Note 3 Business Combination

3 Months Ended

Jun. 30, 2013

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

3. Business Combination

On June 27, 2013, we completed the acquisition of a 4-bit and 8-bit microcontroller product line of the System LSI Division of Samsung Electronics Co., Ltd. The acquired product line includes microcontrollers for various consumer, medical, automotive, telecom and power management applications. The acquisition is intended to bolster our product portfolio and empower customers to utilize products from across our multiple product lines.

The aggregate purchase price for the acquired assets is $50.0 million. The closing payment was $20.0 million and we are obligated to pay $30.0 million in two installment payments of $15.0 million each. The first installment is due on June 27, 2014 and the second installment is due on December 31, 2014, bearing simple interest at a variable annual rate equal to six-month LIBOR plus a 3 percentage point margin. The above deferred payments are included in “Accrued expenses and other current liabilities” and “Other long term liabilities”, respectively, on our unaudited condensed consolidated balance sheets.

As of June 30, 2013, we have incurred $201,000 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 unaudited condensed consolidated statements of operations.

The following table summarizes the preliminary values of the assets acquired at the acquisition date.

Recognized amounts of identifiable assets acquired (in thousands):

		Preliminary Purchase Price Allocation
Inventories		$	1,150
Property, plant and equipment			36
Identifiable intangible assets			48,649
	Total identifiable net assets		49,835
Goodwill			165
	Total purchase price	$	50,000

Identifiable intangible assets consisted of developed intellectual property, customer relationships, in process intellectual property, contract backlog and anoncompetition agreement. The valuation of the acquired intangibles was classified as a level 3 measurement under the fair value measurement guidance, because the valuation was based on significant unobservable inputs and involved management judgment and assumptions about market participants and pricing. 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 cost 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 and in processintellectual property, noncompetitionagreement, contract backlogand customer relationships. We utilized a weighted average cost of capital rate of 17% to value these intangibles using the income approach. The cost approach was used to determine the fair value of tangible assets and indicates the fair value of an asset based upon expected replacement value.The purchase price allocation table presented above reflects our preliminary determination of the fair values of the assets acquired. We are in the process of obtaining additional information and reviewing fair value calculations and assumptions prior to finalizing the purchase price allocation during the quarter ended March 31, 2014. The goodwill will be deductible for tax purposes.

Supplemental Pro Forma Financial Information:

We completed the acquisition on June 27, 2013. The acquisition did not have any material impact on our unaudited condensed consolidated statements of operations for the quarter ended June 30, 2013 as there were no material transactions by the acquired business during the quarter. We are in the process of obtaining the required financial information, including the audited financials of the acquired business for the relevant periods, and will disclose the required pro forma financial information in our subsequent Securities and Exchange Commission, or SEC, filings, when it becomes practicable to do so.