Maximus, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements (Tables)

Fair Value Measurements (Tables)

6 Months Ended

Mar. 31, 2023

Schedule of Fair Value of Assets and Liabilities


Table 8.1: Fair Value Measurements
	As of March 31, 2023
	Level 1		Level 2		Level 3		Balance
	(in thousands)
Assets:
Deferred compensation assets - Rabbi Trust	$	25,820	$	—	$	—	$	25,820
Interest rate swap - $300 million notional value	—		24,636		—		24,636
Notes receivable	—		—		7,055		7,055
Total assets	$	25,820	$	24,636	$	7,055	$	57,511
Liabilities:
Interest rate swaps - $350 million notional value	$	—	$	4,548	$	—	$	4,548
Contingent consideration	—		—		13,654		13,654
Total liabilities	$	—	$	4,548	$	13,654	$	18,202

The fair values of receivables, prepaids, 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).

Accumulated Other Comprehensive Loss

All amounts recorded in accumulated other comprehensive loss are related to our foreign currency translations and interest rate swap, net of tax. The following table shows changes in accumulated other comprehensive loss:


Table 8.2: Details of Changes in Accumulated Other Comprehensive Loss by Category
	Foreign currency translation adjustment		Net unrealized gain on derivatives, net of tax		Total
	(in thousands)
Balance as of September 30, 2022	$	(57,109)	$	23,148	$	(33,961)
Other comprehensive income before reclassifications	8,885		(5,012)		3,873
Amounts reclassified from accumulated other comprehensive loss	116		(3,331)		(3,215)
Net current period other comprehensive losses	9,001		(8,343)		658
Balance as of March 31, 2023	$	(48,108)	$	14,805	$	(33,303)

Contingent Consideration

The fair value of our contingent considerations are based upon estimates of the likely payments, which are based upon assumptions over future performance. The liabilities are reviewed on a quarterly basis and, where changes in estimates arise, these are recorded to selling and general administrative expenses.

Our contingent consideration relates to the businesses below:

•In October 2021, we acquired the student loan servicing business from Navient, rebranded as Aidvantage. Future payments are based upon volumes, up to a maximum payment of $65.0 million. At March 31, 2023 and September 30, 2022, the Aidvantage contingent consideration was $11.2 million and $13.8 million, respectively.

•In January 2022, we acquired BZ Bodies Limited. Future payments are based upon the performance of the business through December 2023, up to a maximum payment of $2.5 million (£2.0 million British Pounds). At March 31, 2023 and September 30, 2022, we recorded a contingent consideration liability for the maximum payment, which we anticipate making in fiscal year 2024.

•In December 2015, we acquired companies doing business as Assessments Australia. Future payments were based upon future revenue earnings. The deadline for the payment expired on December 31, 2022, with no payment being required.

Movement in our contingent consideration balance is as follows:


Table 8.3: Fair Value Measurement Using Significant Unobservable Inputs (Level 3)
	Contingent Consideration
	(in thousands)
Opening contingent consideration as of September 30, 2022	$	16,236
Adjustments to fair value recorded in the period	1,202
Cash payments	(4,041)
Foreign currency translations	257
Closing contingent consideration as of March 31, 2023	$	13,654