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 that reflect quoted prices for identical assets or liabilities in markets which 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 December 31, 2014, 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 December 31, 2014		Total Loss for the Three Months Ended December 31, 2014			Total Loss for the Nine Months Ended December 31, 2014
Inventories	$	—	$	4,588	$	—	$	4,588	$	(3,805	)	$	(7,167	)
Assets held for sale	—		15,313		—		15,313		(25,614		)	(28,751		)
Total assets	$	—	$	19,901	$	—	$	19,901	$	(29,419	)	$	(35,918	)

The following table summarizes the assets as of December 31, 2013, 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 December 31, 2013		Total Loss for the Three Months Ended December 31, 2013			Total Loss for the Nine Months Ended December 31, 2013
Inventories	$	—	$	13,424	$	—	$	13,424	$	—		$	(2,364	)
Assets held for sale	—		6,733		—		6,733		(1,234		)	(3,414		)
Total assets	$	—	$	20,157	$	—	$	20,157	$	(1,234	)	$	(5,778	)

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 nine months ended December 31, 2014 related to 12 and 18 aircraft held for sale, respectively, and the loss for the three and nine months ended December 31, 2013 related to three and six aircraft held for sale, respectively.

Recurring Fair Value Measurements

The following table summarizes the financial instruments we had as of December 31, 2014, 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 December 31, 2014		Balance Sheet Classification
Rabbi Trust investments	$	5,546	$	—	$	—	$	5,546	Other assets
Total assets	$	5,546	$	—	$	—	$	5,546

Contingent consideration: ⁽¹⁾
Current	$	—	$	—	$	7,845	$	7,845	Other accrued liabilities
Long-term	—		—		24,250		24,250		Other liabilities and deferred credits
Total liabilities	$	—	$	—	$	32,095	$	32,095

______________


⁽¹⁾	Relates to our investment in Cougar Helicopters Inc. (“Cougar”). For further details on the Cougar investment, see Note 3 to the fiscal year 2014 Financial Statements.

The following table summarizes the financial instruments we had as of March 31, 2014, 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, 2014		Balance Sheet Classification
Rabbi Trust investments	$	6,599	$	—	$	—	$	6,599	Other assets
Total assets	$	6,599	$	—	$	—	$	6,599

Contingent consideration: ⁽¹⁾
Current	$	—	$	—	$	7,652	$	7,652	Other accrued liabilities
Long-term	—		—		23,670		23,670		Other liabilities and deferred credits
Total liabilities	$	—	$	—	$	31,322	$	31,322

______________


⁽¹⁾	Relates to our investment in Cougar. For further details on the Cougar investment, see Note 3 to the fiscal year 2014 Financial Statements.

The rabbi trust investments consist of cash and mutual funds whose fair value are 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 following table provides a rollforward of the contingent consideration liability Level 3 fair value measurements during the nine months ended December 31, 2014 (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 December 31 and March 31, 2014, 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):



	December 31, 2014				March 31, 2014
	Carrying Value		Fair Value		Carrying Value		Fair Value
6¼% Senior Notes	$	401,535	$	399,527	$	450,000	$	477,000
Term Loan	223,288		223,288		226,604		226,604
3% Convertible Senior Notes	113,025		119,600		109,904		142,382
Revolving Credit Facility	58,500		58,500		24,000		24,000
Eastern Airways debt	21,840		21,840		29,911		29,911
Other	—		—		883		883
	$	818,188	$	822,755	$	841,302	$	900,780

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.

Significant
Unobservable
Inputs (Level 3)

Balance as of March 31, 2014

Change in fair value of contingent consideration

Balance as of December 31, 2014