2. SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION

Accounting Policies

The accounting policies of the Company reflect industry practices and conform to generally accepted accounting principles in the United States. The more significant of such accounting policies are described below.

Principles of Consolidation — The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. The Company’s operations constitute one reportable segment because all of its printing businesses operate in the commercial printing industry and exhibit similar economic characteristics.

Use of Estimates — The preparation of financial statements in conformity with 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.

Reclassification and Other Corrections — Certain reclassifications of prior period data have been made to conform to the current period reporting. Additionally, the Company has corrected deferred tax accounts in the March 31, 2012 consolidated balance sheet to reflect deferred taxes associated with a multi-employer pension withdrawal accrual as noncurrent. This resulted in a reduction of the current deferred tax asset and non-current deferred tax liability in the amount of $6,789.

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 $38,140 as of March 31, 2013 and $42,993 as of March 31, 2012.

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 7% of the Company’s revenues in any of the years ended March 31, 2013, 2012 or 2011. 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 consolidated balance sheets are reflected net of allowance for doubtful accounts of $3,323 and $3,246 at March 31, 2013 and 2012, respectively.

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 costs. The carrying values of inventories are set forth below:

	March 31
	2013		2012

Raw materials	$	24,189	$	24,565
Work in progress	23,676		21,345
Finished goods	7,524		8,219
	$	55,389	$	54,129

Goodwill and Long-Lived Assets — Goodwill totaled $23,870 at March 31, 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.

The Company applies the provisions of Accounting Standards Update No. 2011-08 “Intangibles-Goodwill and Other” (Topic 350): Testing for Impairment (“ASU 2011-08”), which permits an entity to first assess 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, an entity determines it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the entity 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 recognized a non-cash, pre-tax impairment charge to its goodwill in the amount of $949 for the year ended March 31, 2013 and $1,984 for the year ended March 31, 2012. Tax benefits totaling $370 in fiscal 2013 and $774 in fiscal 2012 were recorded in connection with these impairments.

Goodwill is as follows:

	Year Ended March 31
	2013			2012			2011

Beginning balance, gross	$	240,231		$	240,524		$	237,626
Accumulated impairments	(215,384		)	(213,400		)	(213,400		)
Beginning balance, net	24,847			27,124			24,226
Acquisitions	124			(102		)	2,546
Foreign exchange translation	(152		)	(191		)	352

Impairment charges	(949		)	(1,984		)	—

Ending balance	$	23,870		$	24,847		$	27,124

The Company compares the carrying value of long-lived assets, including property, plant and equipment and intangible assets (other than goodwill), 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. The Company recorded impairments of $1,896, $2,016 and $1,205 in fiscal 2013, 2012 and 2011, respectively, which are included in other charges in the consolidated income statements.

The net book value of other intangible assets at March 31, 2013 was $11,936. 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 $3,586, $3,593 and $3,574 in fiscal 2013, 2012 and 2011, respectively. The Company’s future amortization expense by fiscal year is as follows:

	2014		2015		2016		2017		2018

Amortization expense	$	3,269	$	3,269	$	2,162	$	957	$	166

Accrued Liabilities — The significant components of accrued liabilities are as follows:

	March 31
	2013		2012

Compensation and benefits	$	29,639	$	26,920
Advances from customers	11,867		10,066
Other (1)	16,848		17,815
Manufacturing materials and services	8,949		9,136
Sales, property and other taxes	4,671		4,559
	$	71,974	$	68,496

(1) Other accrued liabilities include accrued self-insurance claims for certain insurance programs. None of the individual items in other accrued liabilities at March 31, 2013 and 2012 were individually greater than 5% of total current liabilities in those years.

Income Taxes — The provision for income taxes includes federal, state and foreign income taxes which are currently payable or deferred based on current tax laws. Deferred income taxes are provided for the tax consequences of differences between the financial statement and tax bases of assets and liabilities. The Company reduces deferred tax assets by a valuation allowance when, based on its estimates, it is more likely than not that a portion of those assets will not be realized in a future period. The Company is subject to audit by taxing authorities and these audits occasionally result in proposed assessments which may result in additional tax liabilities and, in some cases, interest and penalties. The Company recognizes a tax position in its financial statements when it is more likely than not that the position would be sustained upon examination by tax authorities. The recognized tax position is then measured at the largest amount of benefit that is greater than fifty percent likely to be realized upon ultimate settlement. The Company has a reserve for unrecognized tax benefits related to uncertain tax positions. The Company adjusts the reserve upon changes in circumstances that would cause a change to the estimate of the ultimate liability, upon effective settlement, or upon the expiration of the statute of limitations relating to such tax positions, in the period in which such event occurs. Although we believe our estimates are reasonable, the final outcome of uncertain tax positions may be different from that which is reflected in the financial statements.

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 estimated withdrawal liability will be adjusted upon receipt of notice from the pension plan of the actual withdrawal liability and required withdrawal payments.

Supplemental Cash Flow Information — The consolidated statements of cash flows provide information about the Company’s sources and uses of cash and exclude the effects of non-cash transactions. The Company paid cash for interest totaling $5,321, $6,389 and $7,797 for the years ended March 31, 2013, 2012 and 2011, respectively. The Company paid cash for income taxes, net of refunds, totaling $13,915, $2,857 and $17,521 for the years ended March 31, 2013, 2012 and 2011, respectively.

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:

	Year Ended March 31
	2013		2012		2011

Numerator:
Net income	$	22,225	$	14,102	$	41,412
Denominator:
Weighted average number of common shares outstanding	9,812,400		10,591,642		11,416,002
Dilutive options and stock awards	24,413		115,886		182,146
Diluted weighted average number of common shares outstanding	9,836,813		10,707,528		11,598,148
Net earnings per share
Basic	$	2.27	$	1.33	$	3.63
Diluted	$	2.26	$	1.32	$	3.57

Diluted net earnings per share take into consideration the dilutive effect of certain unvested restricted stock unit awards and unexercised stock options. For the years ended March 31, 2013, 2012 and 2011, options to purchase 1,023,500, 866,300 and 881,341 shares of common stock, respectively, were outstanding but not included in the computation of diluted net earnings per share because inclusion would have an anti-dilutive effect.

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 $73,793 and $96,793 at March 31, 2013 and 2012, respectively, approximated their fair values. The Company believes that the recorded values of its fixed rate debt obligations, which totaled $49,891 and $66,953 at March 31, 2013 and 2012, respectively, approximated their fair values. Our debt obligations are classified within Level 2 of the valuation hierarchy and are valued utilizing estimated interest rates for the same or similar debt offered to the Company having the same or similar maturities and collateral requirements.

Concentrations of Credit Risk — Financial instruments that potentially subject the Company to concentrations of credit risk are primarily trade accounts receivable. Concentrations of credit risk with respect to trade accounts receivable are limited because the Company’s printing businesses provide services to a large, diverse group of customers in various geographical regions. Management performs ongoing credit evaluations of its customers and generally does not require collateral for extensions of credit. The Company’s cash deposits are held with large, well-known financial institutions.

Share-Based Compensation — The Company accounts for share-based compensation by measuring the cost of the employee services received in exchange for an award of equity instruments, including grants of stock options and restricted stock unit awards, based on the fair value of the award at the date of grant. In addition, to the extent that the Company receives an excess tax benefit upon exercise of an award, such benefit is reflected as cash flow from financing activities in the consolidated statements of cash flows.

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 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 Accumulated Other Comprehensive Income (Loss). The net foreign currency transaction loss (gain) related to the revaluation of certain transactions denominated in currencies other than the reporting unit’s functional currency totaled ($351), $294 and $237 in fiscal 2013, 2012 and 2011, respectively, and is recorded in Other Expense on the consolidated income statements.

Accumulated Other Comprehensive Income (Loss) — Accumulated Other Comprehensive Income (Loss) is comprised of foreign currency translation adjustments, net of taxes.

Geographic Information — Revenues of the Company’s subsidiaries operating outside the United States were $59,703, $58,041 and $55,956 in fiscal 2013, 2012 and 2011, respectively, and long-lived assets were $36,192 and $36,233 as of March 31, 2013 and 2012, respectively.