Vistaprint 2014 Annual Report Download - page 74

70
Noncontrolling Interest
We entered into a Put and Call Option Agreement with Cap2, with respect to the Cap2 Retained Equity.
Pursuant to the Put and Call Option Agreement, Cap2 has the right to sell to us all (but not less than all) of the Cap2
Retained Equity at the end of Pixartprinting’s fiscal years ending June 30, 2015, 2016 and 2017 for a purchase
price based on Pixartprinting’s EBITDA and net financial position (as reflected in its annual financial statements) for
the fiscal year as to which the put option is exercised. We have the right to buy from Cap2 all (but not less than all)
of the Cap2 Retained Equity at the end of Pixartprinting’s fiscal years ending June 30, 2017 and 2018 for a
purchase price based on Pixartprinting’s EBITDA and net financial position (as reflected in its annual financial
statements) for the fiscal year as to which the call option is exercised. The parties’ put and call rights are also
triggered by certain other events and are exercisable during 30-day periods following the determination of the
option purchase price for the relevant fiscal year. Due to the presence of the put arrangement, the noncontrolling
interest is presented as temporary equity in our consolidated balance sheet. Upon acquisition, we recognized the
noncontrolling interest at fair value of $5,728 and will adjust the balance for the pro rata impact of the Pixartprinting
earnings or loss, as well as adjustments to increase the balance to the redemption value, if necessary.
CEO Retained Equity
We entered into a Put and Call Option Agreement with Mr. Tenderini with respect to the CEO Retained
Equity which will take effect if Mr. Tenderini exercises the purchase right described above. Because this purchase
right is contingent upon Mr. Tenderini's post-acquisition employment, it is not included as part of the consideration
but will be recognized as share-based compensation over the vesting period. The award is considered a liability
award and will be marked to fair value each reporting period. In order to estimate the fair value of the award as of
June 30, 2014, we utilized a lattice model with a Monte Carlo simulation. The total fair value of the award is $1,825
and we have recognized $439 in general and administrative expense as of June 30, 2014. Assuming Mr. Tenderini
exercises this purchase right, then pursuant to the Put and Call Option Agreement, Mr. Tenderini has the right to sell
to us all (but not less than all) of the CEO Retained Equity at the end of Pixartprinting’s fiscal years ending June 30,
2015, 2016 and 2017 for a purchase price based on Pixartprinting’s EBITDA and net financial position (as reflected
in its annual financial statements) for the fiscal year as to which the put option is exercised. We have the right to
buy from Mr. Tenderini all (but not less than all) of the CEO Retained Equity at the end of Pixartprinting’s fiscal
years ending June 30, 2017 and 2018 for a purchase price based on Pixartprinting’s EBITDA and net financial
position (as reflected in its annual financial statements) for the fiscal year as to which the call option is exercised.
The parties’ put and call rights are also triggered by certain other events and are exercisable during 30-day periods
following the determination of the option purchase price for the relevant fiscal year.
The table below details the consideration transferred to acquire Pixartprinting:
Cash paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 175,896
Shareholder loans assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,227
Fair value of contingent consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,953
Total consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 201,076