Fair Value Measurements

6 Months Ended

Sep. 30, 2013

Fair Value Measurements [Abstract]

Fair Value Measurements

12. Fair Value Measurements

The following table summarizes the Company’s financial assets and liabilities measured at fair value, by level within the fair value hierarchy as of September 30, 2013 and March 31, 2013:

	September 30, 2013								March 31, 2013
			Fair Value Measurements								Fair Value Measurements
			Using Inputs Considered as								Using Inputs Considered as
	Fair Value		Level 1		Level 2		Level 3		Fair Value		Level 1		Level 2		Level 3
Assets
Short-term investments
Mutual funds	$	452,000	$	452,000		-		-	$	411,000	$	411,000		-		-
Prepaid expenses and other current assets
Forward foreign currency exchange contracts		-		-		-		-		683,000		-	$	683,000		-
Liabilities
Other current liabilities
Deferred compensation		452,000		452,000		-		-		411,000		411,000		-		-
Forward foreign currency exchange contracts		150,000		-	$	150,000		-		-		-		-		-
Other liabilities
Warrant liability		5,975,000		-		-	$	5,975,000		2,014,000		-		-	$	2,014,000

The Company’s short-term investments, which fund its deferred compensation liabilities, consist of investments in mutual funds. These investments are classified as Level 1 as the shares of these mutual funds trade with sufficient frequency and volume to enable the Company to obtain pricing information on an ongoing basis.

The forward foreign currency exchange contracts are primarily measured based on the foreign currency spot and forward rates quoted by the banks or foreign currency dealers. During the three and six months ended September 30, 2013, a loss of $100,000 and $833,000, respectively, was recorded in general and administrative expenses due to the change in the value of the forward foreign currency exchange contracts subsequent to entering into the contracts. During the three and six months ended September 30, 2012, a gain of $431,000 and $340,000, respectively, was recorded in general and administrative expenses due to the change in the value of the forward foreign currency exchange contracts subsequent to entering into the contracts.

The Company estimates the fair value of the warrant liability using level 3 inputs and the Monte Carlo simulation model at each balance sheet date. This amount is recorded as a warrant liability which is included in other liabilities in the consolidated balance sheets at September 30, 2013 and March 31, 2013. Any subsequent changes in the fair value of the warrant liability will be recorded in current period earnings as a general and administrative expense. During the three and six months ended September 30, 2013, a loss of $2,391,000 and $3,961,000, respectively, was recorded in general and administrative expenses due to the change in the fair value of the warrant liability. During the three and six months ended September 30, 2012, a gain of $67,000 and $57,000, respectively, was recorded in general and administrative expenses due to the change in the fair value of the warrant liability.

The assumptions used to determine the fair value of the Cerberus Warrant and the Supplier Warrant recorded as warrant liability were:

	September 30, 2013
	Cerberus Warrant			Supplier Warrant
Risk free interest rate		0.88	%		1.01	%
Expected life in years		3.65			4.00
Expected volatility		44.19	%		43.10	%
Dividend yield		-			-
Probability of future financing		0	%		0	%

The risk free interest rate used was based on U.S. treasury-note yields with terms commensurate with the remaining term of the warrants. The expected life is based on the remaining contractual term of the warrants and the expected volatility is based on the Company’s daily historical volatility over a period commensurate with the remaining term of the warrants.

A summary of the change to the Company’s warrant liability, as measured at fair value on a recurring basis using significant unobservable inputs (Level 3) is presented below:

	Three Months Ended					Six Months Ended
	September 30,					September 30,
	2013		2012			2013		2012
Beginning balance	$	3,584,000	$	617,000		$	2,014,000	$	-
Newly issued		-		1,018,000			-		1,625,000
Total loss (gain) included in net loss		2,391,000		(67,000	)		3,961,000		(57,000	)
Warrants exercised		-		-			-		-
Net transfers in (out) of Level 3		-		-			-		-
Ending balance	$	5,975,000	$	1,568,000		$	5,975,000	$	1,568,000

During the three and six months ended September 30, 2013, the Company had no significant measurements of assets or liabilities at fair value on a nonrecurring basis subsequent to their initial recognition.

The carrying amounts of cash, accounts receivable, accounts payable and accrued liabilities approximate their fair value due to the short-term nature of these instruments. The carrying amounts of the revolving loans, term loans and other long-term liabilities approximate their fair value based on the variable nature of interest rates and current rates for instruments with similar characteristics.