Note 6 - Investments in Joint Ventures

9 Months Ended

May. 31, 2015

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments and Joint Ventures Disclosure [Text Block]

6.	INVESTMENTS IN JOINT VENTURES

Financial information from the financial statements of the Company’s joint venture in Germany, Excor Korrosionsschutz – Technologien und Produkte GmbH (EXCOR), joint venture in China, Tianjin-Zerust Anticorrosion Co., Ltd. (Tianjin Zerust), for the periods for which it was accounted for under the equity method (See Note 7) and all of the Company’s other joint ventures, are summarized as follows:

	At May 31, 2015
	Total		EXCOR		All Other
Current assets	$	49,454,666	$	22,205,218	$	27,249,448
Total assets		52,993,622		24,155,320		28,838,303
Current liabilities		12,368,822		3,298,480		9,070,342
Noncurrent liabilities		1,231,277		—		1,231,277
Joint ventures’ equity		39,393,523		20,856,840		18,536,683
Northern Technologies International Corporation’s share of joint ventures’ equity		19,644,767		10,428,422		9,216,345
Northern Technologies International Corporation’s share of joint ventures’ undistributed earnings	$	17,583,956	$	10,397,517	$	7,186,439

	At August 31, 2014
	Total		EXCOR		Tianjin Zerust		All Other
Current assets	$	61,491,957	$	24,361,157	$	9,774,680	$	27,356,120
Total assets		65,466,964		26,652,165		9,793,803		29,020,996
Current liabilities		17,542,634		3,512,143		4,438,380		9,592,111
Noncurrent liabilities		1,929,488		—		868,377		1,061,111
Joint ventures’ equity		45,994,842		23,140,022		4,487,046		18,367,775
Northern Technologies International Corporation’s share of joint ventures’ equity		22,961,989		11,570,013		2,243,524		9,148,452
Northern Technologies International Corporation’s share of joint ventures’ undistributed earnings	$	20,540,523	$	11,539,108	$	2,193,524	$	6,807,891

	Nine Months Ended May 31, 2015
	Total		EXCOR		Tianjin Zerust		All Other
Net sales	$	75,974,770	$	27,580,051	$	3,735,457	$	44,659,262
Gross profit		37,469,186		15,113,100		1,783,673		20,572,413
Net income		9,634,318		6,334,009		265,648		3,034,661
Northern Technologies International Corporation’s share of equity in income of joint ventures	$	4,806,247	$	3,152,489	$	132,824	$	1,520,934

	Nine Months Ended May 31, 2014
	Total		EXCOR		Tianjin Zerust		All Other
Net sales	$	88,213,101	$	29,020,416	$	11,952,115	$	47,240,570
Gross profit		41,609,619		15,000,023		5,550,166		21,059,430
Net income		9,960,639		5,574,387		1,543,155		1,913,097
Northern Technologies International Corporation’s share of equity in income of joint ventures	$	4,416,664	$	2,787,048	$	659,684	$	969,932

All material profits recorded on sales from the Company to its joint ventures have been eliminated for financial reporting purposes.

On January 2, 2015, the Company announced that, effective as of December 31, 2014, the Company terminated its joint venture agreements with its previous joint venture in China, Tianjin Zerust, and began the process of liquidating the joint venture entity. The Company intends to conduct future business in China through a newly formed wholly owned subsidiary, NTIC (Shanghai) Co. Ltd. (NTIC China). As of December 31, 2014, the Company started recognizing Tianjin Zerust based on its carrying value instead of the equity method since the Company no longer expects to significantly affect the joint venture’s operations or decision making during its anticipated liquidation.

The Company records expenses that are directly attributable to the joint ventures on its consolidated statements of operations in the line item “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 nine months ended May 31, 2015. On May 31, 2014, NTI Asean bought out the other 50% owner in its joint venture in Singapore for $110,988, thereby increasing NTI Asean’s ownership in the joint venture from 50% to 100%. The Company did not make any other joint venture investments during the nine months ended May 31, 2014.

On November 30, 2013, the Company agreed to sell its indirect ownership interest in Mütec GmbH (Mütec), the Company’s former joint venture in Germany which manufactures proprietary electronic sensing instruments. Since the purchase price paid to the Company was less than the book value of the Company’s investment in Mütec, the Company recognized a $50,000 impairment charge during the three months ended November 30, 2013, which is included in the consolidated statements of operations in the line item “Equity income of joint ventures.” In connection with the transaction, the owner of Mütec borrowed $168,000 from the Company to be repaid over four years with no interest. As of May 31, 2015 and August 31, 2014, $134,097 and $156,854 was due to the Company related to this transaction.