GOODWILL AND OTHER INTANGIBLE ASSETS

12 Months Ended

Aug. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

NOTE 6. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill by reportable segment is detailed in the following table:


(in thousands)		North America		Europe		Consolidated
Goodwill, gross:
Balance, September 1, 2021		$	71,941	$	4,390	$	76,331
	Acquisitions	144,118		42,687		186,805
	Foreign currency translation	—		(3,962)		(3,962)

Balance at August 31, 2022		216,059		43,115		259,174
	Acquisitions	135,382		—		135,382
	Foreign currency translation	—		1,446		1,446

Balance at August 31, 2023		351,441		44,561		396,002

Accumulated impairment:
Balance, September 1, 2021		(10,036)		(158)		(10,194)
	Foreign currency translation	—		29		29

Balance at August 31, 2022		(10,036)		(129)		(10,165)
	Foreign currency translation	—		(16)		(16)

Balance at August 31, 2023		(10,036)		(145)		(10,181)

Goodwill, net:
Balance, September 1, 2021		61,905		4,232		66,137
	Acquisitions	144,118		42,687		186,805
	Foreign currency translation	—		(3,933)		(3,933)
Balance at August 31, 2022		206,023		42,986		249,009
	Acquisitions	135,382		—		135,382
	Foreign currency translation	—		1,430		1,430
Balance at August 31, 2023		$	341,405	$	44,416	$	385,821

The change in goodwill within the North America segment from August 31, 2022 to August 31, 2023 was due to the 2023 Acquisitions. See Note 2, Changes in Business, for information on the 2023 Acquisitions.

During 2023, 2022 and 2021, the annual goodwill impairment analyses, which are performed as of the first day of the Company's fourth quarter (the "annual impairment test date"), did not result in any impairment charges. For the year ended August 31, 2023, the Company performed qualitative tests for three reporting units consisting of $49.8 million of goodwill as of the 2023 annual impairment test date and quantitative tests for three reporting units consisting of $292.3 million of goodwill as of the 2023 annual impairment test date. The difference in the balance of goodwill between the 2023 annual impairment test date and August 31, 2023 was due to the acquisition of EDSCO and foreign currency translation adjustments. The results of the qualitative and quantitative tests indicated it was more likely than not that the fair value of all reporting units with goodwill exceeded their carrying values.

Other indefinite-lived intangible assets consisted of the following:


(in thousands)	August 31, 2023		August 31, 2022
Trade names	$	54,056	$	53,633
In-process research and development	2,400		2,400
Non-compete agreements	750		750
Total	$	57,206	$	56,783

During 2023 and 2022, the Company did not record any indefinite-lived intangible asset impairment charges. As of the 2023 annual impairment test date, the Company had $57.1 million of indefinite-lived intangible assets, of which $53.8 million were tested for impairment using a quantitative approach. Based on the quantitative tests performed, the Company concluded it to be more likely than not that the estimated fair values of the indefinite-lived intangible assets were greater than their respective carrying values. The change in the balance of intangible assets with indefinite lives from August 31, 2022 to August 31, 2023 and from the 2023 annual impairment test date to August 31, 2023 was due to foreign currency translation adjustments.

Other intangible assets subject to amortization are detailed in the following table:


	August 31, 2023						August 31, 2022
(in thousands)	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
Developed technologies	$	150,445	$	25,228	$	125,217	$	147,040	$	6,485	$	140,555
Customer relationships	74,582		7,606		66,976		53,115		2,116		50,999
Patents	7,203		5,570		1,633		7,203		4,596		2,607
Perpetual lease rights	5,984		910		5,074		3,584		744		2,840
Trade names	3,287		1,129		2,158		3,212		764		2,448
Non-compete agreements	2,300		1,502		798		3,050		1,135		1,915
Other	224		125		99		101		99		2
Total	$	244,025	$	42,070	$	201,955	$	217,305	$	15,939	$	201,366

The acquired assets from the Tendon and EDSCO acquisitions included intangible assets for customer relationships with fair values of $8.9 million and $12.0 million, respectively. The fair value of the intangible assets for customer relationships were each calculated using an income approach, under the with-and-without method, which considers opportunity costs associated with lost profits in the absence of the existing customer bases. The intangible assets for customer relationships were assigned useful lives of five years. See Note 2, Changes in Business, for additional information on the Tendon and EDSCO acquisitions.

The foreign currency translation adjustments related to the intangible assets subject to amortization were immaterial for all periods presented above.

Amortization expense for intangible assets was $25.9 million and $10.0 million in 2023 and 2022, respectively, of which $18.7 million and $6.4 million, respectively, was recorded in cost of goods sold and $7.2 million and $3.6 million, respectively, was recorded in SG&A expenses in the consolidated statements of earnings. Amortization expense for intangible assets was $2.1 million in 2021, all of which was recorded in SG&A expenses in the consolidated statement of earnings. Estimated amortization expense for the next five years is as follows:


Year Ended August 31,	(in thousands)
2024	$	28,195
2025	26,464
2026	25,250
2027	25,142
2028	23,484