Business Combinations

12 Months Ended

Mar. 31, 2012

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

3. Business Combinations

Zilog, Inc.

On February 18, 2010, we completed the acquisition of Zilog, Inc., or Zilog, a supplier of application specific, embedded microcontroller units that are system-on-chip solutions for industrial and consumer markets. We acquired all outstanding shares as of the acquisition date for a cash consideration of $62.5 million, and Zilog became our wholly-owned subsidiary. The acquisition was intended to add digital control to our power management products and to create more cost-effective system integration solutions for our diversified customer base.

In fiscal 2011 and 2010, weincurred $43,000 and $1.2 million, respectively, in legal and consulting costs related to the acquisition. The costs incurred have been fully expensed and are included in “Selling, general and administrative expenses” on our consolidated statements of operations.

The following table summarizes the consideration paid for Zilog and the values of the assets acquired and liabilities assumed at the acquisition date.

Recognized amounts of identifiable assets acquired and liabilities assumed (in thousands):

		Purchase Price Allocation
Cash, restricted cash and cash equivalents		$	35,237
Trade receivables			2,088
Inventories			3,406
Property, plant and equipment			1,373
Deferred tax assets			7,215
Other assets			4,011
Identifiable intangible assets			14,000
Trade payables			(1,869)
Accruals and other liabilities			(9,419)
	Total identifiable net assets		56,042
Goodwill			6,448
	Total purchase price	$	62,490

The fair value of assets acquired included trade receivables of $3.3 million, of which an estimated $1.2million was not expected to be collected, resulting in a fair value of $2.1 million. Other receivables, included above in other assets, were stated at their fair value and also approximate the gross contractual value of the receivable.

Identifiable intangible assets consisted of developed intellectual property, customer relationships, contract backlog, trade name and information technology related assets. In determining fair value of the acquired intangible assets, we determined the appropriate unit of measure, the exit market and the highest and best use for the assets. The income approach and royalty savings approach were used to estimate the fair value. The income approach indicates the fair value of an asset based on the value of the cash flows that the asset can be expected to generate in the future through a discounted cash flow method. The income approach was used to determine the fair values of developed intellectual property, contract backlog and customer relationships. We utilized a discount rate of 22% to value these intangibles using the income approach. The royalty savings approach was used to determine the fair value of the trade name and indicates the fair value of an asset based upon a 22% discount rate and a 1% royalty rate. The purchase price allocation table presented above reflects our determination of the fair values of the assets acquired and liabilities assumed.

The goodwill arising from the acquisition was largely attributable to the synergies expected to be realized after our acquisition and integration of Zilog. During fiscal 2011, we completed our purchase accounting of the Zilog acquisition. We recognized measurement period adjustments retrospectively in the amount of $2.4 million upon the completion of the valuation reports related to income tax. The principal adjustments were an increase in the deferred tax assets of $2.8 million and a partially offsetting increase in income tax payable of $643,000. We have determined that the Zilog business is its own reporting unit, so all of the goodwill was assigned to that reporting unit. The goodwill is not deductible for tax purposes.During our annual impairment analysis in the fourth quarter of fiscal 2012, we concluded that the goodwill associated with the acquisition of the Zilog businesses was completely impaired. As a result, we recorded an impairment charge of $6.4 million to write off all the outstanding goodwill associated with the Zilog reporting unit. See Note 7, “Goodwill and Intangible Assets” for further discussion of adjustments to goodwill during fiscal 2011.

Zilog contributed revenues and profit before tax of $4.9 million and $447,000, respectively, in our consolidated statement of operations for the year ended March 31, 2010.

Supplemental Pro Forma Financial Information (unaudited):

The consolidated financial statements include the operational results of the acquired business from the date of acquisition on February 18, 2010. The following pro forma summary gives effect to the acquisition of Zilog as if it had occurred at the beginning of fiscal 2010. The summary is provided for illustrative purposes only and is not necessarily indicative of the consolidated results of operations for future periods.

	Year Ended March 31, 2010
Pro forma net revenues		$	271,828
Pro forma net loss		$	(7,049)
Pro forma net loss per share (basic)		$	(0.23)
Pro forma net loss per share (diluted)		$	(0.23)

Leadis Technology, Inc.

On September 14, 2009, we completed the acquisition of the assets and certain associated intellectual property of the LED driver and display driver businesses of Leadis. The acquisition was undertaken to expand our market opportunity in the LED market.

The total consideration for the inventory and the identifiable intangible assets acquired was $4.1 million, which was paid in cash.

The following table represents the purchase price allocation of assets acquired on the closing date of the acquisition (in thousands):

		Purchase Price Allocation
Inventory		$	937
Intangible assets			2,810
Goodwill			304
	Total purchase price	$	4,051

Goodwill represents the excess of purchase price of an acquired business over the fair value of the underlying intangible assets. Since these assets were acquired by an entity with a favorable tax ruling, goodwill will not result in any effective tax benefit. The primary item that generated the goodwill is the value of the synergies between the acquired businesses and our previously existing business, which does not qualify as an amortizable intangible asset. The fair value of the amortizable intangible assets was determined using the income approach, royalty savings approach and cost approach. During our annual impairment analysis in the fourth quarter of fiscal 2011, we concluded that the goodwill and the intangible assets associated with the acquisition were completely impaired. As a result, we recorded impairment charges of $304,000 and $398,000, respectively, to write off all the outstanding goodwill and the intangible assets of the acquired Leadis businesses. See Note 7, “Goodwill and Intangible Assets” for further discussion of impairment analysis and related charges recorded.

We incurred $134,000 in legal and consulting costs related to the acquisition. The costs incurred were fully expensed and included in “Selling, general and administrative expenses” on our consolidated statements of operations for fiscal 2010.

The pro forma financial information has not been disclosed because the effect of this acquisition was not material to our financial results.