XML 33 R20.htm IDEA: XBRL DOCUMENT v3.22.1
Fair Value Measurements
 12 Months Ended
Mar. 31, 2022
Fair Value Measurements [Abstract]  
Fair Value Measurements
13. Fair Value Measurements

The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company uses a three-tier valuation hierarchy based upon observable and unobservable inputs:

•
Level 1 — Valuation is based upon quoted prices (unadjusted) in active markets for identical assets or liabilities.

•
Level 2 — Valuation is based upon quoted prices for similar assets and liabilities in active markets, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

•
Level 3 — Valuation is based upon unobservable inputs that are significant to the fair value measurement.

The fair value hierarchy requires the use of observable market data when available. In instances in which the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability.

The following sets forth by level within the fair value hierarchy, the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis according to the valuation techniques the Company used to determine their fair values at:

 
March 31, 2022
    
March 31, 2021
  
         
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
  
$
2,202,000
    
$
2,202,000
    
$
-
    
$
-
    
$
1,652,000
    
$
1,652,000
    
$
-
    
$
-
  
Prepaid expenses and other current assets
                                                                
Forward foreign currency exchange contracts
    
1,113,000
      
-
      
1,113,000
      
-
      
1,429,000
      
-
      
1,429,000
      
-
  
                                                                 
Liabilities
                                                                
Accrued liabilities
                                                                
Short-term contingent consideration
    
-
      
-
      
-
      
-
      
910,000
      
-
      
-
      
910,000
  
Other current liabilities
                                                                
Deferred compensation
    
2,202,000
      
2,202,000
      
-
      
-
      
1,652,000
      
1,652,000
      
-
      
-
  

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 Contracts

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 (See Note 12).

Contingent Consideration

In December 2018, the Company completed the acquisition of certain assets and assumption of certain liabilities from Mechanical Power Conversion, LLC (“E&M”). The Company was contingently obligated to make additional payments to the former owners of E&M up to an aggregate of $5,200,000 over a three-year period. During the year ended March 31, 2022, the Company paid $977,000 to the former owners of E&M.

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

 
  
Years Ended March 31,
  
 
  
2022
    
2021
  
 
  
Contingent
Consideration
    
Contingent
Consideration
  
Beginning balance
  
$
910,000
    
$
2,653,000
  
Newly issued
    
-
      
-
  
Changes in revaluation of contingent consideration included in earnings
   
67,000
      
230,000
Exercises/settlements
    
(977,000
)
    
(1,973,000
)
Ending balance
  
$
-
    
$
910,000
  

During the years ended March 31, 2022 and 2021, 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 and cash equivalents, 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 loan, term loan 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.