9.	Goodwill and Other Intangible Assets

The components of amortizable intangible assets are as follows:

 

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.

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 based on its assessment of the factors listed above in regards to the specific trademarks. Accordingly, all trademarks are now subject to amortization.

Estimated annual amortization expense is as follows:

 

For the fiscal year ending July 2012		$	11,133
For the fiscal year ending July 2013		$	10,944
For the fiscal year ending July 2014		$	10,676
For the fiscal year ending July 2015		$	10,318
For the fiscal year ending July 2016		$	9,262
For the fiscal year ending July 2017 and thereafter		$	73,028

The change in carrying value in goodwill from July 31, 2011 to April 30, 2012 is as follows:

 

		Goodwill
Balance at July 31, 2011		$	244,452
Adjustments to Heartland acquisition goodwill in towables reportable segment			757
Balance at April 30, 2012		$	245,209

All but $7,106 (buses segment) of the goodwill resides in the towable recreation vehicles segment.

 

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. Thor's reporting units are the same as its operating segments, which are identified in Note 6.

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. Management engages an independent valuation firm in many cases to assist in its impairment assessments. The Company completed its impairment review as of April 30, 2012 and no impairment of goodwill was identified.

The Company completed an annual review as of April 30, 2011 that 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.

During the first quarter of fiscal year 2011, the Company 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, trademarks associated with one of the former operating companies ceased to be used. Intangible assets were reviewed at that time for a potential impairment and the related trademark values of $2,036 were written off. The fair value of the trademarks was determined using Level 3 inputs as defined by ASC 820.