GOODWILL, INTANGIBLES AND EQUITY INVESTMENTS

As of December 31, 2017, 2016 and 2015, the goodwill amount for CAM was tested for impairment. To perform the first step of the goodwill impairment test, the Company determined the fair value of CAM using industry market multiples and discounted cash flows utilizing a market-derived rate of return (level 3 fair value inputs). The goodwill included in the CAM segment was not impaired.

On December 30, 2016, the Company purchased 100% of the outstanding stock of Pemco for cash consideration in a debt-free acquisition. Pemco offers aircraft maintenance, repair, and overhaul services as well as aircraft modification services to its customers. The Company operates Pemco as a division of its existing aircraft maintenance businesses. The purchase price was allocated to tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The excess purchase price over the estimated fair value of net assets acquired was recorded as goodwill and reflects the strategic value of marketing Pemco's aircraft conversion capabilities and current aircraft hangar operations with the Company's air transportation solutions. Identified intangible assets include Supplemental Type Certificates ("STCs") granting approval by FAA for Pemco to market and complete certain aircraft modifications. As of December 31, 2017, the goodwill amount for Pemco was tested for impairment. To perform the first step of the goodwill impairment test, the Company determined the fair value of Pemco using industry market multiples and discounted cash flows utilizing a market-derived rate of return (level 3 fair value inputs). The goodwill recorded from the Pemco acquisition was not impaired.

The carrying amounts of goodwill are as follows (in thousands):



	CAM		All Other		Total
Carrying value as of December 31, 2015	$	34,395	$	—	$	34,395
Acquisition of Pemco	—		2,738		2,738
Carrying value as of December 31, 2016	$	34,395	$	2,738	$	37,133
Purchase price adjustment	—		146		146
Carrying value as of December 31, 2017	$	34,395	$	2,884	$	37,279

The Company's acquired intangible assets are as follows (in thousands):



	Airline		Amortizing
	Certificates		Intangibles			Total
Carrying value as of December 31, 2015	$	3,000	$	1,334		$	4,334
Acquisition of Pemco	—		4,400			4,400
Amortization	—		(281		)	(281		)
Carrying value as of December 31, 2016	$	3,000	$	5,453		$	8,453
Amortization	—		(1,155		)	(1,155		)
Carrying value as of December 31, 2017	$	3,000	$	4,298		$	7,298

The airline certificates have an indefinite life and therefore are not amortized. The Company amortizes finite-lived intangibles assets, including customer relationship and STC intangibles, over 4 to 7 years. The Company recorded intangible amortization expense of $1.2 million, $0.3 million and $0.3 million for the years ending December 31, 2017, 2016 and 2015, respectively. Estimated amortization expense for the next five years is $1.2 million, $1.2 million, $1.1 million, $0.3 million and $0.3 million.

Stock warrants issued to a lessee (see Note B) as an incentive are recorded as a lease incentive asset using their fair value at the time that the lessee has met its performance obligation and amortized against revenues over the duration of related aircraft leases. The Company's lease incentive granted to the lessee was as follows (in thousands):



	Lease
	Incentive
Carrying value as of December 31, 2015	$	—
Warrants granted	59,236
Amortization	(4,506		)
Carrying value as of December 31, 2016	$	54,730
Warrants granted	39,940
Amortization	(13,986		)
Carrying value as of December 31, 2017	$	80,684

The lease incentive began to amortize in April 2016, with the commencement of certain aircraft leases. Based on the warrants granted as of December 31, 2017, the Company expects to record amortization, as a reduction to the lease revenue, of $16.9 million, $16.9 million, $16.9 million, $11.7 million and $8.3 million for each of the next five years ending December 31, 2022.

In January 2014, the Company acquired a 25 percent equity interest in West Atlantic AB of Gothenburg, Sweden ("West"). West, through its two airlines, Atlantic Airlines Ltd. and West Air Sweden AB, operates a fleet of aircraft on behalf of European regional mail carriers and express logistics providers. The airlines operate a combined fleet of British Aerospace ATPs, Bombardier CRJ-200-PFs, and Boeing 767 and 737 aircraft. West leases three Boeing 767 aircraft and one Boeing 737 from the Company. The Company’s carrying value of West was $7.1 million and $9.9 million at December 31, 2017 and 2016, respectively, including $5.5 million of excess purchase price over the Company's fair value of West's nets assets in January of 2014. In 2017, the Company paid $2.4 million to West and entered into a preferred equity instrument. The Company's equity interest and the preferred equity instrument are reflected in “Other Assets” in the Company’s consolidated balance sheets as of December 31, 2017 and 2016.

On August 3, 2017 the Company entered into a joint-venture agreement with Precision Aircraft Solutions, LLC, to develop a passenger-to-freighter conversion program for Airbus A321-200 aircraft. The Company anticipates approval of a supplemental type certificate from the FAA in 2019. The Company expects to make contributions equal to its 49% ownership percentage of the program's total costs over the next two years. During 2017, the company contributed $8.7 million to the joint venture. The Company accounts for its investment in the joint venture under the equity method of accounting, in which the carrying value of the investment is reduced for the Company's share of the joint ventures operating losses. The carrying value of the joint venture, reflected in “Other Assets” in the Company’s consolidated balance sheets, was $5.6 million at December 31, 2017.

The Company monitors its investments in affiliates for indicators of other-than-temporary declines in value on an ongoing basis in accordance with GAAP. If the Company determines that an other-than-temporary decline in value has occurred, it recognizes an impairment loss, which is measured as the difference between the recorded carrying value and the fair value of the investment. The fair value is generally determined using an income approach based on discounted cash flows or using negotiated transaction values.