Fair Value Measurement

12 Months Ended

Dec. 31, 2022

11. Fair Value Measurement

Fair Value Measurements-Recurring Basis

In determining fair value, the Company uses various valuation approaches within the fair value measurement framework. Fair value measurements are determined based on the assumptions that market participants would use in pricing an asset or liability. Applicable accounting literature establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The fair value hierarchy is based on observable or unobservable inputs to valuation techniques that are used to measure fair value. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity's pricing based upon its own market assumptions. Applicable accounting literature defines levels within the hierarchy based on the reliability of inputs as follows:

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Level 1: Inputs are quoted prices in active markets for identical assets or liabilities.

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Level 2: Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs other than quoted prices that are observable and market-corroborated inputs, which are derived principally from or corroborated by observable market data.

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Level 3: Inputs that are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable.

Cash and cash equivalents are financial assets measured at fair value on a recurring basis. See Note 1. Significant Accounting Policies and Practices for further discussion.

Contingent consideration are financial liabilities measured at fair value on a recurring basis using Level 3 under the fair value hierarchy. See Note 2. Acquisitions for further discussion.

Nonrecurring Fair Value Measurements

Certain assets are measured at fair value on a nonrecurring basis, generally as a result of acquisitions or the remeasurement of assets resulting in impairment charges. The purchase price of business acquisitions is primarily allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition dates, with the excess, if applicable, recorded as goodwill. The Company utilizes Level 3 inputs in the determination of the initial fair value using certain assumptions.

Non-financial assets, such as goodwill, other intangible assets, and property and equipment are subsequently measured at fair value when there is an indicator of impairment and recorded at fair value when impairment is recognized. The Company assesses the impairment of intangible assets annually or whenever events or changes in circumstances indicate that the carrying amount of an intangible asset may not be recoverable. The fair value of the Company’s goodwill or other

intangible assets are not estimated if there is no change in events or circumstances that indicate the carrying amount of the goodwill and intangible assets may not be recoverable. During the years ended December 31, 2022, 2021 and 2020 the Company measured certain assets at fair value, which resulted in impairment charges. The fair value of these assets were determined using a discounted cash flow (“DCF”) model, which estimated the present value of net cash flows that the asset or asset group was expected to generate. The key inputs to the DCF model included the Company’s future projections of cash operating income, capital expenditures and current discount rates.

For those assets and asset groups for which impairment was recorded, the fair value as of the measurement date, net book value as of December 31, 2022, 2021 and 2020, and the related impairment charges during the years ended December 31, 2022, 2021 and 2020, were as follows:


	Year ended December 31, 2022					As of December 31, 2022
		As of Measurement Date
(millions)	Measurement Date	Impairment Charge		Fair Value Measurement (Level 3)		Net Book Value of Assets Assessed for Impairment
ROU assets	December 31, 2022	$	3.7	$	4.7
Total of ROU assets impaired		$	3.7	$	4.7	$	4.7

	Year ended December 31, 2021					As of December 31, 2021
		As of Measurement Date
(millions)	Measurement Date	Impairment Charge		Fair Value Measurement (Level 3)		Net Book Value of Assets Assessed for Impairment
ROU assets	March 31, 2021	$	0.1	$	—
ROU assets	September 30, 2021		3.5		2.0
Total of ROU assets impaired		$	3.6	$	2.0	$	1.9

	Year ended December 31, 2020					As of December 31, 2020
		As of Measurement Date
(millions)	Measurement Date	Impairment Charge		Fair Value Measurement (Level 3)		Net Book Value of Assets Assessed for Impairment
ROU assets	March 31, 2020	$	77.5	$	147.4
ROU assets	June 30, 2020		16.7		26.2
ROU assets	September 30, 2020		1.6		1.6
ROU assets	December 31, 2020		2.9		5.0
Total of ROU assets impaired		$	98.7	$	180.2	$	121.4
Goodwill - Aviation reporting unit	August 31, 2020	$	59.5	$	149.5	$	149.5
Proprietary know how	June 30, 2020		3.7		3.9
Customer relationships	August 31, 2020		69.2		4.6
Trade names and trademarks	August 31, 2020		2.9		0.5
Total Other intangible assets, net		$	75.8	$	9.0	$	8.3

Financial Instruments Not Measured at Fair Value

The fair value of the Senior Credit Facility and other obligations approximates the carrying amount due to variable interest rates and would be classified as Level 2 in the fair value hierarchy. See Note 12. Borrowing Arrangements for further information.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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