Discontinued Operations and Restructuring Charges

3 Months Ended

Jun. 30, 2012

Discontinued Operations and Restructuring Charges [Abstract]

DISCONTINUED OPERATIONS AND RESTRUCTURING CHARGES

(2) DISCONTINUED OPERATIONS AND RESTRUCTURING CHARGES

On May 24, 2011, the Company approved a plan to close its Cleo manufacturing facility located in Memphis, Tennessee. The Company exited the Memphis facility in December 2011. In connection with this restructuring plan which was completed by March 31, 2012, the Company recorded restructuring charges of $6,749,000 during fiscal 2012 primarily related to severance of 433 employees and facility closure costs. Additionally, there was a non-cash reduction of $177,000 related to severance that was less than originally estimated, which was included in restructuring expenses in fiscal 2012. During the quarter ended June 30, 2012, the Company made payments of $425,000 primarily for costs related to severance. Additionally during the first quarter of fiscal 2013, there was a reduction in the restructuring accrual of $29,000 for costs that were less than originally estimated. As of June 30, 2012, the remaining liability of $376,000 was classified in current liabilities of discontinued operations in the accompanying condensed consolidated balance sheet and will be paid through fiscal 2013.

Selected information relating to the aforementioned restructuring follows (in thousands):

	Employee Termination Costs			Facility and Other Costs			Total
Restructuring reserve as of March 31, 2012	$	750		$	80		$	830
Cash paid – fiscal 2013		(400	)		(25	)		(425	)
Non-cash reductions – fiscal 2013		(10	)		(19	)		(29	)
Restructuring reserve as of June 30, 2012	$	340		$	36		$	376

On September 9, 2011, the Company sold the Cleo Christmas gift wrap business and certain Cleo assets to Impact. Impact acquired the Christmas gift wrap portion of Cleo’s business and certain of Cleo’s assets relating to such business, including certain equipment, contract rights, customer lists, intellectual property and other intangible assets. Cleo’s remaining assets, including accounts receivable and inventory, were excluded from the sale. Cleo retained the right and obligation to fulfill all customer orders for Cleo Christmas gift wrap products for Christmas 2011. The purchase price was $7,500,000, of which $2,000,000 was paid to Cleo in cash at closing. The remainder of the purchase price was paid through the issuance by Impact of an unsecured subordinated promissory note, which provides for quarterly payments of interest at 7% and principal payments as follows: $500,000 on March 1, 2012; $2,500,000 on March 1, 2013; and all remaining principal and interest on March 1, 2014. All interest payments to date and the $500,000 principal payment due on March 1, 2012 were paid when due. As of June 30, 2012, $2,500,000 of this note receivable was recorded in other current assets and $2,500,000 of this note receivable was recorded in other long term assets in the accompanying condensed consolidated balance sheet.

The effective tax rates used to determine income tax expense of discontinued operations were based on the statutory tax rates in effect during the respective periods, adjusted for permanent differences related to the assets and liabilities not being transferred to Impact. The effective tax rates used in the calculations for each period were as follows:

Three Months Ended June 30,
2012	2011
35%	35%

As a result of the sale of its Cleo Christmas gift wrap business, the Company has reported these operations, including the operating loss of the business and all exit activities, as discontinued operations, as shown in the following table (in thousands):

	Three Months Ended June 30,
	2012			2011
Operating loss (A)	$	(57	)	$	(3,297	)
Exit costs		0			(3,042	)
Discontinued operations, before income taxes		(57	)		(6,339	)
Income tax benefit		20			2,217
Discontinued operations, net of tax	$	(37	)	$	(4,122	)

(A) During the quarter ended June 30, 2011, the Company recorded a write down of inventory to net realizable value of $2,547,000, which was included in cost of sales of the discontinued operations.

The following table presents the carrying values of the major accounts of discontinued operations that are included in the condensed consolidated balance sheet (in thousands):

	June 30, 2012		March 31, 2012		June 30, 2011
Cash	$	0	$	0	$	548
Accounts receivable, net		21		78		841
Inventories		121		105		19,152
Other current assets		0		0		777
Total current assets	$	142	$	183	$	21,318
Total assets attributable to discontinued operations	$	142	$	183	$	21,318
Customer programs	$	237	$	237	$	250
Restructuring reserve		376		830		3,015
Other current liabilities		368		1,323		3,582
Total current liabilities	$	981	$	2,390	$	6,847
Total liabilities associated with discontinued operations	$	981	$	2,390	$	6,847