FAIR VALUE MEASUREMENTS

9 Months Ended

Dec. 31, 2017

The fair value of interest rate swaps and foreign exchange forward contracts (as discussed in Note 9) are determined using Level 2 inputs. The carrying value of our debt (discussed in Note 8) approximates fair value as it bears interest at floating rates. The carrying amounts of other financial instruments (i.e., cash and cash equivalents, bank time deposits, accounts receivable, net, accounts payable) approximated their fair values at December 31, 2017 and March 31, 2017 due to their short-term nature.

The fair values of acquisition-related contingent payments were estimated using Level 3 inputs. The contingent payment related to the acquisition of assets from SureSeal Manufacturing (“SureSeal”) utilizing the weighted average probability method using forecasted sales and gross margin. On August 3, 2017, we entered into an agreement with the sellers of the SureSeal product line assets that, among other things, amended the purchase agreement to eliminate the potential contingent payment in exchange for a cash payment substantially equivalent to what was accrued. The contingent payment was settled during the quarter ended September 30, 2017 with a change in estimate of $0.1 million as noted in the table below.

The following table sets forth the change in fair value and the related settlement of the contingent fee recognized within the selling, general and administrative expenses of our condensed consolidated statements of operations (in thousands):



	Nine Months Ended December 31, 2017
	SureSeal
Balance at April 1, 2017	$	6,390
Change in estimate	110
Payment of contingent fee	(6,500		)
Balance at December 31, 2017	$	—

The assets of the Coatings business have been written down to their estimated fair values as a result of the plan to sell the Coatings business as of December 31, 2017. The determination of fair value of long-lived assets is a non-recurring fair value estimate which relies heavily upon the use of Level 3 inputs. Our estimate of fair value was based on both (i) an income approach, which forecasted the future cash flows which could be generated by the underlying assets, and (ii) an estimated recovery value based upon sale of the assets in their current condition.

Our Coatings business experienced a rapid decline in operating revenues and corresponding cash flows during the third fiscal quarter, and these declines are expected to persist for the foreseeable future absent a significant investment. As a result of this rapid decline, we intend to sell the Coatings business to allow us to direct our resources to our other businesses that meet our profitability standards. However, due to the recent challenges associated with our Coatings business and their recent poor financial performance, we have concluded that a material impairment of the assets attributable to the Coatings business was necessary to state the assets at their fair value as of December 31, 2017.

The following table represents the placement in the fair value hierarchy of assets that were measured at fair value on a non-recurring basis as a result of classifying the Coatings business as held-for-sale as of December 31, 2017. Refer to Note 3 for further discussion.



	Carrying Values before Impairment		Estimated Fair Value		Level 1		Level 2		Level 3

Intangible assets	$	30,073	$	—	$	—	$	—	$	—
Property, plant and equipment	8,064		—		—		—		—
Inventory	6,409		—		—		—		—
Prepaid expenses and other current assets	426		215		—		—		215

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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