Other Non-current Assets

12 Months Ended

May 31, 2023

Other Non-current Assets

Other Non-current Assets

10. Other Non-current Assets

At May 31, 2023 and 2022, other non-current assets consisted of the following:

	May 31,
	2023		2022
License fees, net	$	39.6	$	22.2
Contract assets		27.5		22.5
Investments in joint ventures		16.6		20.0
Assets under deferred compensation plan		15.2		12.4
Debt and equity investments		11.4		4.5
Pension assets		8.7		9.8
Other		8.8		6.4
	$	127.8	$	97.8

Investments in Aircraft Joint Ventures

Under the terms of servicing agreements with certain of our aircraft joint ventures, we provide administrative services and technical advisory services, including aircraft evaluations, oversight and logistical support of the maintenance process and records management. We also provide evaluation and inspection services prior to the purchase of an aircraft and remarketing services with respect to the divestiture of aircraft by the joint ventures. During fiscal 2023, 2022, and 2021, we were paid $1.0 million, $1.1 million, and $1.0 million, respectively, for such services.

In the fourth quarter of fiscal 2022, we acquired an aircraft and two engines from one of our aircraft joint ventures for $16.8 million, net of $0.2 million in remarketing fees earned on the purchase, and then sold the assets for $17.0 million.

Investment in Indian Joint Venture

Our investments in joint ventures include $9.8 million for our 40% ownership interest in a joint venture in India to operate an airframe maintenance facility. The facility received certain regulatory approvals and commenced airframe maintenance operations in the second quarter of fiscal 2022.

We guarantee 40% of the Indian joint venture’s debt and have recognized a guarantee liability of $9.6 million as of May 31, 2023. Each of the partners in the Indian joint venture also has a loan to the joint venture proportionate to its equity ownership. In addition to the net equity investment of $6.4 million, our investment in the Indian joint venture includes $3.4 million for our loan to the joint venture as of May 31, 2023.

We account for our share of the earnings or losses of the Indian joint venture using the equity method with a reporting lag of two months, as the financial statements of the Indian joint venture are not completed on a timely basis that is sufficient for us to apply the equity method on a current basis. Our share of the Indian joint venture’s losses for fiscal 2023, 2022, and 2021 were $2.7 million, $1.8 million, and $0 million, respectively.We are currently evaluating a potential exit from our investment in the Indian joint venture.

Investment in Malaysian Joint Venture

In the fourth quarter of fiscal 2020, we made the decision to exit our joint venture which operates a landing gear wheel and brake repair and overhaul facility in Malaysia. In conjunction with the decision to exit the joint venture, we recognized an impairment charge of $1.9 million reflecting the anticipated net proceeds from our investment. During fiscal 2022, we decided to pursue a shutdown of the joint venture and recognized additional impairment charges and related shutdown costs of $0.7 million which is reported in Loss from joint ventures on the Consolidated Statement of Income.

License Fees

In June 2011, we entered into a ten-year agreement with Unison Industries (“Unison”) to be the exclusive worldwide aftermarket distributor for Unison’s electrical components, sensors, switches and other systems for aircraft and industrial uses. In June 2020, we entered into an extension and expansion of our agreement with Unison including a new termination date of December 31, 2031, an initial $25.0 million license fee paid in June 2020 to Unison, and annual license fees at a fixed percentage of our net sales of Unison products. The June 2020 payment of $25.0 million was capitalized and is being amortized on a straight-line basis over the term of the new agreement.

In September 2022, we entered into another amendment of our agreement with Unison to include a one-year extension of the termination date to December 31, 2032, an $18.0 million license fee paid in September 2022, and an increase to the fixed percentage of annual license fees for our net sales of Unison products. The September 2022 payment of $18.0 million relates to specific product lines and is being amortized on a straight-line basis over the non-cancellable license period applicable to these product lines. As of May 31, 2023, the unamortized balance of the license is $36.6 million.

Split-Dollar Life Insurance Arrangements

We previously entered into split-dollar life insurance agreements to benefit certain former executives and officers. Under the terms of the arrangements, we made premium payments on the individuals’ behalf and we retained a collateral interest in the policies generally to the extent of the premiums we previously paid. As of May 31, 2023, our Consolidated Balance Sheet included $5.5 million in Other non-current assets for cumulative premiums paid and expected to be reimbursed upon termination of the policies.

During the second quarter of fiscal 2021, certain split-dollar life insurance agreements were terminated and we received $12.0 million for reimbursement of both the life insurance premiums we previously paid and a portion of our prior tax payments made on the individuals’ behalf related to their imputed income on the policies. The reimbursement of the premiums paid of $10.0 million has been classified as cash flow from investing activities with the remainder included in cash flow from operating activities as it represents the reimbursement of a portion of the income taxes previously paid and expensed. In the second quarter of fiscal 2021, we recognized a benefit of $1.3 million in Selling, general and administrative expenses on the Consolidated Statement of Income for the net recovery of the taxes previously paid on behalf of the individuals.