Annual report pursuant to Section 13 and 15(d)

Goodwill and Other Intangible Assets

v3.19.3
Goodwill and Other Intangible Assets
 12 Months Ended
Aug. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangible Assets
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, 2019 and 2018 by operating segment are as follows (in thousands):
 
 
Industrial Tools & Services
 
Other
 
Total
Balance as of August 31, 2017
 
$
238,707

 
$
33,712

 
$
272,419

Business acquisitions
 
12,441

 
—

 
12,441

Impact of changes in foreign currency rates
 
(2,443
)
 
(2,285
)
 
(4,728
)
Balance as of August 31, 2018
 
248,705

 
31,427

 
280,132

Purchase accounting adjustments
 
253

 
—

 
253

Impairment charge
 
—

 
(13,678
)
 
(13,678
)
Impact of changes in foreign currency rates
 
(6,085
)
 
(207
)
 
(6,292
)
Balance as of August 31, 2019
 
$
242,873

 
$
17,542

 
$
260,415


The changes in the carrying amount of goodwill included within "Assets from discontinued operations" on the Consolidated Balance Sheets for the years ended August 31, 2019 and 2018 are as follows (in thousands):
Balance as of August 31, 2017
 
$
257,662

Impairment charge
 
(21,227
)
Impact of changes in foreign currency rates
 
(2,655
)
Balance as of August 31, 2018
 
233,780

Impairment charge
 
(209,489
)
Impact of changes in foreign currency rates
 
(7,429
)
Balance as of August 31, 2019
 
$
16,862



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, 2019
 
August 31, 2018
 
 
Gross
 
Accumulated Amortization
 
Net Book Value
 
Gross
 
Accumulated Amortization
 
Net Book Value
Amortizable intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Customer relationships
 
14
 
$
126,229

 
$
96,817

 
$
29,412

 
$
128,561

 
$
84,029

 
$
44,532

Patents
 
12
 
13,227

 
12,276

 
951

 
13,324

 
11,915

 
1,409

Trademarks and tradenames
 
16
 
4,513

 
2,921

 
1,592

 
4,275

 
2,826

 
1,449

Non-compete agreements & other
 
3
 
4,835

 
4,835

 
—

 
4,942

 
4,813

 
129

Indefinite lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tradenames
 
N/A
 
20,420

 
—

 
20,420

 
24,138

 
—

 
24,138

 
 
 
 
$
169,224

 
$
116,849

 
$
52,375

 
$
175,240

 
$
103,583

 
$
71,657


The Company estimates that amortization expense for future years is estimated to be $7.6 million in fiscal year 2020, $6.7 million in fiscal 2021, $5.9 million in fiscal 2022, $4.4 million in fiscal 2023, $2.7 million in fiscal 2024 and $4.7 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 2019 Impairment Charges
During fiscal 2019, 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 are to be phased out and re-branded within 12-15 months. 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 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.