FAIR VALUE DISCLOSURES

Assets and liabilities subject to fair value measurement are categorized into one of three different levels depending on the observability of the inputs employed in the measurement, as follows:


•	Level 1 – observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.


•	Level 2 – inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the asset or liability; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.


•	Level 3 – unobservable inputs reflecting the Company’s own assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.

Non-recurring Fair Value Measurements

The majority of our non-financial assets, which include inventories, property and equipment, assets held for sale, goodwill and other intangible assets, are not required to be carried at fair value on a recurring basis. However, if certain triggering events occur such that a non-financial asset is required to be evaluated for impairment and deemed to be impaired, the impaired non-financial asset is recorded at its fair value.

The following table summarizes the assets as of September 30, 2013, which are valued at fair value on a non-recurring basis (in thousands):



	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of September 30, 2013		Total Loss for the Three Months Ended September 30, 2013			Total Loss for the Six Months Ended September 30, 2013
Inventories	$	—	$	18,365	$	—	$	18,365	$	(1,539	)	$	(2,364	)
Assets held for sale	—		3,367		—		3,367		(950		)	(2,180		)
Total assets	$	—	$	21,732	$	—	$	21,732	$	(2,489	)	$	(4,544	)

The following table summarizes the assets as of September 30, 2012, which are valued at fair value on a non-recurring basis (in thousands):



	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of September 30, 2012		Total Loss for the Three Months Ended September 30, 2012			Total Loss for the Six Months Ended September 30, 2012
Assets held for sale	$	—	$	1,961	$	—	$	1,961	$	(2,000	)	(3,889		)
Total assets	$	—	$	1,961	$	—	$	1,961	$	(2,000	)	$	(3,889	)

The fair value of inventories using Level 2 inputs is determined by evaluating the current economic conditions for sale and disposal of spare parts, which includes estimates as to the recoverability of the carrying value of the parts based on historical experience with sales and disposal of similar spare parts, the expected timeframe of sales or disposals, the location of the spare parts to be sold and the condition of the spare parts to be sold or otherwise disposed of. The fair value of assets held for sale using Level 2 inputs is determined through evaluation of expected sales proceeds for aircraft. This analysis includes estimates based on historical experience with sales, recent transactions involving similar assets, quoted market prices for similar assets and condition and location of aircraft to be sold or otherwise disposed of. The loss for the three and six months ended September 30, 2013 related to one and three aircraft held for sale, respectively, and the loss for the three and six months ended September 30, 2012 related to two and nine aircraft held for sale, respectively.

Recurring Fair Value Measurements

The following table summarizes the financial instruments we had as of September 30, 2013, which are valued at fair value on a recurring basis (in thousands):



	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of September 30, 2013		Balance Sheet Classification
Rabbi Trust investments	$	5,235	$	—	$	—	$	5,235	Other assets
Total assets	$	5,235	$	—	$	—	$	5,235

Contingent consideration:
Current	$	—	$	—	$	5,933	$	5,933	Other accrued liabilities
Long-term	—		—		30,499		30,499		Other liabilities and deferred credits
Total liabilities	$	—	$	—	$	36,432	$	36,432

The following table summarizes the financial instruments we had as of March 31, 2013, which are valued at fair value on a recurring basis (in thousands):



	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of March 31, 2013		Balance Sheet Classification
Rabbi Trust investments	$	4,837	$	—	$	—	$	4,837	Other assets
Total assets	$	4,837	$	—	$	—	$	4,837

Contingent consideration	$	—	$	—	$	35,625	$	35,625	Other liabilities and deferred credits
Total liabilities	$	—	$	—	$	35,625	$	35,625

The rabbi trust investments consist of mutual funds whose fair value is based on quoted prices in active markets for identical assets, and are designated as Level 1 within the valuation hierarchy. The rabbi trust holds investments related to our non-qualified deferred compensation plan for our senior executives.

The contingent consideration relates to our acquisition of an investment in Cougar Helicopters Inc. (“Cougar”). The Cougar purchase agreement includes a potential earn-out of $40 million payable over three years based on Cougar achieving certain agreed performance targets. For further details on the Cougar acquisition, see Note 3 to the fiscal year 2013 Financial Statements.

The following table provides a rollforward of the contingent consideration liability Level 3 fair value measurements during the six months ended September 30, 2013 (in thousands):

We assess the estimated fair value of the contractual obligation to pay the contingent consideration on a quarterly basis and any changes in estimated fair value are recorded as accretion expense included in depreciation and amortization on our condensed consolidated statements of income. Fluctuations in the fair value of contingent consideration are impacted by two unobservable inputs, management's estimate of the probability of Cougar achieving certain agreed performance targets and the estimated discount rate. As of September 30 and March 31, 2013, the discount rate approximated 4%.

Fair Value of Financial Instruments

The fair value of our financial instruments has been estimated in accordance with the accounting standard regarding fair value. The fair value of our fixed rate long-term debt is estimated based on quoted market prices. The carrying and fair value of our long-term debt, including the current portion, are as follows (in thousands):



	September 30, 2013				March 31, 2013
	Carrying Value		Fair Value		Carrying Value		Fair Value
6¼% Senior Notes	$	450,000	$	468,000	$	450,000	$	484,875
Term Loan	228,107		228,107		230,625		230,625
3% Convertible Senior Notes	107,906		141,019		106,196		131,819
Revolving Credit Facility	45,000		45,000		—		—
Other	70		70		448		448
	$	831,083	$	882,196	$	787,269	$	847,767

Other

The fair values of our cash and cash equivalents, accounts receivable and accounts payable approximate their carrying values due to the short-term nature of these items.

Balance as of March 31, 2013

Change in fair value of contingent consideration

Balance as of September 30, 2013