Note 3 Business Combination

12 Months Ended

Mar. 31, 2014

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, or the Acquired MCU Business, of the System LSI Division of Samsung Electronics Co., Ltd. The acquired product line includes microcontrollers potentially useful in a number of applications, which have to date been principally used in consumer product 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. The installments bear simple interest at a variable annual rate equal to six-month LIBOR plus a 3 percentage point margin. The above deferred payments and interest are included in “Accrued expenses and other current liabilities” on our audited consolidated balance sheets.

As of March 31, 2014, we have incurred $403,000 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, or SG&A expenses, on our audited consolidated statements of operations.

The following table summarizes the fair values of the assets acquired at the acquisition date (in thousands):

		Purchase Price Allocation
Inventories		$	800
Property, plant and equipment			36
Identifiable intangible assets			24,000
	Total identifiable net assets		24,836
Goodwill			25,164
	Total purchase price	$	50,000

Identifiable intangible assets consisted of developed intellectual property, customer relationships, 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 intellectual property, noncompetition agreement, contract backlog and customer relationships. The goodwill arising from the acquisition was largely attributable to the synergies expected to be realized after our acquisition and integration of the Acquired MCU Business. The goodwill is not deductible for tax purposes.

The Acquired MCU Business contributed revenues of $36.1 million in our audited consolidated statements of operations for fiscal year 2014. As the Acquired MCU Business is fully integrated within our existing operations we are not able to calculate and report the net income contribution specific to the Acquired MCU Business.

Supplemental Pro Forma Financial Information

The following pro forma summary gives effect to the acquisition of the Acquired MCU Business as if it had occurred at the beginning of fiscal 2013. The pro forma financial information reflects the business combination accounting effects resulting from this acquisition including our amortization charges from acquired intangible assets, the acquisition related expenses and the interest expenses on deferred payments of the acquisition. The summary is provided for illustrative purposes only and is not necessarily indicative of the consolidated results of operations for future periods.

The Acquired MCU Business's fiscal year ended on December 31, while our fiscal year ends on March 31. As such, the financial information of the Acquired MCU Business is included in the following unaudited pro forma table so as to align with the reporting periods of our fiscal quarters. In the following unaudited pro forma table, the financial information for fiscal year 2014 includes the historical results of IXYS Corporation for the twelve months ended March 31, 2014 and the historical results of the Acquired MCU Business for the three months ended March 31, 2013; the financial information for fiscal year 2013 includes the historical results of IXYS Corporation for the twelve months ended March 31, 2013 and the historical results of the Acquired MCU Business for the twelve months ended December 31, 2012 (in thousands, except per share data):

	Years Ended March 31
	2014		2013
	(unaudited)
Pro forma net revenues	$	360,228	$	369,086
Pro forma net income	$	15,364	$	18,189
Pro forma net income per share (basic)	$	0.49	$	0.59
Pro forma net income per share (diluted)	$	0.48	$	0.57