NOTE 10 – DEFERRED COSTS

In the normal course of its business, the Corporation enters into agreements with certain customers for the supply of greeting cards and related products. The agreements are negotiated individually to meet competitive situations and, therefore, while some aspects of the agreements may be similar, important contractual terms may vary. Under these agreements, the customer may receive a combination of cash payments, credits, discounts, allowances and other incentive considerations to be earned by the customer as product is purchased from the Corporation over the stated term of the agreement or the minimum purchase volume commitment. In the event an agreement is not completed, in most instances, the Corporation has a claim for unearned advances under the agreement. The agreements may or may not specify the Corporation as the sole supplier of social expression products to the customer.

A portion of the total consideration may not be paid by the Corporation at the time the agreement is consummated. All future payment commitments are classified as liabilities at inception until paid. The payments that are expected to be made in the next twelve months are classified as “Other current liabilities” on the Consolidated Statement of Financial Position and the remaining payment commitments beyond the next twelve months are classified as “Other liabilities.” The Corporation maintains an allowance for deferred costs related to supply agreements of $7,900 and $10,000 at February 28, 2013 and February 29, 2012, respectively. This allowance is included in “Other assets” on the Consolidated Statement of Financial Position.

Deferred costs and future payment commitments were as follows:


	February 28, 2013			February 29, 2012
Prepaid expenses and other	$	93,873		$	94,071
Other assets		332,159			395,397

Deferred cost assets		426,032			489,468
Other current liabilities		(61,282	)		(45,891	)
Other liabilities		(92,153	)		(137,360	)

Deferred cost liabilities		(153,435	)		(183,251	)

Net deferred costs	$	272,597		$	306,217

A summary of the changes in the carrying amount of the Corporation’s net deferred costs during the years ended February 28, 2013, February 29, 2012 and February 28, 2011 is as follows:


Balance at February 28, 2010	$	287,965
Payments		83,919
Amortization		(98,181	)
Currency translation		1,543

Balance at February 28, 2011		275,246
Payments		134,247
Amortization		(102,993	)
Currency translation		(283	)

Balance at February 29, 2012		306,217
Payments		82,474
Amortization		(109,543	)
Effective settlement of Clinton Cards contract upon acquisition		(6,192	)
Currency translation		(359	)

Balance at February 28, 2013	$	272,597