Goodwill and Other Intangible Assets

9 Months Ended

Nov. 30, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

5. Goodwill and Other Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of net assets of acquired businesses and is not amortized. Goodwill and indefinite-lived intangibles are evaluated for impairment on an annual basis as of November 30 of each year, or more frequently if impairment indicators arise, using a fair-value-based test that compares the fair value of the asset to its carrying value. Goodwill and other intangible assets are tested for impairment at a reporting unit level, which the Company has determined is at the Print Segment and Apparel Segment level. The impairment test for goodwill uses a two-step approach. Step one compares the fair value of the reporting unit to which goodwill is assigned to its carrying amount. If the carrying amount exceeds its estimated value, a potential impairment is indicated and step two is performed. Step two compares the carrying amount of the reporting unit’s goodwill to its implied fair value. In calculating the implied fair value of reporting unit goodwill, the fair value of the reporting unit is allocated to all of the assets and liabilities, including unrecognized intangible assets of that reporting unit based on their fair values, similar to the allocation that occurs in a business combination. The excess of the fair value of a reporting unit over the amount assigned to its other assets and liabilities is the implied fair value of goodwill. If the carrying value of goodwill exceeds its implied fair value, an impairment charge is recognized in an amount equal to that excess. If the implied fair value of goodwill exceeds the carrying amount, goodwill is not impaired. During the initial preparation of the annual first step impairment analysis, there were indicators that an impairment may exist with respect to the Company’s Apparel Segment. Therefore, the execution of the formal impairment analysis with respect to the Company’s Apparel Segment was accelerated. During the preparation of the impairment analysis on the Apparel Segment it was determined that an estimated impairment charge of $93.3 million was required to the Apparel Segment’s recorded goodwill and trademarks, or approximately 88% of the carrying value of such recorded goodwill and trademarks prior to such impairment charge, to reduce the carrying values of those assets to their estimated fair values. While the impairment analysis process is substantially complete and the impairment expense recorded is based on the best information currently available, the Company will finalize the analysis during the fourth quarter and adjust the estimate if necessary. The impairment charge was primarily driven by the depressed market environment and the resulting impact on the Apparel Segment’s expected future cash flows. The Company must make assumptions regarding estimated future cash flows and other factors to determine the fair value of the respective assets in assessing the recoverability of its goodwill and other intangibles. If these estimates or the related assumptions change, the Company may be required to record additional impairment charges relating to these assets in the future. No impairment indicators were noted during the initial preparation of the first step of the impairment analysis relating to the Print Segment, and therefore the formal impairment analysis for that reporting unit will be completed during the fourth quarter as well.

The cost of intangible assets is based on fair values at the date of acquisition. Intangible assets with determinable lives are amortized on a straight-line basis over their estimated useful life (between 1 and 15 years). Trademarks and trade names with indefinite lives are evaluated for impairment on an annual basis, or more frequently if impairment indicators arise. The Company assesses the recoverability of its definite-lived intangible assets primarily based on its current and anticipated future undiscounted cash flows.

The carrying amount and accumulated amortization of the Company’s intangible assets at each balance sheet date are as follows (in thousands):


As of November 30, 2014	Weighted Average Remaining Life *(in years)*		Gross Carrying Amount		Accumulated Amortization		Net
Amortized intangible assets
Trade names		—	$	1,234	$	1,234	$	—
Customer lists		9.7		71,857		25,993		45,864
Patent		3.2		773		359		414

Total		9.7	$	73,864	$	27,586	$	46,278


As of February 28, 2014
Amortized intangible assets
Trade names		—	$	1,234	$	1,234	$	—
Customer lists		7.1		70,207		21,840		48,367
Patent		4.0		773		263		510

Total		7.1	$	72,214	$	23,337	$	48,877


	November 30, 2014		February 28, 2014
Non-amortizing intangible assets
Trademarks and trade names	$	26,901	$	62,898

Aggregate amortization expense for the nine months ended November 30, 2014 and November 30, 2013 was $4.2 million and $2.8 million, respectively.

The Company’s estimated amortization expense for the next five fiscal years ending in February of the stated calendar year is as follows (in thousands):


2016			5,656
2017			5,656
2018			5,417
2019			4,954
2020			4,548

Changes in the net carrying amount of goodwill as of the dates indicated are as follows (in thousands):


	Print Segment Total		Apparel Segment Total			Total
Balance as of March 1, 2013	$	47,260	$	74,549		$	121,809
Goodwill acquired		12,024		—			12,024
Goodwill impairment		—		(18,626	)		(18,626	)

Balance as of February 28, 2014		59,284		55,923			115,207
Goodwill acquired		957		—			957
Goodwill impairment		—		(55,923	)		(55,923	)

Balance as of November 30, 2014	$	60,241	$	—		$	60,241

During the fiscal year ended February 28, 2014, $12.0 million was added to goodwill related to the acquisition of the Wisco, NIC and Folder Express assets. The adjustment of ($18.6) million reflects an impairment charge related to goodwill recorded in connection with the acquisition of Alstyle Apparel. During the nine months ended November 30, 2014, $12,000 was added to goodwill related to the adjustment of the fair values of certain Wisco assets, $945,000 was added to goodwill related to the acquisition of the Sovereign Business Forms assets, and an adjustment of ($55.9) million reflects an impairment charge related to goodwill recorded in connection with the acquisition of Alstyle Apparel.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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