FAIR VALUE MEASUREMENT OF ASSETS AND LIABILITIES

Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact, and it considers assumptions that market participants would use when pricing the asset or liability. The accounting guidance for fair value establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is as follows:

Level 1 - Applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

The Company has deferred compensation plans for its officers and certain other employees. Amounts deferred under the plans are invested in hypothetical investments selected by the participant or the participant’s investment manager. The Company’s deferred compensation plan assets are for the most part included in other noncurrent assets on the condensed consolidated balance sheets and primarily include investments in equity securities that are valued using active market prices.

Level 2 - Applies to assets or liabilities for which there are inputs other than quoted prices included within level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets) such as cash and cash equivalents and money market funds; or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

The Company values foreign exchange forward contracts using level 2 observable inputs which primarily consist of an income approach based on the present value of the forward rate less the contract rate multiplied by the notional amount.

The Company’s cash equivalents are comprised of bank deposits and money market funds, which are valued using level 2 inputs, such as interest rates and maturity periods. Due to their short-term nature, their carrying amount approximates fair value.

The Company’s deferred compensation plan assets also include money market funds, mutual funds, corporate and government bonds and certain convertible securities that are valued using prices obtained from various pricing sources. These sources price these investments using certain market indices and the performance of these investments in relation to these indices. As a result, the Company has classified these investments as level 2 in the fair value hierarchy.

Level 3 - Applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company has accrued for contingent consideration in connection with its business acquisitions, which is measured at fair value based on certain internal models and unobservable inputs.

During the three-month period ended December 31, 2015, the Company accrued $81.0 million of contingent consideration related to the acquisition of NEXTracker on the date of acquisition. The fair value of the liability was estimated using a simulation-based measurement technique with significant inputs that are not observable in the market and thus represents a level 3 fair value measurement. The significant inputs in the fair value measurement not supported by market activity included the Company's probability assessments of expected future revenue during the earn-out period and associated volatility, appropriately discounted considering the uncertainties associated with the obligation, and calculated in accordance with the terms of the merger agreement. Significant decreases in expected revenue during the earn-out period, or significant increases in the discount rate or volatility in isolation would result in lower fair value estimates. The interrelationship between these inputs is not considered significant.

During the three-month period ended December 31, 2016, the Company paid $40.6 million of the total contingent consideration following the first year's targets achievement in accordance with the terms of the merger agreement, which is included in other financing activities, net, in the condensed consolidated statements of cash flows.

The following table summarizes the activities related to contingent consideration:



	Three-Month Periods Ended					Nine-Month Periods Ended
	December 31, 2016			December 31, 2015		December 31, 2016			December 31, 2015
	(In thousands)
Beginning balance	$	75,614		$	4,500	$	73,423		$	4,500
Additions to accrual	—			81,000		—			81,000
Payments	(40,555		)	—		(42,776		)	—
Fair value adjustments	(6,997		)	4,000		(2,585		)	4,000
Ending balance	$	28,062		$	89,500	$	28,062		$	89,500

The Company values deferred purchase price receivables relating to its asset-backed securitization program based on a discounted cash flow analysis using unobservable inputs (i.e., level 3 inputs), which are primarily risk free interest rates adjusted for the credit quality of the underlying creditor. Due to its high credit quality and short term maturity, the fair value approximates carrying value. Significant increases in either of the major unobservable inputs (credit spread, risk free interest rate) in isolation would result in lower fair value estimates, however the impact is not meaningful. The interrelationship between these inputs is also insignificant. Refer to note 10 for a reconciliation of the change in the deferred purchase price receivable during the three-month and nine-month periods ended December 31, 2016 and December 31, 2015.

There were no transfers between levels in the fair value hierarchy during the three-month and nine-month periods ended December 31, 2016 and December 31, 2015.

Financial Instruments Measured at Fair Value on a Recurring Basis

The following table presents the Company’s assets and liabilities measured at fair value on a recurring basis:



	Fair Value Measurements as of December 31, 2016
	Level 1		Level 2			Level 3			Total
	(In thousands)
Assets:
Money market funds and time deposits (included in cash and cash equivalents of the condensed consolidated balance sheet)	$	—	$	751,027		$	—		$	751,027
Deferred purchase price receivable (Note 10)	—		—			668,918			668,918
Foreign exchange contracts (Note 8)	—		27,935			—			27,935
Deferred compensation plan assets:									0
Mutual funds, money market accounts and equity securities	6,686		50,522			—			57,208
Liabilities:									0
Foreign exchange contracts (Note 8)	$	—	$	(22,928	)	$	—		$	(22,928	)
Contingent consideration in connection with business acquisitions	—		—			(28,062		)	(28,062		)

	Fair Value Measurements as of March 31, 2016
	Level 1		Level 2			Level 3			Total
	(In thousands)
Assets:
Money market funds and time deposits (included in cash and cash equivalents of the condensed consolidated balance sheet)	$	—	$	1,074,132		$	—		$	1,074,132
Deferred purchase price receivable (Note 10)	—		—			501,097			501,097
Foreign exchange contracts (Note 8)	—		22,648			—			22,648
Deferred compensation plan assets:									0
Mutual funds, money market accounts and equity securities	9,228		40,556			—			49,784
Liabilities:									0
Foreign exchange contracts (Note 8)	$	—	$	(21,091	)	$	—		$	(21,091	)
Contingent consideration in connection with business acquisitions	—		—			(73,423		)	(73,423		)

Other financial instruments

The following table presents the Company’s debt not carried at fair value:



	As of December 31, 2016				As of March 31, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Fair Value Hierarchy
	(In thousands)
Term Loan, including current portion, due in installments through March 2019	525,000		524,675		547,500		542,709		Level 1
4.625% Notes due February 2020	500,000		525,740		500,000		524,735		Level 1
Term Loan, including current portion, due in installments through November 2021 (1)	700,000		696,941		577,500		573,533		Level 1
5.000% Notes due February 2023	500,000		532,810		500,000		507,500		Level 1
4.750% Notes due June 2025	595,879		639,288		595,589		604,926		Level 1
Total	$	2,820,879	$	2,919,454	$	2,720,589	$	2,753,403

(1) On November 30, 2016, the Company entered into a new arrangement to extend the maturity date of the agreement from August 30, 2018 to November 30, 2021. Refer to note 5 for further details of the arrangement.

The Term Loans and Notes due February 2020, February 2023 and June 2025 are valued based on broker trading prices in active markets.

The Company values its outstanding €49.7 million (approximately $52.3 million as of December 31, 2016), 5-year, unsecured, term-loan due September 30, 2020 based on the current market rate, and as of December 31, 2016, the carrying amount approximates fair value.