Victory Motorcycles Wind Down (Notes)

3 Months Ended

Mar. 31, 2017

Discontinued Operations and Disposal Groups [Abstract]

Victory Motorcycles Wind Down

Victory Motorcycles Wind Down

On January 9, 2017, the Company’s Board of Directors approved a strategic plan to wind down the Victory^® Motorcycles brand. The Company has commenced the wind down activities and disposition options for the related assets. As a result of the wind down activities, the Company incurred total charges of $45,782,000 for the three months ended March 31, 2017 that are within the scope of ASC 420, Exit or Disposal Cost Obligations, which does not include promotional impacts of $11,798,000 incurred during the quarter. The Company estimates that the total impact of wind down activities in 2017 will be in the range of $70,000,000 to $90,000,000, inclusive of promotional activity. Substantially all costs related to wind down activities are expected to be recognized by the end of 2017.

As a result of the wind down activities, the Company incurred expenses within the scope of ASC 420 of $45,782,000 during the three months ended March 31, 2017, consisting of dealer termination, supplier termination, dealer litigation, employee separation, asset impairment charges, including the impairment of a cost method investment, inventory write-down charges and other costs. There were no wind down expenses related to this initiative during the three months ended March 31, 2016. The wind down expenses have been included as components of cost of sales, selling and administrative, general and administrative expenses or other expense, net, in the consolidated income statements. Charges related to the wind down plan for the three months ended March 31, 2017 within the scope of ASC 420 were as follows (in thousands):

	Three months ended March 31,
	2017
Contract termination charges	$	14,307
Asset impairment charges	18,760
Inventory charges	7,451
Other costs	5,264
Total	$	45,782

The total liability balance related to the Victory Motorcycles wind down activities is $24,061,000 as of March 31, 2017, and is included in other accrued expenses and inventory in the consolidated balance sheets. Changes to this accrual during the three months ended March 31, 2017 were as follows (in thousands):

	Contract termination charges			Inventory charges		Other costs			Total
Liability balance as of January 1, 2017	—			—		—			—
Expenses	$	14,307		$	7,451	$	5,264		$	27,022
Cash payments	(187		)	—		(2,774		)	(2,961		)
Liability balance as of March 31, 2017	$	14,120		$	7,451	$	2,490		$	24,061