Fair Value Measurements

9 Months Ended

Dec. 31, 2014

12. Fair Value Measurements

We estimate the fair value of financial instruments using available market information and generally accepted valuation methodologies. We assess the inputs used to measure fair value using a three-tier hierarchy. The hierarchy indicates the extent to which pricing inputs used in measuring fair value are observable in the market. Level 1 inputs include unadjusted quoted prices for identical assets or liabilities and are the most observable. Level 2 inputs include unadjusted quoted prices for similar assets and liabilities that are either directly or indirectly observable, or other observable inputs such as interest rates, foreign currency exchange rates, commodity rates, and yield curves. Level 3 inputs are not observable in the market and include our own judgments about the assumptions market participants would use in pricing the asset or liability. The use of observable and unobservable inputs is reflected in the hierarchy assessment disclosed in the tables below.

There were no significant transfers between Levels 1, 2, and 3 during the nine months ended December 31, 2014 and 2013.

Our cash equivalents consist of highly liquid investments with original maturity dates of three months or less and can include certificates of deposit, commercial paper, treasury bills, money market funds and other investments. The fair value of our marketable securities, comprised of commercial paper, corporate bonds and certificates of deposit, was determined using a market approach, based on prices and other relevant information generated by market transactions involving similar assets, and therefore, is classified within Level 2 of the fair value hierarchy. Our marketable securities consist of investments with original maturity dates from date of acquisition of 90 to 365 days and are classified as available for sale.

The following data summarizes our cash equivalents and marketable securities:



	December 31, 2014

	Amortized		Unrealized		Unrealized		Fair		Cash		Marketable
(In thousands)	cost basis		Gains		Losses		Value		equivalents		securities
Level 2:
Commercial paper	$	2,998	$	—	$	—	$	2,998	$	2,998	$	—
Corporate bonds	5,015		—		—		5,015		—		5,015
Total	$	8,013	$	—	$	—	$	8,013	$	2,998	$	5,015



	March 31, 2014

	Amortized		Unrealized		Unrealized		Fair		Cash		Marketable
(In thousands)	cost basis		Gains		Losses		Value		equivalents		securities
Level 2:
Commercial paper	$	19,993	$	—	$	—	$	19,993	$	19,993	$	—
Certificates of deposit	9,006		—		—		9,006		9,006		—
Total	$	28,999	$	—	$	—	$	28,999	$	28,999	$	—

The following tables present information about our financial assets and liabilities measured at fair value on a recurring basis and indicate the fair value hierarchy of the valuation techniques utilized to determine such fair value:



	Fair value measurement used
	Recorded value as of		Active markets for identical assets or liabilities	Quoted prices in similar instruments and observable inputs	Active markets for unobservable inputs
(In thousands)	December 31, 2014		(Level 1)	(Level 2)	(Level 3)
Assets:
Corporate-owned life insurance — non-current	$	2,441			$	2,441
Liabilities:
Contingent consideration — current	$	180			$	180
Contingent consideration — non-current	1,553				1,553



	Fair value measurement used
	Recorded value as of		Active markets for identical assets or liabilities		Quoted prices in similar instruments and observable inputs		Active markets for unobservable inputs
(In thousands)	March 31, 2014		(Level 1)		(Level 2)		(Level 3)
Assets:
Corporate-owned life insurance — current	$	1,989	$	—	$	—	$	1,989
Corporate-owned life insurance — non-current	2,371		—		—		2,371
Liabilities:
Contingent consideration — current	$	127	$	—	$	—	$	127
Contingent consideration — non-current	1,612		—		—		1,612

The recorded value of the corporate-owned life insurance policies is adjusted to the cash surrender value of the policies obtained from the third party life insurance providers, which are not observable in the market, and therefore, are classified within Level 3 of the fair value hierarchy. Changes in the cash surrender value of these policies are recorded within “Other expense (income), net” in the Condensed Consolidated Statements of Operations.

The fair value of the contingent consideration was determined by calculating the probability-weighted earn-out payments based on the assessment of the likelihood that certain milestones would be achieved.

The following table presents a summary of changes in the fair value of the Level 3 assets:



	Nine months ended
	December 31,
(In thousands)	2014			2013
Corporate-owned life insurance:
Balance on April 1	$	4,360		$	3,673
Unrealized (loss) gain relating to instruments held at reporting date	25			(6		)
Purchases, sales, issuances and settlements, net	45			87
Proceeds from corporate-owned life insurance policy	(1,989		)	—
Balance on December 31	$	2,441		$	3,754

The following tables present a summary of changes in the fair value of the Level 3 liabilities:



	Nine months ended
	December 31,
(In thousands)	2014			2013
Contingent consideration
Balance on April 1	$	1,739		$	—
Activity, payments and other charges (net)	(6		)	1,800
Balance on December 31	$	1,733		$	1,800

- 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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