquisition-date fair value (648)
Payments of withholding taxes in connection with equity awards(2,579)(5,592)
Payments of finance lease obligations(2,526)(1,592)
Other financing activities2 (11)
Net cash used in financing activities(10,351)(91,979)
Effect of exchange rate changes on cash(2,827)2,590 
Net increase (decrease) in cash and cash equivalents10,208 (4,792)
Cash and cash equivalents at beginning of period183,023 45,021 
Cash and cash equivalents at end of period$193,231 $40,229 
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest$14,358 $9,078 
Income taxes7,767 352 
Non-cash investing and financing activities
Property and equipment acquired under finance leases865 76 
Amounts accrued related to business acquisitions44,852 1,676 

See accompanying notes.
5


CIMPRESS PLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited 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, via which we deliver large volumes of individually small-sized customized orders for a broad spectrum of print, signage, photo merchandise, invitations and announcements, writing instruments, packaging, apparel and other categories. We invest in and build customer-focused, entrepreneurial mass customization businesses for the long term, which we manage in a decentralized, autonomous manner. Mass customization is a core element of the business model of each Cimpress business. We drive competitive advantage across Cimpress through a select few shared strategic capabilities that have the greatest potential to create Cimpress-wide value. We limit all other central activities to only those which absolutely must be performed centrally.
Our Vistaprint business and reportable segment has begun evolving its brand architecture to "Vista". Brands like "VistaPrint" and "99designs by Vista" will operate within the "Vista" 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 and reporting structure as a result of this rebranding, but we will refer to this reportable segment as "Vista" from here forward and throughout this document.
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 the related equity securities do not have a readily determinable fair value, are accounted for using the cost method and are included in other assets on the consolidated balance sheets. Investments in entities in which we can either exercise significant influence or, in cases when the entity's structure is that of a limited liability company that maintains a specific ownership account and our investment is more than minor, are recognized as equity method investments. 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.
Significant Accounting Policies
Our significant accounting policies are described in Note 2 in our consolidated financial statements included in the Form 10-K for our year ended June 30, 2021.
Revision of Prior Period Financial Statements
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. In the current quarter, 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
6


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.
We referred to the Codification of SEC Staff Accounting Bulletins (“SAB”) Topics 1.M Materiality and 1.N Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in Current Year Financial Statements to assess the materiality of the error. When considering both quantitative and qualitative factors, we determined the impact of the error was not material to our financial statements in any period previously presented. This immaterial error did not have an impact on operating income, nor did it have an impact on our previously presented consolidated balance sheets or consolidated statements of cash flows. This error did not have an impact on the first quarter of fiscal year 2021, which is the comparative period presented in this report, however, we will revise the comparative period results in the Form 10-Q for the second and third quarters of the current fiscal year as well as the Form 10-K for fiscal year 2022. We will revise our previously reported results to present these transactions on a net basis, which will result in a decrease to revenue and cost of revenue of $5,241 and $5,489 for the second and third quarters of fiscal year 2021, respectively, and $16,552 for the fiscal year ended June 30, 2021.
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.
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 three months ended September 30, 2021 and we had no marketable securities during the three months ended September 30, 2020.
The following is a summary of the net carrying amount, unrealized losses, and fair value of held-to-maturity securities by type and contractual maturity as of September 30, 2021 and June 30, 2021.

September 30, 2021
Amortized costUnrealized lossesFair value
Due within one year or less
Commercial paper$64,478 $(13)$64,465 
Corporate debt securities87,550 (45)87,505 
Total due within one year or less152,028 (58)151,970 
Due between one and two years
Corporate debt securities40,400 (61)40,339 
Total held-to-maturity securities$192,428 $(119)$192,309 

7


June 30, 2021
Amortized costUnrealized lossesFair value
Due within one year or less
Commercial paper$74,463 $(28)$74,435 
Corporate debt securities77,785 (57)77,728 
Total due within one year or less152,248 (85)152,163 
Due between one and two years
Corporate debt securities50,713 (90)50,623 
Total held-to-maturity securities$202,961 $(175)$202,786 
Other Income (Expense), Net
The following table summarizes the components of other income (expense), net:
 Three Months Ended September 30,
20212020
Gains (losses) on derivatives not designated as hedging instruments (1)$13,327 $(13,495)
Currency-related gains, net (2)9,350 4,075 
Other (losses) gains(480)666 
Total other income (expense), net$22,197 $(8,754)
_____________________
(1) Primarily relates to both realized and unrealized gains and losses on derivative currency forward and option contracts not designated as hedging instruments, as well as certain interest rate swap contracts that have been de-designated from hedge accounting due to their ineffectiveness.
(2) We have significant non-functional currency intercompany financing relationships that we may change at times and are subject to currency exchange rate volatility. The currency-related gains, net are primarily driven by this intercompany activity for the periods presented. In addition, we have certain cross-currency swaps designated as cash flow hedges which hedge the remeasurement of certain intercompany loans; both are presented in the same component above. Unrealized gains related to cross-currency swaps were $3,288 during the three months ended September 30, 2021 while there were unrealized losses of $5,437 during the three months ended September 30, 2020.
Net Income (Loss) Per Share Attributable to Cimpress plc
Basic net income (loss) per share attributable to Cimpress plc is computed by dividing net income (loss) attributable to Cimpress plc by the weighted-average number of ordinary shares outstanding for the respective period. Diluted net income (loss) per share attributable to Cimpress plc gives effect to all potentially dilutive securities, including share options, restricted share units (“RSUs”), warrants, and performance share units ("PSUs"), if the effect of the securities is dilutive using the treasury stock method. Awards with performance or market conditions are included using the treasury stock method only if the conditions would have been met as of the end of the reporting period and their effect is dilutive.
The following table sets forth the reconciliation of the weighted-average number of ordinary shares:
 Three Months Ended September 30,
 20212020
Weighted average shares outstanding, basic26,072,249 25,945,998 
Weighted average shares issuable upon exercise/vesting of outstanding share options/RSUs/warrants (1)511,564  
Shares used in computing diluted net income (loss) per share attributable to Cimpress plc26,583,813 25,945,998 
Weighted average anti-dilutive shares excluded from diluted net income (loss) per share attributable to Cimpress plc (2)18,447 450,089 
_____________________
(1) On May 1, 2020, we entered into a financing arrangement with Apollo Global Management, Inc., which included 7-year warrants with a strike price of $60 that have a potentially dilutive impact on our weighted average shares outstanding. For the three months ended September 30, 2021 and 2020, the weighted average dilutive effect of the warrants was 409,561 and 316,257 shares, respectively.
(2) For the three months ended September 30, 2020, we recognized a net loss in the period and therefore presented the impact of share options, RSUs and warrants as being anti-dilutive.
8


Recently Issued or Adopted Accounting Pronouncements
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 for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. The standard is effective for us on July 1, 2022, and early adoption is permitted. We are assessing the 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.
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:
 September 30, 2021
TotalQuoted 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$232 $— $232 $— 
Cross-currency swap contracts760 — 760 — 
Currency forward contracts8,447 — 8,447 — 
Currency option contracts1,982 — 1,982 — 
Total assets recorded at fair value$11,421 $— $11,421 $— 
Liabilities
Interest rate swap contracts$(21,937)$— $(21,937)$— 
Cross-currency swap contracts(6,741)— (6,741)— 
Currency forward contracts(10,303)— (10,303)— 
Currency option contracts(1,150)— (1,150)— 
Total liabilities recorded at fair value$(40,131)$— $(40,131)$— 

9


June 30, 2021
TotalQuoted 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 three months ended September 30, 2021 and year ended June 30, 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.
Although we have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to appropriately reflect both our own nonperformance risk and the respective counterparties' nonperformance risk in the fair value measurement. However, as of September 30, 2021, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives. As a result, we have determined that our derivative valuations in their entirety are classified in Level 2 in the fair value hierarchy.

As of September 30, 2021 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 September 30, 2021 and June 30, 2021, the carrying value of our debt, excluding debt issuance costs and debt premiums and discounts, was $1,751,534 and $1,764,856, respectively, and the fair value was $1,803,480 and $1,887,952, respectively. Our debt at September 30, 2021 includes variable-rate debt instruments indexed to LIBOR that resets periodically, as well as fixed-rate debt instruments. The estimated fair value of our debt was determined using available market information based on recent trades or activity of debt instruments with substantially similar risks, terms and maturities, which fall within Level 2 under the fair value hierarchy.

As of September 30, 2021 and June 30, 2021 our held-to-maturity marketable securities were held at an amortized cost of $192,428 and $202,961, respectively, while the fair value was $192,309 and $202,786, 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.
10


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. As of September 30, 2021, we estimate that $10,399 will be reclassified from accumulated other comprehensive loss to interest expense during the twelve months ending September 30, 2022. As of September 30, 2021, we had fifteen outstanding interest rate swap contracts indexed to USD LIBOR, three of which were not highly effective and therefore not designated for hedge accounting. These hedges have varying start dates and maturity dates through April 2028.
Interest rate swap contracts outstanding:Notional Amounts
Contracts accruing interest as of September 30, 2021
$500,000 
Contracts with a future start date430,000 
Total$930,000 
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 September 30, 2021, we had two outstanding cross-currency swap contracts designated as cash flow hedges with a total notional amount of $120,874, both maturing during June 2024. We entered into the two cross-currency swap contracts to hedge the risk of changes in one Euro-denominated intercompany loan entered into with one of our consolidated subsidiaries that has the Euro as its functional currency.
Amounts reported in accumulated other comprehensive loss will be reclassified to other income (expense), net, as interest payments are accrued or paid and upon remeasuring the intercompany loan. As of September 30, 2021, we estimate that $2,722 of income will be reclassified from accumulated other comprehensive loss to interest expense, net during the twelve months ending September 30, 2022.
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Other Currency Contracts
We execute currency forward and option contracts in order to mitigate our exposure to fluctuations in various currencies against our reporting currency, the U.S. dollar.
As of September 30, 2021, we had four currency forward contracts designated as net investment hedges with a total notional amount of $118,203, maturing during various dates through April 2023. We entered into these contracts to hedge the risk of changes in the U.S. dollar equivalent value of a portion of our net investment in two 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.
We have elected to not apply hedge accounting for all other currency forward and option contracts. During the three months ended September 30, 2021 and 2020, 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.
As of September 30, 2021, we had the following outstanding currency derivative contracts that were not designated for hedge accounting and were used to hedge fluctuations in the U.S. dollar value of forecasted transactions or balances denominated in Australian Dollar, British Pound, Canadian Dollar, Danish Krone, Euro, Indian Rupee, Japanese Yen, Mexican Peso, New Zealand Dollar, Norwegian Krone, Philippine Peso, Swiss Franc and Swedish Krona:
Notional AmountEffective DateMaturity DateNumber of InstrumentsIndex
$557,175September 2019 through September 2021Various dates through October 2024701Various




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Financial Instrument Presentation    
The table below presents the fair value of our derivative financial instruments as well as their classification on the balance sheet as of September 30, 2021 and June 30, 2021. Our derivative asset and liability balances will fluctuate with interest rate and currency exchange rate volatility.
September 30, 2021
Asset DerivativesLiability Derivatives
Balance Sheet line itemGross amounts of recognized assetsGross amount offset in Consolidated Balance SheetNet amountBalance Sheet line itemGross amounts of recognized liabilitiesGross amount offset in Consolidated Balance SheetNet amount
Derivatives designated as hedging instruments
Derivatives in cash flow hedging relationships
Interest rate swapsOther assets$232 $— $232 Other liabilities$(20,827)$267 $(20,560)
Cross-currency swapsOther assets760 — 760 Other liabilities(6,741)— (6,741)
Derivatives in net investment hedging relationships
Currency forward contractsOther current assets / other assets— — — Other current liabilities / other liabilities(7,886)— (7,886)
Total derivatives designated as hedging instruments$992 $— $992 $(35,454)$267 $(35,187)
Derivatives not designated as hedging instruments
Interest rate swapsOther assets$— $— $— Other liabilities$(1,377)$— $(1,377)
Currency forward contractsOther current assets / other assets11,498 (3,051)8,447 Other current liabilities / other liabilities(3,260)843 (2,417)
Currency option contractsOther current assets / other assets2,170 (188)1,982 Other current liabilities / other liabilities(1,265)115 (1,150)
Total derivatives not designated as hedging instruments$13,668 $(3,239)$10,429 $(5,902)$958 $(4,944)

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June 30, 2021
Asset DerivativesLiability Derivatives
Balance Sheet line itemGross amounts of recognized assetsGross amount offset in Consolidated Balance SheetNet amountBalance Sheet line itemGross amounts of recognized liabilitiesGross amount offset in Consolidated Balance SheetNet amount
Derivatives designated as hedging instruments
Derivatives in cash flow hedging relationships
Interest rate swapsOther current assets / other assets$ $ $ Other current liabilities / other liabilities$(23,527)$176 $(23,351)
Cross-currency swapsOther assets —  Other liabilities(9,914) (9,914)
Derivatives in Net Investment Hedging Relationships
Currency forward contractsOther assets   Other current liabilities / other liabilities(11,379) (11,379)
Total derivatives designated as hedging instruments$ $ $ $(44,820)$176 $(44,644)
Derivatives not designated as hedging instruments
Interest rate swapsOther assets$— $— $— Other liabilities$(1,842)$ $(1,842)
Currency forward contractsOther current assets / other assets1,796 (117)1,679 Other current liabilities / other liabilities(11,510)3,238 (8,272)
Currency option contractsOther 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)
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The following table presents the effect of our derivative financial instruments designated as hedging instruments and their classification within comprehensive (loss) income for the three months ended September 30, 2021 and 2020:
Amount of Net Gain (Loss) on Derivatives Recognized in Comprehensive Income
Three Months Ended September 30,
20212020
Derivatives in cash flow hedging relationships
Interest rate swaps$519 $411 
Cross-currency swaps(2,444)3,425 
Derivatives in net investment hedging relationships
Currency forward contracts3,492 (17,538)
Total$1,567 $(13,702)


The following table presents reclassifications out of accumulated other comprehensive loss for the three months ended September 30, 2021 and 2020:
Amount of Net Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into IncomeAffected line item in the
Statement of Operations
Three Months Ended September 30,
20212020
Derivatives in cash flow hedging relationships
Interest rate swaps$2,497 $2,622 Interest expense, net
Cross-currency swaps3,987 (4,767)Other income (expense), net
Total before income tax6,484 (2,145)Income (loss) before income taxes
Income tax(938)74 Income tax expense
Total$5,546 $(2,071)

The following table presents the adjustment to fair value recorded within the consolidated statements of operations for the three months ended September 30, 2021 and 2020 for derivative instruments for which we did not elect hedge accounting and de-designated derivative financial instruments that no longer qualify as hedging instruments.
Amount of Gain (Loss) Recognized in Net Income (Loss)Affected line item in the
Statement of Operations
Three Months Ended September 30,
20212020
Currency contracts$12,863 $(13,468)Other income (expense), net
Interest rate swaps464 (27)Other income (expense), net
Total$13,327 $(13,495)
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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 $938 for the three months ended September 30, 2021:
Gains (losses) on cash flow hedges (1)Losses on pension benefit obligationTranslation adjustments, net of hedges (2)Total
Balance as of June 30, 2021$(23,831)$(1,735)$(53,434)$(79,000)
Other comprehensive income (loss) before reclassifications(1,925)— (8,353)(10,278)
Amounts reclassified from accumulated other comprehensive loss to net income (loss)5,546 — — 5,546 
Net current period other comprehensive income (loss)3,621 — (8,353)(4,732)
Balance as of September 30, 2021$(20,210)$(1,735)$(61,787)$(83,732)
________________________
(1) Gains (losses) on cash flow hedges include our interest rate swap and cross-currency swap contracts designated in cash flow hedging relationships.
(2) As of September 30, 2021 and June 30, 2021, the translation adjustment is inclusive of the effects of our net investment hedges, of which unrealized gains of $3,492 and $1,457, respectively, net of tax, have been included in accumulated other comprehensive loss.
6. Goodwill
The carrying amount of goodwill by reportable segment as of September 30, 2021 and June 30, 2021 was as follows: