Fair Value Measurements

The Company considers fair value as the exchange price that would be received for 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 at the measurement date. The Company utilizes the following three-level fair value hierarchy to establish the priorities of the inputs used to measure fair value:

•Level 1 — Quoted prices in active markets for identical assets or liabilities.

•Level 2 — Observable inputs other than quoted market prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

•Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

The following table presents the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis, excluding assets related to the Company’s defined benefit pension plans, classified by the level within the fair value hierarchy (in thousands):



	June 30, 2017						March 31, 2017
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets:
Cash equivalents	$	426,910	$	—	$	—	$	448,742	$	—	$	—

Trading investments for deferred compensation plan included in other assets:
Money market funds	$	3,107	$	—	$	—	$	2,813	$	—	$	—
Mutual funds	13,807		—		—		12,230		—		—
Total of trading investments for deferred compensation plan	$	16,914	$	—	$	—	$	15,043	$	—	$	—

Currency exchange derivative assets included in other current assets	$	—	$	104	$	—	$	—	$	48	$	—

Liabilities:
Acquisition-related contingent consideration included in accrued and other current liabilities and other non-current liabilities	$	—	$	—	$	7,475	$	—	$	—	$	9,908
Currency exchange derivative liabilities included in accrued and other current liabilities	$	—	$	1,711	$	—	$	—	$	443	$	—

The following table summarizes the change in fair value of the Company’s contingent consideration balance during the three months ended June 30, 2017 and 2016 (in thousands):



	Three Months Ended June 30,
	2017			2016
Beginning of the period	$	9,908		$	—
Fair value of contingent consideration upon acquisition	—			18,000
Change in fair value of contingent consideration	(1,978		)	—
Expected payment for first earn-out period(1)	(455		)	—
End of the period	$	7,475		$	18,000

(1) As of June 30, 2017, the first twelve month earn-out period is complete and the earn-out payment of $0.5 million is based on the actual net sales of Jaybird products and no longer subject to fair value measurement.

Investment Securities

The marketable securities for the Company's deferred compensation plan are recorded at a fair value of $16.9 million and $15.0 million, respectively, as of June 30, 2017 and March 31, 2017, based on quoted market prices. Quoted market prices are observable inputs that are classified as Level 1 within the fair value hierarchy. Unrealized trading gains / (losses) related to trading securities for the three months ended June 30, 2017 and 2016 were not material and are included in other expense, net in the Company's condensed consolidated statements of operations.

Acquisition-related contingent consideration

On April 20, 2016 (the "Acquisition Date"), the Company acquired all of the equity interest of JayBird, LLC (“Jaybird”). Pursuant to the purchase agreement, there is an additional earn-out of up to $45.0 million based on the achievement of certain net revenue growth targets over approximately a two-year period (the "Jaybird Acquisition"). The acquisition-related contingent consideration liability arising from the Jaybird Acquisition represents the future potential earn-out payments of up to $45.0 million based on the achievement of certain net revenue targets over approximately a two year period. If the net revenue targets are met, the Company will pay a maximum of $25.0 million and $20.0 million in fiscal years 2018 and 2019, respectively. The fair value of the earn-out as of the Acquisition Date was $18.0 million, which was determined by using a Monte Carlo Simulation that includes significant unobservable inputs such as a risk-adjusted discount rate of 16% and projected net sales of Jaybird over the earn-out period. The fair value is remeasured at each reporting period at the estimated fair value based on the inputs on the date of remeasurement, with the change in fair value recognized as "change in fair value of contingent consideration for business acquisition" in the operating expense section in the condensed consolidated statements of operations. Projected net sales are based on the Company's internal projections, including analysis of the target markets. The fair value of the contingent consideration was $7.9 million and $9.9 million as of June 30, 2017 and March 31, 2017, respectively. The decrease in fair value of contingent consideration for the three months ended June 30, 2017 results primarily from Jaybird's lower-than-expected net sales, partially offset by the change in the time value of money. As of June 30, 2017, the first twelve month earn-out period is complete and the expected earn-out payment of $0.5 million is included in the accrued and other current liabilities.

Although these estimates are based on management’s best knowledge of current events, the estimates could change significantly from period to period. Any changes to the significant unobservable inputs used, including change in the forecast of net sales for the earn-out periods, may result in change in the fair value of contingent consideration, and could have a material impact on future results of operations. Actual payment of contingent consideration in the future could be different from the current estimated fair value of the contingent consideration.

Assets Measured at Fair Value on a Nonrecurring Basis

The Company’s non-marketable cost method investments, and non-financial assets, such as goodwill, intangible assets and property, plant and equipment, are recorded at fair value only upon initial recognition or if an impairment is recognized. There were no material impairments of long-lived assets during the three months ended June 30, 2017 or 2016.

Non-marketable cost method investments. These investments are classified as Level 3 due to the absence of quoted market prices, the inherent lack of liquidity, and the fact that inputs used to measure fair value are unobservable and require management's judgment. When certain events or circumstances indicate that impairment may exist, the Company revalues the investments using various assumptions, including the financial metrics and ratios of comparable public companies.

The primary investment included in non-marketable investments is the Company’s investment in Series A Preferred Stock of Lifesize Inc. ("Lifesize") recorded at the fair value of $5.6 million on the date of the Lifesize divestiture.

The aggregate recorded amount of cost method investments included in other assets as of June 30, 2017 and March 31, 2017 was $7.1 million and $7.4 million, respectively.