Fair Value Measurements

9 Months Ended

May 31, 2013

Fair Value Measurements

Fair Value Measurements

11.  Fair Value Measurements

The following table presents assets that were measured at fair value on a nonrecurring basis as of May31, 2013 (in thousands):

	Fair value		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total losses
Customer relationships	$	—	$	—	$	—	$	—	$	851
Goodwill	—		—		—		—		1,077
Investment in non-marketable equity security—HPO	938		—		—		938		1,885
Total	$	938	$	—	$	—	$	938	$	3,813

The intangible asset for customer relationships arising from the acquisition of a 51% equity interest in Ning Xiang with a carrying amount of $0.8million was written down to its fair value of zero, resulting in an impairment charge of $851 thousand during the three months ended May 31, 2013. Management determined the fair value of customer relationships using the multi-period excess earnings method under the income approach. Under this approach, the fair value of customer relationships acquired was determined based on the present value of estimated future net cash flows expected to be generated from the Ning Xiang asset group adjusted for a contributory asset charge, which represented the cash flows of the other assets that contributed to the overall cash flows. Significant estimates and assumptions included sales, estimated growth rate, profitability, discount rate, customer attribution rate and contributory asset charge, among others.

Goodwill with a carrying amount of $1.1million was written down to its implied fair value of zero, resulting in an impairment charge of $1,077 thousand during the three months ended May 31, 2013. The fair value of the Ning Xiang reporting unit was determined based on the present value of estimated future net cash flows discounted at the weighted average cost of capital. Management estimated future net cash flows using the reporting unit’s internally developed estimates and included a terminal value calculated using a long-term future growth rate based on analysis of current and expected future economic conditions. Significant estimates and assumptions included sales, estimated growth rate, profitability and discount rate, among others.

An impairment loss on the Company’s investment in HPO was recognized based on the excess of the carrying amount over the estimated fair value. The fair value of the investment was determined based on management’s best estimate of the amount that could be realized from the investment, which considered the latest net asset value reported by the investee and events that have occurred after the investee’s balance sheet date. Management believes the estimated fair value reflected the exit price from a market participant’s perspective at May 31, 2013.

The following table presents assets that were measured at fair value on a nonrecurring basis as of August31, 2012 (in thousands):

	Fair value		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total losses
Property, plant and equipment	$	46,450	$	—	$	—	$	46,450	$	7,507

Property, plant and equipment with a carrying amount of $54.0 million was written down to its fair value of $46.5 million, resulting in an impairment charge of $7.5 million, which was included in the consolidated statement of operations for the year ended August31, 2012.