Vistaprint 2015 Annual Report Download - page 79

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do not believe that the Waltham lease will meet the criteria for "sale-leaseback" treatment. We will finalize our
assessment once the construction is completed in the first quarter of fiscal 2016 and accordingly depreciate the
asset and incur interest expense related to the financing obligation recorded on our consolidated balance sheet.
Although we will not begin making cash lease payments until the lease commencement date, a portion of the
Waltham lease obligation attributable to the land is treated for accounting purposes as an operating lease that
commenced during the second quarter of fiscal 2014. We bifurcated our future lease payments pursuant to the
lease into (i) a portion that is allocated to the building and (ii) a portion that is allocated to the land on which the
building is being constructed, which will be recorded as rental expense during the construction period. We
recognized non-cash rent expense of $1,197 and $875 in our consolidated statements of operations for the land
operating lease during the years ended June 30, 2015 and 2014, respectively.
7. Property, Plant and Equipment, Net
Property, plant and equipment, net consists of the following:
June 30,
Estimated useful lives 2015 2014
Land improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 years $ 2,146 $ 2,382
Building and building improvements . . . . . . . . . . . . . . . . . 10 - 30 years 162,468 144,658
Machinery and production equipment . . . . . . . . . . . . . . . . 4 - 10 years 251,366 229,927
Machinery and production equipment under capital lease 4 - 10 years 27,693 13,513
Computer software and equipment . . . . . . . . . . . . . . . . . . 3 - 5 years 125,520 112,815
Furniture, fixtures and office equipment . . . . . . . . . . . . . . 5 - 7 years 22,957 21,780
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . Shorter of lease term or
expected life of the asset
36,747 28,327
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . 138,582 59,627
767,479 613,029
Less accumulated depreciation, inclusive of assets under
capital lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (331,209) (293,145)
436,270 319,884
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,241 32,337
Property, plant, and equipment, net. . . . . . . . . . . . . . . . . . $ 467,511 $ 352,221
Depreciation expense, inclusive of assets under capital leases, totaled $62,970, $54,060 and $50,602 for
the years ended June 30, 2015, 2014 and 2013, respectively.
8. Business Combinations
Fiscal 2015 Acquisitions
Acquisition of Exagroup SAS
On April 15, 2015, we completed our acquisition of 70% of the shares of Exagroup SAS, a French simplified
joint stock company, for a purchase price of €91,305 ($97,012 based on the exchange rate as of the date of
acquisition), plus an estimated post-closing adjustment of €4,549 ($4,832 based on the exchange rate as of the
date of acquisition) based on Exagroup's working capital and debt to be paid during the first quarter of fiscal 2016.
All shareholders of Exagroup sold the entirety of their Exagroup holdings to us at the closing, with the exception of
Nicolas Dematté and Marise Dematté (the “Remaining Shareholders”), who each retained a 15% ownership interest
in Exagroup. We utilized proceeds from our credit facility to finance the acquisition. The acquisition supports our
strategy of building a software-enabled operational platform that aggregates and optimizes the supply chain and
production of mass customized products such as signage, printing, apparel and promotional products. Exagroup
brings a large variety of high quality products and a sophisticated network of outsourcing partners that we expect,
over time, to significantly expand the breadth and depth of the selection available on our mass customization
platform.
Form 10-K