Deferred Costs, Capitalized, Prepaid, and Other Assets

12 Months Ended

Aug. 31, 2020

Other assets as of August 31, 2020 and 2019, are as follows:


	2020		2019
	(Dollars in thousands)
Goodwill	$	172,404	$	172,404
Customer lists, trademarks and other intangible assets	65,025		71,206
Notes receivable	109,145		189,045
Long-term derivative assets	21,157		36,408
Prepaid pension and other benefits	106,209		73,100
Capitalized major maintenance	228,511		286,890
Cash value life insurance	130,673		122,792
Operating lease right of use assets	257,834		—
Other	48,471		60,350
Total other assets	$	1,139,429	$	1,012,195

Goodwill and Other Intangible Assets

Goodwill represents the excess of cost over the fair value of identifiable assets acquired. Goodwill is assessed for impairment on an annual basis as of July 31, either by first assessing qualitative factors to determine whether a quantitative goodwill impairment test is necessary or by proceeding directly to the quantitative test. The quantitative test may be required more frequently if triggering events or other circumstances occur that could indicate impairment. Goodwill is assessed for impairment at the reporting unit level, which has been determined to be our operating segments or one level below our operating segments in certain instances.

There were no changes in the net carrying amount of goodwill for the year ended August 31, 2020. Changes in the net carrying amount of goodwill for the year ended August 31, 2019, by segment, are as follows:


	Energy		Ag		Corporate and Other		Total
	(Dollars in thousands)
Balances, August 31, 2018	$	552	$	127,338	$	10,574	$	138,464
Goodwill acquired during the period	—		61,358		—		61,358
Impairment	—		(27,418)		—		(27,418)
Balances, August 31, 2019	552		161,278		10,574		172,404

Goodwill of $61.4 million acquired during the third quarter of fiscal 2019 was related to our acquisition of the remaining 75% ownership in West Central Distribution, LLC ("WCD") that we did not previously own. See Note 20, Acquisitions, for additional information related to the acquisition. No goodwill has been allocated to our Nitrogen Production segment, which consists of a single investment accounted for under the equity method.

The outbreak and pandemic of the novel coronavirus known as COVID-19 and other factors resulted in substantial reductions in demand and sharp price declines in certain industries in which we operate during fiscal 2020, particularly with respect to the production of renewable fuels, other energy products and processing and food ingredients. Based on these deteriorated macroeconomic and industry conditions, management considered the impacts on each of our businesses and determined that we needed to perform interim impairment assessments of goodwill and asset groups, during our third quarter, for a reporting unit within our Ag segment that operates in the renewable fuels industry. Third-party price outlooks, projections of future volumes, expenses and other cash flows and a discount rate reflective of the relative risk of the cash flows were used to estimate fair value. Management believes the assumptions utilized in the assessment are appropriate and reasonable for estimating fair value. The estimated fair value of the reporting unit exceeded the carrying amount by approximately 18%, and thus no impairment was recorded.

As a result of our annual goodwill impairment analyses performed as of July 31, 2019, we recorded a goodwill impairment charge of $27.4 million associated with a reporting unit in our Ag segment. The impairment charge primarily resulted from changing market dynamics that reduced future profitability within the reporting unit, as well as strategy changes and the challenging economic environment in the agriculture industry. The impairment charge was recorded in marketing,

general and administrative expenses in the Consolidated Statement of Operations for the year ended August 31, 2019. No material impairments related to long-lived assets were recorded, and no goodwill impairments were identified as a result of our annual goodwill analyses performed as of July 31, 2020 or 2018. Management will continue to monitor the results and projected cash flows for each of our businesses to assess whether any reserves or impairments may be necessary in the future, particularly for our businesses that have experienced or could experience substantial reductions in demand or price declines associated with the COVID-19 pandemic.

Intangible assets subject to amortization primarily include customer lists, trademarks and noncompete agreements, and are amortized over their respective useful lives (ranging from two to 30 years). We have no material intangible assets with indefinite useful lives. All long-lived assets, including other identifiable intangible assets, are also assessed for impairment in accordance with U.S. GAAP and evaluated for impairment whenever triggering events or other circumstances indicate the carrying amount of an asset group or reporting unit may not be recoverable. Intangible assets of $47.2 million were acquired during fiscal 2019 related to the acquisition of the remaining 75% ownership interest in WCD that we did not previously own. See Note 20, Acquisitions, for additional information related to the acquisition. Information regarding intangible assets is as follows:


	August 31, 2020						August 31, 2019
	Carrying Amount		Accumulated Amortization		Net		Carrying Amount		Accumulated Amortization		Net
	(Dollars in thousands)
Customer lists	$	84,895	$	(23,770)	$	61,125	$	84,815	$	(17,609)	$	67,206
Trademarks and other intangible assets	10,735		(6,835)		3,900		9,736		(5,736)		4,000
Total intangible assets	$	95,630	$	(30,605)	$	65,025	$	94,551	$	(23,345)	$	71,206

Intangible asset amortization expense for the years ended August 31, 2020, 2019 and 2018, was $7.3 million, $5.3 million and $3.4 million, respectively. The estimated annual amortization expense related to intangible assets subject to amortization for the next five years is as follows:


	(Dollars in thousands)
2021	$	8,215
2022	7,973
2023	7,870
2024	7,660
2025	7,345
Thereafter	25,866
Total	$	64,929

Capitalized Major Maintenance

Activity related to capitalized major maintenance costs at our refineries for the years ended August 31, 2020, 2019 and 2018, is summarized below:


	Balance at Beginning of Year		Cost Deferred		Amortization		Balance at End of Year
	(Dollars in thousands)
2020	$	286,890	$	14,496	$	(72,875)	$	228,511
2019	130,780		224,406		(68,296)		286,890
2018	105,006		87,460		(61,686)		130,780

Other Current Assets

Other current assets as of August 31, 2020 and 2019, are as follows:


	2020		2019
	(Dollars in thousands)
Derivative assets (Note 15)	$	371,195	$	253,341
Margin and related deposits	194,097		155,306
Supplier advance payments	198,699		197,290
Other	253,497		259,982
Total other current assets	$	1,017,488	$	865,919

Margin and Related Deposits

Many of our derivative contracts with futures and options brokers require us to make margin deposits of cash or other assets. Subsequent margin deposits may also be necessary when changes in commodity prices result in a loss on the contract value to comply with applicable regulations. Our margin and related deposit assets are generally held in segregated accounts to

support the associated derivative contracts and may be used to fund or partially fund the settlement of those contracts as they expire. Similar to our derivative financial instruments, margin and related deposits are reported on a gross basis.

Supplier Advance Payments

Supplier advance payments are typically for periods less than 12 months and primarily include amounts paid for grain purchases from suppliers and amounts paid to crop nutrient and crop protection product suppliers to lock in future supply and pricing.