Goodwill and Other Intangible Assets

12 Months Ended

Feb. 28, 2013

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 impaired all goodwill, recording goodwill impairment charges of $21,254 and $5,900, which included all of the goodwill for the North American Social Expression Products segment and the UK Reporting Unit, respectively.

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


	North American Social Expression Products			International Social Expression Products			Total
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, 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. The remaining balance of that goodwill was impaired for financial reporting purposes in fiscal 2012 as discussed above. As a result, a deferred tax asset was recorded at that time. As the goodwill is amortized for tax purposes in the future, the deferred tax asset will be reversed. 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. The 2013 adjustment for income taxes related to second component goodwill resulted in a reduction of other intangible assets totaling $2,731, which is included within “Accumulated Amortization” in the table below.

At February 28, 2013 and February 29, 2012, intangible assets, net of accumulated amortization, were $53,333 and $40,279, respectively. The following table presents information about these intangible assets, which are included in “Other assets” on the Consolidated Statement of Financial Position:


	February 28, 2013							February 29, 2012
	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
Other		20,451		—			20,451		—		—			—

Subtotal		26,651		—			26,651		6,200		—			6,200
Intangible assets with finite useful lives:
Patents		5,325		(3,927	)		1,398		4,953		(3,730	)		1,223
Trademarks		9,714		(8,158	)		1,556		11,702		(9,789	)		1,913
Artist relationships		19,230		(8,034	)		11,196		19,230		(4,824	)		14,406
Customer relationships		16,725		(6,670	)		10,055		25,262		(12,671	)		12,591
Other		14,806		(12,329	)		2,477		19,074		(15,128	)		3,946

Subtotal		65,800		(39,118	)		26,682		80,221		(46,142	)		34,079

Total	$	92,451	$	(39,118	)	$	53,333	$	86,421	$	(46,142	)	$	40,279

The table above includes intangible assets totaling $20,451 in connection with the acquisition of Clinton Cards in 2013. Categorization of the Clinton Cards intangible assets will be determined upon finalization of the purchase price allocation in 2014; however, based on current information, the Corporation expects this amount to be categorized as tradenames or a combination of tradenames and goodwill, in either case, an asset with an indefinite useful life.

The required annual impairment test of indefinite-lived intangible assets was completed in the fourth quarter of 2013 and 2012 and based on the results of the testing, no impairment charges were recorded.

Amortization expense for intangible assets totaled $5,079, $5,015 and $4,583 in 2013, 2012 and 2011, respectively. Estimated annual amortization expense for the next five years will approximate $4,417 in 2014, $3,576 in 2015, $3,285 in 2016, $2,781 in 2017 and $2,686 in 2018.

- 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.

+ References+ Details