Other Non-current Assets

12 Months Ended

May 31, 2024

Other Non-current Assets

Other Non-current Assets

12. Other Non-current Assets

At May 31, 2024 and 2023, other non-current assets consisted of the following:

	May 31,
	2024		2023
License fees, net	$	51.8	$	39.6
Investments in joint ventures		35.8		16.6
Contract assets		24.6		27.5
Assets under deferred compensation plan		18.9		15.2
Debt and equity investments		14.4		11.4
Pension assets		1.5		8.7
Other		8.6		8.8
	$	155.6	$	127.8

Investment in Indian Joint Venture

Our investments in joint ventures include $10.1 million for our 40% ownership interest in a joint venture in India to operate an airframe maintenance facility at May 31, 2024. We guarantee 40% of the Indian joint venture’s debt and have recognized a guarantee liability of $9.4 million as of May 31, 2024. Each of the partners in the Indian joint venture also has a loan to the joint venture proportionate to its equity ownership. In addition to the net equity investment of $6.5 million, our investment in the Indian joint venture includes $3.6 million for our loan to the joint venture as of May 31, 2024.

We account for our share of the earnings or losses of the Indian joint venture using the equity method with a reporting lag of two months, as the financial statements of the Indian joint venture are not completed on a timely basis that is sufficient for us to apply the equity method on a current basis. Our share of the Indian joint venture’s gains (losses) for fiscal 2024, 2023, and 2022 were $0.2 million, $(2.7) million, and $(1.8) million, respectively. We are currently evaluating a potential exit from our investment in the Indian joint venture.

Investment in AAR Sumisho Aviation Services (ASAS)

Our investments in joint ventures include a 50% ownership interest in a joint venture to provide aviation aftermarket supply chain solutions to Japanese defense and global commercial markets. Each of the partners in the ASAS joint venture have provided financial guarantees to third - parties to guarantee the payments for ASAS’s financing arrangements, including inventory purchases. No liabilities have been recognized on the outstanding guarantees. We are unable to estimate our maximum exposure under these guarantees as they are largely dependent on the volume of inventory purchase orders outstanding.

Our sales to the ASAS joint venture, including service fees earned by us on providing support to the ASAS joint venture, were $4.9 million, $1.5 million, and $1.0 million for fiscal 2024, 2023, and 2022, respectively.

Investments in Aircraft Joint Ventures

Under the terms of servicing agreements with certain of our aircraft joint ventures, we provide administrative services and technical advisory services, including aircraft evaluations, oversight and logistical support of the maintenance process and records management. We also provide evaluation and inspection services prior to the purchase of an aircraft and remarketing services with respect to the divestiture of aircraft by the joint ventures. During fiscal 2024, 2023, and 2022, we were paid $1.6 million, $1.0 million, and $1.1 million, respectively, for such services.

In the fourth quarter of fiscal 2022, we acquired an aircraft and two engines from one of our aircraft joint ventures for $16.8 million, net of $0.2 million in remarketing fees earned on the purchase, and then sold the assets for $17.0 million.

License Fees

In June 2011, we entered into a ten-year agreement with Unison Industries (“Unison”) to be the exclusive worldwide aftermarket distributor for Unison’s electrical components, sensors, switches and other systems for aircraft and industrial uses. In June 2020, we entered into an extension and expansion of our agreement with Unison including a new termination date of December 31, 2031, an initial $25.0 million license fee paid in June 2020 to Unison, and annual license fees at a fixed percentage of our net sales of Unison products. The June 2020 payment of $25.0 million was capitalized and is being amortized on a straight-line basis over the term of the new agreement.

In September 2022, we entered into another amendment of our agreement with Unison to include a one-year extension of the termination date to December 31, 2032, an $18.0 million license fee paid in September 2022, and an increase to the fixed percentage of annual license fees for our net sales of Unison products. The September 2022 payment of $18.0 million relates to specific product lines and is being amortized on a straight-line basis over the non-cancellable license period applicable to these product lines. As of May 31, 2024, the unamortized balance of the license is $33.0 million.