Business Acquisitions (Notes)

6 Months Ended

Sep. 30, 2012

Business Acquisition [Line Items]

Business Combination Disclosure [Text Block]

Business Acquisitions

Acquisition of SMSC

On August 2, 2012, the Company acquired SMSC, a publicly traded company based in Hauppauge, New York, for $37.00 per share and the exchange of certain share-based payment awards, or a total of $919.6 million. As a result of the acquisition, SMSC became a wholly owned subsidiary of the Company. SMSC is a leading developer of smart mixed-signal connectivity solutions. SMSC employs a unique systems level approach that incorporates a broad set of technologies and intellectual property to deliver differentiating products to its customers. SMSC is focused on delivering connectivity solutions that enable the proliferation of data in automobiles, consumer devices, PCs and other applications. SMSC's feature-rich products drive a number of industry standards and include USB, MOST^® automotive networking, Kleer^® and JukeBlox^® wireless audio, embedded system control and analog solutions, including thermal management and RightTouch^® capacitive sensing. The Company's primary reason for this acquisition was to expand the Company's range of solutions, products and capabilities in the automotive, industrial, computing, consumer and wireless audio markets by extending its served available market.

The acquisition was accounted for under the purchase method of accounting, with the Company identified as the acquirer, and the operating results of SMSC have been included in the Company's consolidated financial statements as of the closing date of the acquisition. Under the purchase method of accounting, the aggregate amount of consideration paid by the Company was allocated to SMSC's net tangible assets and intangible assets based on their estimated fair values as of August 2, 2012.  The excess purchase price over the value of the net tangible assets and intangible assets was recorded to goodwill. The goodwill has been allocated to the semiconductor products reporting segment.  None of the goodwill related to the SMSC acquisition is deductible for tax purposes.  The Company retained an independent third-party appraiser to assist management in its valuation; however, the purchase price allocation has not been finalized. This could result in adjustments to the carrying value of the assets acquired and liabilities assumed, the useful lives of intangible assets and residual amount allocated to goodwill. The preliminary allocation of the purchase price is based on the best estimates of management and is subject to revision based on the final valuations and estimates of useful lives.

The table below represents the preliminary allocation of the purchase price to the net assets acquired based on their estimated fair values as of August 2, 2012, as well as the associated estimated useful lives of the acquired intangible assets at that date:

	August 2, 2012
	(in thousands)
Assets acquired
Cash and cash equivalents	$	180,925
Accounts receivable, net	58,441
Inventories	89,662
Prepaid expenses	5,675
Deferred tax assets	13,717
Other current assets	18,290
Property, plant and equipment, net	36,669
Long-term investments	24,275
Goodwill	157,840
Intangible assets, net	7,390
Purchased intangible assets	517,800
Other assets	3,835
Total assets acquired	1,114,519
Liabilities assumed
Accounts payable	(28,035		)
Accrued liabilities	(52,453		)
Deferred income on shipments to distributors	(11,376		)
Long-term income tax payable	(72,781		)
Deferred tax liability	(20,194		)
Other liabilities	(10,079		)
Total liabilities assumed	(194,918		)
Purchase price allocated	$	919,601

The total purchase price allocated of $919.6 million includes approximately $6.9 million of non cash consideration for the exchange of certain share-based payment awards for the Company's stock awards. The amount of cash paid by the Company, net of cash acquired from SMSC of $180.9 million, was $731.8 million.

Purchased Intangible Assets	Useful Life	August 2, 2012
	(in years)	(in thousands)
Core/developed technology	7-15	$	238,100
In-process technology	7-15	80,300
Corporate trade name	1	2,300
Product trademarks	6	11,700
Customer-related	5	163,500
Backlog	1	21,900
		$	517,800

Purchased intangible assets include core and developed technology, in-process research and development, trademarks and trade names, customer-related intangibles and acquisition-date backlog. The estimated fair values of the core and developed technology and in-process research and development were determined based on the present value of the expected cash flows to be generated by the respective existing technology or future technology. The core and developed technology intangible assets are being amortized on a technology-by-technology basis with the amortization recorded for each technology commensurate with the expected cash flows used in the initial determination of fair value. In-process technology is capitalized until such time the related projects are completed or abandoned at which time the capitalized amounts will begin to be amortized or written off.

Trademarks and trade names include SMSC's corporate trade name as well as SMSC's product trademarks. The estimated fair value of the trademarks and trade names was determined based on the income approach, using the relief from royalty methodology. Trademarks and trade names are considered by the Company to be finite-lived assets and are being amortized using the straight-line method, which management believes is materially consistent with the pattern of benefit to be realized by these assets.

Customer-related intangible assets consist of SMSC's contractual relationships and customer loyalty related to its distributor and end-customer relationships, and the fair values of the customer-related intangibles were determined based on SMSC's projected revenues. An analysis of expected attrition and revenue growth for existing customers was prepared from SMSC's historical customer information.  Customer relationships are being amortized in a manner consistent with the estimated cash flows associated with the existing customers and anticipated retention rates. Backlog relates to the value of orders not yet shipped by SMSC at the acquisition date, and the preliminary fair values were based on the estimated profit associated with those orders. Backlog related assets are being recognized commensurate with recognition of the revenue for the orders on which the backlog intangible assets were determined.  Amortization expense associated with acquired intangible assets is not deductible for tax purposes.  Thus, approximately $10.1 million was established as a net deferred tax liability for the future amortization of the intangible assets.

The amount of SMSC net sales and net loss included in the Company's condensed consolidated statements of income for the period August 2, 2012 to September 30, 2012 was $48.2 million and $89.2 million, respectively.

The following unaudited pro-forma consolidated results of operations for the three and six-month periods ended September 30, 2012 and 2011 assume the SMSC acquisition occurred as of April 1, 2011. The pro forma results of operations are presented for informational purposes only and are not indicative of the results of operations that would have been achieved if the acquisition had taken place on April 1, 2011 or of results that may occur in the future (amounts in thousands):

	Three Months Ended				Six Months Ended
	September 30,				September 30,
	2012		2011		2012		2011
Net sales	$	441,192	$	453,183	$	896,404	$	907,185
Net income	59,593		23,685		118,619		16,217
Basic earnings per share	$	0.31	$	0.12	$	0.61	$	0.08
Diluted earnings per share	$	0.29	$	0.12	$	0.58	$	0.08

Acquisition of Roving Networks

On April 18, 2012, the Company acquired Roving Networks, a privately-held company. Roving Networks is an innovator in low-power embedded Wi-Fi and Bluetooth solutions based in Los Gatos, California. The business acquisition was accounted for under the purchase method of accounting.  Total consideration paid for this business was approximately $20.6 million.  The acquisition also included contingent consideration with an estimated fair value at the date of purchase of approximately $14.7 million. The initial purchase price of the acquisition resulted in purchased intangible assets of approximately $22.8 million and goodwill of approximately $8.7 million which was all allocated to the Company's semiconductor products segment.  Goodwill recognized in this transaction is non-deductible. Purchased intangible assets included $10.6 million of developed technology, $10.6 million of customer-related intangibles, $0.3 million of acquisition-date backlog and $1.3 million of in-process research and development. The purchased intangible assets (other than in-process technology and acquisition-date backlog) are being amortized over their expected useful lives which range between four and ten years. Acquisition-date backlog is being amortized over one year and in-process research and development is capitalized until such time the related projects are completed or abandoned at which time the capitalized amounts will begin to be amortized or written off.