Goodwill and Other Intangible Assets

12 Months Ended

Feb. 29, 2012

Goodwill and Other Intangible Assets [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

NOTE 9 – GOODWILL AND OTHER INTANGIBLE ASSETS

In accordance with ASC 350, the Corporation is required to evaluate the carrying value of its goodwill for potential impairment on an annual basis or an interim basis if there are indicators of potential impairment. During the fourth quarter of 2012, the Corporation’s market capitalization significantly declined as a result of decreases in its stock price. In connection with the preparation of its annual financial statements, the Corporation concluded the decline in the stock price and market capitalization were indicators of potential impairment which required the performance of an impairment analysis. Based on this analysis, it was determined that the fair values of the North American Social Expression Products segment, which is also the reporting unit, and the Corporation’s reporting unit located in the United Kingdom (the “UK Reporting Unit”) within the International Social Expression Products segment, were less than their carrying values. As a result, the Corporation recorded goodwill impairment charges of $21,254 and $5,900, which include all of the goodwill for the North American Social Expression Products segment and the UK Reporting Unit, respectively.

During 2011, the Corporation completed the required annual impairment test of goodwill as of the end of the third quarter and based on the results of the testing, no impairment charges were recorded.

A summary of the changes in the carrying amount of the Corporation’s goodwill during the years ended February 29, 2012 and February 28, 2011 by segment is as follows:

	North American Social Expression Products			International Social Expression   Products			Total
Balance at February 28, 2010	$	26,474		$	4,632		$	31,106
Adjustment related to income taxes		(2,509	)		–			(2,509	)
Currency translation		–			306			306
Balance at February 28, 2011		23,965			4,938			28,903
Adjustment related to income taxes		(2,711	)		–			(2,711	)
Acquisition		–			1,036			1,036
Impairment		(21,254	)		(5,900	)		(27,154	)
Currency translation		–			(74	)		(74	)
Balance at February 29, 2012	$	–		$	–		$	–

The above adjustment related to income taxes totaling $2,711 and $2,509 for 2012 and 2011, respectively, is a reduction related to second component goodwill, which results in a reduction of goodwill for financial reporting purposes when amortized for tax purposes. At the date of the acquisition of Recycled Paper Greetings, Inc. (“RPG”) during 2009, there were two components of tax-deductible goodwill specifically related to the operations of RPG. The first component of tax-deductible goodwill of approximately $28,170 is related to goodwill for financial reporting purposes, and this asset will generate deferred income taxes in the future as the asset is amortized for income tax purposes. The second component of tax-deductible goodwill of approximately $89,806 is the amount of tax deductible goodwill in excess of goodwill for financial reporting purposes. In accordance with ASC Topic 740, “Income Taxes,” the tax benefits associated with this excess can be applied to first reduce the amount of goodwill, and then other intangible assets for financial reporting purposes in the future, if and when such tax benefits are realized for income tax purposes.

At February 29, 2012 and February 28, 2011, intangible assets, net of accumulated amortization, were $40,279 and $43,049, respectively. The following table presents information about these intangible assets, which are included in “Other assets” on the Consolidated Statement of Financial Position:

	February 29, 2012							February 28, 2011
	Gross Carrying      Amount		Accumulated Amortization			Net Carrying     Amount		Gross Carrying      Amount		Accumulated Amortization			Net Carrying     Amount
Intangible assets with indefinite useful lives:
Tradenames	$	6,200	$	–		$	6,200	$	6,200	$	–		$	6,200
Subtotal		6,200		–			6,200		6,200		–			6,200
Intangible assets with finite useful lives:
Patents		4,953		(3,730	)		1,223		4,616		(3,558	)		1,058
Trademarks		11,702		(9,789	)		1,913		10,901		(9,097	)		1,804
Artist relationships		19,230		(4,824	)		14,406		19,230		(3,201	)		16,029
Customer relationships		25,262		(12,671	)		12,591		24,886		(11,672	)		13,214
Other		19,074		(15,128	)		3,946		18,586		(13,842	)		4,744
Subtotal		80,221		(46,142	)		34,079		78,219		(41,370	)		36,849
Total	$	86,421	$	(46,142	)	$	40,279	$	84,419	$	(41,370	)	$	43,049

The Corporation completed the required annual impairment test of indefinite-lived intangible assets in the fourth quarter of 2012 and 2011 and based on the results of the testing, no impairment charges were recorded.

Amortization expense for intangible assets totaled $5,015, $4,583 and $5,533 in 2012, 2011 and 2010, respectively. Estimated annual amortization expense for the next five years will approximate $4,999 in 2013, $4,335 in 2014, $3,462 in 2015, $3,186 in 2016 and $2,695 in 2017.