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(Mark One)
|
|
þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
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For the quarterly period ended September 30, 2017
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or
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|
o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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The Netherlands
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98-0417483
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer
Identification No.)
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Title of Each Class
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Name of Exchange on Which Registered
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Ordinary Shares, €0.01 par value
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NASDAQ Global Select Market
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Large accelerated filer
þ
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
o
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(Do not check if a smaller reporting company)
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|
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Emerging growth company
o
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Page
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PART I
FINANCIAL INFORMATION
|
|
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Item 1. Financial Statements (unaudited)
|
||
Consolidated Balance Sheets as of September 30, 2017 and June 30, 2017
|
||
Consolidated Statements of Operations for the three months ended September 30, 2017 and 2016
|
||
Consolidated Statements of Comprehensive Income (Loss) for the three months ended September 30, 2017 and 2016
|
||
Consolidated Statements of Cash Flows for the three months ended September 30, 2017 and 2016
|
||
Notes to Consolidated Financial Statements
|
||
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
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||
Item 3. Quantitative and Qualitative Disclosures About Market Risk
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Item 4. Controls and Procedures
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||
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Part II
OTHER INFORMATION
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|
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Item 1A. Risk Factors
|
||
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
|
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Item 6. Exhibits
|
||
Signatures
|
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September 30,
2017 |
|
June 30,
2017 |
||||
Assets
|
|
|
|
|
|
||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
42,800
|
|
|
$
|
25,697
|
|
Accounts receivable, net of allowances of $4,297 and $3,590, respectively
|
58,413
|
|
|
48,630
|
|
||
Inventory
|
56,754
|
|
|
46,563
|
|
||
Prepaid expenses and other current assets
|
75,921
|
|
|
78,835
|
|
||
Assets held for sale
|
—
|
|
|
46,276
|
|
||
Total current assets
|
233,888
|
|
|
246,001
|
|
||
Property, plant and equipment, net
|
511,890
|
|
|
511,947
|
|
||
Software and website development costs, net
|
50,312
|
|
|
48,470
|
|
||
Deferred tax assets
|
78,748
|
|
|
48,004
|
|
||
Goodwill
|
525,806
|
|
|
514,963
|
|
||
Intangible assets, net
|
268,678
|
|
|
275,924
|
|
||
Other assets
|
26,772
|
|
|
34,560
|
|
||
Total assets
|
$
|
1,696,094
|
|
|
$
|
1,679,869
|
|
Liabilities, noncontrolling interests and shareholders’ equity
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
121,119
|
|
|
$
|
127,386
|
|
Accrued expenses
|
186,502
|
|
|
175,567
|
|
||
Deferred revenue
|
39,239
|
|
|
30,372
|
|
||
Short-term debt
|
19,941
|
|
|
28,926
|
|
||
Other current liabilities
|
86,998
|
|
|
78,435
|
|
||
Liabilities held for sale
|
—
|
|
|
8,797
|
|
||
Total current liabilities
|
453,799
|
|
|
449,483
|
|
||
Deferred tax liabilities
|
58,805
|
|
|
60,743
|
|
||
Lease financing obligation
|
105,679
|
|
|
106,606
|
|
||
Long-term debt
|
800,860
|
|
|
847,730
|
|
||
Other liabilities
|
108,607
|
|
|
94,683
|
|
||
Total liabilities
|
1,527,750
|
|
|
1,559,245
|
|
||
Commitments and contingencies (Note 13)
|
|
|
|
||||
Redeemable noncontrolling interests
|
83,841
|
|
|
45,412
|
|
||
Shareholders’ equity:
|
|
|
|
|
|
||
Preferred shares, par value €0.01 per share, 100,000,000 shares authorized; none issued and outstanding
|
—
|
|
|
—
|
|
||
Ordinary shares, par value €0.01 per share, 100,000,000 shares authorized; 44,080,627 shares issued; and 31,020,287 and 31,415,503 shares outstanding, respectively
|
615
|
|
|
615
|
|
||
Treasury shares, at cost, 13,060,340 and 12,665,124 shares, respectively
|
(627,002
|
)
|
|
(588,365
|
)
|
||
Additional paid-in capital
|
366,684
|
|
|
361,376
|
|
||
Retained earnings
|
432,273
|
|
|
414,771
|
|
||
Accumulated other comprehensive loss
|
(88,325
|
)
|
|
(113,398
|
)
|
||
Total shareholders’ equity attributable to Cimpress N.V.
|
84,245
|
|
|
74,999
|
|
||
Noncontrolling interests (Note 10)
|
258
|
|
|
213
|
|
||
Total shareholders' equity
|
84,503
|
|
|
75,212
|
|
||
Total liabilities, noncontrolling interests and shareholders’ equity
|
$
|
1,696,094
|
|
|
$
|
1,679,869
|
|
|
Three Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
Revenue
|
$
|
563,284
|
|
|
$
|
443,713
|
|
Cost of revenue (1)
|
283,755
|
|
|
213,050
|
|
||
Technology and development expense (1)
|
62,103
|
|
|
59,010
|
|
||
Marketing and selling expense (1)
|
166,093
|
|
|
132,668
|
|
||
General and administrative expense (1)
|
38,778
|
|
|
56,580
|
|
||
Amortization of acquired intangible assets
|
12,633
|
|
|
10,213
|
|
||
Restructuring expense (1)
|
854
|
|
|
—
|
|
||
(Gain) on sale of subsidiaries
|
(47,545
|
)
|
|
—
|
|
||
Income (loss) from operations
|
46,613
|
|
|
(27,808
|
)
|
||
Other expense, net
|
(16,312
|
)
|
|
(2,132
|
)
|
||
Interest expense, net
|
(13,082
|
)
|
|
(9,904
|
)
|
||
Income (loss) before income taxes
|
17,219
|
|
|
(39,844
|
)
|
||
Income tax (benefit) expense
|
(6,187
|
)
|
|
(9,814
|
)
|
||
Net income (loss)
|
23,406
|
|
|
(30,030
|
)
|
||
Add: Net (income) loss attributable to noncontrolling interest
|
(43
|
)
|
|
927
|
|
||
Net income (loss) attributable to Cimpress N.V.
|
$
|
23,363
|
|
|
$
|
(29,103
|
)
|
Basic net income (loss) per share attributable to Cimpress N.V.
|
$
|
0.75
|
|
|
$
|
(0.92
|
)
|
Diluted net income (loss) per share attributable to Cimpress N.V.
|
$
|
0.72
|
|
|
$
|
(0.92
|
)
|
Weighted average shares outstanding — basic
|
31,220,311
|
|
|
31,570,824
|
|
||
Weighted average shares outstanding — diluted
|
32,332,162
|
|
|
31,570,824
|
|
|
Three Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
Cost of revenue
|
$
|
40
|
|
|
$
|
43
|
|
Technology and development expense
|
1,856
|
|
|
2,325
|
|
||
Marketing and selling expense
|
985
|
|
|
820
|
|
||
General and administrative expense
|
3,928
|
|
|
8,383
|
|
||
Restructuring expense
|
103
|
|
|
—
|
|
|
Three Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
Net income (loss)
|
$
|
23,406
|
|
|
$
|
(30,030
|
)
|
Other comprehensive income (loss), net of tax:
|
|
|
|
||||
Foreign currency translation gains, net of hedges
|
27,307
|
|
|
9,178
|
|
||
Net unrealized gains (losses) on derivative instruments designated and qualifying as cash flow hedges
|
3,571
|
|
|
(1,769
|
)
|
||
Amounts reclassified from accumulated other comprehensive loss to net income (loss) on derivative instruments
|
(2,764
|
)
|
|
832
|
|
||
Unrealized loss on available-for-sale-securities
|
—
|
|
|
(924
|
)
|
||
Gain on pension benefit obligation, net
|
—
|
|
|
36
|
|
||
Comprehensive income (loss)
|
51,520
|
|
|
(22,677
|
)
|
||
Add: Comprehensive (income) loss attributable to noncontrolling interests
|
(3,084
|
)
|
|
390
|
|
||
Total comprehensive income (loss) attributable to Cimpress N.V.
|
$
|
48,436
|
|
|
$
|
(22,287
|
)
|
|
Three Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
Operating activities
|
|
|
|
|
|
||
Net income (loss)
|
$
|
23,406
|
|
|
$
|
(30,030
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
||
Depreciation and amortization
|
42,384
|
|
|
35,405
|
|
||
Share-based compensation expense
|
6,912
|
|
|
11,571
|
|
||
Deferred taxes
|
(16,589
|
)
|
|
(18,163
|
)
|
||
Gain on sale of subsidiaries
|
(47,545
|
)
|
|
—
|
|
||
Change in contingent earn-out liability
|
827
|
|
|
16,020
|
|
||
Unrealized loss on derivatives not designated as hedging instruments included in net income (loss)
|
6,066
|
|
|
1,811
|
|
||
Effect of exchange rate changes on monetary assets and liabilities denominated in non-functional currency
|
8,386
|
|
|
3,027
|
|
||
Other non-cash items
|
23
|
|
|
670
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||
Accounts receivable
|
(8,839
|
)
|
|
2,917
|
|
||
Inventory
|
(8,985
|
)
|
|
(1,220
|
)
|
||
Prepaid expenses and other assets
|
(4,893
|
)
|
|
671
|
|
||
Accounts payable
|
(1,621
|
)
|
|
(7,952
|
)
|
||
Accrued expenses and other liabilities
|
16,847
|
|
|
(5,127
|
)
|
||
Net cash provided by operating activities
|
16,379
|
|
|
9,600
|
|
||
Investing activities
|
|
|
|
|
|
||
Purchases of property, plant and equipment
|
(20,457
|
)
|
|
(19,319
|
)
|
||
Proceeds from the sale of subsidiaries, net of transaction costs and cash divested
|
93,779
|
|
|
—
|
|
||
Business acquisitions, net of cash acquired
|
(110
|
)
|
|
(580
|
)
|
||
Purchases of intangible assets
|
(24
|
)
|
|
(26
|
)
|
||
Capitalization of software and website development costs
|
(8,934
|
)
|
|
(8,312
|
)
|
||
Other investing activities
|
(1,956
|
)
|
|
785
|
|
||
Net cash provided by (used in) investing activities
|
62,298
|
|
|
(27,452
|
)
|
||
Financing activities
|
|
|
|
||||
Proceeds from borrowings of debt
|
179,532
|
|
|
87,000
|
|
||
Payments of debt and debt issuance costs
|
(237,929
|
)
|
|
(82,725
|
)
|
||
Payments of withholding taxes in connection with equity awards
|
(1,190
|
)
|
|
(7,549
|
)
|
||
Payments of capital lease obligations
|
(4,658
|
)
|
|
(3,276
|
)
|
||
Purchase of ordinary shares
|
(40,674
|
)
|
|
—
|
|
||
Proceeds from issuance of ordinary shares
|
6,070
|
|
|
—
|
|
||
Issuance of loans
|
(12,000
|
)
|
|
—
|
|
||
Proceeds from sale of noncontrolling interest
|
35,390
|
|
|
—
|
|
||
Net cash used in financing activities
|
(75,459
|
)
|
|
(6,550
|
)
|
||
Effect of exchange rate changes on cash
|
1,843
|
|
|
601
|
|
||
Change in cash held for sale
|
12,042
|
|
|
—
|
|
||
Net increase (decrease) in cash and cash equivalents
|
17,103
|
|
|
(23,801
|
)
|
||
Cash and cash equivalents at beginning of period
|
25,697
|
|
|
77,426
|
|
||
Cash and cash equivalents at end of period
|
$
|
42,800
|
|
|
$
|
53,625
|
|
|
Three Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
Supplemental disclosures of cash flow information:
|
|
|
|
||||
Cash paid during the period for:
|
|
|
|
||||
Interest
|
$
|
8,430
|
|
|
$
|
5,362
|
|
Income taxes
|
5,369
|
|
|
8,555
|
|
||
Non-cash investing and financing activities:
|
|
|
|
||||
Property and equipment acquired under capital leases
|
$
|
—
|
|
|
$
|
2,077
|
|
Amounts accrued related to business acquisitions
|
50,904
|
|
|
21,805
|
|
|
Three Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
(Losses) gains on derivatives not designated as hedging instruments (1)
|
$
|
(8,250
|
)
|
|
$
|
77
|
|
Currency-related losses, net (2)
|
(8,202
|
)
|
|
(2,966
|
)
|
||
Other gains
|
140
|
|
|
757
|
|
||
Total other expense, net
|
$
|
(16,312
|
)
|
|
$
|
(2,132
|
)
|
|
Three Months Ended September 30,
|
||||
|
2017
|
|
2016
|
||
Weighted average shares outstanding, basic
|
31,220,311
|
|
|
31,570,824
|
|
Weighted average shares issuable upon exercise/vesting of outstanding share options/RSUs/RSAs (1)
|
1,111,851
|
|
|
—
|
|
Shares used in computing diluted net income (loss) per share attributable to Cimpress N.V.
|
32,332,162
|
|
|
31,570,824
|
|
Weighted average anti-dilutive shares excluded from diluted net income (loss) per share attributable to Cimpress N.V.
|
9,163
|
|
|
1,524,854
|
|
•
|
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.
|
|
September 30, 2017
|
||||||||||||||
|
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
|
$
|
2,047
|
|
|
$
|
—
|
|
|
$
|
2,047
|
|
|
$
|
—
|
|
Currency forward contracts
|
1,212
|
|
|
—
|
|
|
1,212
|
|
|
—
|
|
||||
Total assets recorded at fair value
|
$
|
3,259
|
|
|
$
|
—
|
|
|
$
|
3,259
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities
|
|
|
|
|
|
|
|
||||||||
Interest rate swap contracts
|
$
|
(668
|
)
|
|
$
|
—
|
|
|
$
|
(668
|
)
|
|
$
|
—
|
|
Cross-currency swap contracts
|
(29,294
|
)
|
|
—
|
|
|
(29,294
|
)
|
|
—
|
|
||||
Currency forward contracts
|
(27,623
|
)
|
|
—
|
|
|
(27,623
|
)
|
|
—
|
|
||||
Currency option contracts
|
(607
|
)
|
|
—
|
|
|
(607
|
)
|
|
—
|
|
||||
Contingent consideration
|
(5,734
|
)
|
|
—
|
|
|
—
|
|
|
(5,734
|
)
|
||||
Total liabilities recorded at fair value
|
$
|
(63,926
|
)
|
|
$
|
—
|
|
|
$
|
(58,192
|
)
|
|
$
|
(5,734
|
)
|
|
June 30, 2017
|
||||||||||||||
|
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
|
$
|
1,717
|
|
|
$
|
—
|
|
|
$
|
1,717
|
|
|
$
|
—
|
|
Total assets recorded at fair value
|
$
|
1,717
|
|
|
$
|
—
|
|
|
$
|
1,717
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities
|
|
|
|
|
|
|
|
||||||||
Interest rate swap contracts
|
$
|
(483
|
)
|
|
$
|
—
|
|
|
$
|
(483
|
)
|
|
$
|
—
|
|
Cross-currency swap contracts
|
(19,760
|
)
|
|
—
|
|
|
(19,760
|
)
|
|
—
|
|
||||
Currency forward contracts
|
(14,700
|
)
|
|
—
|
|
|
(14,700
|
)
|
|
—
|
|
||||
Currency option contracts
|
(651
|
)
|
|
—
|
|
|
(651
|
)
|
|
—
|
|
||||
Contingent consideration
|
(5,453
|
)
|
|
—
|
|
|
—
|
|
|
(5,453
|
)
|
||||
Total liabilities recorded at fair value
|
$
|
(41,047
|
)
|
|
$
|
—
|
|
|
$
|
(35,594
|
)
|
|
$
|
(5,453
|
)
|
|
Three Months Ended September 30,
|
||||||
|
2017 (1)
|
|
2016 (2)
|
||||
Balance at June 30
|
$
|
5,453
|
|
|
$
|
1,212
|
|
Fair value adjustment
|
102
|
|
|
1,112
|
|
||
Foreign currency impact
|
179
|
|
|
15
|
|
||
Balance at September 30
|
$
|
5,734
|
|
|
$
|
2,339
|
|
Interest rate swap contracts outstanding:
|
|
Notional Amounts
|
||
Contracts accruing interest as of September 30, 2017
|
|
$
|
60,000
|
|
Contracts with a future start date
|
|
240,000
|
|
|
Total
|
|
$
|
300,000
|
|
Notional Amount
|
|
Effective Date
|
|
Maturity Date
|
|
Number of Instruments
|
|
Index
|
$449,834
|
|
June 2016 through September 2017
|
|
Various dates through March 2019
|
|
490
|
|
Various
|
|
September 30, 2017
|
||||||||||||||||||||||||||
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||||||||||||||||||
Derivatives designated as hedging instruments
|
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 in Cash Flow Hedging Relationships
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest rate swaps
|
Other non-current assets
|
|
$
|
2,388
|
|
|
$
|
(341
|
)
|
|
$
|
2,047
|
|
|
Other current liabilities / other liabilities
|
|
$
|
(668
|
)
|
|
$
|
—
|
|
|
$
|
(668
|
)
|
Cross-currency swaps
|
Other non-current assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Other liabilities
|
|
(12,425
|
)
|
|
—
|
|
|
(12,425
|
)
|
||||||
Derivatives in Net Investment Hedging Relationships
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cross-currency swaps
|
Other non-current assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Other liabilities
|
|
(16,869
|
)
|
|
—
|
|
|
(16,869
|
)
|
||||||
Currency forward contracts
|
Other non-current assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Other liabilities
|
|
(15,497
|
)
|
|
—
|
|
|
(15,497
|
)
|
||||||
Total derivatives designated as hedging instruments
|
|
|
$
|
2,388
|
|
|
$
|
(341
|
)
|
|
$
|
2,047
|
|
|
|
|
$
|
(45,459
|
)
|
|
$
|
—
|
|
|
$
|
(45,459
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivatives not designated as hedging instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Currency forward contracts
|
Other current assets / other assets
|
|
$
|
1,360
|
|
|
$
|
(148
|
)
|
|
$
|
1,212
|
|
|
Other current liabilities / other liabilities
|
|
$
|
(13,733
|
)
|
|
$
|
1,607
|
|
|
$
|
(12,126
|
)
|
Currency option contracts
|
Other current assets / other assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Other current liabilities / other liabilities
|
|
(607
|
)
|
|
—
|
|
|
(607
|
)
|
||||||
Total derivatives not designated as hedging instruments
|
|
|
$
|
1,360
|
|
|
$
|
(148
|
)
|
|
$
|
1,212
|
|
|
|
|
$
|
(14,340
|
)
|
|
$
|
1,607
|
|
|
$
|
(12,733
|
)
|
|
June 30, 2017
|
||||||||||||||||||||||||||
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||||||||||||||||||
Derivatives designated as hedging instruments
|
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 in Cash Flow Hedging Relationships
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest rate swaps
|
Other non-current assets
|
|
$
|
2,072
|
|
|
$
|
(355
|
)
|
|
$
|
1,717
|
|
|
Other current liabilities / other liabilities
|
|
$
|
(483
|
)
|
|
$
|
—
|
|
|
$
|
(483
|
)
|
Cross-currency swaps
|
Other non-current assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Other liabilities
|
|
(7,640
|
)
|
|
—
|
|
|
(7,640
|
)
|
||||||
Derivatives in Net Investment Hedging Relationships
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cross-currency swaps
|
Other non-current assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Other liabilities
|
|
(12,120
|
)
|
|
—
|
|
|
(12,120
|
)
|
||||||
Currency forward contracts
|
Other non-current assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Other liabilities
|
|
(9,896
|
)
|
|
—
|
|
|
(9,896
|
)
|
||||||
Total derivatives designated as hedging instruments
|
|
|
$
|
2,072
|
|
|
$
|
(355
|
)
|
|
$
|
1,717
|
|
|
|
|
$
|
(30,139
|
)
|
|
$
|
—
|
|
|
$
|
(30,139
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivatives not designated as hedging instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Currency forward contracts
|
Other current assets / other assets
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Other current liabilities / other liabilities
|
|
$
|
(8,033
|
)
|
|
$
|
3,229
|
|
|
$
|
(4,804
|
)
|
Currency Option Contracts
|
Other current assets / other assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Other current liabilities / other liabilities
|
|
(651
|
)
|
|
—
|
|
|
(651
|
)
|
||||||
Total derivatives not designated as hedging instruments
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
(8,684
|
)
|
|
$
|
3,229
|
|
|
$
|
(5,455
|
)
|
Derivatives in Hedging Relationships
|
Amount of Gain (Loss) Recognized in Comprehensive Income (Loss) on Derivatives (Effective Portion)
|
||||||
|
Three Months Ended September 30,
|
||||||
In thousands
|
2017
|
|
2016
|
||||
Derivatives in Cash Flow Hedging Relationships
|
|
|
|
||||
Interest rate swaps
|
$
|
63
|
|
|
$
|
251
|
|
Cross-currency swaps
|
3,508
|
|
|
(2,020
|
)
|
||
Derivatives in Net Investment Hedging Relationships
|
|
|
|
||||
Cross-currency swaps
|
(5,124
|
)
|
|
(2,059
|
)
|
||
Currency forward contracts
|
(6,394
|
)
|
|
(456
|
)
|
||
|
$
|
(7,947
|
)
|
|
$
|
(4,284
|
)
|
Details about Accumulated Other
Comprehensive Loss Components
|
Amount Reclassified from Accumulated Other Comprehensive Income (Loss) to Net Income (Loss)
|
|
Affected line item in the
Statement of Operations
|
||||||
|
Three Months Ended September 30,
|
|
|
||||||
In thousands
|
2017
|
|
2016
|
|
|
||||
Derivatives in Cash Flow Hedging Relationships
|
|
|
|
|
|
||||
Interest rate swaps
|
$
|
58
|
|
|
$
|
(156
|
)
|
|
Interest expense, net
|
Cross-currency swaps
|
(3,747
|
)
|
|
(953
|
)
|
|
Other expense, net
|
||
Total before income tax
|
(3,689
|
)
|
|
(1,109
|
)
|
|
Income (loss) before income taxes
|
||
Income tax
|
925
|
|
|
277
|
|
|
Income tax benefit
|
||
Total
|
$
|
(2,764
|
)
|
|
$
|
(832
|
)
|
|
|
|
Amount of Gain (Loss) Recognized in Net Income (loss)
|
|
Location of Gain (Loss) Recognized in Income (Ineffective Portion)
|
||||||
|
Three Months Ended September 30,
|
|
|
||||||
In thousands
|
2017
|
|
2016
|
|
|
||||
Derivatives not designated as hedging instruments
|
|
|
|
|
|
||||
Currency contracts
|
$
|
(8,281
|
)
|
|
$
|
77
|
|
|
Other expense, net
|
Interest rate swaps
|
31
|
|
|
—
|
|
|
Other expense, net
|
||
|
$
|
(8,250
|
)
|
|
$
|
77
|
|
|
|
|
Gains (losses) on cash flow hedges (1)
|
|
Gains (losses) on pension benefit obligation
|
|
Translation adjustments, net of hedges (2)
|
|
Total
|
||||||||
Balance as of June 30, 2017
|
$
|
(2,250
|
)
|
|
$
|
(357
|
)
|
|
$
|
(110,791
|
)
|
|
$
|
(113,398
|
)
|
Other comprehensive income (loss) before reclassifications
|
3,571
|
|
|
—
|
|
|
24,266
|
|
|
27,837
|
|
||||
Amounts reclassified from accumulated other comprehensive loss to net income (loss)
|
(2,764
|
)
|
|
—
|
|
|
—
|
|
|
(2,764
|
)
|
||||
Net current period other comprehensive income (loss)
|
807
|
|
|
—
|
|
|
24,266
|
|
|
25,073
|
|
||||
Balance as of September 30, 2017
|
$
|
(1,443
|
)
|
|
$
|
(357
|
)
|
|
$
|
(86,525
|
)
|
|
$
|
(88,325
|
)
|
|
Vistaprint
|
|
Upload and Print
|
|
National Pen
|
|
All Other Businesses
|
|
Total
|
||||||||||
Balance as of June 30, 2017
|
$
|
147,207
|
|
|
$
|
321,805
|
|
|
$
|
34,520
|
|
|
$
|
11,431
|
|
|
$
|
514,963
|
|
Adjustments (1)
|
(58
|
)
|
|
—
|
|
|
(86
|
)
|
|
—
|
|
|
(144
|
)
|
|||||
Effect of currency translation adjustments (2)
|
468
|
|
|
10,519
|
|
|
—
|
|
|
—
|
|
|
10,987
|
|
|||||
Balance as of September 30, 2017
|
$
|
147,617
|
|
|
$
|
332,324
|
|
|
$
|
34,434
|
|
|
$
|
11,431
|
|
|
$
|
525,806
|
|
|
September 30, 2017
|
|
June 30, 2017
|
||||
Compensation costs
|
$
|
49,166
|
|
|
$
|
54,487
|
|
Income and indirect taxes
|
35,640
|
|
|
34,469
|
|
||
Advertising costs
|
26,724
|
|
|
26,641
|
|
||
Interest payable
|
10,255
|
|
|
5,263
|
|
||
Shipping costs
|
7,928
|
|
|
6,651
|
|
||
Production costs
|
7,652
|
|
|
7,472
|
|
||
Sales returns
|
5,178
|
|
|
4,474
|
|
||
Purchases of property, plant and equipment
|
3,171
|
|
|
3,786
|
|
||
Professional costs
|
3,243
|
|
|
3,021
|
|
||
Other
|
37,545
|
|
|
29,303
|
|
||
Total accrued expenses
|
$
|
186,502
|
|
|
$
|
175,567
|
|
|
September 30, 2017
|
|
June 30, 2017
|
||||
Contingent earn-out liability
|
$
|
46,316
|
|
|
$
|
44,049
|
|
Current portion of lease financing obligation
|
12,569
|
|
|
12,569
|
|
||
Short-term derivative liabilities
|
13,078
|
|
|
7,243
|
|
||
Current portion of capital lease obligations
|
11,471
|
|
|
11,573
|
|
||
Mandatorily redeemable noncontrolling interest (1)
|
905
|
|
|
901
|
|
||
Other
|
2,659
|
|
|
2,100
|
|
||
Total other current liabilities
|
$
|
86,998
|
|
|
$
|
78,435
|
|
|
September 30, 2017
|
|
June 30, 2017
|
||||
Long-term derivative liabilities
|
$
|
47,199
|
|
|
$
|
31,936
|
|
Long-term capital lease obligations
|
25,712
|
|
|
28,306
|
|
||
Mandatorily redeemable noncontrolling interest (1)
|
2,469
|
|
|
2,456
|
|
||
Other (2)
|
33,227
|
|
|
31,985
|
|
||
Total other liabilities
|
$
|
108,607
|
|
|
$
|
94,683
|
|
|
September 30, 2017
|
|
June 30, 2017
|
||||
Senior secured credit facility
|
$
|
546,043
|
|
|
$
|
600,037
|
|
7.0% Senior unsecured notes due 2022
|
275,000
|
|
|
275,000
|
|
||
Other
|
8,246
|
|
|
7,541
|
|
||
Debt issuance costs and debt discounts (1)
|
(8,488
|
)
|
|
(5,922
|
)
|
||
Total debt outstanding, net
|
820,801
|
|
|
876,656
|
|
||
Less short-term debt (2)
|
19,941
|
|
|
28,926
|
|
||
Long-term debt
|
$
|
800,860
|
|
|
$
|
847,730
|
|
•
|
Revolving loans of
$745,000
with a maturity date of July 13, 2022
|
•
|
Term loan of
$296,250
amortizing over the loan period, with a final maturity date of July 13, 2022.
|
|
|
Redeemable noncontrolling interests
|
|
Noncontrolling interest
|
||||
Balance as of June 30, 2017
|
|
$
|
45,412
|
|
|
$
|
213
|
|
Net income (loss) attributable to noncontrolling interest
|
|
(2
|
)
|
|
45
|
|
||
Proceeds from sale of noncontrolling interest
|
|
35,390
|
|
|
—
|
|
||
Foreign currency translation
|
|
3,041
|
|
|
—
|
|
||
Balance as of September 30, 2017
|
|
$
|
83,841
|
|
|
$
|
258
|
|
•
|
Vistaprint -
Includes the operations of our Vistaprint-branded websites focused on the North America, Europe, Australia and New Zealand markets, and our Webs-branded business, which is managed with the Vistaprint-branded digital business in the previously listed geographies.
|
•
|
Upload and Print -
Includes the results of our druck.at, Easyflyer, Exagroup, Pixartprinting, Printdeal, Tradeprint, and WIRmachenDRUCK branded businesses.
|
•
|
National Pen
- Includes the global operations of our National Pen branded businesses, which manufacture and market custom writing instruments and promotional products, apparel and gifts.
|
•
|
All Other Businesses -
Includes the operations of our Most of World and Corporate Solutions businesses. Our Most of World businesses are focused on our emerging market portfolio, including operations in Brazil, China, India and Japan. These businesses have been combined into one reportable segment based on materiality. Our All Other Businesses also includes Albumprinter results through the divestiture date of August 31, 2017.
|
|
Three Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
Revenue:
|
|
|
|
||||
Vistaprint (1)
|
$
|
319,043
|
|
|
$
|
286,535
|
|
Upload and Print (2)
|
160,390
|
|
|
131,957
|
|
||
National Pen (3)
|
59,717
|
|
|
—
|
|
||
All Other Businesses (4)
|
28,054
|
|
|
26,334
|
|
||
Total segment revenue
|
567,204
|
|
|
444,826
|
|
||
Inter-segment eliminations
|
(3,920
|
)
|
|
(1,113
|
)
|
||
Total consolidated revenue
|
$
|
563,284
|
|
|
$
|
443,713
|
|
|
Three Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
Segment profit (loss):
|
|
|
|
||||
Vistaprint
|
$
|
30,895
|
|
|
$
|
25,272
|
|
Upload and Print
|
14,768
|
|
|
13,451
|
|
||
National Pen
|
1,185
|
|
|
—
|
|
||
All Other Businesses
|
(7,551
|
)
|
|
(9,752
|
)
|
||
Total segment profit
|
39,297
|
|
|
28,971
|
|
||
Central and corporate costs
|
(28,257
|
)
|
|
(28,186
|
)
|
||
Acquisition-related amortization and depreciation
|
(12,687
|
)
|
|
(10,213
|
)
|
||
Earn-out related charges (1)
|
(1,137
|
)
|
|
(16,247
|
)
|
||
Share-based compensation related to investment consideration
|
(40
|
)
|
|
(4,103
|
)
|
||
Restructuring related charges
|
(854
|
)
|
|
—
|
|
||
Interest expense for Waltham lease
|
1,911
|
|
|
1,970
|
|
||
Gain on the purchase or sale of subsidiaries (2)
|
48,380
|
|
|
—
|
|
||
Total income (loss) from operations
|
46,613
|
|
|
(27,808
|
)
|
||
Other expense, net
|
(16,312
|
)
|
|
(2,132
|
)
|
||
Interest expense, net
|
(13,082
|
)
|
|
(9,904
|
)
|
||
Income (loss) before income taxes
|
$
|
17,219
|
|
|
$
|
(39,844
|
)
|
|
Three Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
Depreciation and amortization:
|
|
|
|
||||
Vistaprint
|
$
|
16,774
|
|
|
$
|
14,771
|
|
Upload and Print
|
14,720
|
|
|
14,465
|
|
||
National Pen
|
5,095
|
|
|
—
|
|
||
All Other Businesses
|
2,287
|
|
|
3,604
|
|
||
Central and corporate costs
|
3,508
|
|
|
2,565
|
|
||
Total depreciation and amortization
|
$
|
42,384
|
|
|
$
|
35,405
|
|
|
Three Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
Purchases of property, plant and equipment:
|
|
|
|
||||
Vistaprint
|
$
|
13,664
|
|
|
$
|
11,209
|
|
Upload and Print
|
3,257
|
|
|
4,800
|
|
||
National Pen
|
2,490
|
|
|
—
|
|
||
All Other Businesses
|
671
|
|
|
2,639
|
|
||
Central and corporate costs
|
375
|
|
|
671
|
|
||
Total purchases of property, plant and equipment
|
$
|
20,457
|
|
|
$
|
19,319
|
|
|
Three Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
Capitalization of software and website development costs:
|
|
|
|
||||
Vistaprint
|
$
|
5,573
|
|
|
$
|
3,134
|
|
Upload and Print
|
774
|
|
|
444
|
|
||
National Pen
|
—
|
|
|
—
|
|
||
All Other Businesses
|
968
|
|
|
1,268
|
|
||
Central and corporate costs
|
1,619
|
|
|
3,466
|
|
||
Total capitalization of software and website development costs
|
$
|
8,934
|
|
|
$
|
8,312
|
|
|
Severance and Related Benefits
|
|
Other Restructuring Costs
|
|
Total
|
||||||
Accrued restructuring liability as of June 30, 2017
|
$
|
4,602
|
|
|
$
|
208
|
|
|
$
|
4,810
|
|
Restructuring Charges
|
854
|
|
|
—
|
|
|
854
|
|
|||
Cash payments
|
(3,926
|
)
|
|
(156
|
)
|
|
(4,082
|
)
|
|||
Non-cash charges (1)
|
(103
|
)
|
|
—
|
|
|
(103
|
)
|
|||
Accrued restructuring liability as of September 30, 2017
|
$
|
1,427
|
|
|
$
|
52
|
|
|
$
|
1,479
|
|
•
|
Reported revenue increased by
27%
to
$563.3 million
.
|
•
|
Consolidated constant-currency revenue increased by
24%
and excluding acquisitions and divestitures completed in the last four quarters increased by
12%
.
|
•
|
Operating income increased
$74.4 million
to
$46.6 million
.
|
•
|
Adjusted net operating profit (a non-GAAP financial measure which were refer to as adjusted NOP) increased from
$2.7 million
to
$10.4 million
.
|
•
|
Cash provided by operating activities increased
$6.8 million
to
$16.4 million
.
|
•
|
Unlevered free cash flow (a non-GAAP financial measure) increased from
$(14.7) million
to
$(6.5) million
.
|
•
|
The sale of our Albumprinter business, which resulted in a
$47.5 million
gain in the current period.
|
•
|
The net decrease in acquisition-related expense of
$16.7 million
, due to the following:
|
◦
|
Earn-out related charges decreased
$15.1 million
, which relates to our WIRmachenDRUCK contingent earn-out out, which we adjusted in fiscal 2017 to increase the fair value to the maximum potential payout.
|
◦
|
Acquisition-related share based compensation decreased
$4.1 million
, due to a one-time modification expense related to our Tradeprint acquisition during the prior period.
|
◦
|
These decreases were partially offset by an increase in amortization of acquired intangible assets of
$2.5 million
, due to our fiscal 2017 acquisition of National Pen.
|
In thousands
|
Three Months Ended September 30,
|
|
|
|
Currency
Impact: |
|
Constant-
Currency |
|
Impact of Acquisitions/ Divestitures:
|
|
Constant- Currency revenue growth
|
||||||
|
2017
|
|
2016
|
|
%
Change |
|
(Favorable)/Unfavorable
|
|
Revenue Growth (1)
|
|
(Favorable)/Unfavorable
|
|
Excluding acquisitions/ divestitures (2)
|
||||
Vistaprint
|
$
|
319,043
|
|
|
$
|
286,535
|
|
|
11%
|
|
(1)%
|
|
10%
|
|
—%
|
|
10%
|
Upload and Print
|
160,390
|
|
|
131,957
|
|
|
22%
|
|
(6)%
|
|
16%
|
|
—%
|
|
16%
|
||
National Pen
|
59,717
|
|
|
—
|
|
|
100%
|
|
—%
|
|
100%
|
|
(100)%
|
|
—%
|
||
All Other Businesses (3)
|
28,054
|
|
|
26,334
|
|
|
7%
|
|
(2)%
|
|
5%
|
|
35%
|
|
40%
|
||
Inter-segment eliminations
|
(3,920
|
)
|
|
(1,113
|
)
|
|
|
|
|
|
|
|
|
|
|
||
Total revenue
|
$
|
563,284
|
|
|
$
|
443,713
|
|
|
27%
|
|
(3)%
|
|
24%
|
|
(12)%
|
|
12%
|
|
Three Months Ended September 30,
|
|
|
|||||||
|
2017
|
|
2016
|
|
2017 vs. 2016
|
|||||
Technology and development expense
|
$
|
62,103
|
|
|
$
|
59,010
|
|
|
5
|
%
|
% of revenue
|
11.0
|
%
|
|
13.3
|
%
|
|
|
|||
Marketing and selling expense
|
$
|
166,093
|
|
|
$
|
132,668
|
|
|
25
|
%
|
% of revenue
|
29.5
|
%
|
|
29.9
|
%
|
|
|
|||
General and administrative expense
|
$
|
38,778
|
|
|
$
|
56,580
|
|
|
(31
|
)%
|
% of revenue
|
6.9
|
%
|
|
12.8
|
%
|
|
|
|
||
Amortization of acquired intangible assets
|
$
|
12,633
|
|
|
$
|
10,213
|
|
|
24
|
%
|
% of revenue
|
2.2
|
%
|
|
2.3
|
%
|
|
|
|
||
Restructuring expense
|
$
|
854
|
|
|
$
|
—
|
|
|
100
|
%
|
% of revenue
|
0.2
|
%
|
|
—
|
%
|
|
|
|
||
(Gain) on sale of subsidiaries
|
$
|
(47,545
|
)
|
|
$
|
—
|
|
|
(100
|
)%
|
% of revenue
|
(8.4
|
)%
|
|
—
|
%
|
|
|
|
|
Three Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
(Losses) gains on derivatives not designated as hedging instruments
|
$
|
(8,250
|
)
|
|
$
|
77
|
|
Currency-related losses, net
|
(8,202
|
)
|
|
(2,966
|
)
|
||
Other gains
|
140
|
|
|
757
|
|
||
Total other expense, net
|
$
|
(16,312
|
)
|
|
$
|
(2,132
|
)
|
|
Three Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
Income tax (benefit) expense
|
$
|
(6,187
|
)
|
|
$
|
(9,814
|
)
|
Effective tax rate
|
(35.9
|
)%
|
|
24.6
|
%
|
|
Three Months Ended September 30,
|
|||||||||
|
2017
|
|
2016
|
|
2017 vs. 2016
|
|||||
Reported Revenue
|
$
|
319,043
|
|
|
$
|
286,535
|
|
|
11
|
%
|
Segment Profit
|
30,895
|
|
|
25,272
|
|
|
22
|
%
|
||
% of revenue
|
10
|
%
|
|
9
|
%
|
|
|
|
Three Months Ended September 30,
|
|||||||||
|
2017
|
|
2016
|
|
2017 vs. 2016
|
|||||
Reported Revenue
|
$
|
160,390
|
|
|
$
|
131,957
|
|
|
22
|
%
|
Segment Profit
|
14,768
|
|
|
13,451
|
|
|
10
|
%
|
||
% of revenue
|
9
|
%
|
|
10
|
%
|
|
|
|
Three Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
|
2017 vs. 2016
|
||
Reported Revenue
|
$
|
59,717
|
|
|
n/a
|
|
n/a
|
Segment Profit
|
1,185
|
|
|
n/a
|
|
n/a
|
|
% of revenue
|
2
|
%
|
|
n/a
|
|
|
|
Three Months Ended September 30,
|
|||||||||
|
2017
|
|
2016
|
|
2017 vs. 2016
|
|||||
Reported Revenue
|
$
|
28,054
|
|
|
$
|
26,334
|
|
|
7
|
%
|
Segment Loss
|
(7,551
|
)
|
|
(9,752
|
)
|
|
23
|
%
|
||
% of revenue
|
(27
|
)%
|
|
(37
|
)%
|
|
|
|
Three Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
Net cash provided by operating activities
|
$
|
16,379
|
|
|
$
|
9,600
|
|
Net cash provided by (used in) investing activities
|
62,298
|
|
|
(27,452
|
)
|
||
Net cash used in financing activities
|
(75,459
|
)
|
|
(6,550
|
)
|
•
|
Net income of
$23.4 million
|
•
|
Adjustments for non-cash items of
$0.5 million
primarily related to negative adjustments for our gain on the sale of our Albumprinter business of
$47.5 million
and non-cash tax related items of
$16.6 million
, partially offset by positive adjustments for depreciation and amortization of
$42.4 million
, unrealized currency-related gains of
$14.5 million
, share-based compensation costs of
$6.9 million
and the change of our contingent earn-out liability of
$0.8 million
|
•
|
Proceeds from the sale of our Albumprinter business of
$93.8 million
, net of transaction costs
|
•
|
Proceeds from the sale of noncontrolling interest, related to our WIRmachenDRUCk business of
$35.4 million
|
•
|
Proceeds from the issuance of ordinary shares from the exercise of share options of
$6.1 million
|
•
|
Payments of debt and debt issuance costs of
$58.4 million
, net of proceeds
|
•
|
Purchases of our ordinary shares of
$40.7 million
|
•
|
Capital expenditures of
$20.5 million
of which
$4.6 million
were related to the purchase of manufacturing and automation equipment for our production facilities,
$1.9 million
were related to the purchase of land, facilities and leasehold improvements, and
$14.0 million
were related to computer and office equipment
|
•
|
Issuance of loans of
$12.0 million
to two equity holders of our Printi business (refer to Note 11 for additional details)
|
•
|
Internal costs for software and website development that we have capitalized of
$8.9 million
|
•
|
Changes in working capital balances of
$7.5 million
primarily driven by seasonality trends in our National Pen business which results in increases in accounts receivable and inventory during the first quarter, partially offset by increases in accrued expense and other liabilities amongst several of our businesses
|
•
|
Payments for capital lease arrangements of
$4.7 million
|
•
|
Payments of withholding taxes in connection with share awards of
$1.2 million
|
|
September 30, 2017
|
||
Maximum aggregate available for borrowing
|
$
|
1,041,250
|
|
Outstanding borrowings of senior secured credit facilities
|
(546,043
|
)
|
|
Remaining amount
|
495,207
|
|
|
Limitations to borrowing due to debt covenants and other obligations (1)
|
(232,795
|
)
|
|
Amount available for borrowing as of September 30, 2017 (2)
|
$
|
262,412
|
|
•
|
our total leverage ratio, which is the ratio of our consolidated total indebtedness (*) to our TTM consolidated EBITDA (*), will not exceed 4.50 to 1.00, except that we may, on no more than three occasions during the term of the Credit Agreement, increase our leverage ratio to up to 4.75 for up to four consecutive fiscal quarters after a corporate acquisition that meets certain criteria.
|
•
|
our senior secured leverage ratio, which is the ratio of our consolidated senior secured indebtedness (*) to our TTM consolidated EBITDA (*), will not exceed 3.25 to 1.00, except that we may, on no more than three occasions during the term of the Credit Agreement, increase our senior leverage ratio to up to 3.50 for up to four consecutive fiscal quarters after a corporate acquisition that meets certain criteria.
|
•
|
our interest coverage ratio, which is the ratio of our consolidated EBITDA to our consolidated interest expense, will be at least 3.00 to 1.00.
|
•
|
Organic investments will continue to be made across a wide spectrum of activities. These range from large, discrete projects that we believe can provide us with materially important competitive capabilities and/or market positions over the longer term to smaller investments intended to maintain or improve our competitive position and support value-creating revenue growth.
|
•
|
Purchases of ordinary shares
|
•
|
Corporate acquisitions and similar investments
|
•
|
Reduction of debt
|
In thousands
|
Payments Due by Period
|
||||||||||||||||||
|
Total
|
|
Less
than 1
year
|
|
1-3
years
|
|
3-5
years
|
|
More
than 5
years
|
||||||||||
Operating leases, net of subleases
|
$
|
57,228
|
|
|
$
|
18,019
|
|
|
$
|
27,660
|
|
|
$
|
9,748
|
|
|
$
|
1,801
|
|
Build-to-suit lease
|
105,583
|
|
|
12,569
|
|
|
25,138
|
|
|
24,693
|
|
|
43,183
|
|
|||||
Purchase commitments
|
83,919
|
|
|
59,432
|
|
|
24,487
|
|
|
—
|
|
|
—
|
|
|||||
Senior unsecured notes and interest payments
|
371,250
|
|
|
19,250
|
|
|
38,500
|
|
|
313,500
|
|
|
—
|
|
|||||
Other debt and interest payments
|
648,266
|
|
|
39,930
|
|
|
98,339
|
|
|
506,050
|
|
|
3,947
|
|
|||||
Capital leases
|
38,853
|
|
|
13,675
|
|
|
17,303
|
|
|
4,892
|
|
|
2,983
|
|
|||||
Other
|
56,563
|
|
|
50,259
|
|
|
5,650
|
|
|
654
|
|
|
—
|
|
|||||
Total (1)
|
$
|
1,361,662
|
|
|
$
|
213,134
|
|
|
$
|
237,077
|
|
|
$
|
859,537
|
|
|
$
|
51,914
|
|
•
|
Earn-out liability related to the WIRmachenDRUCK acquisition of
$46.3 million
, payable in January 2018.
|
•
|
Deferred payments related to our other acquisitions of
$4.6 million
, in aggregate.
|
•
|
Installment obligation of
$5.7 million
related to the fiscal 2012 intra-entity transfer of the intellectual property of our subsidiary Webs, Inc., which resulted in tax being paid over a 7.5 year term and has been classified as a deferred tax liability in our consolidated balance sheet as of
September 30, 2017
.
|
|
Three Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
GAAP operating income (loss)
|
$
|
46,613
|
|
|
$
|
(27,808
|
)
|
Exclude expense (benefit) impact of:
|
|
|
|
|
|||
Acquisition-related amortization and depreciation
|
12,687
|
|
|
10,213
|
|
||
Earn-out related charges (1)
|
1,137
|
|
|
16,247
|
|
||
Share-based compensation related to investment consideration
|
40
|
|
|
4,103
|
|
||
Restructuring related charges
|
854
|
|
|
—
|
|
||
Less: Interest expense associated with Waltham lease
|
(1,911
|
)
|
|
(1,970
|
)
|
||
Less: Gains on the purchase or sale of subsidiaries (2)
|
(48,380
|
)
|
|
—
|
|
||
Include: Realized (losses) gains on certain currency derivatives not included in operating income
|
(634
|
)
|
|
1,888
|
|
||
Adjusted Net Operating Profit
|
$
|
10,406
|
|
|
$
|
2,673
|
|
|
Three Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
Net cash provided by operating activities
|
$
|
16,379
|
|
|
$
|
9,600
|
|
Purchases of property, plant and equipment
|
(20,457
|
)
|
|
(19,319
|
)
|
||
Purchases of intangible assets not related to acquisitions
|
(24
|
)
|
|
(26
|
)
|
||
Capitalization of software and website development costs
|
(8,934
|
)
|
|
(8,312
|
)
|
||
Free cash flow
|
(13,036
|
)
|
|
(18,057
|
)
|
||
Plus: cash paid during the period for interest
|
8,430
|
|
|
5,362
|
|
||
Less: interest expense for Waltham lease
|
(1,911
|
)
|
|
(1,970
|
)
|
||
Unlevered free cash flow
|
$
|
(6,517
|
)
|
|
$
|
(14,665
|
)
|
•
|
Translation of our non-U.S. dollar revenues and expenses:
Revenue and related expenses generated in currencies other than the U.S. dollar could result in higher or lower net income (loss) when, upon consolidation, those transactions are translated to U.S. dollars. When the value or timing of revenue and expenses in a given currency are materially different, we may be exposed to significant impacts on our net income (loss) and non-GAAP financial metrics, such as EBITDA.
|
•
|
Translation of our non-U.S. dollar assets and liabilities
: Each of our subsidiaries translates its assets and liabilities to U.S. dollars at current rates of exchange in effect at the balance sheet date. The resulting gains and losses from translation are included as a component of accumulated other comprehensive income (loss) on the consolidated balance sheet. Fluctuations in exchange rates can materially impact the carrying value of our assets and liabilities.
|
•
|
Remeasurement of monetary assets and liabilities:
Transaction gains and losses generated from remeasurement of monetary assets and liabilities denominated in currencies other than the functional currency of a subsidiary are included in other expense, net on the consolidated statements of operations. Certain of our subsidiaries hold intercompany loans denominated in a currency other than their functional currency. Due to the significance of these balances, the revaluation of intercompany loans can have a material impact on other expense, net. We expect these impacts may be volatile in the future, although our largest intercompany loans do not have a U.S. dollar cash impact for the consolidated group because they are either 1) U.S. dollar loans or 2) we elect to hedge certain non-U.S. dollar loans with cross currency
|
•
|
our failure to adequately execute our strategy or anticipate and overcome obstacles to achieving our strategic goals;
|
•
|
our failure to develop our mass customization platform or the failure of the platform to drive the efficiencies and competitive advantage we expect;
|
•
|
our failure to manage the growth, complexity, and pace of change of our business and expand our operations;
|
•
|
our failure to acquire, at a value-accretive price or at all, businesses that enhance the growth and development of our business or to effectively integrate the businesses we do acquire into our business;
|
•
|
our inability to purchase or develop technologies and other key assets and capabilities to increase our efficiency, enhance our competitive advantage, and scale our operations;
|
•
|
our failure to realize the anticipated benefits of the decentralization of our operations;
|
•
|
the failure of our current supply chain to provide the resources we need at the standards we require and our inability to develop new or enhanced supply chains;
|
•
|
our failure to acquire new customers and enter new markets, retain our current customers, and sell more products to current and new customers;
|
•
|
our failure to address inefficiencies and performance issues in some of our businesses and markets;
|
•
|
our failure to sustain growth in relatively mature markets;
|
•
|
our failure to promote, strengthen, and protect our brands;
|
•
|
our failure to effectively manage competition and overlap within our brand portfolio;
|
•
|
the failure of our current and new marketing channels to attract customers;
|
•
|
our failure to realize expected returns on our capital allocation decisions;
|
•
|
unanticipated changes in our business, current and anticipated markets, industry, or competitive landscape;
|
•
|
our failure to attract and retain skilled talent needed to execute our strategy and sustain our growth; and
|
•
|
general economic conditions.
|
•
|
concerns about buying customized products without face-to-face interaction with design or sales personnel;
|
•
|
the inability to physically handle and examine product samples before making a purchase;
|
•
|
delivery time associated with Internet orders;
|
•
|
concerns about the security of online transactions and the privacy of personal information;
|
•
|
delayed or lost shipments or shipments of incorrect or damaged products;
|
•
|
limited access to the Internet; and
|
•
|
the inconvenience associated with returning or exchanging purchased items.
|
•
|
investments in our business in the current period intended to generate longer-term returns, where the shorter-term costs will not be offset by revenue or cost savings until future periods, if at all;
|
•
|
seasonality-driven or other variations in the demand for our products and services, in particular during our second fiscal quarter;
|
•
|
currency and interest rate fluctuations, which affect our revenues, costs, and fair value of our assets and liabilities;
|
•
|
our hedging activity;
|
•
|
our ability to attract visitors to our websites and convert those visitors into customers;
|
•
|
our ability to retain customers and generate repeat purchases;
|
•
|
shifts in revenue mix toward less profitable products and brands;
|
•
|
the commencement or termination of agreements with our strategic partners, suppliers, and others;
|
•
|
our ability to manage our production, fulfillment, and support operations;
|
•
|
costs to produce and deliver our products and provide our services, including the effects of inflation;
|
•
|
our pricing and marketing strategies and those of our competitors;
|
•
|
expenses and charges related to our compensation arrangements with our executives and employees, including expenses and charges relating to the long-term incentive compensation program we launched at the beginning of fiscal year 2017;
|
•
|
costs and charges resulting from litigation;
|
•
|
significant increases in credits, beyond our estimated allowances, for customers who are not satisfied with our products;
|
•
|
changes in our income tax rate;
|
•
|
costs to acquire businesses or integrate our acquired businesses;
|
•
|
financing costs;
|
•
|
impairments of our tangible and intangible assets including goodwill; and
|
•
|
the results of our minority investments and joint ventures.
|
•
|
difficulty managing operations in, and communications among, multiple businesses, locations, and time zones;
|
•
|
difficulty complying with multiple tax laws, treaties, and regulations and limiting our exposure to onerous or unanticipated taxes, duties, and other costs;
|
•
|
our failure to improve and adapt our financial and operational controls to manage our decentralized business and comply with our legal obligations;
|
•
|
local regulations that may restrict or impair our ability to conduct our business as planned;
|
•
|
protectionist laws and business practices that favor local producers and service providers;
|
•
|
our inexperience in marketing and selling our products and services within unfamiliar countries and cultures;
|
•
|
challenges of working with local business partners;
|
•
|
our failure to properly understand and develop graphic design content and product formats and attributes appropriate for local tastes;
|
•
|
disruptions caused by political and social instability that may occur in some countries;
|
•
|
corrupt business practices, such as bribery or the willful infringement of intellectual property rights, that may be common in some countries or in some sales channels and markets;
|
•
|
difficulty expatriating cash from some countries;
|
•
|
difficulty importing and exporting our products across country borders and difficulty complying with customs regulations in the many countries where we sell products;
|
•
|
disruptions or cessation of important components of our international supply chain;
|
•
|
the challenge of complying with disparate laws in multiple countries;
|
•
|
restrictions imposed by local labor practices and laws on our business and operations; and
|
•
|
failure of local laws to provide a sufficient degree of protection against infringement of our intellectual property.
|
•
|
The business we acquired or invested in may not perform as well as we expected.
|
•
|
We may overpay for acquired businesses, which can, among other things, negatively affect our intrinsic value per share.
|
•
|
We may fail to integrate acquired businesses, technologies, services, or internal systems effectively, or the integration may be more expensive or take more time than we anticipated.
|
•
|
The management of our minority investments and joint ventures may be more expensive or may take more resources than we expected.
|
•
|
We may not realize the anticipated benefits of integrating acquired businesses into our mass customization platform.
|
•
|
We may encounter unexpected cultural or language challenges in integrating an acquired business or managing our minority investment in a business.
|
•
|
We may not be able to retain customers and key employees of the acquired businesses, and we and the businesses we acquire or invest in may not be able to cross sell products and services to each other's customers.
|
•
|
fire, natural disasters, or extreme weather
|
•
|
labor strike, work stoppage, or other issues with our workforce
|
•
|
political instability or acts of terrorism or war
|
•
|
power loss or telecommunication failure
|
•
|
attacks on our external websites or internal network by hackers or other malicious parties
|
•
|
undetected errors or design faults in our technology, infrastructure, and processes that may cause our websites to fail
|
•
|
inadequate capacity in our systems and infrastructure to cope with periods of high volume and demand
|
•
|
human error, including poor managerial judgment or oversight
|
•
|
traditional offline suppliers and graphic design providers;
|
•
|
online printing and graphic design companies, many of which provide products and services similar to ours;
|
•
|
office superstores, drug store chains, food retailers, and other major retailers targeting small business and consumer markets;
|
•
|
wholesale printers;
|
•
|
self-service desktop design and publishing using personal computer software;
|
•
|
email marketing services companies;
|
•
|
website design and hosting companies;
|
•
|
suppliers of customized apparel, promotional products and gifts;
|
•
|
online photo product companies;
|
•
|
Internet retailers;
|
•
|
online providers of custom printing services that outsource production to third party printers; and
|
•
|
providers of digital marketing such as social media and local search directories.
|
•
|
damage our reputation and brands;
|
•
|
expose us to losses, litigation, enforcement actions, and possible liability;
|
•
|
result in a failure to comply with legal and industry privacy regulations and standards;
|
•
|
lead to the misuse of our and our customers' confidential or personal information; or
|
•
|
cause interruptions in our operations.
|
•
|
incur additional indebtedness, guarantee indebtedness, and incur liens;
|
•
|
pay dividends or make other distributions or repurchase or redeem capital stock;
|
•
|
prepay, redeem, or repurchase certain subordinated debt;
|
•
|
issue certain preferred stock or similar redeemable equity securities;
|
•
|
make loans and investments;
|
•
|
sell assets;
|
•
|
enter into transactions with affiliates;
|
•
|
alter the businesses we conduct;
|
•
|
enter into agreements restricting our subsidiaries’ ability to pay dividends; and
|
•
|
consolidate, merge, or sell all or substantially all of our assets.
|
•
|
Our lenders could declare all outstanding principal and interest to be due and payable, and we and our subsidiaries may not have sufficient assets to repay that indebtedness.
|
•
|
Our secured lenders could foreclose against the assets securing their borrowings.
|
•
|
Our lenders under the credit facility could terminate all commitments to extend further credit under that facility.
|
•
|
We could be forced into bankruptcy or liquidation.
|
•
|
making it more difficult for us to satisfy our obligations with respect to our debt;
|
•
|
limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions, or other general corporate requirements;
|
•
|
requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, acquisitions, and other general corporate purposes;
|
•
|
increasing our vulnerability to general adverse economic and industry conditions;
|
•
|
exposing us to the risk of increased interest rates as some of our borrowings, including borrowings under our credit facility, are at variable rates of interest;
|
•
|
limiting our flexibility in planning for and reacting to changes in the industry and marketplaces in which we compete;
|
•
|
placing us at a disadvantage compared to other, less leveraged competitors; and
|
•
|
increasing our cost of borrowing.
|
|
Total Number of Shares Purchased
|
|
Average Price Paid Per Share (1)
|
|
Total Number of Shares Purchased as Part of a Publicly Announced Program
|
|
Approximate Number of Shares that May Yet be Purchased Under the Program
|
|||||
July 1, 2017 through July 31, 2017
|
56,454
|
|
|
$
|
88.43
|
|
|
56,454
|
|
|
6,243,546
|
|
August 1, 2017 through August 31, 2017
|
316,577
|
|
|
89.12
|
|
|
373,031
|
|
|
5,926,969
|
|
|
September 1, 2017 through September 30, 2017
|
79,789
|
|
|
93.62
|
|
|
452,820
|
|
|
5,847,180
|
|
|
Total
|
452,820
|
|
|
$
|
89.82
|
|
|
452,820
|
|
|
5,847,180
|
|
Exhibit
|
|
|
No.
|
|
Description
|
10.1
*
|
|
Form of Supplemental Performance Share Unit Agreement for employees and executives under our 2016 Performance Equity Plan
|
10.2
*
|
|
Amendment No. 8 to Employment Agreement between Cimpress USA Incorporated and Robert Keane dated September 30, 2017
|
|
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Rule 13a-14(a)/15d-14(a), by Chief Executive Officer
|
|
|
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Rule 13a-14(a)/15d-14(a), by Chief Financial Officer
|
|
|
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Chief Executive Officer and Chief Financial Officer
|
|
101
|
|
The following materials from this Quarterly Report on Form 10-Q, formatted in Extensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Cash Flows, and (iv) Notes to Condensed Consolidated Financial Statements.
|
|
|
*Management contract or compensatory plan or arrangement
|
|
By:
|
/s/ Sean E. Quinn
|
|
|
Sean E. Quinn
|
|
|
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
CAGR
as of the Measurement Date |
Multiplier to the number of PSUs subject to the Award
|
11 to 11.99%
|
125.0%
|
12 to 12.99%
|
137.5%
|
13 to 13.99%
|
150.0%
|
14 to 14.99%
|
162.5%
|
15 to 15.99%
|
175.0%
|
16 to 16.99%
|
187.5%
|
17 to 17.99%
|
200.0%
|
18 to 18.99%
|
212.5%
|
19 to 19.99%
|
225.0%
|
20% to 25.8925%
|
250.0%
|
25.8925% or above
|
Variable Cap (as defined below)
|
•
|
$70 Baseline 3YMA
|
•
|
27% Measurement Date CAGR
|
•
|
Year 6 - Measurement Period
|
Title:
|
Chief Financial Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Cimpress N.V.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Robert S. Keane
|
|
|
Robert S. Keane
|
|
|
Chief Executive Officer
|
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Cimpress N.V.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Sean E. Quinn
|
|
|
Sean E. Quinn
|
|
|
Chief Financial Officer
|
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
November 3, 2017
|
|
/s/ Robert S. Keane
|
|
|
|
|
Robert S. Keane
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
|
|
Date:
|
November 3, 2017
|
|
/s/ Sean E. Quinn
|
|
|
|
|
Sean E. Quinn
|
|
|
|
|
Chief Financial Officer
|
|