NOTE 4 – GOODWILL AND INTANGIBLE ASSETS

We do not record amortization expense on goodwill or other intangible assets that have indefinite useful lives. Amortization expense is recorded for intangible assets with definite useful lives. We perform an annual impairment review of goodwill and other intangible assets during the first quarter of each fiscal year. We also perform interim testing, if necessary, as required by GAAP. We write down any asset deemed to be impaired to its fair value.

The Company’s traditional impairment test methodology uses primarily estimated future discounted cash flow models (“DCF Models”). The DCF Models use a number of assumptions including expected future cash flows from the assets, volatility, risk free rate, and the expected life of the assets, the determination of which require significant judgments from management. In determining the assumptions to be used, the Company considers the existing rates on Treasury Bills, yield spreads on assets with comparable expected lives, historical volatility of the Company’s common stock and that of comparable companies and general economic and industry trends, among other considerations. When stock market conditions warrant, the Company will expand its traditional impairment test methodology to give weight to

other methods that provide additional observable market information in order to better reflect the current risk level being incorporated into market prices and in order to corroborate the fair values of each of the Company’s reporting units.

Management will use these additional methods in conjunction with its DCF Models in the event that the total market capitalization of its stock drops below its consolidated stockholders’ equity balance for a sustained period of time.

Considerable management judgment is necessary in reaching a conclusion regarding the reasonableness of fair value estimates, evaluating the most likely impact of a range of possible external conditions, considering the resulting operating changes and their impact on estimated future cash flows, determining the appropriate discount factors to use, and selecting and weighting appropriate comparable market level inputs.

Annual Impairment Testing in the First Quarter of Fiscal Years 2013 and 2012 - The Company performed its annual evaluations of goodwill and indefinite-lived intangible assets for impairment during the first quarter of fiscal years 2013 and 2012. As a result of its testing, the Company concluded no impairment charges were required in either fiscal year as the estimated fair value of the indefinite-lived trademarks and licenses, reporting unit net assets and the Company’s estimated enterprise value exceeded their respective carrying values as of the dates of each evaluation.

Impairments in the Fourth Quarter of Fiscal Year 2011 - In the Housewares segment, as a result of continued net sales revenue declines associated with rechargeable lighting products, management performed a reassessment of the category’s long-term earnings prospects and decided to exit the category. As a result, the Company wrote down the carrying value of the associated inventory, and wrote off all related trademark and patent costs. The various adjustments were recorded as a non-cash impairment charge of $0.75 million ($0.70 million after tax). In the Personal Care segment, based upon continued net sales revenue declines and the future market growth prospects for certain professional product trademarks, the Company performed interim impairment testing using a revised outlook for the brands. As a result of its testing, the Company recorded a non-cash impairment charge of $0.91 million ($0.89 million after tax). The charge was related to trademarks, which were written down to fair value, determined on the basis of future discounted cash flows using the relief from royalty valuation method.

Annual Impairment Testing in the First Quarter of Fiscal Year2011 - The Company performed its annual evaluation of goodwill and indefinite-lived intangible assets for impairment during the first quarter of fiscal year 2011. As a result of its testing, the Company recorded a non-cash impairment charge of $0.50 million ($0.49 million after tax). The charge was related to trademarks in our Personal Care segment that were written down to fair value, determined on the basis of future discounted cash flows using the relief from royalty valuation method.

The following tables summarize by operating segment the changes in our goodwill and intangible assets for fiscal years 2013 and 2012:

GOODWILL AND INTANGIBLE ASSETS

(in thousands)

Balances at

Weighted

February 29, 2012

Year Ended February 28, 2013

February 28, 2013

Average

Gross

Cumulative

Acquisition

Gross

Cumulative

Life

Carrying

Goodwill

and Retirement

Carrying

Goodwill

Accumulated

Net Book

Description / Life

(Years)

Amount

Impairments

Additions

Impairments

Adjustments

Amount

Impairments

Amortization

Value

Personal Care:

Goodwill

81,842

(46,490)

81,842

(46,490)

35,352

Trademarks - indefinite

75,303

Trademarks - finite

15.6

150

(72)

Licenses - indefinite

10,300

500

10,800

Licenses - finite

7.2

19,564

(881)

18,683

(15,570)

3,113

Other Intangibles - finite

5.0

49,437

(20,955)

28,482

Total Personal Care

236,596

(46,490)

500

(881)

236,215

(46,490)

(36,597)

153,128

Housewares:

Goodwill

166,131

Trademarks - indefinite

75,200

Other Intangibles - finite

3.7

15,774

278

(443)

15,609

(10,070)

5,539

Total Housewares

257,105

278

(443)

256,940

(10,070)

246,870

Healthcare / Home Environment:

Goodwill

250,867

891

251,758

Trademarks - indefinite

54,000

Licenses - finite

4.0

14,900

400

15,300

(3,455)

11,845

Other Intangibles - finite

8.6

114,790

(300)

114,490

(23,222)

91,268

Total Healthcare / Home Environment

434,557

991

435,548

(26,677)

408,871

Total

928,258

(46,490)

778

(333)

928,703

(46,490)

(73,344)

808,869

GOODWILL AND INTANGIBLE ASSETS

(in thousands)


		Balances at										Balances at
	Weighted	February 28, 2011				Year Ended February 29, 2012						February 29, 2012
	Average	Gross		Cumulative						Acquisition		Gross		Cumulative
	Life	Carrying		Goodwill						and Retirement		Carrying		Goodwill		Accumulated		Net Book
Description / Life	(Years)	Amount		Impairments		Additions		Impairments		Adjustments		Amount		Impairments		Amortization		Value

Personal Care:
Goodwill		$	81,901	$	(46,490)	$	-	$	-	$	(59)	$	81,842	$	(46,490)	$	-	$	35,352
Trademarks - indefinite		75,303		-		-		-		-		75,303		-		-		75,303
Trademarks - finite	16.6	150		-		-		-		-		150		-		(67)		83
Licenses - indefinite		10,300		-		-		-		-		10,300		-		-		10,300
Licenses - finite	7.8	19,564		-		-		-		-		19,564		-		(15,967)		3,597
Other Intangibles - finite	6.0	49,401		-		36		-		-		49,437		-		(15,012)		34,425
Total Personal Care		236,619		(46,490)		36		-		(59)		236,596		(46,490)		(31,046)		159,060

Housewares:
Goodwill		166,131		-		-		-		-		166,131		-		-		166,131
Trademarks - indefinite		75,200		-		-		-		-		75,200		-		-		75,200
Other Intangibles - finite	4.7	19,320		-		338		-		(3,884)		15,774		-		(9,000)		6,774
Total Housewares		260,651		-		338		-		(3,884)		257,105		-		(9,000)		248,105

Healthcare / Home Environment:
Goodwill		154,700		-		86,162		-		10,005		250,867		-		-		250,867
Trademarks - indefinite		-		-		54,000		-		-		54,000		-		-		54,000
Licenses - finite	5.0	-		-		14,900		-		-		14,900		-		(481)		14,419
Other Intangibles - finite	9.6	91,550		-		23,240		-		-		114,790		-		(11,741)		103,049
Total Healthcare / Home Environment		246,250		-		178,302		-		10,005		434,557		-		(12,222)		422,335

Total		$	743,520	$	(46,490)	$	178,676	$	-	$	6,062	$	928,258	$	(46,490)	$	(52,268)	$	829,500

The following table summarizes the amortization expense attributable to intangible assets for the fiscal years 2013, 2012 and 2011, as well as estimated amortization expense for the fiscal years 2014 through 2018:

AMORTIZATION OF INTANGIBLE ASSETS

*(in thousands)*
Aggregate Amortization Expense
For the fiscal years ended

February 2013	$	22,400
February 2012	$	20,069
February 2011	$	9,888

Estimated Amortization Expense
For the fiscal years ended

February 2014	$	21,506
February 2015	$	21,008
February 2016	$	20,825
February 2017	$	20,498
February 2018	$	16,292

Many of the license agreements under which we sell or intend to sell products with trademarks owned by other entities require that we pay minimum royalties and make minimum levels of advertising expenditures. For fiscal year 2014, estimated minimum royalties due and minimum advertising expenditures under these license agreements total $13.45 and $5.97 million, respectively.