Goodwill and Other Intangibles

12 Months Ended

Dec. 31, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLES

The Company has two reporting units that have goodwill, ATI (a component of the ACMI Services segment) and CAM. In conjunction with the phase-out of BAX/Schenker's dedicated airlift in North America (see Note B), which relied on operations provided by the Company, the Company tested the carrying values of goodwill and related intangible assets as of July 31, 2011. The Company recognized an impairment charge in 2011 to reduce the value of the recorded goodwill and customer relationship intangible associated with ATI to $52.6 million and $2.5 million, respectively. BAX/Schenker's decision to discontinue a dedicated U.S. air network using ATI's DC-8 aircraft was precipitated by prolonged recessionary conditions and trends toward higher fuel prices. ATI's goodwill and related intangible assets were not impaired further at the time because of expected future net cash flows from its growing fleet of Boeing 767 aircraft and combi aircraft services that it provides to the U.S. Military.

As of December 31, 2013, 2012 and 2011, the goodwill amounts were retested for impairment. The CAM goodwill was not impaired. The ATI goodwill was found to be impaired as of December 31, 2013. The Company recorded an impairment charge of $52.6 million in 2013 to write-off the ATI goodwill. As a result of recent events and market changes, the Company does not expect ATI to generate the forecasted net cash flows from ATI's Boeing 767 operations as previously expected. In December 2013 and in January 2014, the Company received notification from DHL that it would cease using ATI's Boeing 767 services in the Middle East by the end of February 2014. Further, as a result of persistent stagnant growth conditions and excess airlift capacity, including the recent projections published by the U.S. Military that reflect continued reductions in their demand for cargo (non combi) airlift, the Company plans to allocate fewer Boeing 767 aircraft to ATI than previously expected. The Company expects instead to deploy more Boeing 767 aircraft with other airlines, including Atlantic Airline Ltd., an airline owned by West Atlantic, AB for which the Company acquired a 25% equity interest in January 2014.

The Company determined the fair values of ATI and CAM separately using industry market multiples and discounted cash flows utilizing a market-derived rate of return (level 3 fair value inputs).

The carrying amounts of goodwill by reportable segment, are as follows (in thousands):



	ACMI Services			CAM		Total
Carrying value as of December 31, 2011	$	52,585		$	34,395	$	86,980
Impairment	—			—		—
Carrying value as of December 31, 2012	$	52,585		$	34,395	$	86,980
Impairment	$	(52,585	)	$	—	$	(52,585	)
Carrying value as of December 31, 2013	$	—		$	34,395	$	34,395

The Company's intangible assets relate to the ACMI Services segment and are as follows (in thousands):



	Customer			Airline
	Relationships			Certificates			Total
Carrying value as of December 31, 2011	$	2,396		$	4,000		$	6,396
Amortization	(250		)	(1,000		)	(1,250		)
Carrying value as of December 31, 2012	$	2,146		$	3,000		$	5,146
Amortization	(250		)	—			(250		)
Carrying value as of December 31, 2013	$	1,896		$	3,000		$	4,896

The customer relationship intangible amortizes over seven more years. The Company recorded amortization expense for the customer relationship intangible asset of $0.3 million, $0.3 million and $0.6 million for the years ending December 31, 2013, 2012 and 2011, respectively. The airline certificate related to Capital Cargo International Airlines, Inc.'s ("CCIA") Boeing 727 aircraft operations amortized through December 31, 2012. The remaining airline certificates have an indefinite life and therefore are not amortized.

- 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