Note 6 - Investments in Joint Ventures

3 Months Ended

Nov. 30, 2014

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments and Joint Ventures Disclosure [Text Block]

6.           INVESTMENTS IN JOINT VENTURES

The financial statements of the Company’s foreign joint ventures are initially prepared using the accounting principles accepted in the respective joint ventures’ countries of domicile.  Amounts related to foreign joint ventures reported in the below tables and the accompanying consolidated financial statements have subsequently been adjusted to conform with accounting principles generally accepted in the United States of America in all material respects.  All material profits recorded on sales from the Company to its joint ventures have been eliminated for financial reporting purposes.

Financial information from the audited and unaudited financial statements of the Company’s joint venture in Germany, Excor Korrosionsschutz – Technologien und Produkte GmbH (EXCOR), joint venture in China and all of the Company’s other joint ventures, are summarized as follows:

	At November 30, 2014
	Total		EXCOR		China		All Other
Current assets	$	63,676,926	$	25,235,772	$	10,271,450	$	28,169,704
Total assets		67,341,357		27,164,361		10,289,207		29,887,789
Current liabilities		18,187,978		3,334,169		4,665,093		10,188,716
Noncurrent liabilities		2,497,563		—		868,779		1,628,784
Joint ventures’ equity		46,655,816		23,830,192		4,755,335		18,070,289
Northern Technologies International Corporation’s share of joint ventures’ equity		23,302,301		11,915,098		2,377,668		9,009,535
Northern Technologies International Corporation’s share of joint ventures’ undistributed earnings	$	21,178,153	$	11,884,193	$	2,327,668	$	6,966,292

	At August 31, 2014
	Total		EXCOR		China		All Other
Current assets	$	61,491,957	$	24,361,157	$	9,774,680	$	27,356,120
Total assets		65,466,964		26,652,165		9,793,803		29,020,996
Current liabilities		17,542,634		3,512,143		4,438,380		9,592,111
Noncurrent liabilities		1,929,488		—		868,377		1,061,111
Joint ventures’ equity		45,994,842		23,140,022		4,487,046		18,367,775
Northern Technologies International Corporation’s share of joint ventures’ equity		22,961,989		11,570,013		2,243,524		9,148,452
Northern Technologies International Corporation’s share of joint ventures’ undistributed earnings	$	20,540,523	$	11,539,108	$	2,193,524	$	6,807,891

	Three Months Ended November 30, 2014
	Total		EXCOR		China		All Other
Net sales	$	29,120,852	$	9,524,270	$	3,735,457	$	15,861,125
Gross profit		14,035,784		4,974,751		1,783,673		7,277,360
Net income		3,184,570		1,956,191		265,648		962,731
Northern Technologies International Corporation’s share of equity in income of joint ventures	$	1,606,683	$	978,096	$	132,824	$	495,763

	Three Months Ended November 30, 2013
	Total		EXCOR		China		All Other
Net sales	$	29,661,218	$	9,476,403	$	4,294,138	$	15,890,677
Gross profit		14,166,070		5,063,662		2,016,809		7,085,599
Net income		2,837,565		1,853,307		298,708		685,550
Northern Technologies International Corporation’s share of equity in income of joint ventures	$	1,427,748	$	926,654	$	149,354	$	351,740

The Company records expenses that are directly attributable to the joint ventures on its consolidated statements of operations in the line item “Expenses incurred in support of joint ventures.”  The expenses include items such as employee compensation and benefit expenses, travel expense and consulting expense.

The Company did not make any joint venture investments during the three months ended November 30, 2014 and 2013.  See note 15 for developments subsequent to period end.

On November 30, 2013, the Company agreed to sell its indirect ownership interest in Mütec GmbH (Mütec), the Company’s former joint venture in Germany which manufactures proprietary electronic sensing instruments.  Since the purchase price paid to the Company was less than the book value of the Company’s investment in Mütec, the Company recognized a $50,000 impairment charge during the three months ended November 30, 2013, which is included in the consolidated statements of operations in the line item “Equity income of joint ventures.”  In connection with the transaction, the owner of Mütec borrowed $168,000 from the Company to be repaid over four years with no interest. As of November 30, 2014 and August 31, 2014, $150,733 and $156,854 was due to the Company related to this transaction.