Goodwill

12 Months Ended

Jun. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Acquired Intangibles

The carrying amount of goodwill by reportable segment as of June 30, 2020 and June 30, 2019 was as follows:



	Vistaprint			PrintBrothers			The Print Group			National Pen			All Other Businesses			Total
Balance as of June 30, 2018	$	146,207		$	127,571		$	201,200		$	34,434		$	11,431		$	520,843
Acquisitions (1)	—			—			2,686			—			212,286			214,972
Impairments (2)	—			—			—			—			(7,503		)	(7,503		)
Adjustments	—			—			—			—			(181		)	(181		)
Effect of currency translation adjustments (3)	(246		)	(3,482		)	(5,523		)	—			—			(9,251		)
Balance as of June 30, 2019	145,961			124,089			198,363			34,434			216,033			718,880
Acquisitions (1)	—			6,879			—			—			—			6,879
Impairments (2)	—			—			(40,391		)	(34,434		)	(26,017		)	(100,842		)
Adjustments (4)	3,919			—			—			—			(3,919		)	—
Effect of currency translation adjustments (3)	966			(1,204		)	(2,775		)	—			—			(3,013		)
Balance as of June 30, 2020	$	150,846		$	129,764		$	155,197		$	—		$	186,097		$	621,904

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(1) During the first quarter of fiscal 2020, we recognized goodwill related to an immaterial acquisition within our PrintBrothers reportable segment. In fiscal year 2019 we acquired the BuildASign and VIDA businesses as well as an immaterial supplier of one of our businesses within The Print Group reportable segment.

(2) During the third quarter of fiscal 2020, we identified triggering events in response to the COVID-19 pandemic, resulting in the recognition of impairment to goodwill, please refer below for further detail. Additionally, during the fourth quarter of fiscal 2020, we divested our VIDA business and recognized a loss of $1,520, in addition to the goodwill impairment recognized. In fiscal year 2019 we recorded an impairment charge for the goodwill of our Printi reporting unit. Refer below for additional details.

(3) Related to goodwill held by subsidiaries whose functional currency is not the U.S. dollar.

(4) Due to changes in the composition of our reportable segments during the first quarter of fiscal 2020, we reclassified the goodwill associated with our Vistaprint Corporate Solutions reporting unit from All Other Businesses to our Vistaprint reportable segment. Refer to Note 16 for additional details on the changes in our reportable segments.

Impairment Review

Fiscal 2020 Annual Impairment Test

Our goodwill accounting policy establishes an annual goodwill impairment test date of May 31. As described below, we identified triggering events during the third quarter of fiscal 2020 that required an interim period impairment analysis for all of our reporting units in response to disruptions associated with the COVID-19 pandemic. For our annual impairment assessment, we performed a qualitative test for all eight reporting units with goodwill, which focused on comparing key performance indicators between the pandemic-related financial models used in our quantitative test during the third quarter triggering event assessment, to the actual performance through our annual test date. For each of our reporting units, we are experiencing a better than previously expected recovery when comparing our revenue and EBITDA results for April and May 2020. In addition, we considered our current forecasts for the beginning of fiscal 2021, which again anticipates a better recovery as compared to the third quarter financial models that were used for our third quarter quantitative tests. Lastly, we also considered macroeconomic factors, as well as the headroom between our estimated fair value and carrying value from our third quarter

impairment analysis. We continue to believe that the impacts of the pandemic are temporary, so the better than expected results, combined with an improved near-term outlook were key inputs into our annual impairment analysis, in which we concluded that no impairment exists.

Our goodwill analysis requires significant judgment, including the identification of reporting units and the amount and timing of expected future cash flows. While we believe our assumptions are reasonable, actual results could differ from our projections. There have been no indications of impairment that would require analysis for any of our other reporting units as of June 30, 2020.

COVID-19 Triggering Event

During March 2020, all of our businesses experienced varying levels of decline in revenue due to the disruptions associated with the COVID-19 pandemic. Although we expect the impacts to be temporary, the negative effects of the pandemic on revenue and profitability triggered an assessment of goodwill, as we expected some of our businesses to achieve materially lower financial results than previously expected. A triggering event existed for all ten reporting units with goodwill, which required us to perform an impairment test in the third quarter of fiscal 2020.

As required, prior to performing the quantitative goodwill impairment test during the third quarter, we first evaluated the recoverability of long-lived assets as the change in expected long-term cash flows is indicative of a potential impairment. We performed the recoverability test using undiscounted cash flows for the asset groups of all of our reporting units and concluded that no impairment of long-lived assets existed.

As of our March 31, 2020 test date, seven of our ten reporting units had a significant level of headroom between the estimated fair value and carrying value of the reporting units from our most recent test, and significant headroom remained after considering the deterioration in cash flow due to COVID-19, resulting in no indication of impairment during the third quarter of fiscal 2020. We identified triggering events that extended beyond the near-term impacts of the pandemic for three of our reporting units, which resulted in reductions to the long-term profitability outlooks for our Exaprint, National Pen and VIDA reporting units. The triggering events in these specific reporting units were due to a combination of the near-term disruptions outlined above, along with reductions to the long-term profitability expected from each business, as compared to prior expectations. In light of our decision to exit the VIDA business, which was completed on April 10, 2020, the negotiated sale price was the primary input in our goodwill analysis.

Our March 31, 2020 goodwill impairment test resulted in impairment charges to our Exaprint reporting unit, included within The Print Group reportable segment, the National Pen reporting unit, and our VIDA reporting unit, included within our All Other Business reportable segment. In order to execute the quantitative goodwill impairment test, we compared the fair value of each reporting unit to its carrying value. We used the income approach, specifically the discounted cash flow method, to derive the fair value. This approach calculates fair value by estimating the after-tax cash flows attributable to a reporting unit and then discounting the after-tax cash flows to a present value using a risk-adjusted discount rate. We selected this method as being the most meaningful in preparing our goodwill assessment as we believe the income approach most appropriately measures our income-producing assets. We considered using the market approach but concluded it was not appropriate in valuing these particular reporting units given the lack of relevant market comparisons available. The cash flow projections in the fair value analysis are considered Level 3 inputs, and consist of management's estimates of revenue growth rates and operating margins, taking into consideration historical results, as well as industry and market conditions. The discount rate used in the fair value analysis is based on a weighted average cost of capital (“WACC”), which represents the average rate a business must pay its providers of debt and equity, plus a risk premium. The respective WACC percentages used for each reporting unit within our goodwill impairment test were derived from a group of comparable companies for each respective reporting unit and adjusted for the risk premium associated with each reporting unit.

Based on the goodwill impairment test performed, we recognized the following impairment charges during the third quarter of fiscal 2020:


•	A partial impairment of the goodwill of our Exaprint reporting unit of $40,391, using a WACC of 14.5%, resulting in $23,767 of goodwill that remains after the impairment as of June 30, 2020


•	A full impairment of the goodwill of our National Pen reporting unit of $34,434, using a WACC of 13.0%


•	A full impairment of the goodwill of our VIDA reporting unit of $26,017, based upon our negotiated sale price

Fiscal 2019

During fiscal 2019, we identified triggering events associated with our Printi reporting unit, which indicated that it was more likely than not that the fair value of the reporting unit is below the carrying amount. Printi is the leader in Brazil's online printing industry and has grown quickly since its founding. That said, investment in capacity and other fixed costs was far too high in fiscal year 2019 relative to the scale of the business and the mid-term outlook. As a result, we implemented restructuring activities and aligned future operating plans during the fourth quarter of fiscal 2019 that negatively impacted our cash flow forecasts for this business. Based upon these changes to the business, we determined that it was more likely than not that the fair value of the reporting unity was below the carrying amount. We concluded that the fair value of the reporting unit indicated a full impairment of the Printi goodwill, resulting in an impairment charge of $7,503.

Acquired Intangible Assets



	June 30, 2020							June 30, 2019
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Trade name	$	144,168	$	(45,570	)	$	98,598	$	145,908	$	(35,199	)	$	110,709
Developed technology	84,171		(56,763		)	27,408		84,980		(48,653		)	36,327
Customer relationships	190,329		(123,857		)	66,472		191,719		(97,392		)	94,327
Customer network and other	15,847		(11,696		)	4,151		15,970		(10,150		)	5,820
Print network	24,743		(12,144		)	12,599		25,014		(9,496		)	15,518
Total intangible assets	$	459,258	$	(250,030	)	$	209,228	$	463,591	$	(200,890	)	$	262,701

Acquired intangible assets amortization expense for the years ended June 30, 2020, 2019 and 2018 was $51,786, $53,256 and $49,881, respectively. Estimated intangible assets amortization expense for each of the five succeeding fiscal years and thereafter is as follows:



2021	$	47,583
2022	42,534
2023	34,166
2024	23,935
2025	13,701
Thereafter	47,309
	$	209,228