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Goodwill And Other Intangible Assets

12 Months Ended

Jul. 31, 2011

Goodwill And Other Intangible Assets

Goodwill And Other Intangible Assets

C.   GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and indefinite-lived intangible assets are reviewed for impairment by applying a fair-value based test on an annual basis at April 30, or more frequently if events or circumstances indicate a potential impairment.

The components of amortizable intangible assets are as follows:

						July 31, 2011								July 31, 2010
		Weighted Average   Years Remaining Life				Cost				Accumulated Amortization				Cost				Accumulated Amortization
Dealer networks		12					$        72,230				$          6,154				$    5,230				$         156
Non-Compete agreements		4					6,851				3,300				2,721				2,315
Trademarks		24					36,669				1,008				–				–
Technology and other intangibles		14					22,260				2,293				270				22
Total amortizable intangible assets							$      138,010				$        12,755				$    8,221				$      2,493

Aggregate amortization expense for amortizable intangibles for the fiscal years ended July 31, 2011, 2010 and 2009 were $10,262, $510 and $476, respectively. The dealer networks are primarily being amortized on an accelerated cash flow basis. Non-compete agreements and other intangibles are amortized on a straight-line basis. Prior to the Heartland acquisition, the Company had deemed its various trademarks to have indefinite lives and therefore not subject to amortization. However, in assessing the trademarks obtained in the Heartland acquisition, the Company determined that with the cyclicality in the RV industry and the extent of competition in the industry it was more appropriate to consider those trademarks as definite-lived assets with 25 year useful lives. The Company also re-assessed its other trademarks and, effective on May 1, 2011, re-characterized all of its trademarks as definite-lived assets with useful lives of 20-25 years. Accordingly, all trademarks are now subject to amortization and fourth quarter amortization of previously unamortized trademarks was $126. All of the Company's previously classified indefinite-lived trademarks were subject to the Company's April 30, 2011 impairment assessment.

Estimated Amortization Expense:

For the fiscal year ending July 2012			$        11,131
For the fiscal year ending July 2013			$        10,939
For the fiscal year ending July 2014			$        10,671
For the fiscal year ending July 2015			$        10,313
For the fiscal year ending July 2016 and thereafter			$        82,201

Goodwill is not subject to amortization.

During the first quarter of fiscal year 2011, management decided to combine its Damon and Four Winds motorized operations to form Thor Motor Coach to optimize operations and garner cost efficiencies. As a result, indefinite-lived intangible assets were reviewed at that time for a potential impairment, trademarks associated with one of the former operating companies were discontinued and the related trademark values of $2,036 were written off.

For the annual impairment test at April 30, 2011, 2010 and 2009, management engaged an independent valuation firm to assist in its impairment assessment reviews. The fair value of all previously indefinite-lived trademarks was determined using a royalty savings methodology similar to that employed when the associated businesses were acquired but using updated estimates of sales, royalty and discount rates. The fair value of the Company's reporting units for purposes of goodwill testing was determined by employing a discounted cash flow methodology and a market approach, when appropriate. The April 30, 2011 review resulted in a non-cash trademark impairment of $1,430 associated with an operating subsidiary in the Company's bus segment. This impairment resulted from lower anticipated sales than previously expected. The fair value of the trademark was determined using level 3 inputs as defined by ASC 820. As a result of the annual impairment assessment as of April 30, 2011, no impairment of goodwill or indefinite-lived intangible assets was identified other than the trademark impairment described above.

The Company completed an impairment review as of April 30, 2010 that resulted in a non-cash trademark impairment of $500 in the third quarter of fiscal 2010 for the trademark associated with an operating subsidiary in the towables segment. This impairment resulted from the sluggish market and outlook for the park model business.

The Company completed an unscheduled impairment review as of January 31, 2009 that resulted in a non-cash trademark impairment of $564 in the second quarter of fiscal 2009 for the trademark associated with an operating subsidiary in the motorized reportable segment. Another review was also conducted as of April 30, 2009 which resulted in a non-cash goodwill impairment charge of $9,717 in the third quarter of fiscal 2009 for the goodwill associated with an operating subsidiary in the motorized reportable segment. The impairments resulted from the difficult market environment and outlook for the motorhome business.

The change in carrying value in goodwill and indefinite-lived trademarks from July 31, 2010 to July 31, 2011 is as follows:

		Goodwill				Trademarks
Balance at July 31, 2010			$150,901				$     14,936
Impairment of trademark in motorized reportable segment			–				(2,036)
Impairment of trademark in buses reportable segment			–				(1,430)
Amounts resulting from Heartland acquisition in towables reportable segment			93,551				–
Reclassification of certain trademarks to definite-lived			–				(11,470)
Balance at July 31, 2011			$  244,452				$              –

Changes in the carrying amount of goodwill as of July 31, 2011 and 2010 are summarized as follows:

		Towables				Motorized				Buses				2011 Total				Towables				Motorized				Buses				2010 Total
Balance as of beginning of fiscal year:
Goodwill		$	143,795			$	17,252			$	7,106			$	168,153			$	143,795			$	17,252			$	4,616			$	165,663
Accumulated impairment charges			–				(17,252)				–				(17,252)				–				(17,252)				–				(17,252)
Net Balance at beginning of fiscal year			143,795				–				7,106				150,901				143,795				–				4,616				148,411
Fiscal year activity:
Goodwill acquired – Heartland			93,551				–				–				93,551				–				–				–				–
Goodwill acquired - SJC			–				–				–				–				–				–				2,490				2,490
Balance as of end of fiscal year:
Goodwill			237,346				17,252				7,106				261,704				143,795				17,252				7,106				168,153
Accumulated impairment charges			–				(17,252)				–				(17,252)				–				(17,252)				–				(17,252)
Net Balance as of July 31:		$	237,346			$	–			$	7,106			$	244,452			$	143,795			$	–			$	7,106			$	150,901

Goodwill and trademarks by segment are as follows:

		July 31, 2011								July 31, 2010
		Goodwill				Trademarks				Goodwill				Trademarks
Recreation Vehicles
Towables			$  237,346				$   33,950				$  143,795				$     9,737
Motorized			–				–				–				2,036
Buses			7,106				1,711				7,106				3,163
Total			$  244,452				$   35,661				$  150,901				$   14,936

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The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6905597&loc=d3e13816-109267

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 30
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6905858&loc=d3e16265-109275

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 142
-Paragraph 42, 43, 44, 45, 46, 47
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 30
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6905858&loc=d3e16373-109275

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 30
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6905858&loc=d3e16323-109275

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6905597&loc=d3e13854-109267

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