Fair Value Measurements

12 Months Ended

Mar. 31, 2020

FAIR VALUE MEASUREMENTS

The accounting standard for fair value measurements establishes a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value as follows: observable inputs such as quoted prices in active markets (Level 1); inputs other than quoted prices in active markets that are observable either directly or indirectly (Level 2); and unobservable inputs in which there is little or no market data, which requires the Company to develop its own assumptions (Level 3).

A financial instrument's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The financial instruments measured at fair value in the accompanying consolidated balance sheets consist of the following:



	Recurring Fair Value Measurements as of March 31, 2020
	Level 1		Level 2		Level 3		Total
Assets:
Long term deferred compensation plan asset (2)	5,879		—		—		5,879
Total Assets	$	5,879	$	—	$	—	$	5,879
Liabilities:
Contingent consideration liability (3)	$	—	$	—	$	1,224	$	1,224
Current derivative instruments (1)	—		18,831		—		18,831
Long-term derivative instruments (1)	—		37,819		—		37,819
Long term deferred compensation plan liability (2)	5,879		—		—		5,879
Total Liabilities	$	5,879	$	56,650	$	1,224	$	63,753



	Recurring Fair Value Measurements as of March 31, 2019
	Level 1		Level 2		Level 3		Total
Assets:
Current derivative instruments (1)	$	—	$	1,790	$	—	$	1,790
Long-term derivative instruments (1)	—		614		—		614
Long term deferred compensation plan asset (2)	$	3,169	$	—	$	—	$	3,169
Total Assets	$	3,169	$	2,404	$	—	$	5,573
Liabilities:
Contingent consideration liability (3)	$	—	$	—	$	1,224	$	1,224
Current derivative instruments (1)	$	—	$	929	$	—	$	929
Long-term derivative instruments (1)	$	—	$	4,347	$	—	$	4,347
Long term deferred compensation plan liability (2)	$	3,169	$	—	$	—	$	3,169
Total liabilities	$	3,169	$	5,276	$	1,224	$	9,669

(1) The Company’s interest rate swaps are considered over-the-counter derivatives and fair value is estimated based on the present value of future cash flows using a model-derived valuation that uses Level 2 observable inputs such as interest rate yield curves. See Note 12 to the consolidated financial statements for further discussion on the Company’s derivative instruments designated as cash flow hedges.

(2) Investments in this category consist of primarily of mutual funds whose fair values are determined by reference to the quoted market price per unit in active markets multiplied by the number of units held without consideration of transaction costs. These assets represent investments held in a consolidated trust to fund the Company's non-qualified deferred compensation plan and are recorded in other long-term assets and other long-term liabilities on our consolidated balance sheets.

(3) The Company recognized a contingent consideration liability of $3.6 million in connection with the acquisition of Aquilent in fiscal 2017. As of both March 31, 2020 and 2019, the estimated fair value of the contingent consideration liability was $1.2 million, and was valued using probability-weighted cash flows, which is based on the use of Level 3 fair value measurement inputs.

The fair value of the Company's cash and cash equivalents, which are Level 1 inputs, approximated its carrying values at March 31, 2020 and 2019. The fair value of the Company's debt instruments approximated its carrying value at March 31, 2020 and 2019. The fair value of debt is determined using quoted prices or other market information obtained from recent trading activity of each debt tranche in markets that are not active (Level 2 inputs). The fair value is corroborated by prices derived from the interest rate spreads of recently completed leveraged loan transactions of a similar credit profile, industry, and terms to that of the Company. The fair value of Senior Notes is determined using quoted prices or other market information from recent trading activity in the high-yield bond market (Level 2 inputs).

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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