Enerpac Tool Group Corp. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

12 Months Ended

Aug. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Note 6. Goodwill, Intangible Assets and Long-Lived Assets

Changes in the gross carrying value of goodwill and intangible assets result from changes in foreign currency exchange rates, business acquisitions, divestitures and impairment charges. The changes in the carrying amount of goodwill for the years ended August 31, 2021 and 2020 by operating segment are as follows (in thousands):


	IT&S		Other		Total
Balance as of August 31, 2019	$	242,873	$	17,542	$	260,415
Acquisition of HTL Group (Note 4)	11,261		—		11,261
Impact of changes in foreign currency rates	9,403		75		9,478
Balance as of August 31, 2020	263,537		17,617		281,154
Impairment charge	—		(5,656)		(5,656)
Impact of changes in foreign currency rates	1,550		545		2,095
Balance as of August 31, 2021	$	265,087	$	12,506	$	277,593

The gross carrying value and accumulated amortization of the Company’s intangible assets are as follows (in thousands):


	Weighted Average Amortization Period (Year)	August 31, 2021						August 31, 2020
		Gross		Accumulated Amortization		Net Book Value		Gross		Accumulated Amortization		Net Book Value
Amortizable intangible assets:
Customer relationships	14	$	142,453	$	114,463	$	27,990	$	141,853	$	106,491	$	35,362
Patents	12	14,492		13,688		804		14,365		13,228		1,137
Trademarks and tradenames	12	3,307		2,391		916		3,277		2,257		1,020
Indefinite lived intangible assets:
Tradenames	N/A	24,835		—		24,835		24,863		—		24,863
		$	185,087	$	130,542	$	54,545	$	184,358	$	121,976	$	62,382

The Company estimates that amortization expense for future years is estimated to be $7.5 million in fiscal 2022, $5.9 million in fiscal 2023, $4.2 million in fiscal 2024, $3.5 million in fiscal 2025, $2.0 million in fiscal 2026 and $6.6 million in aggregate thereafter. The future amortization expense amounts represent estimates and may be impacted by future acquisitions, divestitures or changes in foreign currency exchange rates, among other causes.

Fiscal 2021 Impairment Charges

In the fourth quarter of fiscal 2021, the Cortland Industrial business lagged behind our IT&S segment with respect to recovery in demand from the COVID-19 pandemic. Further, though volumes did increase from previous quarters, it became clear that the business was not on track to realize the annual savings from the prior years' footprint optimization actions at the pace initially projected. Therefore, in conjunction with our annual goodwill impairment assessment, the Company recognized a $5.7 million goodwill impairment charge associated with the Cortland Industrial reporting unit (Other Segment) within "Impairment & divestiture charges (benefit)" in the Consolidated Statements of Operations.

Fiscal 2019 Impairment Charges

Within the Other segment, the Company recognized a $13.7 million goodwill impairment charge related to Cortland U.S. in conjunction with triggering events identified during the fiscal year.

In the fourth quarter of fiscal 2019, the Company's branding strategy was revised such that two secondary tradenames previously considered to have indefinite lives were to be phased out and re-branded over the course of fiscal 2020. As such, the Company recorded an impairment & divestiture charge of $2.6 million based on the estimated remaining fair value of the respective tradenames. In addition, based on restructuring actions taken in the fourth quarter of fiscal 2019 related to the North America Services operations, the Company concluded that the fair value of a customer relationship intangible was less than the current net book value, and therefore, a $6.2 million impairment & divestiture charge was recorded. The tradename and customer relationships impairments both related to assets within the IT&S segment.