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Note 6 - Investments in Joint Ventures

3 Months Ended

Nov. 30, 2012

Equity Method Investments and Joint Ventures Disclosure [Text Block]

6. 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 consolidated 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 of goods 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), joint venture in China and all of the Company’s other joint ventures, are summarized as follows:

	At November 30, 2012
	Total		EXCOR		China		All Other
Current assets	$	61,936,535	$	21,440,244	$	11,933,790	$	28,562,501
Total assets		68,157,107		23,756,509		11,968,500		32,432,098
Current liabilities		20,079,934		4,737,085		4,822,792		10,520,057
Noncurrent liabilities		4,815,797		—		856,547		3,959,250
Joint ventures’ equity		43,261,376		19,019,424		6,289,161		17,952,791
Northern Technologies International Corporation’s share of joint ventures’ equity		21,435,223		9,509,714		3,148,679		8,776,830
Northern Technologies International Corporation’s share of joint ventures’ undistributed earnings	$	19,341,157	$	9,478,809	$	3,095,230	$	6,767,118

	At August 31, 2012
	Total		EXCOR		NTI ASEAN		All Other
Current assets	$	61,973,725	$	24,357,139	$	15,358,967	$	22,257,619
Total assets		68,585,974		26,620,589		15,522,456		26,442,929
Current liabilities		18,686,181		4,749,574		5,763,857		8,172,750
Noncurrent liabilities		4,700,458		—		1,055965		3,644,493
Joint ventures’ equity		45,199,335		21,871,015		8,702,634		14,625,686
Northern Technologies International Corporation’s share of joint ventures’ equity		21,461,492		10,935,509	$	3,685,404		6,840,579
Northern Technologies International Corporation’s share of joint ventures’ undistributed earnings	$	19,403,150	$	10,904,604	$	3,314,445	$	5,184,101

	Three Months Ended November 30, 2012
	Total		EXCOR		China		All Other
Net sales	$	27,524,934	$	8,609,463	$	3,568,798	$	15,346,673
Gross profit		13,127,067		4,434,290		1,730,402		6,962,375
Net income		2,440,560		1,570,374		294,003		576,183
Northern Technologies International Corporation’s share of equity in income of joint ventures	$	1,154,296	$	785,187	$	147,001	$	222,108

	Three Months Ended November 30, 2011
	Total		EXCOR		NTI ASEAN		All Other
Net sales	$	28,795,232	$	8,542,250	$	5,022,328	$	15,230,654
Gross profit		13,339,072		4,325,802		2,286,705		6,726,565
Net income		2,538,769		1,457,055		738,922		689,348
Northern Technologies International Corporation’s share of equity in income of joint ventures	$	1,357,680	$	728,528	$	369,461	$	259,691

The Company records expenses that are directly attributable to the joint ventures on the consolidated 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 other joint venture investments during the three months ended November 30, 2012 and 2011.

- Definition

The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group.

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