Fair Value Measurements

3 Months Ended

Jun. 30, 2015

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 June 30, 2015 and March 31, 2015:

	June 30, 2015								March 31, 2015
			Fair Value Measurements Using Inputs Considered as								Fair Value Measurements 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	$	878,000	$	878,000		-		-	$	699,000	$	699,000		-		-
Liabilities
Accrued liabilities
Contingent consideration		393,000		-		-	$	393,000		-		-		-		-
Other current liabilities
Deferred compensation		878,000		878,000		-		-		699,000		699,000		-		-
Forward foreign currency exchange contracts		1,015,000		-	$	1,015,000		-		1,193,000		-	$	1,193,000		-
Other liabilities
Warrant liability		11,648,000		-		-		11,648,000		10,506,000		-		-	$	10,506,000
Contingent consideration		927,000		-		-		927,000		-		-		-		-

Short-term Investments and Deferred Compensation

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.

Forward Foreign Currency Exchange

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 months ended June 30, 2015 and 2014, gains of $178,000 and $233,000, respectively, were 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.

Warranty Liability

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 June 30, 2015 and March 31, 2015. Any subsequent changes from the initial recognition in the fair value of the warrant liability are recorded in current period earnings as a general and administrative expense. During the three months ended June 30, 2015 and 2014, a loss of $1,142,000 and a gain of $1,114,000, respectively, were 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 Supplier Warrant recorded as warrant liability were:

	June 30, 2015
Risk-free interest rate		0.73	%
Expected life in years		2.25
Expected volatility		45.70	%
Dividend yield		-
Probability of future financing		0	%

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

Contingent Consideration

The preliminary fair value of the contingent consideration of the OE Plus acquisition discussed in Note 2 was $1,320,000. The contingent consideration was recorded in accrued expenses and other liabilities in the Company’s consolidated balance sheets, and was Level 3 liability that was measured at fair value. The Company estimated the fair value of the contingent consideration based on an option pricing model.

The assumptions used to determine the fair value of the contingent consideration were:

	June 30, 2015
Expected volatility		35.00	%
Probability		90.00	%
Counter party present value factor		4.52	%

In addition to the above assumptions, a risk-free interest rate ranging from 0.23% to 1.28% commensurate with the term of the contingent consideration was used.  Any subsequent changes from the initial recognition in the fair value of the contingent consideration liability will be recorded in current period earnings as a general and administrative expense.

The following table summarizes the activity for financial assets and liabilities utilizing Level 3fair value measurements:

	Three Months Ended June 30,
	2015				2014
	Supplier Warrant		Contingent Consideration		Supplier Warrant			Contingent Consideration
Beginning balance	$	10,506,000	$	-	$	10,047,000		$	-
Newly issued		-		1,320,000		-			-
Total (gain) loss included in net loss		1,142,000		-		(1,114,000	)		-
Exercises/settlements		-		-		-			-
Net transfers in (out) of Level 3		-		-		-			-
Ending balance	$	11,648,000	$	1,320,000	$	8,933,000		$	-

During the three months ended June 30, 2015, 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.