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Goodwill And Other Intangible Assets
 12 Months Ended
Aug. 31, 2016
Goodwill And Other Intangible Assets [Abstract]  
Goodwill And Other Intangible Assets

Note 5. Goodwill and Other Intangible Assets



Acquisitions



During the first quarter of fiscal year 2015, the Company entered into an agreement by and between GT 85 Limited (“GT85”) and WD-40 Company Limited, which is the Company’s U.K. subsidiary, to acquire the GT85 business and certain of its assets for a purchase consideration of $4.1 million. Of this purchase consideration, $3.7 million was paid in cash upon completion of the acquisition (“completion”) and the remaining balance was paid in June 2015.  Located in the U.K., the GT85 business was engaged in the marketing and sale of the GT85® and SG85 brands of maintenance products. This acquisition complements the Company’s maintenance products and will help to build upon its strategy to develop new product categories for WD-40 Specialist and WD-40 BIKE.



The purchase price was allocated to certain customer-related, trade name-related, and technology-based intangible assets in the amount of $1.7 million, $0.9 million, and $0.2 million, respectively. The Company began to amortize these definite-lived intangible assets on a straight-line basis over their estimated useful lives of eight,  ten, and four years, respectively, in the first quarter of fiscal year 2015. The purchase price exceeded the fair value of the intangible assets acquired and, as a result, the Company recorded goodwill of $1.3 million in connection with this transaction. This acquisition did not have a material impact on the Company’s condensed consolidated financial statements, and as a result no pro forma disclosures have been presented.



During the second quarter of fiscal year 2014, the Company entered into an Asset Purchase Agreement (the “Purchase Agreement”) by and between Etablissements Decloedt SA/NV (“Etablissements”) and WD-40 Company Limited. From January 1998 through the date of this Purchase Agreement, Etablissements acted as one of the Company’s international marketing distributors located in Belgium where it marketed and distributed certain of the WD-40 products. Pursuant to the Purchase Agreement, the Company acquired the list of customers and related information (the “customer list”) from Establissements for a purchase consideration of $1.8 million in cash. The Company has been using this customer list since its acquisition to solicit and transact direct sales of its products in Belgium. The Company began to amortize this customer list definite-lived intangible asset on a straight-line basis over its estimated useful life of five years in the second quarter of fiscal year 2014. 



Goodwill



The following table summarizes the changes in the carrying amounts of goodwill by segment (in thousands):  



 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 



Americas

 

EMEA

 

Asia-Pacific

 

Total

Balance as of August 31, 2014

$

 85,581 

 

$

 8,707 

 

$

 1,211 

 

$

 95,499 

GT85 acquisition

 

 -

 

 

 1,231 

 

 

 -

 

 

 1,231 

Translation adjustments

 

 (49)

 

 

 (271)

 

 

 (1)

 

 

 (321)

Balance as of August 31, 2015

 

 85,532 

 

 

 9,667 

 

 

 1,210 

 

 

 96,409 

Translation adjustments

 

 (80)

 

 

 (680)

 

 

 -

 

 

 (760)

Balance as of August 31, 2016

$

 85,452 

 

$

 8,987 

 

$

 1,210 

 

$

 95,649 



 

 

 

 

 

 

 

 

 

 

 

During the second quarter of fiscal year 2016, the Company performed its annual goodwill impairment test. The annual goodwill impairment test was performed at the reporting unit level as required by the authoritative guidance. The Company performed a qualitative assessment of each reporting unit to determine whether it was more likely than not that the fair value of a reporting unit was less than its carrying amount. In performing this qualitative assessment, the Company assessed relevant events and circumstances that may impact the fair value and the carrying amount of each of its reporting units. Factors that were considered included, but were not limited to, the following: (1) macroeconomic conditions; (2) industry and market conditions; (3) historical financial performance and expected financial performance; (4) other entity specific events, such as changes in management or key personnel; and (5) events affecting the Company’s reporting units, such as a change in the composition of net assets or any expected dispositions. Based on the results of this qualitative assessment, the Company determined that it is more likely than not that the carrying value of each of its reporting units is less than its fair value and, thus, the two-step quantitative analysis was not required.  As a result, the Company concluded that no impairment of its goodwill existed as of February 29, 2016.



In addition, there were no indicators of impairment identified as a result of the Company’s review of events and circumstances related to its goodwill subsequent to February 29, 2016, the date of its most recent annual goodwill impairment test. To date, there have been no impairment losses identified and recorded related to the Company’s goodwill.

Definite-lived Intangible Assets



The Company’s definite-lived intangible assets, which include the 2000 Flushes, Spot Shot, Carpet Fresh, 1001 and GT85 trade names, the Belgium customer list, the GT85 customer relationships and the GT85 technology are included in other intangible assets, net in the Company’s condensed consolidated balance sheets. The following table summarizes the definite-lived intangible assets and the related accumulated amortization (in thousands):



 

 

 

 

 



 

 

 

 

 



August 31,

 

August 31,



2016

 

2015

Gross carrying amount

$

 36,009 

 

$

 37,805 

Accumulated amortization

 

 (16,818)

 

 

 (14,844)

Net carrying amount

$

 19,191 

 

$

 22,961 



 

 

 

 

 



There has been no impairment charge for the period ended August 31, 2016 as a result of the Company’s review of events and circumstances related to its existing definite-lived intangible assets.



Changes in the carrying amounts of definite-lived intangible assets by segment are summarized below (in thousands):





 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 



Americas

 

EMEA

 

Asia-Pacific

 

Total

Balance as of August 31, 2014

$

 19,328 

 

$

 4,343 

 

$

 -

 

$

 23,671 

Amortization expense

 

 (2,207)

 

 

 (832)

 

 

 -

 

 

 (3,039)

GT85 customer relationships

 

 -

 

 

 1,570 

 

 

 -

 

 

 1,570 

GT85 trade name

 

 -

 

 

 896 

 

 

 -

 

 

 896 

GT85 technology

 

 -

 

 

 159 

 

 

 -

 

 

 159 

Translation adjustments

 

 -

 

 

 (296)

 

 

 -

 

 

 (296)

Balance as of August 31, 2015

 

 17,121 

 

 

 5,840 

 

 

 -

 

 

 22,961 

Amortization expense

 

 (2,208)

 

 

 (768)

 

 

 -

 

 

 (2,976)

Translation adjustments

 

 -

 

 

 (794)

 

 

 -

 

 

 (794)

Balance as of August 31, 2016

$

 14,913 

 

$

 4,278 

 

$

 -

 

$

 19,191 



 

 

 

 

 

 

 

 

 

 

 



The estimated amortization expense for the Company’s definite-lived intangible assets in future fiscal years is as follows (in thousands):



 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 



Trade Names

 

Customer-Based

 

Technology

Fiscal year 2017

$

 2,422 

 

$

 452 

 

$

 34 

Fiscal year 2018

 

 2,417 

 

 

 452 

 

 

 33 

Fiscal year 2019

 

 2,417 

 

 

 262 

 

 

 -

Fiscal year 2020

 

 2,022 

 

 

 167 

 

 

 -

Fiscal year 2021

 

 1,232 

 

 

 167 

 

 

 -

Thereafter

 

 6,947 

 

 

 167 

 

 

 -

Total

$

 17,457 

 

$

 1,667 

 

$

 67 



 

 

 

 

 

 

 

 

Included in the total estimated future amortization expense is the amortization expense for the 1001 trade name and the GT85 intangible assets, which are based on current foreign currency exchange rates, and as a result amounts in future periods may differ from those presented due to fluctuations in those rates.