Goodwill and Other Intangible Assets

9 Months Ended

Apr. 30, 2013

5.	Goodwill and Other Intangible Assets

The components of amortizable intangible assets are as follows:


	Weighted Average Remaining Life	April 30, 2013				July 31, 2012
	in Years at April 30, 2013	Cost		Accumulated Amortization		Cost		Accumulated Amortization
Dealer networks	10	$	68,310	$	17,530	$	72,230	$	13,343
Non-compete agreements	3		4,130		2,168		6,321		3,678
Trademarks	22		37,775		3,646		36,775		2,522
Design technology and other intangibles	12		21,320		4,015		21,300		2,856

Total amortizable intangible assets		$	131,535	$	27,359	$	136,626	$	22,399

Dealer networks are primarily being amortized on an accelerated cash flow basis. Non-compete agreements, trademarks, and design technology and other intangibles are amortized on a straight-line basis.

Estimated annual amortization expense is as follows:


For the fiscal year ending July 31, 2013	$	11,037
For the fiscal year ending July 31, 2014	$	10,488
For the fiscal year ending July 31, 2015	$	10,139
For the fiscal year ending July 31, 2016	$	9,097
For the fiscal year ending July 31, 2017	$	8,710
For the fiscal year ending July 31, 2018 and thereafter	$	63,062

The change in carrying value in goodwill from July 31, 2012 to April 30, 2013 is as follows:


	Goodwill
Balance at July 31, 2012	$	245,209
Acquisitions of bus businesses		5,263
Third quarter impairment in bus reportable segment		(6,810)

Balance at April 30, 2013	$	243,662

Goodwill by reportable segment is as follows:


	April 30, 2013		July 31, 2012
Towables recreation vehicles	$	238,103	$	238,103
Buses		5,559		7,106

Total	$	243,662	$	245,209

In April 2013, the Company determined that it was more likely than not that certain long-lived assets associated with the Company’s ambulance product line would be sold before the end of their previously estimated useful life. This was determined to be a triggering event and an impairment assessment relative to those assets was performed. Based on the assessment, the Company determined that the carrying amount of the assets would not be recoverable from future cash flows and as a result, a non-cash impairment charge of $4,715 related to certain amortizable intangible assets within the Company’s bus reportable segment was recorded.

The Company performed an interim goodwill impairment assessment relative to the goodwill associated with the bus reporting unit which historically included the ambulance product line. Based on the assessment, the Company determined that the fair value of the reporting unit was less than the carrying value and therefore performed the second step of the goodwill impairment assessment, which requires estimating the fair values of the reporting unit’s net identifiable assets and calculating the implied fair value of goodwill. As of the last annual impairment assessment, the fair value of this reporting unit exceeded carrying value by 15%. Recent performance of this reporting unit, particularly its margin percentage was below previous forecasts and resulted in a reduction of the five year forecast. The fair value of the reporting unit was determined by a discounted cash flow model and market approach, consistent with its last annual impairment assessment as more fully described below. The implied fair value of goodwill was determined to be zero and, therefore, recorded goodwill was impaired and a non-cash impairment charge of $6,810 was recognized in the third quarter of fiscal year 2013. The goodwill impairment was primarily a result of lower forecasted margins and increased working capital requirements within the reporting unit. These non-cash impairment charges totaling $11,525 are included in Impairment of Goodwill and Intangible Assets on the Condensed Consolidated Statements of Operations and Comprehensive Income.

Goodwill is not subject to amortization, but instead is reviewed for impairment by applying a fair-value based test to the Company’s reporting units on an annual basis as of April 30, or more frequently if events or circumstances indicate a potential impairment. The Company’s reporting units are the same as its operating segments, which are identified in Note 3 to the Condensed Consolidated Financial Statements. Fair values are determined by a discounted cash flow model and a market approach, when appropriate. These estimates are subject to significant management judgment including the determination of many factors such as sales growth rates, gross margin patterns, cost growth rates, comparable companies, terminal value assumptions and discount rates and therefore largely represent Level 3 inputs as defined by ASC 820. Changes in these estimates can have a significant impact on the determination of cash flows and fair value and could potentially result in future material impairments. The Company completed its annual impairment review as of April 30, 2013 and April 30, 2012; no additional impairment of goodwill was identified, other than as described above in our interim assessment which was required as a result of a triggering event.

- Definition

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+ Details