Business Combination

6 Months Ended

Oct. 02, 2016

Business Combinations [Abstract]

Business Combination

Business Combination

Acquisition of Synkera Technologies, Inc.

On July 22, 2016, IDT purchased substantially all of the assets and liabilities of Synkera Technologies, Inc. (Synkera), a company engaged in developing and marketing metal oxide gas sensor technology, for total purchase consideration of approximately $2.8 million, of which $1.5 million was paid in cash at closing and $1.3 million was recorded as a liability representing the fair value of contingent cash consideration of up to $1.5 million. The contingent cash consideration will be paid based upon the achievement of certain milestones to be completed within 3.5 years. The goodwill described below is deductible for tax purposes.

The Company’s preliminary allocation of the purchase price is as follows:

(in thousands)	Estimated Fair Value			Estimated Useful Life (in years)
Developed technology	$	970		5
Customer relationships	310			3
Trade name	180			1
Goodwill	1,353
Tangible assets	80
Liabilities	(119		)
Total purchase price	$	2,774

Pro forma results of operations for this acquisition have not been presented because the effect of the acquisition was not material to the Company's financial results.

Acquisition of Zentrum Mikroelektronik Dresden AG

On December 7, 2015, the Company completed its purchase all of the outstanding no-par-value shares of Zentrum Mikroelektronik Dresden AG (ZMDI), a privately-held company mainly operating in Germany, in an all-cash transaction for approximately $307.0 million. ZMDI is a global supplier of sensing products for mobile, automotive and industrial solutions. The acquisition provides the Company a significant new growth opportunity in the automotive and industrial business.

Total consideration consisted of the following:

(in thousands)
Cash paid to ZMDI shareholders	$	307,030
Less: cash acquired	(27,892		)
Total purchase price, net of cash acquired	$	279,138

The total cash consideration paid includes a Euro-equivalent of $20.0 million which is maintained in an escrow account and will be released to the selling shareholders upon meeting of certain conditions in accordance with the escrow agreement.

The Company allocated the purchase price to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. The excess purchase price over those fair values was recorded as goodwill. Because the Acquisition was structured as a stock acquisition for income tax purposes, none of the asset step-up or asset recognition required by purchase accounting, including the goodwill described below, is deductible for tax purposes.

The fair value of cash, accounts receivable, other current assets, accounts payable, and other accrued liabilities were generally determined using historical carrying values given the short-term nature of these assets and liabilities. The fair values for acquired inventory, property, plant and equipment and intangible assets were determined with the input from third-party valuation specialist. The fair values of certain other liabilities were determined internally using historical carrying values and estimates made by management. As additional information becomes available, the Company may revise the preliminary purchase price allocation during the remainder of the measurement period (which will not exceed 12 months from the acquisition date). Any such revisions or changes may be material.

The financial results of the ZMDI have been included in the Company’s Condensed Consolidated Statements of Operations from December 7, 2015, the closing date of the acquisition. The ZMDI business is primarily included in the Company's Computing, Consumer and Industrial reportable segment. Goodwill is primarily attributable to the assembled workforce of ZMDI, anticipated synergies and economies of scale expected from the operations of the combined company.

The Company's preliminary allocation of the purchase price is as follows:

(in thousands)	Estimated Fair Value
Cash	$	27,892
Accounts receivable	10,618
Inventories	19,892
Other current assets	1,551
Property, plant and equipment	9,287
Other non-current assets	2,003
Intangible assets	126,200
Goodwill	170,089
Accounts payable	(5,633		)
Accrued and other current liabilities	(19,141		)
Loans payable	(9,437		)
Deferred tax liability	(23,467		)
Other long term liabilities	(2,824		)
Total purchase price	$	307,030

A summary of the preliminary allocation of intangible assets is as follows:

(in thousands)	Estimated Fair Value		Estimated Useful Life (in years)
Developed technology	$	75,600	7
Customer relationships	44,000		7
Backlog	5,800		1
Trademarks	800		1
Total	$	126,200

Pro Forma Financial Information (unaudited):

The following unaudited pro forma financial information present combined results of operations for each of the periods presented, as if ZMDI had been acquired as of the beginning of fiscal year 2016. The pro forma financial information include the business combination effect of the amortization charges from acquired intangible assets, the amortization of fair market value inventory write-up and acquisition-related costs. The pro forma data is for informational purposes only and is not necessarily indicative of the consolidated results of operations of the combined business had the acquisition actually occurred at the beginning of fiscal year 2016 or of the results of future operations of the combined business. Consequently, actual results will differ from the unaudited pro forma information presented below:

	Three Months Ended					Six Months Ended
(Unaudited in thousands, except per share data)	October 2, 2016		September 27, 2015			October 2, 2016		September 27, 2015
Revenues	$	184,059	$	199,217	*	$	376,187	$	379,008	*
Net income	$	25,583	$	44,798		$	49,493	$	69,128
Basic net income per share - continuing operations	$	0.19	$	0.3		$	0.37	$	0.47
Diluted net income per share - continuing operations	$	0.19	$	0.29		$	0.36	$	0.45

* Includes one-time revenue of approximately $10.3 million related to intellectual property licensing agreement with a customer for three and six months ended September 27, 2015.