personnel; the ability to identify, manage or integrate future acquisitions; the costs associated with and the outcome of outstanding and future litigation; and changes in government regulations.
In view of such uncertainties, investors should not place undue reliance on our forward-looking statements since such statements may prove to be inaccurate and speak only as of the date when made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Results of Operations

        Consolidated                                                  Fiscal Years Ended
Statements of Earnings - Data                2009                            2008                            2007

Net sales                          $ 584,029          100.0 %      $ 610,610          100.0 %      $ 584,713          100.0 %
Cost of goods sold                   440,553           75.4          446,736           73.2          428,391           73.3

Gross profit                         143,476           24.6          163,874           26.8          156,322           26.7
Selling, general and
administrative                        86,217           14.8           88,851           14.5           83,121           14.2
Impairment of goodwill and
trademarks                            67,851           11.6                -            0.0                -            0.0
Gain from disposal of assets            (514 )         (0.1 )           (757 )         (0.1 )           (258 )          0.0

Income (loss) from operations        (10,078 )         (1.7 )         75,780           12.4           73,459           12.5
Other expense, net                    (2,981 )         (0.5 )         (5,995 )         (1.0 )         (7,094 )         (1.2 )

Earnings (loss) before income
taxes                                (13,059 )         (2.2 )         69,785           11.4           66,365           11.3
Provision for income taxes            19,709            3.4           25,195            4.1           24,764            4.2

Net earnings (loss)                $ (32,768 )         -5.6 %      $  44,590            7.3 %      $  41,601            7.1 %

Critical Accounting Policies and Judgments In preparing our consolidated financial statements, we are required to make estimates and assumptions that affect the disclosures and reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. We evaluate our estimates and judgments on an ongoing basis, including those related to allowance for doubtful receivables, inventory valuations, property, plant and equipment, intangible assets, pension plan, accrued liabilities and income taxes. We base our estimates and judgments on historical experience and on various other factors that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We believe the following accounting policies are the most critical due to their affect on our more significant estimates and judgments used in preparation of our consolidated financial statements.
We maintain a defined-benefit pension plan for employees. Included in our financial results are pension costs that are measured using actuarial valuations. The actuarial assumptions used may differ from actual results. As our pension assets are invested in marketable securities, fluctuations in market values could potentially impact our funding status and associated liability recorded.
Amounts allocated to intangibles are determined based on valuation analysis for our acquisitions and are amortized over their expected useful lives. We evaluate these amounts periodically (at least once a year) to determine whether the value has been impaired by events occurring during the fiscal year.
We exercise judgment in evaluating our long-lived assets for impairment. We assess the impairment of long-lived assets that include other intangible assets, goodwill, and property, plant, and equipment annually or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. In performing tests of impairment, we must make assumptions regarding the estimated future cash flows and other factors to determine the fair value of the respective assets in assessing the recoverability of our long lived assets. If these estimates or the related assumptions change, we may be required to record impairment charges for these assets in the future. Actual results could differ from assumptions made by management. In the fourth quarter of fiscal year 2009, we recorded a non-cash impairment charge of $63.2 million and $4.7 million of goodwill and trademarks, respectively. We believe our businesses will generate sufficient undiscounted cash flow to recover the investments we have made in property, plant and equipment, as well as the goodwill and other intangibles recorded as a result of our acquisitions. However, we cannot predict the occurrence of future impairment triggering events nor the impact such events might have on our reported asset values. See Risk Factor - "In 2009 we were required to write down goodwill and other

intangible assets and we may have similar charges in the future, which could cause our financial condition and results of operations to be negatively affected in the future" on page 7 of the Report for further discussion.
Revenue is generally recognized upon shipment of products. Net sales consist of gross sales invoiced to customers, less certain related charges, including discounts, returns and other allowances. Returns, discounts and other allowances have historically been insignificant. In some cases and upon customer request, we print and store custom print product for customer specified future delivery, generally within twelve months. In this case, risk of loss from obsolescence passes to the customer, the customer is invoiced under normal credit terms and revenue is recognized when manufacturing is complete. Approximately $18.3 million, $20.2 million, and $20.1 million of revenue were recognized under these agreements during fiscal years ended February 28, 2009, February 29, 2008, and February 28, 2007 respectively.
Derivative instruments are recognized on the balance sheet at fair value as determined under Financial Accounting Standard No. 157, "Fair Value Measurements". Changes in fair values of derivatives are accounted for based upon their intended use and designation. When utilized, interest rate swaps are held for purposes other than trading. The Company utilized swap agreements related to its term and revolving loans to effectively fix the interest rate for a specified principal amount. The swaps were designated as cash flow hedges, and the after-tax effect of the mark-to-market valuation that relates to the effective amount of derivative financial instruments was recorded as an adjustment to accumulated other comprehensive income with the offset included in long-term debt. We entered into a $40.0 million interest rate swap designated as a cash flow hedge related to our variable rate financial instruments. The fair value of the interest rate swap agreement recorded in the consolidated balance sheet, excluding accrued interest, at February 28, 2009, was a liability of approximately $2.2 million. There were no derivatives, swaps or deferred gains or losses at February 29, 2008.
We maintain an allowance for doubtful receivables to reflect estimated losses resulting from the inability of customers to make required payments. On an on-going basis, we evaluate the collectability of accounts receivable based upon historical collection trends, current economic factors, and the assessment of the collectability of specific accounts. We evaluate the collectability of specific accounts using a combination of factors, including the age of the outstanding balances, evaluation of customers' current and past financial condition and credit scores, recent payment history, current economic environment, discussions with our project managers, and discussions with the customers directly.
Our inventories are valued at the lower of cost or market. We regularly review inventory values on hand, using specific aging categories, and write down inventory deemed obsolete and/or slow-moving based on historical usage and estimated future usage to its estimated market value. As actual future demand or market conditions may vary from those projected by management, adjustments to inventory valuations may be required.
As part of the process of preparing our consolidated financial statements, we are required to estimate our income taxes in each jurisdiction in which we operate. This process involves estimating our actual current tax exposure together with assessing temporary differences resulting from different treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included in our consolidated balance sheets. We must then assess the likelihood that our deferred tax assets will be recovered from future taxable income. To the extent we believe that recovery is not likely, we must establish a valuation allowance. To the extent we establish a valuation allowance we must include an expense within the tax provision in the consolidated statements of earnings. In the event that actual results differ from these estimates, our provision for income taxes could be materially impacted.
In addition to the above, we also have to make assessments as to the adequacy of our accrued liabilities, more specifically our liabilities recorded in connection with our workers compensation and health insurance, as these plans are self funded. To help us in this evaluation process, we routinely get outside third party assessments of our potential liabilities under each plan.
In view of such uncertainties, investors should not place undue reliance on our forward-looking statements since such statements speak only as of the date when made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Results of Operations - Consolidated
Overview. Our results of operations for the second half of fiscal year ended 2009 was significantly affected by the recent economic downturn. Both our Print Segment and Apparel Segment saw double digit volume declines during the final quarter of the year which placed extreme pressure on each Segment's operating margins. Our apparel sector continues to be impacted by the sluggish retail landscape which, along with a reduction in retail inventory levels, has contributed to what we believed to be a temporary increase in inventory at the manufacturer level. This resulted in intensified pricing pressures in the marketplace, from both domestic and international competitors. During the fourth quarter of fiscal year 2009, we commenced cost reduction initiatives in both our Segments and will continue to adjust our costs to coincide with projected volume levels. These steps help to mitigate, but not fully offset, the negative impacts associated with this economic downturn during the fourth quarter. In addition, due to the significant stock market devaluation experienced this fiscal year, we were required to take a non-cash impairment charge of $63.2 million and $4.7 million to goodwill and trademarks, respectively during the fourth quarter of fiscal 2009.
Net Sales. Our net sales for fiscal year 2009 were $584.0 million, compared to $610.6 million for fiscal year 2008, a decrease of $26.6 million, or 4.4.%. Our Print Segment sales decreased by approximately $18.0 million, or 5.2% during the period while our Apparel Segment sales decreased $8.6 million, or 3.2%. Our sales for the period were impacted by the significant economic downturn experienced during the past quarter, as our sales for the nine months ended November 30, 2008 were up $5.6 million, or 1.2%. During the quarter, both the Apparel and Print Segments saw double digit declines, with apparel being down 29.6% and print being down 15.8%. See "Results of Operations - Segments" of this Report for further discussion.
Net sales for fiscal year 2008 were $610.6 million, compared to $584.7 million for fiscal year 2007, an increase of $25.9 million, or 4.4%. The increase in our sales during fiscal year 2008 related primarily to an increase in our Print Segment sales, which increased $19.3 million during the fiscal year 2008, or 5.9%. Our Apparel Segment sales increased by approximately $6.6 million, or 2.5% during fiscal year 2008. See "Results of Operations - Segments" of this Report for further discussion.
Cost of Goods Sold. Our cost of goods sold for fiscal year 2009 was approximately $440.6 million, or 75.4% of sales, compared to $446.7 million, or 73.2% of sales for fiscal year 2008. The decrease in our cost of sales, on a dollar-basis relates primarily to our decreased sales volume during the period. The increase in our cost of sales, as a percentage of sales, related primarily to our Apparel Segment, which experienced significant cost side pressures relating to material, freight, chemical and utilities during the period, as well as sell side pressures due to retail inventory strategies and excess inventory levels at manufacturers. As a result, our overall gross profit margin (net sales less cost of goods sold), as a percentage of sales, decreased from 26.8 % in fiscal year 2008 to 24.6% in fiscal year 2009. Our apparel margins decreased from 26.4% to 22.6%, while our print margins decreased from 27.2% to 26.1%, for fiscal years 2008 and 2009, respectively. Our apparel margins were especially impacted during the fourth quarter, by the abrupt turndown in the economy which throttled demand at the retail level creating excess inventory at the manufacturing level which put further pricing pressures in the marketplace. See "Results of Operations - Segments" of this Report for further discussion.
Our cost of goods sold for fiscal year 2008 was approximately $446.7 million, or 73.2% of sales, compared to $428.4 million, or 73.3% of sales for fiscal year 2007. The increase in our cost of sales during fiscal year 2008, on a dollar-basis relates primarily to our increased sales volume as previously discussed. Our gross profit margins, as a percentage of sales, was 26.8% for fiscal year ending February 29, 2008, a slight increase over 26.7% for fiscal year ended February 28, 2007. Our gross profit margins increased in our Print Segment from 25.2% to 27.2%, while our Apparel Segment margins decreased from 28.7% to 26.4% for fiscal year 2007 and 2008, respectively. See "Results of Operations - Segments" of this Report for further discussion.
Selling, general, and administrative expenses. For fiscal year 2009, our selling, general and administrative expenses decreased approximately $2.7 million, or 3.0% from $88.9 million, or 14.6% of sales for fiscal year 2008 to $86.2 million, or 14.8% of sales for fiscal year 2009. On a dollar basis, these expenses decreased primarily as a result of our cost reduction initiatives, lower employment and factoring expenses, offset by higher bad debt expense, associated with the bankruptcy filing of a large apparel customer and higher health insurance expense. On a percentage basis, these expenses increased primarily as a result of our decline in sales during the period.
For fiscal year 2008, our selling, general and administrative expenses were $88.9 million, or 14.6% of sales, compared to $83.1 million, or 14.2% of sales for fiscal year 2007, or an increase of $5.8 million, or 7.0%. On a dollar and percentage basis, these expenses increased primarily as a result of our acquisitions and the increase in our

miscellaneous expenses, which was attributable to a significant increase in our credit card fees due to increased usage of credit/purchase cards by our customers.
Gain from disposal of assets. The gain from disposal of assets of $514,000 for fiscal year ended February 28, 2009 resulted from $334,000 gain from sale of vacant facilities and $180,000 gain from sale of equipment. The gain from disposal of assets of $757,000 for the fiscal year ended February 29, 2008 resulted primarily from the sale of two print manufacturing facilities located in Dallas, Texas.
Impairment of goodwill and trademarks. After conducting our annual impairment testing, we determined $63.2 million of goodwill and $4.7 million trademarks associated with our Apparel Segment was impaired. The impairment charge is primarily the result of the current adverse economic conditions and the resulting impact on the financial market valuation multiples.
Income from operations. Our income from operations for fiscal year 2009 decreased from operational earnings of $75.8 million, or 12.4% of sales for fiscal year 2008, to an operational loss of $10.1 million, or -1.7% of sales for fiscal year 2009. The dollar decrease in our operational earnings during fiscal year 2009, related primarily to the non-cash impairment charge of $67.9 million and decrease in sales as discussed previously.
Our earnings from operations for fiscal year 2008 increased by approximately $2.3 million, or 3.1%, from operational earnings of $73.5 million in fiscal year 2007 to operational earnings of $75.8 million in fiscal year 2008. As a percentage of sales, our operational earnings were 12.4% for fiscal year 2008 and 12.6% for fiscal year 2007, respectively. The increase in our operational earnings, on a dollar basis, during fiscal year 2008 related primarily to the increase in sales due to our acquisitions of Trade and B&D in fiscal year 2008 and full year revenue associated with our fiscal year 2007 acquisition of Block. The slight decrease in our operational earnings, as a percentage of sales, related primarily to the increase of selling, general and administrative expenses during fiscal year 2008 as previously discussed.
Other income and expense Our interest expense was $3.4 million, $5.7 million and $6.9 million for fiscal years 2009, 2008 and 2007, respectively. Our interest expense decreased in fiscal year 2009 and 2008 due to less debt on average being outstanding for each prior fiscal year and a lower effective borrowing rate during fiscal year 2008.
Provision for income taxes. Our effective tax rates for fiscal years 2009, 2008 and 2007 were -150.9%, 36.1 % and 37.3%, respectively. The increase in the effective tax rate for 2009 was due to a non-deductible goodwill impairment charge of $63.2 million. The decrease in our effective tax rate during 2008 over the comparable prior year related primarily to an increase in our Domestic Production Activities Deduction and State Income Tax Credit. The increase in our overall effective tax rate during fiscal year 2007 related primarily to an increase in our effective foreign and state income tax rates.
Net earnings. Our net earnings decreased from approximately $44.6 million, or 7.3% of sales for fiscal year 2008 to a loss of $32.8 million, or -5.6% of sales for fiscal year 2009. Basic earnings per share decreased from earnings of $1.74 per share for fiscal year 2008 to a loss of $1.27 per share for fiscal year 2009. Diluted earnings per share decreased from earnings of $1.72 per share for fiscal year 2008 to a loss of $1.27 per share for fiscal year 2009. The decrease in net earnings during the period related primarily to our decrease in sales and non-cash impairment charge of $67.9 million, as previously discussed. Without the impairment charge and certain other unusual items (bankruptcy of large apparel customer and higher than normal inventory reserve charge), our diluted earnings per share for the current year would have been $1.46 per share.
Our net earnings increased from earnings of $41.6 million, or 7.1% of sales in fiscal year 2007 to $44.6 million, or 7.3% of sales in fiscal year 2008. Basic earnings per share increased from earnings of $1.63 per share to $1.74 per share in fiscal years 2007 and 2008, respectively. Diluted earnings per share increased from earnings of $1.62 per share to $1.72 per share in fiscal years 2007 and 2008, respectively. The increase in our net earnings during the period related primarily to our increased sales volume and our lower effective tax rate.

Results of Operations - Segments

                                                      Fiscal Years Ended
       Net Sales by Segment (in thousands)     2009          2008          2007
       Print                                 $ 327,034     $ 345,042     $ 325,679
       Apparel                                 256,995       265,568       259,034

       Total                                 $ 584,029     $ 610,610     $ 584,713

Print Segment. The print segment net sales represented 56.0%, 56.5%, and 55.7% of our consolidated net sales for fiscal years 2009, 2008, and 2007, respectively.
Our net sales for the Print Segment were approximately $327.0 million for fiscal year 2009 compared to approximately $345.0 million for fiscal year 2008, or a decrease of $18.0 million, or 5.2%. The decline in our Print Segment's sales for the period occurred primarily during the last quarter, where sales were down $13.8 million or 15.8% over the comparable period last year, and was due to the significant decline in the economy during the quarter. The decrease was partially offset by increased sales from our acquisition of B&D, Skyline and Trade which were acquired October 5, 2007 and September 17, 2007, respectively. The positive impact of these acquired entities on sales was $17.4 million for the fiscal year ended February 28, 2009. Sales from our traditional print plants continue to be impacted by the general economic conditions and the continued contraction of traditional business forms which occurs as customers continue to migrate away from traditional printed business form products due to technological advancements.
Our net sales for the Print Segment were approximately $345.0 million for fiscal year 2008 compared to approximately $325.7 million for fiscal year 2007, or an increase of $19.3 million, or 5.9%. The increase in the Print Segment's net sales for the fiscal year 2008 related primarily to our acquisition of B&D and Trade and the full year impact of our acquisition of Block Graphics, Inc. ("Block") which was acquired on August 8, 2006. Net sales for the acquired entities were $53.3 million for the fiscal year ended 2008 compared to $24.9 million for the fiscal year ended 2007. The impact of the increase in sales from our acquired entities was offset by the planned attrition of low margin print sales and the decline in our commercial print operations over comparable periods last year due to the impact of the loss of two large promotional customers. While this impacted our sales during fiscal year 2008 by approximately $3.3 million, we feel the impact associated with these accounts has matured as the sales in our commercial print operations during the last six months of fiscal year ended 2008 has been above comparable sales levels last year. Due to the contracting nature of the print industry, our traditional print plants saw their sales decline by approximately $5.8 million, or 2.0% during fiscal year 2008.
Apparel Segment. The Apparel Segment net sales represented 44.0%, 43.5%, and 44.3% of our consolidated net sales for fiscal years 2009, 2008 and 2007 respectively.
Our fiscal year 2009 net sales for the Apparel Segment was approximately $257.0 million compared to approximately $265.6 million for fiscal year 2008, or a decrease of $8.6 million, or 3.2%. The decrease in our apparel sales for the current fiscal year is the result of decreased sales during the fourth quarter where apparel sales were down $18.3 million, or 29.6%. Our Apparel Segment continues to be impacted by the sluggish retail landscape which has contributed to inventory levels being reduced at the retail level and correspondingly increased at the manufacturers' level. This resulted in intensified pricing pressures in the marketplace, from both domestic and international competitors during the fourth quarter, which placed additional pressures on top lines and on operational margins..
For fiscal year 2008, our Apparel Segment net sales were approximately $265.6 million compared to approximately $259.0 million for fiscal year 2007, or an increase of $6.6 million, or 2.5%. The increase in the Apparel Segment's net sales during fiscal year 2008 was primarily due to increased volume associated with new customers and increased sales to existing customers. Management believes that the Apparel sales during fiscal year 2008 were negatively impacted during the first six months by lower inventory levels at the beginning of the fiscal year, which hindered the Apparel Segment's ability to capture certain opportunity sales during this period. Traditionally, the Apparel Segment rebuilds its inventory levels in the last half of the fiscal year for the upcoming summer buying season due to the normal falloff of demand during the winter season. However, during the second half of fiscal year 2007, demand was at or above forecasted sales levels. As a result, production levels were only able to stay abreast of then current sales levels, which resulted in inventory levels not being as robust in the fourth quarter of fiscal year 2007 as during the same period the previous fiscal year. Consequently, several initiatives were implemented during the first and second quarters of fiscal year 2008 to improve the Apparel Segment's inventory levels and to meet forecasted demand. Significant progress was made on these initiatives during the second and third quarters of fiscal year 2008 and the Apparel Segment's inventory levels during the third quarter were significantly improved, which management believes allowed the apparel sales to return to more normalized sales growth levels during the . . .