BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Sep. 30, 2013

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

Use of Estimates — The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires the use of certain estimates and assumptions by management in determining the reported amounts of assets and liabilities, disclosure of contingent liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including depreciation of property and equipment and amortization or impairment of intangible assets. The Company evaluates its estimates and assumptions on an ongoing basis and relies on historical experience and various other factors that it believes to be reasonable under the circumstances to determine such estimates. Because uncertainties with respect to estimates and assumptions are inherent in the preparation of financial statements, actual results could differ from these estimates.

Cash and Cash Equivalents

Cash and Cash Equivalents — The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. Pursuant to the Company’s cash management system, the Company deposits cash into its bank accounts as checks written by the Company are presented to the bank for payment. Checks issued by the Company but not presented to the bank for payment are included in accounts payable and totaled $38,878 as of September 30, 2013 and $38,140 as of March 31, 2013.

Revenue Recognition and Accounts Receivable

Revenue Recognition and Accounts Receivable — The Company primarily recognizes revenue upon delivery of the printed product to the customer. In the case of customer fulfillment arrangements, including multiple deliverables of printing services and distribution services, revenue relating to the printed product is recognized upon the delivery of the printed product into the Company’s fulfillment warehouses, and invoicing of the customer for the product at an agreed price. Revenue from distribution services is recognized when the services are provided. Because printed products manufactured for the Company’s customers are customized based upon the customer’s specifications, product returns are not significant. Revenue is recognized net of sales taxes. The Company derives the majority of its revenues from sales and services to a broad and diverse group of customers with no individual customer accounting for more than 3% of the Company’s revenues for the six months ended September 30, 2013. The Company maintains an allowance for doubtful accounts based upon its evaluation of aging of receivables, historical experience and the current economic environment. Accounts receivable in the accompanying condensed consolidated balance sheets are reflected net of allowance for doubtful accounts of $3,183 and $3,323 at September 30, 2013 and March 31, 2013, respectively.

Inventories

Inventories — Inventories are valued at the lower of cost or market utilizing the first-in, first-out method for raw materials and the specific identification method for work in progress and finished goods. Raw materials consist of paper, ink, proofing materials, plates, boxes and other general supplies. Inventory values include the cost of purchased raw materials, labor and overhead. The carrying values of inventories are set forth below:

	September 30, 2013		March 31, 2013
Raw materials	$	27,697	$	24,189
Work in progress	26,705		23,676
Finished goods	8,590		7,524
	$	62,992	$	55,389

Goodwill and Long-Lived Assets

Goodwill and Long-Lived Assets — Goodwill totaled $23,776 at September 30, 2013 and represents the excess of the Company’s purchase cost over the fair value of the net identifiable assets acquired, net of previously recorded amortization and impairment charges. Each of the Company’s printing businesses is separately evaluated for goodwill impairment because they comprise individual reporting units. The Company evaluates goodwill for impairment at the end of each fiscal year, or at any time that management becomes aware of an indication of impairment.

Under the applicable accounting standards, the Company first assesses qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of the events or circumstances, the Company determines it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the Company is required to perform the first step of the two-step impairment test. The first step, used to identify potential impairment, involves comparing each reporting unit’s estimated fair value to its carrying value including goodwill. The Company estimates the fair value for each reporting unit using trailing twelve months earnings before interest, income taxes and depreciation and amortization (“EBITDA”) multiplied by management’s estimate of an appropriate enterprise value-to-EBITDA multiple for each reporting unit, adjusted for a control premium. Management’s total Company enterprise value-to-EBITDA multiple is based upon the multiple derived from using the market capitalization of the Company’s common stock on or around the applicable balance sheet date, after considering an appropriate control premium (25% at March 31, 2013, based upon historical transactions in the printing industry). If the fair value of a reporting unit exceeds its carrying value, applicable goodwill is considered not to be impaired. If the carrying value exceeds fair value, there is an indication of impairment and the second step is performed to measure the amount of impairment. The second step involves calculating an implied fair value of goodwill for each reporting unit for which the first step indicated potential impairment. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination, which is the excess of the fair value of the reporting unit, as determined in the first step, over the aggregate fair values of the individual assets, liabilities and identifiable intangible assets as if the reporting unit was being acquired in a business combination. If the implied fair value of goodwill in the “proforma” business combination accounting described above exceeds the goodwill assigned to the reporting unit, there is no impairment. If the goodwill assigned to a reporting unit exceeds the implied fair value of the goodwill, an impairment charge is recorded for the excess. A recognized impairment loss cannot exceed the amount of goodwill assigned to a reporting unit, and the loss establishes a new basis in the goodwill. Subsequent reversal of goodwill impairment losses is not permitted.

The Company compares the carrying value of long-lived assets, including property, plant and equipment and intangible assets (other than goodwill or intangible assets with indefinite lives), to projections of future undiscounted cash flows attributable to such assets whenever events or changes in conditions indicate the carrying value may not be recoverable. In the event that the carrying value of any long-lived asset exceeds the projection of future undiscounted cash flows attributable to such asset, the Company records an impairment charge against income equal to the excess, if any, of the carrying value over the asset’s fair value. Property and equipment in the accompanying condensed consolidated balance sheets are reflected net of accumulated depreciation of $523,435 and $502,422 at September 30, 2013 and March 31, 2013, respectively.

The net book value of other intangible assets at September 30, 2013 was $10,254. Other intangible assets consist primarily of the value assigned to such items as customer lists and trade names in connection with the allocation of purchase price for acquisitions and are generally amortized on a straight-line basis over periods of between 5 and 25 years. Such assets are evaluated for recoverability with other long-lived assets as discussed above. Amortization expense totaled $809 and $898 for the three months ended September 30, 2013 and 2012, respectively. Amortization expense totaled $1,620 and $1,792 for the six months ended September 30, 2013 and 2012, respectively.

Multi-Employer Pension Plans

Multi-Employer Pension Plans — The Company participates in multi-employer pension plans for certain of its employees covered by union agreements. Amounts expensed in the financial statements equal the regular contributions made to pension plans during the year. In addition to regular contributions, the Company could be obligated to pay additional amounts, known as a withdrawal liability, if a multi-employer pension plan has unfunded vested benefits and the Company decreases or ceases participation in the plan. The Company’s subsidiaries have in the past withdrawn from certain multi-employer pension plans. Upon withdrawing from a plan, the Company records an estimated liability equal to the present value of estimated required future withdrawal payments. The accrued pension liability as of September 30, 2013 and March 31, 2013, respectively, was $28,704 and $28,174. The estimated withdrawal liability is adjusted upon receipt of notice from the pension plan of the actual withdrawal liability and required withdrawal payments, unless the Company, based upon our view of the relevant law concerning multi-employer pension plans, disputes the plan’s calculation of the withdrawal liability.  During the three months ended September 30, 2013, the Company received notice of a withdrawal liability from one plan which exceeds the estimated liability presently recorded by the Company.  The Company, in consultation with its actuaries, believes the plan has incorrectly calculated the assessed liability.  While the Company believes the amount recorded represents the best estimate of the withdrawal liability, the actual amount of the liability could differ from the estimated accrued liability recognized as of September 30, 2013.

Supplemental Cash Flow Information

Supplemental Cash Flow Information — The condensed consolidated statements of cash flows provide information about the Company’s sources and uses of cash and exclude the effects of non-cash transactions. For the six months ended September 30, 2013 and 2012, the Company paid cash for interest totaling $1,176 and $2,971, respectively. For the six months ended September 30, 2013, the Company paid cash for income taxes, net of refunds, totaling $3,874. For the six months ended September 30, 2012, the Company received income tax refunds, net of taxes paid, totaling $86.

Earnings Per Share

Earnings Per Share — Basic earnings per share are calculated by dividing net income by the weighted average number of common shares outstanding. Diluted earnings per share reflect net income divided by the weighted average number of common shares, dilutive stock options and restricted stock unit awards outstanding using the treasury stock method. Earnings per share are set forth below:

	Three Months Ended September 30				Six Months Ended September 30
	2013		2012		2013		2012
Numerator:
Net income	$	10,630	$	6,709	$	14,230	$	6,261
Denominator:
Weighted average number of common shares outstanding	9,679,309		9,863,363		9,657,781		10,017,546
Dilutive options and stock awards	104,808		35,338		72,821		57,942
Diluted weighted average number of common shares outstanding	9,784,117		9,898,701		9,730,602		10,075,488
Net earnings per share
Basic	$	1.10	$	.68	$	1.47	$	.62
Diluted	$	1.09	$	.68	$	1.46	$	.62

Diluted net earnings per share take into consideration the dilutive effect of certain unvested restricted stock unit awards and unexercised stock options. For the three and six months ended September 30, 2013 options to purchase 837,500 and 929,000 shares of common stock, respectively, were outstanding but not included in the computation of diluted net earnings per share because the inclusion would have had an anti-dilutive effect. For the three and six months ended September 30, 2012 options to purchase 1,063,956 and 1,065,427 shares of common stock, respectively, were outstanding but not included in the computation of diluted net earnings per share because the inclusion would have had an anti-dilutive effect.

Fair Value of Financial Instruments

Fair Value of Financial Instruments — The Company’s financial instruments consist of cash, trade receivables, trade payables and debt obligations. The Company does not currently hold or issue derivative financial instruments. The Company believes that the recorded values of its variable rate debt obligations, which totaled $60,842 at September 30, 2013 and $73,793 at March 31, 2013, respectively, approximated their fair values. The Company believes that the recorded values of its fixed rate debt obligations, which totaled $36,702 at September 30, 2013 and $49,891 at March 31, 2013, respectively, approximated their fair values. Estimates of fair value are based on estimated interest rates for the same or similar debt offered to the Company having the same or similar maturities and collateral requirements and were determined to be Level 2 under the fair value hierarchy.

Foreign Currency

Foreign Currency — Assets and liabilities of subsidiaries operating outside the United States with a functional currency other than the U.S. dollar are translated at the period-end exchange rates. Income and expense items are translated at the average monthly exchange rates. The effects of period-end translation are included as a component of Other Comprehensive Loss in the condensed consolidated statements of comprehensive income. The net foreign currency transaction loss or (gain) related to the revaluation of certain transactions denominated in currencies other than the reporting unit’s functional currency totaled transaction loss of $233 and gain of ($146) for the three months ended September 30, 2013 and 2012, respectively, and loss of $167 and gain of ($213) for the six months ended September 30, 2013 and 2012, respectively, and is recorded in Other Expense (Income) on the condensed consolidated income statements.

Accumulated Other Comprehensive Income

Accumulated Other Comprehensive Income — Accumulated Other Comprehensive Income is comprised of foreign currency translation adjustments.

Income Taxes

Income Taxes — The Company’s federal income tax returns for the tax years ended 2010 and after remain subject to examination.  The various states in which the Company is subject to income tax are generally open for tax years after 2008.  The Company reduced the reserve for unrecognized tax benefits by $2,200 during the three and six months ended September 30, 2013 due to the settlement of certain tax audits.

Geographic Information

Geographic Information — Revenues of the Company’s subsidiaries operating outside the United States were $13,207 and $13,681 for the three months ended September 30, 2013 and 2012, respectively, and $26,245 and $27,030 for the six months ended September 30, 2013 and 2012, respectively.  Long-lived assets of the Company’s subsidiaries operating outside the United States were $32,206 as of September 30, 2013 and $36,192 as of March 31, 2013.