XML 28 R13.htm IDEA: XBRL DOCUMENT v3.20.4
Goodwill and Other Intangibles
 12 Months Ended
Dec. 31, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangibles GOODWILL, INTANGIBLES AND EQUITY INVESTMENTS
As disclosed in Note B, on November 9, 2018, the Company acquired Omni. 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. Identified intangible assets included OAI's certificated authority granted by the FAA to operate as an airline and OAI's long term customer relationships.
On February 1, 2019, the Company acquired a group of companies under common control, referred to as TriFactor. TriFactor resells material handling equipment and provides engineering design solutions for warehousing, retail distribution and e-commerce operations. Revenues and operating expenses include the activities of TriFactor for periods since its acquisition by the Company. The excess purchase price over the estimated fair
value of net assets acquired was recorded as goodwill. The acquisition of TriFactor did not have a significant impact on the Company's financial statements or results of operations.
As of December 31, 2020, 2019 and 2018, the goodwill amounts for reporting units that have goodwill were separately tested for impairment. To perform the goodwill impairment test, the Company determined the fair value of the reporting units using industry market multiples and discounted cash flows utilizing a market-derived cost of capital (level 3 fair value inputs). The goodwill amounts were not impaired. The carrying amounts of goodwill are as follows (in thousands):
CAMACMI ServicesAll OtherTotal
Carrying value as of December 31, 2018$153,290 $234,571 $2,884 $390,745 
Acquisition of TriFactor— — 5,229 5,229 
Carrying value as of December 31, 2019$153,290 $234,571 $8,113 $395,974 
Carrying value as of December 31, 2020$153,290 $234,571 $8,113 $395,974 
The Company's acquired intangible assets are as follows (in thousands):
AirlineAmortizing
CertificatesIntangiblesTotal
Carrying value as of December 31, 2018$9,000 $135,614 $144,614 
Amortization— (11,434)(11,434)
Right of use asset— (1,500)(1,500)
Carrying value as of December 31, 2019$9,000 $122,680 $131,680 
Amortization— (11,364)(11,364)
Carrying value as of December 31, 2020$9,000 $111,316 $120,316 
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 5 to 18 remaining years. The Company recorded intangible amortization expense of $11.4 million, $11.4 million and $2.7 million for the years ending December 31, 2020, 2019 and 2018, respectively. Estimated amortization expense for the next five years is $10.6 million, $10.6 million, $10.6 million, $10.6 million and $9.8 million.
Stock warrants issued to a lessee (see Note D) as an incentive are recorded as a lease incentive asset using their fair value at the time that the lessee has met its performance obligations 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, 2018$63,780 
Adoption of ASU 2018-07100,076 
Amortization(17,178)
Carrying value as of December 31, 2019$146,678 
Amortization(20,671)
Carrying value as of December 31, 2020$126,007 
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, 2020, the Company expects to record amortization, as a reduction to the lease revenue, of $22.6 million, $22.7 million, $18.1 million, $15.1 million and $15.2 million for each of the next five years ending December 31, 2025.
In January 2014, the Company acquired a 25 percent equity interest in West Atlantic AB of Gothenburg, Sweden ("West"). West, through its two airlines, West Atlantic UK and West Atlantic Sweden, 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. In April 2019, West issued additional shares to a new investor in conjunction with a capital investment and purchase agreement which reduced the Company's ownership to approximately 10% and reduced the Company's influence over West. In 2020, the Company sold its remaining interest to the same investor.
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 2021. The Company expects to make contributions equal to its 49% ownership percentage of the program's total costs over the next two years. During the 2020, 2019 and 2018 years, the Company contributed $13.3 million, $12.3 million and $11.4 million to the joint venture, respectively. The Company accounts for its investment in the aircraft conversion joint venture under the equity method of accounting, in which the carrying value of each investment is reduced for the Company's share of the non-consolidated affiliates operating results.
The carrying value of West and the joint venture totaled $10.7 million and $10.9 million at December 31, 2020 and 2019, respectively, and are reflected in “Other Assets” in the Company’s consolidated balance sheets. 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.