Annual report pursuant to Section 13 and 15(d)

Fair Value Measurements

Fair Value Measurements
12 Months Ended
Sep. 30, 2022
Fair Value Disclosures [Abstract]  
We had two assets recorded at fair value on a recurring basis as of September 30, 2022; the deferred compensation asset related to investments in mutual funds, and the interest rate swap. For the deferred compensation asset, the mutual funds prices are quoted in active markets and therefore are classified as Level 1. For the interest rate swap, we obtain its Level 2 pricing inputs from its counterparty for the interest rate swap. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data, or are supported by observable levels at which transactions are executed in the marketplace. As of September 30, 2022, we had liabilities recorded at fair value on a recurring basis for contingent consideration related to acquisitions. The contingent consideration liability is considered Level 3, as the inputs are not observable and based on internal assumptions about forecasted revenues, margins, volumes, and probability of contract extensions on businesses acquired.
The fair values of receivables, prepaid assets, other assets, accounts payable, accrued costs, and other current liabilities approximate the carrying values as a result of the short-term nature of these instruments. The carrying value of our debt is consistent with the fair value as the stated interest rates in the agreements are consistent with the current market rates used in notes with similar terms in the markets (Level 2 inputs).
Other long-lived assets are reviewed when events indicate they may no longer be able to recover their value. Assets that we cease using or which do not appear able to generate sufficient future cash flows to support their values are reviewed and, where necessary, their value is written down. In this instance, the expense is reported in the same place where future expenses were anticipated to be recorded. For example, a fixed asset impairment would be recorded in depreciation expense. All the non-recurring fair values are considered Level 3, as the inputs are not observable and based on internal assumptions. During the years ending, September 30, 2021, and 2020, we recorded impairment charges of, $12.5 million, and $1.2 million on long-lived assets within our U.S. Services and Outside the U.S. Services Segments relating to underperforming contracts. We did not record impairment charges in the year ended September 30, 2022.
Table 9.1: Fair Value Measurements
As of September 30, 2022
Level 1 Level 2 Level 3 Balance
(in thousands)
Deferred compensation assets - Rabbi Trust $ 22,769  $ —  $ —  $ 22,769 
Interest rate swap —  31,409  —  31,409 
Total assets $ 22,769  $ 31,409  $ —  $ 54,178 
Contingent consideration $ —  $ —  $ 16,236  $ 16,236 
Total liabilities $ —  $ —  $ 16,236  $ 16,236 
The following table presents a reconciliation of the contingent consideration which is measured and recorded at fair value on a recurring basis using Level 3 inputs:
Table 9.2: Fair Value Measurement Using Significant Unobservable Inputs (Level 3)
Contingent Consideration
(in thousands)
Balance as of September 30, 2021 $ 270 
Contingent consideration from current year acquisitions
Adjustments to fair value recorded in the current year
Payments (1,395)
Foreign currency translations (453)
Balance as of September 30, 2022 $ 16,236