Note 5 - Investments in Joint Ventures

6 Months Ended

Feb. 29, 2012

5. 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 financial statements have subsequently been adjusted to approximate U.S. GAAP in all material respects. All material profits recorded on sales from the Company to its joint ventures, that remain in inventory, 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), the Company’s joint venture holding company in the Association of Southeast Asian Nations, or ASEAN, region, NTI ASEAN, LLC (NTI ASEAN), and all of the Company’s other joint ventures, are summarized as follows:

	February 29, 2012
	TOTAL		EXCOR		NTI ASEAN		All Other
Current assets	$	61,449,882	$	20,754,978	$	15,429,546	$	25,265,358
Total assets		68,109,529		23,378,049		15,577,183		29,154,297
Current liabilities		22,008,135		3,797,080		6,499,839		11,711,216
Noncurrent liabilities		5,190,921		—		990,752		4,200,169
Joint ventures’ equity		40,910,473		19,580,969		8,086,592		13,242,912
Northern Technologies International Corporation’s share of joint ventures’ equity		18,900,336		9,790,486		2,990,939		6,118,911

	August 31, 2011
	TOTAL		EXCOR		NTI ASEAN		All Other
Current assets	$	66,956,061	$	24,411,880	$	14,565,219	$	27,978,962
Total assets		73,155,916		27,093,874		14,759,582		31,302,460
Current liabilities		24,712,555		5,145,239		6,123,684		13,443,632
Noncurrent liabilities		4,605,837		—		1,020,034		3,585,803
Joint ventures’ equity		43,837,523		21,948,635		7,615,864		14,273,025
Northern Technologies International Corporation’s share of joint ventures’ equity		20,559,509		10,931,819		2,803,194		6,824,496

	Six Months Ended February 29, 2012
	TOTAL		EXCOR		NTI ASEAN		All Other
Net sales	$	54,792,662	$	16,958,519	$	10,482,144	$	27,351,999
Gross profit		25,945,925		8,860,381		4,705,397		12,380,147
Net income		4,798,435		3,158,682		1,276,056		363,697
Northern Technologies International Corporation’s share of equity in income of joint ventures	$	2,582,355	$	1,576,496	$	692,115	$	313,744

	Six Months Ended February 28, 2011
	TOTAL		EXCOR		NTI ASEAN		All Other
Net sales	$	53,405,322	$	16,737,132	$	8,690,315	$	27,977,875
Gross profit		24,910,772		8,506,310		4,055,738		12,348,724
Net income		5,277,712		3,116,690		1,053,512		1,107,510
Northern Technologies International Corporation’s share of equity in income of joint ventures	$	2,824,790	$	1,547,773	$	558,260	$	718,757

The Company records expenses that are directly attributable to the joint ventures on the statements of operations on the line “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 six months ended February 29, 2012 and February 28, 2011.

- Definition

The entire disclosure for investment holdings. This includes the long positions of investments for the entity. It contains investments in affiliated and unaffiliated issuers. The investments include securities and non securities (i.e. commodities and futures contracts).

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