Goodwill and Other Intangible Assets

ASC Topic 350 prohibits the amortization of goodwill and intangible assets with indefinite useful lives. Topic 350 requires that these assets be reviewed for impairment at least annually. The Company periodically evaluates the remaining useful lives of indefinite-lived intangible assets to ensure they continue to be indefinite-lived. An impairment charge for goodwill is recognized only when the estimated fair value of a reporting unit, including goodwill, is less than its carrying amount. An impairment charge for an indefinite-lived intangible asset is recognized when its fair value is less than its carrying amount.

During the fourth quarter of 2018, the Company voluntarily changed the date of the annual impairment test from December 31 to October 1. This voluntary change is preferable under the circumstances as it provides the Company with additional time to complete its annual goodwill and indefinite-lived intangible asset impairment testing in advance of its year-end reporting and results in better alignment with the timing of the Company’s long-range planning and forecasting process. The voluntary change in accounting principle related to the annual testing date will not delay, accelerate or avoid an impairment charge. This change is not applied retrospectively as it is impracticable to do so because retrospective application would require application of significant estimates and assumptions with the use of hindsight. Accordingly, the change will be applied prospectively.

The Company performed the annual impairment test as of October 1, 2018 and December 31, 2017. The results of the impairment test indicated that no goodwill or indefinite-lived intangible asset impairment existed as of the test date. The Company has had no historical impairments of goodwill. In accordance with Topic 350, the Company will continue to complete an impairment analysis on an annual basis or more frequently if an event or circumstance that would more likely than not reduce the fair value of a reporting unit below its carrying amount occurs. In 2017, the Company recorded impairments of certain developed technology intangible assets, primarily related to the wind down of Victory Motorcycles. See Note 15 for additional discussion of the wind down activities.

Goodwill and other intangible assets, net of accumulated amortization, for the periods ended December 31, 2018 and 2017 are as follows (in thousands):



	2018		2017
Goodwill	$	647,077	$	433,374
Other intangible assets, net	870,517		347,212
Total goodwill and other intangible assets, net	$	1,517,594	$	780,586

Additions to goodwill and other intangible assets in 2018 primarily relate to the acquisition of Boat Holdings in July 2018. The aggregate purchase price was allocated on a preliminary basis to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. Boat Holding’s financial results are included in the Company’s consolidated results from the date of acquisition. As of December 31, 2018, the purchase price allocation remains preliminary. The pro forma financial results and the preliminary purchase price allocation are included in Note 3. There were no material additions to goodwill and other intangible assets in 2017.

The changes in the carrying amount of goodwill for the years ended December 31, 2018 and 2017 are as follows (in thousands):



	2018			2017
Balance as of beginning of year	$	433,374		$	421,563
Goodwill from businesses acquired	218,191			1,563
Currency translation effect on foreign goodwill balances	(4,488		)	10,248
Balance as of end of year	$	647,077		$	433,374

For other intangible assets, the changes in the net carrying amount for the years ended December 31, 2018 and 2017 are as follows (in thousands):



	2018						2017
	Gross Amount			Accumulated Amortization			Gross Amount			Accumulated Amortization
Other intangible assets, beginning	$	423,846		$	(76,634	)	$	420,546		$	(49,130	)
Intangible assets acquired during the period	557,390			—			(461		)	—
Intangible assets disposed of during the period	(13,659		)	13,659			—			—
Amortization expense	—			(32,927		)	—			(25,855		)
Impairment	—			—			(3,657		)	1,987
Currency translation effect on foreign balances	(2,924		)	1,766			7,418			(3,636		)
Other intangible assets, ending	$	964,653		$	(94,136	)	$	423,846		$	(76,634	)

The components of other intangible assets were as follows (in thousands):



December 31, 2018	Estimated Life (Years)	Gross Carrying Amount		Accumulated Amortization			Net
Non-compete agreements	4	$	2,630	$	(329	)	$	2,301
Dealer/customer related	5-20	506,401		(85,614		)	420,787
Developed technology	5-7	13,323		(8,193		)	5,130
Total amortizable		522,354		(94,136		)	428,218
Non-amortizable—brand/trade names		442,299		—			442,299
Total other intangible assets, net		$	964,653	$	(94,136	)	$	870,517

December 31, 2017	Estimated Life (Years)	Gross Carrying Amount		Accumulated Amortization			Net
Non-compete agreements	5	$	540	$	(540	)	$	—
Dealer/customer related	5-10	169,694		(60,638		)	109,056
Developed technology	5-7	22,903		(15,456		)	7,447
Total amortizable		193,137		(76,634		)	116,503
Non-amortizable—brand/trade names		230,709		—			230,709
Total other intangible assets, net		$	423,846	$	(76,634	)	$	347,212

Amortization expense for intangible assets for the year ended December 31, 2018 and 2017 was $32,927,000 and $25,855,000, respectively. Estimated amortization expense for 2019 through 2023 is as follows: 2019, $40,955,000; 2020, $35,831,000; 2021, $33,036,000; 2022, $28,069,000; 2023, $25,539,000; and after 2023, $264,788,000. The preceding expected amortization expense is an estimate and actual amounts could differ due to additional intangible asset acquisitions, changes in foreign currency rates or impairment of intangible assets.