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Fair Value Measurements
 9 Months Ended
Dec. 31, 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 December 31, 2013 and March 31, 2013:

 
 
December 31, 2013
  
March 31, 2013
 
 
 
  
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
 
$
496,000
  
$
496,000
   
-
   
-
  
$
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
  
496,000
   
496,000
   
-
   
-
   
411,000
   
411,000
   
-
   
-
 
Forward foreign currency exchange contracts
  
76,000
   
-
  
$
76,000
   
-
   
-
   
-
   
-
   
-
 
Other liabilities
                                
Warrant liability
  
6,485,000
   
-
   
-
  
$
6,485,000
   
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 nine months ended December 31, 2013, a gain of $74,000 and a loss of $759,000, 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 nine months ended December 31, 2012, a gain of $20,000 and $360,000, 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 December 31, 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 nine months ended December 31, 2013, a loss of $2,920,000 and $6,881,000, respectively, was recorded in general and administrative expenses due to the change in the fair value of the warrant liability. During the three and nine months ended December 31, 2012, a loss of $882,000 and $825,000, 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 Supplier Warrant recorded as warrant liability were:
 
 
 
December 31, 2013
 
 
 
Supplier Warrant
 
 
 
 
Risk free interest rate
  
1.12
%
Expected life in years
  
3.75
 
Expected volatility
  
45.29
%
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.

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
December 31,
  
Nine Months Ended
December 31,
 
 
 
2013
  
2012
  
2013
  
2012
 
 
 
  
  
  
 
Beginning balance
 
$
5,975,000
  
$
1,568,000
  
$
2,014,000
  
$
-
 
Newly issued
  
-
   
-
   
-
   
1,625,000
 
Total loss included in net income (loss)
  
2,920,000
   
882,000
   
6,881,000
   
825,000
 
Exercises/settlements (1)
  
(2,410,000
)
  
-
   
(2,410,000
)
  
-
 
Net transfers in (out) of Level 3
  
-
   
-
   
-
   
-
 
Ending balance
 
$
6,485,000
  
$
2,450,000
  
$
6,485,000
  
$
2,450,000
 

(1)Represents the fair value of the Cerberus Warrant as of the settlement date (see Note 7).

During the three and nine months ended December 31, 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.