Acquisition

12 Months Ended

Jul. 31, 2011

Acquisition

Acquisition

S.  ACQUISITIONS

On September 16, 2010, the Company purchased all of the outstanding capital stock of Towable Holdings, Inc., which owned all of the outstanding equity interests of Heartland Recreational Vehicles, LLC ("Heartland"). Heartland is engaged in the business of manufacturing and marketing recreation vehicles, consisting of travel trailers and fifth wheel vehicles. Heartland operates as a wholly-owned subsidiary of the Company and is managed as its own operating segment that is aggregated into the Company's towable recreation vehicle reportable segment. The assets acquired as a result of the acquisition include equipment and other tangible and intangible property. The assets of Heartland are used in connection with the operation of Heartland's business of manufacturing and marketing towable recreation vehicles.

Pursuant to the purchase agreement entered into in connection with the acquisition, the Company paid $99,562, subject to adjustment, in cash and issued 4,300,000 shares of the Company's unregistered common stock ("Thor Shares") valued at an aggregate of $90,531. Thus far, adjustments to increase consideration of $170 have been identified and accrued as of July 31, 2011. The value of the Thor Shares was based on an independent appraisal. The cash portion of the consideration was funded entirely from the Company's cash on hand. The Company expensed $1,826 of transaction costs as part of corporate selling, general and administrative expense in connection with the acquisition during fiscal year 2011.

Members of management of Heartland who received Thor Shares also entered into a stock restriction agreement with the Company, which, among other things, places certain restrictions aligned with their employment with the Company on the disposition of the Company's common stock issued to such persons for a period of four years after the closing of the transaction. These restrictions lapse in pro rata amounts beginning on the first anniversary of the closing of the transaction and every six months thereafter, with an exception for certain permitted acceleration events. In addition, the Company granted to the former indirect security holders of Heartland, who received Thor Shares, registration rights to register the resale of the Thor Shares.

The following table summarizes the fair value of the net assets acquired, which are based on internal and independent external evaluations, at the date of the closing. Certain provisional estimates of tax deductible costs have been adjusted and these adjustments reduced net taxes and goodwill by approximately $1,300. Additional adjustments to the allocation are possible and are expected to be finalized in the first quarter of 2012. Such adjustments are not expected to be material.

Current assets	$	48,913
Property, plant and equipment		9,993
Dealer network		67,000
Goodwill		93,551
Trademarks		25,200
Technology assets		21,300
Non-compete agreements		4,130
Backlog		690
Current liabilities		(41,073)
Deferred income tax liabilities		(37,364)
Other liabilities		(2,077)
Total fair value of net assets acquired	$	190,263

The Company did not assume any of Heartland's outstanding debt, other than existing capital lease obligations of $429. Amortized intangible assets have a weighted average useful life of 14.9 years. The dealer network was valued based on the Discounted Cash Flow Method and is being amortized on an accelerated cash flow basis over 12 years. The technology assets were valued based on the Relief from Royalty Method and are being amortized on a straight line basis over 10 to 15 years. The non-compete agreements were valued based on the Lost Income Method, a form of the Discounted Cash Flow Method, and are being amortized on a straight line basis over 5 years. The trademarks were valued based on the Relief from Royalty Method and are being amortized on a straight line basis over 25 years. The backlog was valued based on the Discounted Cash Flow Method and was amortized over 3 weeks. Goodwill is not subject to amortization. Prior to the acquisition, Heartland had historical net tax basis in goodwill of approximately $11,600 that is deductible for tax purposes and will continue to be deductible.

The primary reasons for the acquisition include Heartland's future earning potential, its fit with the Company's existing operations, its market share and its cash flow. The results of operations of Heartland are included in the Company's Consolidated Statement of Income from the September 16, 2010 date of acquisition through July 31, 2011. During this period, Heartland recorded net sales of $365,389 and net income before tax of $13,132. Net income before tax includes one-time costs of $746 related to the step-up in finished goods inventory and $690 for amortization of backlog. In addition, Heartland's results from September 16, 2010 through July 31, 2011 included ongoing amortization costs of $8,563.

The following unaudited pro forma information represents the Company's results of operations as if the acquisition had occurred at the beginning of each of the respective periods. These performance results may not be indicative of the actual results that would have occurred under the ownership and management of the Company.

	Fiscal Year Ended July 31,
	2011		2010
Net sales	$	2,817,400	$	2,673,976
Net income	$	109,431	$	119,676
Basic earnings per common share	$	1.96	$	2.09
Diluted earnings per common share	$	1.96	$	2.08

On March 1, 2010, the Company acquired 100% of SJC Industries Corp. ("SJC"), a privately-held manufacturer of ambulances based in Elkhart, Indiana, for $19,756 in cash and $325 of future cash obligations to the seller for a total purchase price of $20,081. The Company believes that the ambulance business is a natural fit with its bus business and has included the operations of SJC in its Buses reportable segment. The operations of SJC are included in the Company's operating results from the date of its acquisition. From March 1, 2010 through July 31, 2010, SJC recorded net sales of $13,218 and acquisition costs were not material.

Based on internal and independent external valuations, the Company allocated the purchase price to the net identifiable assets of SJC as follows:

Net working capital	$	7,412
Property, plant and equipment		2,459
Dealer network		5,230
Goodwill		2,490
Trademarks		2,100
Technology		270
Non-compete		120
	$	20,081

Amortized intangible assets have a weighted average useful life of 13.4 years. The dealer network is being amortized on a straight line basis over 14 years, and the technology assets and non-compete agreements, are both being amortized on a straight line basis over 5 years. Goodwill is not subject to amortization. The entire goodwill balance is tax deductible. Pro forma financial information has not been presented due to its insignificance.