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 as applicable, which is measured at fair value based on certain internal models and unobservable inputs.

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.

The following table summarizes the activities related to contingent consideration payable for historic acquisitions:



	Three-Month Periods Ended						Nine-Month Periods Ended
	December 31, 2017			December 31, 2016			December 31, 2017			December 31, 2016
	(In thousands)
Beginning balance	$	17,342		$	75,614		$	22,426		$	73,423
Payments	(17,109		)	(40,555		)	(17,109		)	(42,776		)
Fair value adjustments	767			(6,997		)	(4,317		)	(2,585		)
Ending balance	$	1,000		$	28,062		$	1,000		$	28,062

In connection with the acquisition of NEXTracker, Inc. in fiscal year 2016, the Company had an obligation to pay additional cash consideration to the former shareholders contingent upon NEXTracker, Inc.'s achievement of revenue targets during the two years after acquisition (ending on September 30, 2017). During the nine-month period ended December 31, 2017, the Company paid $17.1 million of the total contingent consideration following the second year's targets achievement in accordance with the terms of the merger agreement. The payment of the contingent consideration is included in other financing activities, net, in the condensed consolidated statements of cash flows.

There were no transfers between levels in the fair value hierarchy during the nine-month periods ended December 31, 2017 and December 31, 2016.

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, 2017
	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)	$	—	$	424,744		$	—		$	424,744
Foreign exchange contracts (Note 8)	—		21,003			—			21,003
Deferred compensation plan assets:									0
Mutual funds, money market accounts and equity securities	7,212		67,503			—			74,715
Liabilities:									0
Foreign exchange contracts (Note 8)	$	—	$	(25,330	)	$	—		$	(25,330	)
Contingent consideration in connection with business acquisitions	—		—			(1,000		)	(1,000		)

	Fair Value Measurements as of March 31, 2017
	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)	$	—	$	1,066,841		$	—		$	1,066,841
Foreign exchange contracts (Note 8)	—		22,022			—			22,022
Deferred compensation plan assets:									0
Mutual funds, money market accounts and equity securities	7,062		52,680			—			59,742
Liabilities:									0
Foreign exchange contracts (Note 8)	$	—	$	(11,742	)	$	—		$	(11,742	)
Contingent consideration in connection with business acquisitions	—		—			(22,426		)	(22,426		)

Other financial instruments

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



	As of December 31, 2017				As of March 31, 2017
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Fair Value Hierarchy
	(In thousands)
4.625% Notes due February 2020	$	500,000	$	516,925	$	500,000	$	526,255	Level 1
Term Loan, including current portion, due in installments through November 2021	691,875		693,605		700,000		699,566		Level 1
Term Loan, including current portion, due in installments through June 2022 (1)	489,938		491,163		502,500		503,756		Level 1
5.000% Notes due February 2023	500,000		536,515		500,000		534,820		Level 1
4.750% Notes due June 2025	596,282		643,440		595,979		633,114		Level 1
Euro Term Loan due September 2020	58,021		58,021		53,075		53,075		Level 1
Euro Term Loan due January 2022	119,786		119,786		107,357		107,357		Level 1
Total	$	2,955,902	$	3,059,455	$	2,958,911	$	3,057,943

(1) On June 30, 2017, the Company entered into a new agreement that effectively extended the maturity date of the loan from March 31, 2019 to June 30, 2022. Refer to note 6 for further details of the arrangement.

The Company values its Euro Term Loans due September 2020 and January 2022 based on the current market rate, and as of December 31, 2017, the carrying amounts approximate fair values.

The Term Loans due November 2021 and June 2022, and the Notes due February 2020, February 2023 and June 2025 are valued based on broker trading prices in active markets.