Goodwill and Intangibles Assets

12 Months Ended

Aug. 31, 2017

Note 4—Goodwill and Intangible Assets

The changes in the carrying value of goodwill, by operating segment, are as follows:


	Industrial Materials		Construction Materials		Consolidated
Balance at August 31, 2015	$	33,390	$	10,733	$	44,123
Acquisition of Spray Products (India) Private Limited		107		—		107
Foreign currency translation adjustment		(617)		(37)		(654)
Balance at August 31, 2016	$	32,880	$	10,696	$	43,576
Acquisition of Resin Designs, LLC		7,592		—		7,592
Sale of the fiber optic cable components business		(409)		—		(409)
Foreign currency translation adjustment		28		(3)		25
Balance at August 31, 2017	$	40,091	$	10,693	$	50,784

The Company’s goodwill is allocated to each reporting unit based on the nature of the products manufactured by the respective business combinations that originally created the goodwill. The Company has identified eleven reporting units within its two operating segments that are used to evaluate the possible impairment of goodwill. Goodwill impairment exists when the carrying amount of goodwill exceeds its fair value. Assessments of possible impairment of goodwill are made when events or changes in circumstances indicate that the carrying value of the asset may not be recoverable through future operations. Additionally, testing for possible impairment of recorded goodwill and certain intangible asset balances is required annually. The amount and timing of any impairment charges based on these assessments require the estimation of future cash flows and the fair market value of the related assets based on management’s best estimates of certain key factors, including future selling prices and volumes; operating, raw material and energy costs; and various other projected operating and economic factors. When testing, fair values of the reporting units and the related implied fair values of their respective goodwill are established using discounted cash flows.

The Company performs impairment reviews annually each fourth quarter and whenever events or circumstances indicate the carrying value of goodwill may not be recoverable. For fiscal 2017, the Company’s review indicated no impairment of goodwill, or at-risk reporting units.

As of August 31, 2017, the Company had a total goodwill balance of $50,784 related to its acquisitions, of which $13,497 remains deductible for income taxes.

Intangible assets subject to amortization consist of the following as of August 31, 2017 and 2016:


	Weighted Average		Gross Carrying		Accumulated		Net Carrying
	Amortization Period		Value		Amortization		Value
August 31, 2017
Patents and agreements	14.4	years	$	1,845	$	1,671	$	174
Formulas and technology	7.8	years		9,318		5,387		3,931
Trade names	6.0	years		7,709		5,813		1,896
Customer lists and relationships	9.6	years		70,180		29,335		40,845
			$	89,052	$	42,206	$	46,846

August 31, 2016
Patents and agreements	14.5	years	$	1,805	$	1,663	$	142
Formulas and technology	8.4	years		8,248		4,310		3,938
Trade names	5.9	years		7,137		4,909		2,228
Customer lists and relationships	9.4	years		52,742		22,470		30,272
			$	69,932	$	33,352	$	36,580

Aggregate amortization expense related to intangible assets for the years ended August 31, 2017, 2016 and 2015 was $9,127, $7,836 and $6,762, respectively. As of August 31, 2017 estimated amortization expense for the next five fiscal years is as follows:


Years ending August 31,
2018			9,110
2019			8,441
2020			7,574
2021			7,044
2022			6,164

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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