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Fair Value Measurements
3 Months Ended
Mar. 31, 2023
Fair Value Disclosures [Abstract]  
Fair Value Measurements FAIR VALUE MEASUREMENTS
The Company’s money market funds and interest rate swaps are reported on the Company’s consolidated balance sheets at fair values based on market values from comparable transactions. The fair value of the Company’s money market funds, Convertible Notes (as defined in Note F), convertible note hedges and interest rate swaps are based on observable inputs (Level 2) from comparable market transactions.
The fair value of the stock warrant obligations to Amazon resulting from aircraft leased to ASI were determined using a Black-Scholes pricing model which considers various assumptions, including ATSG's common stock price, the volatility of ATSG's common stock, the expected dividend yield, exercise price and the risk-free interest rate (Level 2 inputs). The fair value of the stock warrant obligations for unvested stock warrants, conditionally granted to Amazon for the execution of incremental, future aircraft leases, include additional assumptions including the
expected exercise prices and the probabilities that future leases will occur (Level 3 inputs). The fair value of the sale option for Amazon to sell back shares to the Company under certain conditions was determined based on future share repurchase scenarios. Judgement was applied to determine the number of shares that would be repurchased by the Company at a certain price and the probability of each scenario. There is uncertainty regarding the future stock price at the time of repurchase which affects the magnitude of the gain or loss recognized (Level 3 inputs).
The following table reflects assets and liabilities that are measured at fair value on a recurring basis (in thousands):
As of March 31, 2023Fair Value Measurement UsingTotal
 Level 1Level 2Level 3
Assets
Cash equivalents—money market$— $56,230 $— $56,230 
Total Assets$— $56,230 $— $56,230 
Liabilities
Interest rate swap$— $(249)$— $(249)
Sale option— — (952)$(952)
Stock warrant obligations— — (557)(557)
Total Liabilities$— $(249)$(1,509)$(1,758)

As of December 31, 2022Fair Value Measurement UsingTotal
 Level 1Level 2Level 3
Assets
Cash equivalents—money market$— $4,047 $— $4,047 
Interest rate swap— 677 — 677 
Total Assets$— $4,724 $— $4,724 
Liabilities
Stock warrant obligations— — (695)(695)
Total Liabilities$— $— $(695)$(695)
As a result of higher market interest rates compared to the stated interest rates of the Company’s fixed rate debt obligations, the fair value of the Company’s debt obligations, based on Level 2 observable inputs, was approximately $82.0 million less than the carrying value, which was $1,545.1 million at March 31, 2023. As of December 31, 2022, the fair value of the Company’s debt obligations was approximately $48.3 million less than the carrying value, which was $1,464.9 million. The non-financial assets, including goodwill, intangible assets and property and equipment are measured at fair value on a non-recurring basis.