Goodwill and Other Intangible Assets
 12 Months Ended
Aug. 31, 2012
Goodwill And Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangible Assets

Note 6 — Goodwill and other intangible assets

The Company’s goodwill of $8.0 million and $7.9 million at August 31, 2012 and 2011, respectively, relates to the Company’s Food Ingredients reporting unit. The Company completed its evaluation of the carrying value of goodwill as of June 1, 2012 and determined there was no impairment to the recorded value of goodwill. In order to identify potential impairments, Penford compared the fair value of its Food Ingredients reporting unit with its carrying amount, including goodwill. Penford then compared the implied fair value of goodwill with the carrying amount of that goodwill. The implied fair value of the reporting unit was determined using the discounted cash flow method, the implied market capitalization method and the guideline company method. Since there was no indication of impairment, Penford was not required to complete the second step of the process which would measure the amount of any impairment. At June 1, 2012, the fair value of the Food Ingredients reporting unit was substantially in excess of its carrying value, and there are no changes in that conclusion as of August 31, 2012.

 

(Dollars in thousands)       

Goodwill, August 31, 2011

    $ 7,897   

Acquisition of Carolina Starches

      81   
  

 

 

  

Goodwill, August 31, 2012

    $ 7,978   
  

 

 

  

Penford’s intangible assets consist of patents, customer lists and non-compete agreements. Patents are being amortized over the weighted average remaining amortization period of four years as of August 31, 2012. There is no residual value associated with patents. The fair value of customer lists and non-compete agreements from the acquisition of Carolina Starches are being amortized over their estimated useful lives. Customer lists are amortized on a straight-line basis over two years and the non-compete agreements are being amortized on a straight-line basis over the five-year term of the agreements. The carrying amount and accumulated amortization of intangible assets are as follows (dollars in thousands):

 

     August 31, 2012      August 31, 2011  
     Carrying      Accumulated      Carrying      Accumulated  
     Amount      Amortization      Amount      Amortization  

Intangible assets:

            

Patents

    $ 1,748       $ 1,500       $ 1,768       $ 1,436   

Customer lists

      190         59         —           —     

Non-compete agreements

      100         12         —           —     
  

 

 

     

 

 

     

 

 

     

 

 

  

Other intangible assets

    $ 2,038       $ 1,571       $ 1,768       $ 1,436   
  

 

 

     

 

 

     

 

 

     

 

 

  

Amortization expense related to intangible assets was $0.1 million in fiscal year 2012 and less than $0.1 million in each of fiscal years 2011 and 2010. The estimated aggregate annual amortization expense for patents is not significant for the next five fiscal years, 2013 through 2017.