10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2017

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

COMMISSION FILE NUMBER 000-26124

IXYS CORPORATION

(Exact name of registrant as specified in its charter)

DELAWARE	77-0140882
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1590 BUCKEYE DRIVE

MILPITAS, CALIFORNIA 95035-7418

(Address of principal executive offices and Zip Code)

(408) 457-9000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐  (Do not check if a smaller reporting company)	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

The number of shares of the registrant’s common stock, $0.01 par value, outstanding as of July 27, 2017 was 32,603,143.

IXYS CORPORATION

FORM 10-Q

June  30, 2017

INDEX

	Page
PART I – Financial Information		3
Item 1. Financial Statements		3
Unaudited Condensed Consolidated Balance Sheets		3
Unaudited Condensed Consolidated Statements of Operations		4
Unaudited Condensed Consolidated Statements of Comprehensive Income		5
Unaudited Condensed Consolidated Statements of Cash Flows		6
Notes to Unaudited Condensed Consolidated Financial Statements		7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		19
Item 3. Quantitative and Qualitative Disclosures about Market Risk		27
Item 4. Controls and Procedures		27
PART II – Other Information		28
Item 1. Legal Proceedings		28
Item 1A. Risk Factors		28
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		41
Item 3. Defaults upon Senior Securities		41
Item 4. Mine Safety Disclosures		42
Item 5. Other Information		42
Item 6. Exhibits		42

2

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

IXYS CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

	June 30,			March 31,
	2017			2017
ASSETS
Current assets:
Cash and cash equivalents	$	171,010		$	167,904
Restricted cash		1,422			1,330
Accounts receivable, net		42,138			41,167
Inventories		92,369			89,436
Prepaid expenses and other current assets		6,488			3,977
Total current assets		313,427			303,814
Property, plant and equipment, net		44,065			42,240
Intangible assets, net		2,398			2,984
Goodwill		42,378			42,227
Deferred income taxes		24,917			24,739
Other assets		22,202			17,975
Total assets	$	449,387		$	433,979
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of loans payable	$	1,107		$	1,058
Accounts payable		10,523			11,409
Accrued expenses and other current liabilities		23,539			25,347
Total current liabilities		35,169			37,814
Long term loans, net of current portion		76,853			76,791
Pension liabilities		15,558			14,901
Other long term liabilities		6,591			6,618
Total liabilities		134,171			136,124
Commitments and contingencies (Note 15)
Stockholders’ equity:
Preferred stock, $0.01 par value:
Authorized: 5,000,000 shares; none issued and outstanding		—			—
Common stock, $0.01 par value:
Authorized: 80,000,000 shares; 38,383,751 issued and 32,595,143 outstanding at June 30, 2017 and 38,326,329 issued and 31,912,021 outstanding at March 31, 2017		384			383
Additional paid-in capital		217,840			217,355
Treasury stock, at cost: 5,788,608 common shares at June 30, 2017 and 6,414,308 common shares at March 31, 2017		(52,653	)		(58,347	)
Retained earnings		171,321			167,009
Accumulated other comprehensive loss		(21,676	)		(28,545	)
Total stockholders’ equity		315,216			297,855
Total liabilities and stockholders’ equity	$	449,387		$	433,979

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3

IXYS CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	Three Months Ended
	June 30,
	2017			2016
Net revenues	$	83,542		$	80,638
Cost of goods sold		56,996			56,644
Gross profit		26,546			23,994
Operating expenses:
Research, development and engineering		7,573			7,910
Selling, general and administrative		10,006			10,038
Amortization of acquisition-related intangible assets		596			1,017
Total operating expenses		18,175			18,965
Operating income		8,371			5,029
Other income (expense):
Interest income		79			62
Interest expense		(694	)		(635	)
Other income (expense), net		(515	)		815
Income before income tax provision		7,241			5,271
Provision for income tax		(1,747	)		(2,252	)
Net income	$	5,494		$	3,019
Net income per share:
Basic	$	0.17		$	0.10
Diluted	$	0.17		$	0.09
Cash dividends per common share	$	—		$	0.040
Weighted average shares used in per share calculation:
Basic		32,086			31,401
Diluted		33,044			32,001

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

IXYS CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

	Three Months Ended
	June 30,
	2017			2016
Net income	$	5,494		$	3,019
Foreign currency translation adjustments		6,882			(2,825	)
Changes in market value of investments:
Changes in unrealized gains (losses), net of income taxes of $(8) for the three months ended June 30, 2017, and net of income taxes of $45 for the three months ended June 30, 2016		(13	)		85
Reclassification adjustment for net losses realized in net income, net of income taxes of $61 for the three months ended June 30, 2016		—			90
Net change in market value of investments		(13	)		175
Total comprehensive income	$	12,363		$	369

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5

IXYS CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Three Months Ended
	June 30,
	2017			2016
Cash flows from operating activities:
Net income	$	5,494		$	3,019
Adjustments to reconcile net income to net cash provided by (used in) operating activities, net of assets acquired and liabilities assumed:
Depreciation and amortization		2,411			2,832
Provision for receivable allowances		2,428			1,610
Net change in inventory provision		383			425
Stock-based compensation		907			855
Gain on investments		(431	)		(169	)
Foreign currency adjustments on intercompany amounts and other non-cash items		69			(111	)
Changes in operating assets and liabilities, net of business acquired:
Accounts receivable		(2,553	)		(4,652	)
Inventories		(636	)		2,083
Prepaid expenses and other assets		(2,282	)		130
Accounts payable		(1,468	)		559
Accrued expenses and other liabilities		(4,533	)		1,113
Pension liabilities		(206	)		(198	)
Net cash provided by (used in) operating activities		(417	)		7,496
Cash flows from investing activities:
Purchases of investments		(2,203	)		—
Purchases of plant and equipment		(2,144	)		(3,477	)
Net cash used in investing activities		(4,347	)		(3,477	)
Cash flows from financing activities:
Repayments of loans and notes payable		(278	)		(7,970	)
Proceeds from employee equity plans		5,212			694
Net cash provided by (used in) financing activities		4,934			(7,276	)
Effect of exchange rate fluctuations on cash and cash equivalents		3,028			(1,161	)
Net increase (decrease) in cash and cash equivalents		3,198			(4,418	)
Cash and cash equivalents and restricted cash at beginning of period (1)		169,234			156,083
Cash and cash equivalents and restricted cash at end of period (2)	$	172,432		$	151,665

(1) Includes restricted cash of $1.3 million and $277,000 as of March 31, 2017 and 2016, respectively.

(2) Includes restricted cash of $1.4 million and $272,000 as of June 30, 2017 and 2016, respectively.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Unaudited Condensed Consolidated Financial Statements

The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. The unaudited condensed consolidated financial statements include the accounts of IXYS Corporation and its wholly-owned subsidiaries. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and judgments that affect the amounts reported in the financial statements and accompanying notes. Some of the accounting estimates that require significant judgements by management include, but are not limited to, revenue reserves, inventory valuation, accounting for income taxes, and allocation of purchase price in business combinations. All significant intercompany transactions have been eliminated in consolidation. All adjustments of a normal recurring nature that, in the opinion of management, are necessary for a fair statement of the results for the interim periods have been made. The condensed consolidated balance sheet as of March 31, 2017 has been derived from our audited consolidated balance sheet as of that date. It is recommended that the interim financial statements be read in conjunction with our audited consolidated financial statements and notes thereto for the fiscal year ended March 31, 2017, or fiscal 2017, contained in our Annual Report on Form 10-K. Interim results are not necessarily indicative of the operating results expected for later quarters or the full fiscal year. Our fiscal year end is March 31. References to any numerically identified year preceded by the word “fiscal” are references to the year ending on March 31 of such numerically identified year.

2. Recent Accounting Pronouncements and Accounting Changes

In May 2014, Financial Accounting Standards Board, or FASB, issued a new standard on the recognition of revenue from contracts with customers, which includes a single set of rules and criteria for revenue recognition to be used across all industries. The revenue standard’s core principle is built on the contract between a vendor and a customer for the provision of goods and services. It attempts to depict the exchange of rights and obligations between the parties in the pattern of revenue recognition based on the consideration to which the vendor is entitled. To accomplish this objective, the standard requires five basic steps: identify the contract with the customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract and recognize revenue when or as the entity satisfies a performance obligation. For public companies, this standard is effective for annual reporting periods beginning after December 15, 2017, including interim periods during the annual period. Early adoption is permitted for annual periods commencing after December 15, 2016. Two different transition methods are available: full retrospective method and a modified retrospective approach.

We are currently evaluating the potential impact of this standard on our financial position and results of operations, as well as our selected transition method. Based on our preliminary assessment, we believe the new standard will not have a material impact on our financial position and results of operations, as our revenue is primarily generated from the sale of finished, tangible products to customers. Sales predominantly contain a single delivery element and revenue is recognized at a single point in time when ownership, risks, and rewards transfer. We do not expect to change the manner or timing of recognizing revenue on a majority of our revenue transactions.

In July 2015, FASB issued an amendment to modify the inventory measurement guidance in Topic 330, Inventory, for inventory that is measured using the methods other than last-in, first-out, or LIFO, and the retail inventory method. It requires that an entity measure inventory within the scope of this update at the lower of cost and net realizable value. It eliminated the guidance in Topic 330 that required a reporting entity measuring inventory at the lower of cost or market to consider the replacement cost of inventory and the net realizable value of inventory less an approximately normal profit margin along with net realizable value in determining the market value. We have adopted this standard on a prospective basis in the first quarter of fiscal 2018. The effect on our consolidated financial statements was not material.

In January 2016, FASB issued authoritative guidance that modifies how entities measure equity investments and present changes in the fair value of financial liabilities. Under the new guidance, entities will have to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income unless the investments qualify for the new practicality exception. A practicality exception will apply to those equity investments that do not have a readily determinable fair value and do not qualify for the practical expedient to estimate fair value under Accounting Standards Codification, Fair Value Measurements, or ASC 820, and as such these investments may be measured at cost. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. We are currently evaluating the impact of this standard on our consolidated financial statements.

In February 2016, FASB issued amended guidance for lease arrangements, which requires lessees to recognize the following for all leases with terms longer than 12 months: a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, or ROU asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The amendment is effective for financial statements issued for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact of this amended guidance on our consolidated financial statements.

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In March 2016, FASB issued amended guidance which simplifies several aspects of the accounting for employee share-based payment awards, including forfeitures, excess tax benefits or deficiencies and classification on the statement of cash flows. The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Under this guidance, entities are permitted to make an accounting policy election to either estimate forfeitures on shared-based payment awards or to recognize forfeitures as they occur. We have adopted this guidance during the three months ended June 30, 2017 and have elected to recognize forfeitures as they occur. The effect of the adoption related to forfeitures was an increase to additional paid-in capital of $60,000, an increase to deferred tax assets of $21,000 and a decrease to retained earnings of $39,000. In addition, the new guidance requires us to record all of the tax effects related to share-based payments through our consolidated statement of operations. Accordingly, on a prospective basis, we recorded excess tax benefits of $545,000 in the three months ended June 30, 2017. Further, the guidance requires all tax-related cash flows resulting from share-based payments be reported as operating activities on the statement of cash flows. We have elected to apply the change in cash flow classification on a prospective basis. The presentation requirement related to employee taxes paid through withholding shares did not impact the statements of cash flows because such cash flows had historically been presented as financing activities. Taxes withheld on net exercises of stock options during June 30, 2017 and 2016 were $490,000 and $0, respectively, and were included in cash flows from financing activities in our consolidated statements of cash flows for the three months ended June 30, 2017 and 2016. The adoption had no other material impact on our consolidated financial statements.

In August 2016, FASB issued amended guidance that provides clarification on cash flow classification related to eight specific issues, including debt prepayment or debt extinguishment costs, contingent consideration payments made after a business combination, distributions received from equity method investees and proceeds from the settlement of insurance claims. The guidance will be effective for fiscal years beginning after December 15, 2017, including interim reporting periods within those fiscal years. Early adoption is permitted. The amended guidance should be applied retrospectively to all periods presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. We do not expect this change to have a significant impact on our consolidated financial statements.

In October 2016, FASB issued amended guidance which requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. This eliminates the current exception for all intra-entity transfers of an asset other than inventory that requires deferral of the tax effects until the asset is sold to a third party or otherwise recovered through use. The guidance will be effective for fiscal years beginning after December 15, 2017, including interim reporting periods within those annual reporting periods. Early adoption is permitted in the first interim period only. The amendments should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. As early adoption is permitted, we elected to early adopt this standard in the first quarter of fiscal 2018. In accordance with the guidance that required adjustments to reflect the cumulative effect, we recorded a reduction in retained earnings and an increase in income tax payable of $1.1 million during the three months ended June 30, 2017.

In January 2017, FASB issued amended guidance which narrows the existing definition of a business and provides a framework for evaluating whether a transaction should be accounted for as an acquisition (or disposal) of assets or a business. The definition of a business affects areas of accounting such as acquisitions, disposals and goodwill. The revised definition of a business under this guidance is expected to reduce the number of transactions that are accounted for as business combinations. The guidance is effective on a prospective basis for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The impact on our consolidated financial statements will depend on the facts and circumstances of any specific future transactions.

3. Fair Value

We account for certain assets and liabilities at fair value. In determining fair value, we consider its principal or most advantageous market and the assumptions that market participants would use when pricing, such as inherent risk, restrictions on sale and risk of non-performance. The fair value hierarchy is based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. The fair value measurements are classified under the following hierarchy:

Level 1	—	Quoted prices for identical instruments in active markets.
Level 2	—	Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs or significant value-drivers are observable in active markets.
Level 3	—	Model-derived valuations in which one or more significant inputs or significant value drivers are unobservable.

8

Fair Value Measurements on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis, excluding accrued interest components, consisted of the following types of instruments as of June 30, 2017 and March 31, 2017 (in thousands):

	June 30, 2017 (1)						March 31, 2017 (1)
			Fair Value Measured at						Fair Value Measured at
			Reporting Date Using						Reporting Date Using
Description	Total		Level 1		Level 2		Total		Level 1		Level 2
	(unaudited)						(unaudited)
Money market funds (2)	$	98,303	$	98,303	$	—	$	90,752	$	90,752	$	—
Marketable equity securities (3)		1,821		1,821		—		1,771		1,771		—
Auction rate preferred securities (3)		350		—		350		350		—		350
Total assets measured at fair value	$	100,474	$	100,124	$	350	$	92,873	$	92,523	$	350

(1) We did not have any recurring fair value measurements of assets or liabilities whose fair value was measured using significant unobservable inputs.

(2) Included in “Cash and cash equivalents” on our unaudited condensed consolidated balance sheets.

(3) Included in “Other assets” on our unaudited condensed consolidated balance sheets.

We measure our marketable equity securities and derivative contracts at fair value. Marketable equity securities are valued using the quoted market prices and are therefore classified as Level 1 estimates. All of the marketable equity securities are subject to a periodic impairment review. We review any impairment to determine whether it is other than temporarily impaired. This review is based on factors such as length of time of impairment, extent to which the fair value is below the cost basis, financial conditions of the issuer of the security, our expectations of future recoveries and our ability and intent to hold or sell the securities. Based on our review, we recognized other than temporary impairment losses of $0 and $151,000 in marketable equity securities during the three months ended June 30, 2017 and June 30, 2016 respectively.

From time to time, we use derivative instruments to manage exposure to changes in interest rates and currency exchange rates and the fair values of these instruments are recorded on the balance sheets. We have elected not to designate these instruments as accounting hedges. The changes in the fair value of these instruments are recorded in the current period’s statement of operations and are included in other income (expense), net. All of our derivative instruments are traded on over-the-counter markets where quoted market prices are not readily available. For those derivatives, we measure fair value using prices obtained from the counterparties with whom we have traded. The counterparties price the derivatives based on models that use primarily market observable inputs, such as yield curves and option volatilities. Accordingly, we classify these derivatives as Level 2. We held no derivative instruments at June 30, 2017 and March 31, 2017.

Auction rate preferred securities, or ARPS, are stated at par value based upon observable inputs, including historical redemptions received from the ARPS issuers, and are therefore categorized as Level 2 estimates.

Cash and cash equivalents are recognized and measured at fair value in our consolidated financial statements. Accounts receivable and prepaid expenses and other current assets are financial assets with carrying values that approximate fair value. Accounts payable and accrued expenses and other current liabilities are financial liabilities with carrying values that approximate fair value.

Our indebtedness for borrowed money and our installment payment obligations approximated fair value, as the interest rates either adjusted according to the market rates or the interest rates approximated the market rates. The estimated fair value of these items was approximately $78.0 million and $77.8 million as of June 30, 2017 and March 31, 2017, respectively.

Our equity method investments, cost method investments and non-financial assets, such as acquired intangible assets and property, plant and equipment, are recorded at fair value only if impairment is recognized. No impairment losses on the investments accounted for under the equity method or the cost method were recognized as of June 30, 2017 and June 30, 2016, as there have not been any events or changes in circumstances that we believe would have had a significant adverse effect on the fair value of those investments.

Our acquisition-related intangible assets were initially recorded at fair value. The valuation of the acquisition-related intangible assets was classified as a Level 3 measurement because the valuation was based on significant unobservable inputs and involved management judgement and assumptions about market participants and pricing. We review our intangible assets for impairment whenever events and circumstances indicate that the carrying value of an asset might not be recoverable, based upon estimated undiscounted future cash flows. When we are required to determine the fair value of intangible assets other than goodwill, we use the income approach. We start with a forecast of all the expected net cash flows associated with the asset and then we apply an asset-specific discount rate to arrive at a net present value amount. Some of the more significant estimates and assumptions inherent in this approach include: the amount and timing of the projected net cash flows on the projections and the selection of a long-term growth rate and the discount rate. Based on our review, the intangible assets resulting from the RadioPulse acquisition were determined to be fully impaired and an impairment charge of $1.4 million was recognized during the quarter ended December 31, 2016.

9

4. Accounts Receivable

Accounts receivable consisted of the following (in thousands):

	June 30, 2017			March 31, 2017
	(unaudited)
Accounts receivable, gross	$	46,253		$	45,856
Allowances		(4,115	)		(4,689	)
Accounts receivable, net	$	42,138		$	41,167

5. Other Assets

Other assets consist of the following (in thousands):

	June 30,		March 31,
	2017		2017
	(unaudited)
Marketable equity securities	$	1,821	$	1,771
Long-term equity method investments		12,145		11,589
Other items, including cost method investments		8,236		4,615
Total	$	22,202	$	17,975

Available-for-Sale Investments

Marketable equity securities and auction rate preferred securities are designated as available-for-sale and are reported at fair value with unrealized gains and losses, net of income taxes, recorded in other comprehensive income (loss). Realized gains and losses (calculated as proceeds less specifically identified costs) and declines in value of these investments judged by management to be other than temporary, if any, are included in other income (expense), net.

Equity Method Investments

We have equity interests in Powersem GmbH, or Powersem, a semiconductor manufacturer based in Germany, EB Tech Ltd., or EB Tech, a radiation services provider based in South Korea and Automated Technology, Inc., or ATEC, an assembly and test services provider in the Philippines. These investments are accounted for using the equity method. For the three months ended June 30, 2017 and 2016, we recorded an immaterial amount of our proportionate share of the affiliates’ gains and losses under the equity method of accounting. The carrying values of our investments in Powersem, EB Tech and ATEC at June 30, 2017 were $2.7 million, $2.6 million and $6.8 million, respectively. The carrying values of our investments in Powersem, EB Tech and ATEC at March 31, 2017 were $2.5 million, $2.6 million and $6.5 million, respectively.

Cost Method Investments

During the three months ended June 30, 2017 and during fiscal 2017, we made investments in privately-held companies. Those investments are accounted for under the cost method as they do not qualify for the fair value method or for another accounting method. As of June 30, 2017 and March 31, 2017, the carrying values of those investments were $4.1 million and $3.1 million, respectively. We do not estimate the fair value of those cost method investments because determining the fair value is not practicable.

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6. Inventories

Inventories consist of the following (in thousands):

	June 30,		March 31,
	2017		2017
	(unaudited)
Raw materials	$	18,831	$	17,920
Work in process		46,392		45,634
Finished goods		27,146		25,882
Total	$	92,369	$	89,436

7. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (in thousands):

	June 30,		March 31,
	2017		2017
	(unaudited)
Uninvoiced goods and services	$	14,638	$	12,703
Compensation and benefits		7,118		6,707
Income taxes (1)		—		3,521
Commissions, royalties and other		1,783		2,416
Total	$	23,539	$	25,347

(1) Prepaid income taxes of $1.1 million at June 30, 2017 were included in “Prepaid expenses and other current assets” on our unaudited condensed consolidated balance sheet as of June 30, 2017.

8. Borrowing Arrangements

Revolving Credit Agreement

On November 20, 2015, we entered into a Revolving Credit Agreement with a syndicate of banks for a line of credit of $125.0 million. The agent for the banks is Bank of the West. The obligations are guaranteed by four of our subsidiaries. The loan is collateralized pursuant to a Contingent Collateral Agreement, under which the assets of the parent company and the four subsidiaries could be subject to security interests for the benefit of the banks in the event of a loan default.

The credit agreement provides different interest rate alternatives under which we may borrow funds. We may elect to borrow based on LIBOR plus a margin or an alternative base rate plus a margin. The margin can range from 0.75% to 2.5%, depending on interest rate alternatives and on our leverage of liabilities to effective tangible net worth. The applicable interest rate as of June 30, 2017 was 3.18%. An unused commitment fee is also payable. It ranges from 0.25% to 0.625% annually, depending on leverage.

The terms of the facility impose restrictions on our ability to undertake certain transactions, to create liens on assets and to incur subsidiary indebtedness. In addition, the credit agreement is subject to a set of financial covenants, including minimum effective tangible net worth, the ratio of cash, cash equivalents and accounts receivable to current liabilities, profitability, a leverage ratio and a minimum amount of U.S. domestic cash on hand.

In December 2016, we entered into an amendment to the Revolving Credit Agreement with the lenders under which the contractual term of the revolving loan was extended to November 20, 2019. The leverage ratio was increased to 2.50 to 1.00 from 2.00 to 1.00. No other terms of the Revolving Credit Agreement were affected by the amendment. At June 30, 2017, we complied with all of the financial covenants, including the leverage ratio.

In relation to the Revolving Credit Agreement and the amendment to the Revolving Credit Agreement, we incurred loan costs that were deferred and reduced our “Long term loans, net of current portion” on our unaudited consolidated balance sheets. Those costs are being amortized over the new life of the credit agreement. The unamortized balance at June 30, 2017 and March 31, 2017 was $362,000 and $399,000, respectively.

At June 30, 2017 and March 31, 2017, the outstanding balance under the credit agreement was $72.6 million.

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The Revolving Credit Agreement also includes a $10.0 million letter of credit subfacility. Borrowing under this subfacility is limited to the extent of availability under the $125.0 million revolving line of credit. See Note 15, “Commitments and Contingencies” for further information regarding the terms of the subfacility.

IKB Deutsche Industriebank

In April 2015, we entered into a loan with IKB Deutsche Industriebank, or IKB. Under the agreement, we borrowed €6.5 million, or about $7.2 million at the time. The loan has a term ending March 31, 2022 and bears a fixed annual interest rate of 1.75%. Each fiscal quarter a principal payment of €232,000, or about $265,000, and a payment of accrued interest are required. Financial covenants for a ratio of indebtedness to cash flow, a ratio of equity to total assets and a minimum stockholders’ equity for the German subsidiary must be satisfied for the loan to remain in good standing. Compliance with these covenants is required annually at March 31. We complied with all of these financial covenants at March 31, 2017. The loan may be prepaid in whole or in part with a modest penalty. The loan is also collateralized by a security interest in the facility in Lampertheim, Germany, and a security deposit of €1.0 million. The security deposit will mature on December 29, 2017, so long as compliance occurs through that date. At June 30, 2017, the outstanding principal balance was €4.4 million, or about $5.0 million at that time. At March 31, 2017, the outstanding principal balance was €4.6 million, or $5.0 million.

Loans Assumed from Business Acquisitions

Our outstanding balances relating to loans assumed upon business acquisitions at June 30, 2017 and March 31, 2017 were $284,000 and $288,000, respectively. These loans consisted of certain short-term facilities from financial institutions and loans from government agencies to support research and development activities.

9. Pension Plans

We maintain three defined benefit pension plans: one for United Kingdom, or UK, employees, one for German employees and one for Philippine employees. We deposit funds for the UK and Philippine plans with financial institutions and make payments to former German employees directly. We accrue for the unfunded portion of the obligations. The measurement date for projected benefit obligations and plan assets is March 31. As of June 30, 2017, the German defined benefit plan was completely unfunded and we accrued for its obligations. The UK and German plans have been curtailed. As such, the plans are closed to new entrants and no credit is provided for additional periods of service. We expect to contribute approximately $948,000 to the UK and the Philippines plans in the fiscal year ending March 31, 2018. This contribution is primary contractual.

Net Period Pension Cost

The net periodic pension expense includes the following components (in thousands):

	Three Months Ended
	June 30,
	2017			2016
	(unaudited)
Service cost	$	24		$	28
Interest cost on projected benefit obligation		279			352
Expected return on plan assets		(280	)		(323	)
Recognized actuarial loss		98			48
Net periodic pension expense	$	121		$	105

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Information on Plan Assets

We report and measure the plan assets of our defined benefit pension plans at fair value. The table below sets forth the fair value of our plan assets as of June 30, 2017 and March 31, 2017, using the same three-level hierarchy of fair-value inputs described in Note 3, “Fair Value” (in thousands):

	June 30, 2017						March 31, 2017
Description	Level 1		Level 2		Total		Level 1		Level 2		Total
	(unaudited)						(unaudited)
Cash and cash funds	$	616	$	—	$	616	$	136	$	—	$	136
Equity		—		—		—		314		—		314
Fixed interest		964		57		1,021		1,203		58		1,261
Mutual funds		13,639		13,584		27,223		13,181		13,390		26,571
Total	$	15,219	$	13,641	$	28,860	$	14,834	$	13,448	$	28,282

10. Employee Equity Incentive Plans

Stock Purchase and Stock Option Plans

Equity Incentive Plans

On September 10, 2009, our stockholders approved the 2009 Equity Incentive Plan, or the 2009 Plan, under which 900,000 shares of our common stock were reserved for the grant of stock options and other equity incentives. On September 16, 2011, our stockholders approved the 2011 Equity Incentive Plan, or the 2011 Plan, under which 600,000 shares of our common stock were reserved for the grant of stock options and other equity incentives. On August 30, 2013, our stockholders approved the 2013 Equity Incentive Plan, or the 2013 Plan, under which 2,000,000 shares of our common stock were reserved for the grant of stock options and other equity incentives. On August 26, 2016, our stockholders approved the 2016 Equity Incentive Plan, or the 2016 Plan, under which 2,000,000 shares of the common stock were reserved for the grant of stock options and other equity incentives. The 2009 Plan, the 2011 Plan, the 2013 Plan and the 2016 Plan are referred to as the Plans.

Stock Options

Under the Plans, nonqualified and incentive stock options may be granted to employees, consultants and non-employee directors. Generally, the per share exercise price shall not be less than 100% of the fair market value of a share on the grant date. The Board of Directors has the full power to determine the provisions of each option issued under the Plans. While we may grant options that become exercisable at different times or within different periods, we have primarily granted options that vest over four years. The options, once granted, expire ten years from the date of grant.

Stock Awards

Stock awards, denominated restricted stock under the 2009 Plan and the 2011 Plan, may be granted to any employee, director or consultant under the Plans. Pursuant to a stock award, we will issue shares of common stock. Shares that are subject to the restriction will be released from restriction if certain requirements, including continued performance of services, are met.

Stock Appreciation Rights

Awards of stock appreciation rights, or SARs, may be granted to employees, consultants and non-employee directors pursuant to the Plans. A SAR is payable on the difference between the market price at the time of exercise and the exercise price at the date of grant. In any event, the exercise price of a SAR shall not be less than 100% of the fair market value of a share on the grant date and shall expire no later than ten years from the grant date. Upon exercise, the holder of a SAR shall be entitled to receive payment either in cash or a number of shares by dividing such cash amount by the fair market value of a share on the exercise date.

Restricted Stock Units

Restricted stock units, denominated performance units in the 2009 Plan, may be granted to employees, consultants and non-employee directors under the Plan. Each restricted stock unit shall have a value equal to the fair market value of one share. After the applicable performance period has ended, the holder will be entitled to receive a payment, either in cash or in the form of shares, based on the number of restricted stock units earned over the performance period, to be determined as a function of the extent to which the corresponding performance goals or other vesting provisions have been achieved.

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Employee Stock Purchase Plan

The Board of Directors has approved the Amended and Restated 1999 Employee Stock Purchase Plan, or the Purchase Plan, and reserved a total of 1,950,000 shares of common stock for issuance under the Purchase Plan. Under the Purchase Plan, all eligible employees may purchase our common stock at a price equal to 85% of the lower of the fair market value at the beginning of the offer period or the semi-annual purchase date. Stock purchases are limited to 15% of an employee’s eligible compensation. During the three months ended June 30, 2017, there were 57,422 shares purchased under the Purchase Plan, leaving approximately 70,648 shares available for purchase under the Purchase Plan in the future, pending a stockholder vote on an additional 400,000 shares at the upcoming annual meeting.

Stock-Based Compensation

The following table summarizes the effects of stock-based compensation charges (in thousands):

	Three Months Ended June 30,
Statement of Operations Classifications	2017		2016
	(unaudited)
Cost of goods sold	$	93	$	100
Research, development and engineering		325		303
Selling, general and administrative		489		452
Stock-based compensation effect in income before income tax provision		907		855
Provision for income tax (1)		363		342
Net stock-based compensation effects in net income	$	544	$	513

(1) Calculated at the U.S. statutory income tax rate of 40% in fiscal 2018 and 2017.

During the three months ended June 30, 2017, the unaudited condensed consolidated statements of operations and cash flows do not reflect any tax benefit for the tax deduction from option exercises and other awards. As of June 30, 2017, approximately $9.2 million in stock-based compensation is to be recognized for unvested stock options granted under our equity incentive plans. The unrecognized compensation cost is expected to be recognized over a weighted average period of 2.9 years.

The Black-Scholes option pricing model is used to estimate the fair value of options granted under our equity incentive plans and rights to acquire stock granted under our stock purchase plan. The weighted average estimated fair values of employee stock option grants and rights granted under the Purchase Plan, as well as the weighted average assumptions that were used in calculating such values during the three months ended June 30, 2017 and 2016, were based on estimates at the date of grant as follows:

	Stock Options						Purchase Plan
	Three Months Ended June 30,						Three Months Ended June 30,
	2017			2016			2017			2016
	(unaudited)						(unaudited)
Weighted average estimated fair value of grant per share	$	6.49		$	3.96		$	2.92		$	3.94
Risk-free interest rate		1.9	%		1.4	%		0.7	%		0.3	%
Expected term in years		6.63			6.41			0.75			1.00
Volatility		36.8	%		41.0	%		29.9	%		42.9	%
Dividend yield (1)		0.0	%		1.4	%		0.0	%		1.4	%

(1) No dividends were declared for the quarter ended June 30, 2017.

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Activity with respect to outstanding stock options for the three months ended June 30, 2017 was as follows:

	Number of Shares			Weighted Average Exercise Price Per Share		Intrinsic Value (1)
				(unaudited)		(000)
Balance at March 31, 2017		5,097,545		$	10.71
Options granted		549,000		$	16.05
Options exercised		(812,045	)	$	9.40	$	5,187
Options cancelled		(89,750	)	$	11.42
Options expired		(19,000	)	$	9.35
Balance at June 30, 2017		4,725,750		$	11.54
Exercisable at June 30, 2017		2,607,500		$	10.75
Exercisable at March 31, 2017		3,300,295		$	10.34

(1) Represents the difference between the exercise price and the value of our common stock at the time of exercise.

11. Accumulated Other Comprehensive Income (Loss)

The components and the changes in accumulated other comprehensive income (loss), net of tax, for the three months ended June 30, 2017 and 2016 were as follows (in thousands):

	Foreign Currency			Unrealized Losses on Securities			Defined Benefit Pension Plans			Accumulated Other Comprehensive Income (Loss)
				(unaudited)
Balance as of March 31, 2017	$	(19,233	)	$	(219	)	$	(9,093	)	$	(28,545	)
Other comprehensive income (loss) before reclassifications		6,882			(13	)		—			6,869
Net current period other comprehensive income (loss)		6,882			(13	)		—			6,869
Balance as of June 30, 2017	$	(12,351	)	$	(232	)	$	(9,093	)	$	(21,676	)
	Foreign Currency			Unrealized Gains (Losses) on Securities			Defined Benefit Pension Plans			Accumulated Other Comprehensive Income (Loss)
				(unaudited)
Balance as of March 31, 2016	$	(10,639	)	$	(82	)	$	(9,545	)	$	(20,266	)
Other comprehensive income (loss) before reclassifications		(2,825	)		85			—			(2,740	)
Net loss reclassified from accumulated other comprehensive income (loss)		—			90			—			90
Net current period other comprehensive income (loss)		(2,825	)		175			—			(2,650	)
Balance as of June 30, 2016	$	(13,464	)	$	93		$	(9,545	)	$	(22,916	)

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The amounts reclassified out of accumulated other comprehensive income (loss) for the three months ended June 30, 2017 and 2016 are as follows (in thousands):

Accumulated Other Comprehensive Income (Loss) Components	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)					Impacted Line Item on Unaudited Condensed Consolidated Income Statements
	Three Months Ended June 30,
	2017		2016
	(unaudited)
Impairment of marketable securities		—		(151	)	Other income (expense), net
Subtotal		—		(151	)	Income before income tax provision
Tax impact		—		61		Provision for income tax
Total reclassifications for the period	$	—	$	(90	)	Net income

12. Computation of Earnings per Share

Basic and diluted earnings per share are calculated as follows (in thousands, except per share amounts):

	Three Months Ended
	June 30,
	2017		2016
	(unaudited)
Net income	$	5,494	$	3,019
Weighted average shares - basic		32,086		31,401
Weighted average shares - diluted		33,044		32,001
Net income per share - basic	$	0.17	$	0.10
Net income per share - diluted	$	0.17	$	0.09

Diluted weighted average shares included approximately 958,000 and 600,000 common equivalent shares from stock options for the three months ended June 30, 2017 and 2016.

Basic net income available per common share is computed using net income and the weighted average number of common shares outstanding during the period. Diluted net income per common share is computed using net income and the weighted average number of common shares outstanding, assuming dilution, which includes potentially dilutive common shares outstanding during the period. Potentially dilutive common shares include the assumed exercise of stock options using the treasury stock method. During the three months ended June 30, 2017 and 2016, there were outstanding options to purchase 579,033 and 2,889,670 shares, respectively, that were not included in the computation of diluted net income per share since the exercise prices of the options exceeded the market price of the common stock and thus their inclusion would be anti-dilutive. These options could dilute earnings per share in future periods if the market price of the common stock increases.

13. Segment and Geographic Information

We have a single operating segment and reportable segment. We design develop, manufacture and market high performance semiconductor products. Our two Chief Executive Officers, one of whom is also the Chief Financial Officer, have been identified as the chief operating decision makers. Our chief operating decision makers review financial information presented as one operating segment for the purpose of making decisions, allocating resources and assessing financial performance.

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Our net revenues by major geographic area (based on destination) were as follows (in thousands):

	Three Months Ended
	June 30,
	2017		2016
	(unaudited)
United States	$	19,613	$	19,501
Europe and the Middle East:
France		1,935		3,450
Germany		10,058		8,599
Italy		978		1,076
Netherlands		1,396		1,140
United Kingdom		3,803		3,627
Other		5,854		5,953
Asia Pacific:
China		23,819		22,640
Japan		2,119		1,718
Singapore		3,019		3,007
South Korea		5,813		4,695
Other		2,823		3,362
Rest of the World:
India		1,040		900
Other		1,272		970
Total	$	83,542	$	80,638

The following table sets forth net revenues for each of our product groups for the three months ended June 30, 2017 and 2016 (in thousands):

	Three Months Ended June 30,
	2017		2016
	(unaudited)
Power semiconductors	$	57,628	$	56,479
Integrated circuits		21,172		20,382
Systems and radio frequency power semiconductors		4,742		3,777
Total	$	83,542	$	80,638

Revenue from significant customers, those representing 10% or more of total revenue for the respective periods, is summarized as follows:

	Three Months Ended June 30,
	2017			2016
	(unaudited)
Revenues:
Distributor A		15.2	%		13.8	%
Distributor B		10.7	%		10.6	%

14. Income Taxes

For the three months ended June 30, 2017 and 2016, we recorded income tax provisions of $1.7 million and $2.3 million, reflecting effective tax rates of 24.1% and 42.7%, respectively. The June 2017 quarter was impacted by the adoption of Accounting Standards Update, or ASU, No. 2016-09 during the quarter ended June 30, 2017, which required the recognition of all excess tax benefits and tax deficiencies in our statement of operations when the awards vested or were settled, the adoption of ASU 2016-16, that eliminated the deferral of recognition of deferred tax attributes on certain intercompany transactions and the estimates of annual income in domestic and foreign jurisdictions. Our effective tax rate for the quarter ended June 30, 2016 was affected by non-benefitted losses incurred in certain tax jurisdictions and estimates of annual income in domestic and foreign jurisdictions.

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15. Commitments and Contingencies

Revolving Credit Agreement

See Note 8, “Borrowing Arrangements” for information regarding the terms of the credit agreement.

Other Commitments and Contingencies

On occasion, we provide limited indemnification to customers against intellectual property infringement claims related to our products. To date, we have not experienced significant activity or claims related to such indemnifications. We also provide in the normal course of business indemnification to our officers, directors and selected parties. We are unable to estimate any potential future liability, if any. Therefore, no liability for these indemnification agreements has been recorded as of June 30, 2017 and March 31, 2017.

We make strategic investments in other companies from time to time. These investments include commitments in certain instances to provide additional financing up to the contracted amount. These commitments are insignificant individually or in aggregate.

We have ongoing income tax audits of our subsidiary in the Philippines for the fiscal years ended March 31, 2010 and 2011. The Philippine Bureau of Internal Revenue, or BIR, has made an assessment for a deficiency of income taxes, inclusive of interest and penalties, of approximately $2.5 million and $156,000, respectively, for the fiscal years 2010 and 2011. We are vigorously contesting the assessments of both years. While there are no assurances that we will prevail, we believe that we have valid legal reasons to challenge the BIR’s decision and that our appeals will merit a favorable resolution. Accordingly, we have not accrued any amount for this matter.

16. Subsequent Events

On July 21, 2017, we acquired Componentes Semiconductores de Portugal, LDA, an assembly service provider in Portugal. Upon the close of the acquisition transaction, we assumed liabilities of approximately €2.7 million.

In July 2017, we advanced $1.5 million pursuant to a convertible bridge financing agreement with a privately-held UK company.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This discussion contains forward-looking statements, which are subject to certain risks and uncertainties, including, without limitation, those described elsewhere in this Form 10-Q and, in particular, in Item 1A of Part II hereof. Actual results may differ materially from the results discussed in the forward-looking statements. For a discussion of risks that could affect future results, see “Item 1A. Risk Factors.” All forward-looking statements included in this document are made as of the date hereof, based on the information available to us as of the date hereof, and we assume no obligation to update any forward-looking statement, except as may be required by law.

Overview

We are a multi-market integrated semiconductor company. Our three principal product groups are: power semiconductors; integrated circuits, or ICs; and systems and radio frequency, or RF, power semiconductors.

Our power semiconductors improve system efficiency and reliability by converting electricity at relatively high voltage and current levels into the finely regulated power required by electronic products. We focus on the market for power semiconductors that are capable of processing greater than 200 watts of power.

We also design, manufacture and sell integrated circuits for a variety of applications. Our microcontrollers provide application-specific, embedded system-on-chip, solutions for the industrial and consumer markets. Our analog and mixed-signal ICs are principally used in telecommunications applications. Our mixed-signal application-specific ICs, address the requirements of the medical imaging equipment and display markets. Our power management and control ICs are used in conjunction with our power semiconductors.

Our systems include laser diode drivers, high voltage pulse generators and modulators, and high power subsystems, sometimes known as stacks, that are principally based on our high power semiconductor devices. Our RF power semiconductors enable circuitry that amplifies or receives radio frequencies in wireless and other microwave communication applications, medical imaging applications and defense and space applications.

Since the quarter ended September 30, 2016, our quarterly net revenues increased sequentially. Our net revenues from sales of power semiconductors increased sequentially since that quarter, while our net revenues from sales of ICs and systems and RF power semiconductors fluctuated modestly. During the same periods, sales to the industrial and commercial market and communication infrastructure market notably increased, while sales to other major application markets changed modestly from quarter to quarter in no significant pattern. Geographically, sales in all major areas fluctuated from quarter to quarter, except the Asia Pacific region where sales sequentially increased since the quarter ended December 31, 2016. Our selling, general and administrative, or SG&A, expenses have been relatively stable over the past four quarters. During the same periods, our research, development and engineering expenses, or R&D expenses, have changed insignificantly, largely due to timing effects. In future periods, we expect our SG&A expenses to remain fairly consistent, except to the extent that selling expenses vary with changing revenues. We expect our R&D expenses to fluctuate modestly in the upcoming quarters.

Critical Accounting Policies and Significant Management Estimates

The discussion and analysis of our financial condition and results of operations are based upon our unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, management evaluates the reasonableness of its estimates. Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily available from other sources. Actual results may differ materially from these estimates under different assumptions or conditions.

We believe the following critical accounting policies require that we make significant judgments and estimates in preparing our consolidated financial statements.

Revenue recognition. Revenue is recognized when there is persuasive evidence that an arrangement exists, when delivery has occurred, when the price to the buyer is fixed or determinable and when collectability of the receivable is reasonably assured. These elements are typically met when title to the products is passed to the buyer, which is generally when product is shipped to the customer with sales terms ex-works, or when product is delivered to the customer with sales terms delivered duty paid.

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We sell to distributors and OEMs. Approximately 58.6% of our net revenues in the three months ended June 30, 2017 and 59.5% of our net revenues in the three months ended June 30, 2016 were from distributors. We provide some of our distributors with the following programs: stock rotation and ship and debit.

Reserves for sales returns and allowances, including allowances for so called “ship and debit” transactions, are recorded at the time of shipment, and are based on historical levels of returns and current economic trends and changes in customer demand.

Accounts receivable from distributors are recognized and inventory is relieved when title to inventories transfer, typically upon shipment from us, at which point we have a legally enforceable right to collection under normal payment terms. Under certain circumstances where we are not able to reasonably and reliably estimate the actual returns, revenues and costs relating to distributor sales are deferred until products are sold by the distributors to the distributors’ end customers. Deferred amounts are presented net and included on the balance sheet as part of “Accrued expenses and other current liabilities.”

We state our revenues net of any taxes collected from customers that are required to be remitted to various government agencies. The amount of taxes collected from customers and payable to governmental entities is included under “Accrued expenses and other liabilities.”

Allowance for sales returns. We maintain an allowance for sales returns based on estimated product returns by our customers. We estimate our allowance for sales returns based on our historical return experience, current economic trends, changes in customer demand, known returns we have not received and other assumptions. If we were to make different judgments or utilize different estimates, the amount and timing of our revenue could be materially different. Given that our revenues consist of a high volume of relatively similar products, to date our actual returns and allowances have not fluctuated significantly from period to period, and our returns provisions have historically been reasonably accurate. This allowance is included as part of “Accounts receivable, net” on the balance sheet and as a reduction of revenues in the statement of operations.

Allowance for stock rotation. We also provide “stock rotation” to select distributors. The rotation allows distributors to return a percentage of the previous six months’ sales in exchange for orders of an equal or greater amount. Under the program, approximately $672,000 and $321,000 of products were returned to us in the three months ended June 30, 2017 and 2016, respectively. We establish the allowance for sales to distributors except in cases where the revenue recognition is deferred and recognized upon sale by the distributor of products to the end-customer. The allowance, which is management’s best estimate of future returns, is based upon the historical experience of returns and inventory levels at the distributors. This allowance is included as part of “Accounts receivable, net” on the balance sheet and as a reduction of revenues in the statement of operations. Should distributors increase stock rotations beyond our estimates, these statements would be adversely affected.

Allowance for ship and debit. Ship and debit is a program designed to assist distributors in meeting competitive prices in the marketplace on sales to their end-customers. Ship and debit requires a request from the distributor for a pricing adjustment for a specific part for a customer sale to be shipped from the distributor’s stock. We have no obligation to accept this request. However, it is our historical practice to allow some companies to obtain pricing adjustments for inventory held. We receive periodic statements regarding our products held by our distributors. Ship and debit authorizations may cover current and future distributor activity for a specific part for sale to a distributor’s customer. At the time we record sales to distributors, we provide an allowance for the estimated future distributor activity related to such sales since it is probable that such sales to distributors will result in ship and debit activity. The sales allowance requirement is based on sales during the period, credits issued to distributors, distributor inventory levels, historical trends, market conditions, pricing trends we see in our direct sales activity with original equipment manufacturers and other customers and input from sales, marketing and other key management. We believe that the analysis of these inputs enables us to make reliable estimates of future credits under the ship and debit program. This analysis requires the exercise of significant judgments. Our actual results to date have approximated our estimates. At the time the distributor ships the part from stock, the distributor debits us for the authorized pricing adjustment. This allowance is included as part of “Accounts receivable, net” on the balance sheet and as a reduction of revenues in the statement of operations. If competitive pricing were to decrease sharply and unexpectedly, our estimates might be insufficient, which could adversely affect our operating results.

Additions to the ship and debit allowance are estimates of the amount of expected future ship and debit activity related to sales during the period. Additions to the allowance reduce revenues and gross profit in the period. The following table sets forth the beginning and ending balances of, additions to, and deductions from, our allowance for ship and debit during the three months ended June 30, 2017 (in thousands):

	(unaudited)
Balance at March 31, 2017	$	1,549
Additions		1,878
Deductions		(1,984	)
Balance at June 30, 2017	$	1,443

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Trade accounts receivable and allowance for doubtful accounts. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is our best estimate of the amount of probable credit losses in the existing accounts receivable. We determine the allowance based on the aging of our accounts receivable, the financial condition of our customers and their payment history, our historical write-off experience and other assumptions. Past due balances and other specified accounts as necessary are reviewed individually. If we were to make different judgements of the financial condition of our customers or the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Actual write-offs may be in excess of the recorded allowance. This allowance is reported on the balance sheet as part of “Accounts receivable, net” and is included on the statement of operations as part of SG&A expenses.

Inventories. Inventories are recorded at the lower of standard cost, which approximates actual cost on a first-in-first-out basis, or market value. Our accounting for inventory costing is based on the applicable expenditure incurred, directly or indirectly, in bringing the inventory to its existing condition. Such expenditures include acquisition costs, production costs and other costs incurred to bring the inventory to its use. As it is impractical to track inventory from the time of purchase to the time of sale for the purpose of specifically identifying inventory cost, our inventory is, therefore, valued based on a standard cost, given that the materials purchased are identical and interchangeable at various production processes. We review our standard costs on an as-needed basis but in any event at least once a year, and update them as appropriate to approximate actual costs. The authoritative guidance provided by Financial Accounting Standards Board, or FASB, requires certain abnormal expenditures to be recognized as expenses in the current period instead of capitalized in inventory. It also requires that the amount of fixed production overhead allocated to inventory be based on the normal capacity of the production facilities.

We typically plan our production and inventory levels based on internal forecasts of customer demand, which are highly unpredictable and can fluctuate substantially. The value of our inventories is dependent on our estimate of future demand as it relates to historical sales. If our projected demand is overestimated, we may be required to reduce the valuation of our inventories below cost. We regularly review inventory quantities on hand and record an estimated provision for excess inventory based primarily on our historical sales and expectations for future use. We also recognize a reserve based on known technological obsolescence, when appropriate. Actual demand and market conditions may be different from those projected by our management. This could have a material effect on our operating results and financial position. If we were to make different judgments or utilize different estimates, the amount and timing of our write-down of inventories could be materially different.

Excess inventory frequently remains saleable. When excess inventory is sold, it yields a gross profit margin of up to 100%. Sales of excess inventory have the effect of increasing the gross profit margin beyond that which would otherwise occur, because of previous write-downs. Once we have written down inventory below cost, we do not write it up when it is subsequently utilized, sold or scrapped. We do not physically segregate excess inventory nor do we assign unique tracking numbers to it in our accounting systems. Consequently, we cannot isolate the sales prices of excess inventory from the sales prices of non-excess inventory. Therefore, we are unable to report the amount of gross profit resulting from the sale of excess inventory or quantify the favorable impact of such gross profit on our gross profit margin.

The following table provides information on our excess and obsolete inventory reserve charged against inventory at cost (in thousands):

	(unaudited)
Balance at March 31, 2017	$	19,298
Utilization or sale		(339	)
Scrap		(519	)
Additional accrual		556
Foreign currency translation adjustments		311
Balance at June 30, 2017	$	19,307

The practical efficiencies of wafer fabrication require the manufacture of semiconductor wafers in minimum lot sizes. Often, when manufactured, we do not know whether or when all the semiconductors resulting from a lot of wafers will sell. With more than 10,000 different part numbers for semiconductors, excess inventory resulting from the manufacture of some of those semiconductors will be continual and ordinary. Because the cost of storage is minimal when compared to the potential value and because our products do not quickly become obsolete, we expect to hold excess inventory for potential future sale for years. Consequently, we have no set time line for the utilization, sale or scrapping of excess inventory.

In addition, our inventory is also being written down to the lower of cost or market. We review our inventory listing on a quarterly basis for an indication of losses being sustained for costs that exceed selling prices less direct costs to sell. When it is evident that our selling price is lower than current cost, inventory is marked down accordingly. Our lower of cost or market reserve were $626,000 and $384,000, respectively, as of June 30, 2017 and March 31, 2017.

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Furthermore, we perform an annual inventory count or periodic cycle counts for specific parts that have a high turnover. We also periodically identify any inventory that is no longer usable and write it off.

Goodwill and intangible assets. Goodwill represents the excess of the purchase price over the estimated fair value of the net assets acquired. The costs of acquired intangible assets are recorded at fair value at acquisition. Intangible assets with finite lives are amortized using the straight-line method or accelerated method over their estimated useful lives and evaluated for impairment in accordance with the authoritative guidance provided by FASB.

Goodwill and intangible assets with indefinite lives are reviewed at least annually for impairment charges during the quarter ending March 31, or more frequently if events and circumstances indicate that the asset might be impaired, in accordance with the authoritative guidance provided by FASB. We first assess qualitative factors to determine whether it is necessary to perform the two-step fair value-based impairment test described below. If we believe that, as a result of the qualitative assessment, it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is required. Otherwise, no further testing is required.

Under the quantitative approach effective prior to January 2017, there were two steps in the determination of the impairment of goodwill. The first step compared the carrying amount of the net assets to the fair value of the reporting unit. The second step, if necessary, recognized an impairment loss to the extent the carrying value of the reporting unit’s net assets exceeds the implied fair value of goodwill. An impairment loss was recognized to the extent that the carrying amount of goodwill exceeds its implied fair value. In January 2017, FASB issued amended guidance which eliminated the second step in goodwill impairment testing. Under the new guidance, goodwill impairment is measured as the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying value of goodwill. The new guidance no longer requires us to determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. We adopted the new guidance on a prospective basis commencing with the quarter ended March 31, 2017. See Note 2, “Recent Accounting Pronouncements and Accounting Changes” in the Notes to Unaudited Condensed Consolidated Financial Statements of this Form 10-Q for further information regarding the recent accounting pronouncements and accounting changes. We operate our business as one reporting unit.

We assess the recoverability of the finite-lived intangible assets by examining the occurrences of certain events or changes of circumstances that indicate that the carrying amounts may not be recoverable. After our initial assessment, if it is necessary, we perform the impairment test by determining whether the estimated undiscounted cash flows attributable to the assets in question are less than their carrying values. Impairment losses, if any, are measured as the amount by which the carrying values of the assets exceed their fair value and are recognized in operating results. If a useful life is determined to be shorter than originally estimated, we accelerate the rate of amortization and amortize the remaining carrying value over the new shorter useful life. During the quarter ended December 30, 2016, the intangible assets resulting from the RadioPulse acquisition were determined to be fully impaired and an impairment charge of $1.4 million was recognized.

Income tax. In preparing our consolidated financial statements, we are required to estimate our income taxes in each of the jurisdictions in which we operate. This process involves estimating our actual current tax exposure together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included within our unaudited condensed consolidated balance sheets. We then assess the likelihood that our deferred tax assets will be recovered from future taxable income and, to the extent we believe that recovery is not likely, we establish a valuation allowance. A valuation allowance reduces our deferred tax assets to the amount that management estimates is more likely than not to be realized. In determining the amount of the valuation allowance, we consider income over recent years, estimated future taxable income, feasible tax planning strategies and other factors in each taxing jurisdiction in which we operate. If we determine that it is more likely than not that we will not realize all or a portion of our remaining deferred tax assets, then we will increase our valuation allowance with a charge to income tax expense. Conversely, if we determine that it is likely that we will ultimately be able to utilize all or a portion of the deferred tax assets for which a valuation allowance has been provided, then the related portion of the valuation allowance will reduce income tax expense. Significant management judgment is required in determining our provision for income taxes and potential tax exposures, our deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets. In the event that actual results differ from these estimates or we adjust these estimates in future periods, we may need to establish a valuation allowance, which could materially impact our financial position and results of operations. Our ability to utilize our deferred tax assets and the need for a related valuation allowance are monitored on an ongoing basis.

Furthermore, computation of our tax liabilities involves examining uncertainties in the application of complex tax regulations. We recognize liabilities for uncertain tax positions based on the two-step process as prescribed by the authoritative guidance provided by FASB. The first step is to evaluate the tax position to determine whether there is sufficient available evidence to indicate if it is more likely than not that the position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step requires us to measure and determine the approximate amount of the tax benefit at the largest amount that is more than 50% likely of being realized upon ultimate settlement with the tax authorities. It is inherently difficult and requires significant judgment to estimate such amounts, as this requires us to determine the probability of various possible outcomes. We reexamine these uncertain tax positions on a quarterly basis. This reassessment is based on various factors during the period including, but not limited to, changes in worldwide tax laws and treaties, changes in facts or circumstances, effectively settled issues under audit and any new audit activity. A change in recognition or measurement would result in the recognition of a tax benefit or an additional charge to the tax provision in the period.

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Recent Accounting Pronouncements and Accounting Changes

For a description of accounting changes and recent accounting pronouncements, including the expected dates of adoption and estimated effects, if any, on our unaudited condensed consolidated financial statements, see Note 2, “Recent Accounting Pronouncements and Accounting Changes” in the Notes to Unaudited Condensed Consolidated Financial Statements of this Form 10-Q.

Results of Operations

The following table sets forth selected consolidated statements of operations data for the fiscal periods indicated and the percentage change in such data from period to period. These historical operating results may not be indicative of the results for any future periods.

	Three Months Ended June 30,
	2017		% change			2016
			(unaudited)
	(000)					(000)
Net revenues	$	83,542		3.6		$	80,638
Cost of goods sold		56,996		0.6			56,644
Gross profit	$	26,546		10.6		$	23,994
Operating expenses:
Research, development and engineering	$	7,573		(4.3	)	$	7,910
Selling, general and administrative		10,006		(0.3	)		10,038
Amortization of acquisition-related intangible assets		596		(41.4	)		1,017
Total operating expenses	$	18,175		(4.2	)	$	18,965

The following table sets forth selected statements of operations data as a percentage of net revenues for the fiscal periods indicated. These historical operating results may not be indicative of the results for any future periods.

	% of Net Revenues
	Three Months Ended June 30,
	2017			2016
	(unaudited)
Net revenues		100.0			100.0
Cost of goods sold		68.2			70.2
Gross profit		31.8			29.8
Operating expenses:
Research, development and engineering		9.1			9.8
Selling, general and administrative		12.0			12.4
Amortization of acquisition-related intangible assets		0.7			1.4
Total operating expenses		21.8			23.6
Operating income		10.0			6.2
Other income (expense), net		(1.3	)		0.3
Income before income tax		8.7			6.5
Provision for income tax		(2.1	)		(2.8	)
Net income		6.6			3.7

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Revenues    

The following table sets forth the net revenues for each of our product groups for the fiscal periods indicated:

Net Revenues (1)

	Three Months Ended June 30,
	2017		% change		2016
			(unaudited)
	(000)				(000)
Power semiconductors	$	57,628		2.0	$	56,479
Integrated circuits		21,172		3.9		20,382
Systems and RF power semiconductors		4,742		25.5		3,777
Total	$	83,542		3.6	$	80,638

(1) Revenue information includes intellectual property revenues that are not included in average selling prices.

The following tables set forth the average selling prices, or ASPs, and units for the fiscal periods indicated:

Average Selling Prices

	Three Months Ended June 30,
	2017		% change			2016
			(unaudited)
Power semiconductors	$	1.59		(5.4	)	$	1.68
Integrated circuits	$	0.46		2.2		$	0.45
Systems and RF power semiconductors	$	22.69		4.5		$	21.71

Units

	Three Months Ended June 30,
	2017		% change		2016
			(unaudited)
	(000)				(000)
Power semiconductors		36,161		7.8		33,554
Integrated circuits		45,775		2.4		44,694
Systems and RF power semiconductors		209		20.1		174
Total		82,145		4.7		78,422

The following table sets forth the net revenue by geographic region for the fiscal periods indicated:

	Three Months Ended June 30,
	2017				2016
	Net Revenue		% of Net Revenue		Net Revenue		% of Net Revenue
	(unaudited)
	(000)				(000)
Europe and the Middle East	$	24,024		28.8	$	23,845		29.6
Asia Pacific		37,593		45.0		35,422		43.9
Rest of the world		2,312		2.7		1,870		2.3
International revenues		63,929		76.5		61,137		75.8
USA		19,613		23.5		19,501		24.2
Total	$	83,542		100.0	$	80,638		100.0

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The 3.6% increase in net revenues in the three months ended June 30, 2017 as compared to the three months ended June 30, 2016 reflected an increase of $1.1 million, or 2.0%, in the sale of power semiconductors, an increase of $790,000, or 3.9%, in the sale of ICs and an increase of $965,000, or 25.5%, in the sale of systems and RF power semiconductors. The increase in net revenues from power semiconductors was largely the result of an increase in the sale of bipolar products, principally to the industrial and commercial market and the communication infrastructure market, and an increase in the sale of metal-oxide-silicon, or MOS, transistor products, primarily to the communication infrastructure market and industrial and commercial market. The increase in net revenues from ICs was primarily caused by a $1.2 million increase in the sale of solid state relays, or SSRs, primarily to the industrial and commercial market, partially offset by a decrease in sales of microcontrollers, primarily to the consumer products market. The net revenues from the sale of systems and RF power semiconductors increased primarily due to an increase in net revenues from the sale of RF power semiconductor products, primarily to the communication infrastructure market.

For the three months ended June 30, 2017 as compared to the three months ended June 30, 2016, the increases in unit shipments of power semiconductors, ICs and systems and RF power semiconductors were broad-based, except for a reduction in the shipment of SSRs, application specific integrated circuits and subassemblies.

For the three months ended June 30, 2017 as compared to the same period of the previous fiscal year, the decrease in the ASPs of power semiconductors was mainly due to a decrease in the ASPs of MOS transistor products. The decrease in the ASPs for MOS transistor products was caused by a shift in product mix as we shipped higher quantities of lower-priced products. Comparing to the same period of the previous fiscal year, the ASPs of ICs remained fairly consistent. For the three months ended June 30, 2017 as compared the same period of the previous fiscal year, the increase in the ASPs of systems and RF power semiconductors was due to an increase in the number of higher-priced RF power semiconductors and subassemblies shipped in the period.

For the three months ended June 30, 2017 as compared to the three months ended June 30, 2016, our sales increased in all major geographical areas. Comparing the same periods, our sales increased to the industrial and commercial market and the communication infrastructure market while our sales to our other major application markets decreased.

For the three months ended June 30, 2017 and 2016, one distributor accounted for 15.2% and 13.8% of our net revenues, respectively. For the three months ended June 30, 2017 and 2016, another distributor accounted for 10.7% and 10.6% of our net revenues.

Our net revenues were reduced by allowances for sales returns, stock rotations and ship and debit. See “Critical Accounting Policies and Significant Management Estimates” elsewhere in this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Gross Profit

Gross profit increased to $26.5 million in the three months ended June 30, 2017 from $24.0 million in the three months ended June 30, 2016. Gross profit margin increased to 31.8% in the quarter ended June 30, 2017 from 29.8% in the quarter ended June 30, 2016. The increases in both gross profit dollars and margins were largely because of increased revenues and improved utilization of our manufacturing facilities.

Our gross profit and gross profit margin were positively affected by the sale or utilization of excess inventories which had previously been written down. See “Critical Accounting Policies and Significant Management Estimates—Inventories” elsewhere in this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Research, Development and Engineering

R&D expenses typically consist of internal engineering efforts for product design, process improvement and development. As a percentage of net revenues, our R&D expenses for the three months ended June 30, 2017 were 9.1% as compared to 9.8% for the three months ended June 30, 2016. The decrease in the percentage primarily resulted from higher net revenues. Expressed in dollars, for the three months ended June 30, 2017 as compared to the same period of the prior year, our R&D expenses decreased by approximately $337,000, or 4.3%. The decrease in dollars was primarily due to project timing.

Selling, General and Administrative

As a percentage of net revenues, our SG&A expenses for the three months ended June 30, 2017 were 12.0% as compared to 12.4% for the three months ended June 30, 2016. The decrease in the percentage was primarily due to higher net revenues. Expressed in dollars, SG&A expenses remained consistent with our SG&A expenses for the three months ended June 30, 2016.

Amortization of Acquisition-Related Intangible Assets

For the three months ended June 30, 2017, we recorded amortization expenses on acquired intangible assets of $596,000 as compared to $1.0 million for the same period in fiscal 2017.

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Interest Expense

During the three months ended June 30, 2017, our interest expenses were $694,000 as compared to $635,000 for the three months ended June 30, 2016.

Other Income (Expense)

In the quarter ended June 30, 2017, other expense, net, was $515,000 as compared to other income, net, of $815,000 in the quarter ended June 30, 2016. The shift from other income, net, in the three month period ended June 30, 2016 to other expense, net, in the same period of fiscal 2018 was primarily related to fluctuations in foreign currency exchange rates. Other expense, net, in the three months ended June 30, 2017 principally consisted of $978,000 in losses associated with changes in exchange rates for foreign currency transactions. Other income, net in the three months ended June 30, 2016 principally consisted of $620,000 in gains associated with changes in exchange rates for foreign currency transactions.

Provision for Income Tax

For the three months ended June 30, 2017 and 2016, we recorded income tax provisions of $1.7 million and $2.3 million, reflecting effective tax rates of 24.1% and 42.7%, respectively. The June 2017 quarter was impacted by the adoption of Accounting Standards Update, or ASU, No. 2016-09 during the quarter ended June 30, 2017, which required the recognition of all excess tax benefits and tax deficiencies in our statement of operations when the awards vested or were settled, the adoption of ASU 2016-16, that eliminated the deferral of recognition of deferred tax attributes on certain intercompany transactions and the estimates of annual income in domestic and foreign jurisdictions. Our effective tax rate for the quarter ended June 30, 2016 was affected by non-benefitted losses incurred in certain tax jurisdictions and estimates of annual income in domestic and foreign jurisdictions.

Liquidity and Capital Resources

At June 30, 2017, cash and cash equivalents and restricted cash were $172.4 million as compared to $169.2 million at March 31, 2017.

Our cash used by operating activities in the three months ended June 30, 2017 was $417,000, primarily due to a net decrease of $11.7 million in operating assets and liabilities, partially offset by $5.5 million of net income, $2.8 million for receivable and inventory allowances and $2.4 million for depreciation and amortization. The $11.7 million decrease in operating assets and liabilities principally resulted from increases in assets with the growth of revenues and from the timing of the payment of taxes and accounts payable. Our cash provided by operating activities in the three months ended June 30, 2016 was $7.5 million, primarily due to $3.0 million of net income, $2.8 million for depreciation and amortization and $2.0 million for receivable and inventory allowances. These were partially offset by a net decrease of $965,000 in operating assets and liabilities.

Our net cash used in investing activities for the three months ended June 30, 2017 was $4.3 million, as compared to net cash used in investing activities of $3.5 million during the three months ended June 30, 2016. During the three months ended June 30, 2017, we spent $2.2 million on purchase of investments and $2.1 million on the purchase of property and equipment. During the three months ended June 30, 2016, we spent $3.5 million on the purchase of property and equipment.

For the three months ended June 30, 2017, net cash provided by financing activities was $4.9 million, as compared to net cash used in financing activities of $7.3 million in the three months ended June 30, 2016. During the three months ended June 30, 2017, we received $5.2 million from employee equity plans, offset by $278,000 used for principal repayment on loan obligations. During the three months ended June 30, 2016, we made a principal repayment of $8.0 million on loan obligations, offset by $694,000 received from employee equity plans.

At June 30, 2017, loans payable totaled $78.0 million, consisting of an outstanding loan balance of $5.0 million from IKB Deutsche Industriebank, or IKB, a revolving loan of $72.6 million, net of debt issuance costs, under a revolving credit agreement and $284,000 of loans assumed upon business acquisitions. Of the loans payable, $1.1 million was classified as a short-term loan and included in “Current portion of loans payable” in our unaudited consolidated balance sheet as of June 30, 2017. The loans payable of $78.0 million represented 45.2% of our cash and cash equivalents and restricted cash and 24.7% of our stockholders’ equity.

In April 2015, we borrowed €6.5 million, or about $7.2 million at the time, from IKB. The loan has a term ending March 31, 2022 and bears a fixed annual interest rate of 1.75%. Each fiscal quarter, a principal payment of €232,000, or about $265,000, and a payment of accrued interest are required. See Note 8, “Borrowing Arrangements” in the Notes to Unaudited Condensed Consolidated Financial Statements of this Form 10-Q for further information regarding the loan.

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On November 20, 2015, we entered into a revolving credit agreement with a syndicate of banks for a line of credit of $125.0 million. In December 2016, the term of the loan was extended to November 20, 2019. As of June 30, 2017, the outstanding principal balance was $73.0 million. The credit agreement also includes a $10.0 million letter of credit subfacility. See Note 8, “Borrowing Arrangements” in the Notes to Unaudited Condensed Consolidated Financial Statements of this Form 10-Q for further information regarding the terms of our credit arrangements.

Additionally, we maintain three defined benefit pension plans: one in the United Kingdom, or UK, one in Germany and one in the Philippines. Benefits are based on years of service and the employees’ compensation. We either deposit funds for these plans with financial institutions, consistent with the requirements of local law, or accrue for the unfunded portion of the obligations. The UK and German plans have been curtailed. As such, the plans are closed to new entrants and no credit is provided for additional periods of service. The total pension liability accrued for the three plans at June 30, 2017 was $15.6 million.

We believe that our cash and cash equivalents, together with cash generated from operations, will be sufficient to meet our anticipated cash requirements for the next 12 months. Our liquidity could be negatively affected by a decline in demand for our products, increases in the cost of materials or labor, investments in new product development, or one or more acquisitions. From time to time, we use derivative contracts in the normal course of business to manage our foreign currency exchange and interest rate risks. We did not have any open derivative contracts at June 30, 2017. There can be no assurance that additional debt or equity financing will be available when required or, if available, can be secured on terms satisfactory to us.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our market risk has not changed materially from the market risk disclosed in Item 7A, “Quantitative and Qualitative Disclosures about Market Risk,” of our Annual Report on Form 10-K for the fiscal year ended March  31, 2017.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Based on their evaluation as of June 30, 2017, our Chief Executive Officers, one of whom is also the Chief Financial Officer, have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) were effective to ensure that the information required to be disclosed by us in this Quarterly Report on Form 10-Q was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and regulations. Furthermore, these controls and procedures were also effective to ensure that information required to be disclosed by us in this Quarterly Report on Form 10-Q was accumulated and communicated to our management, including our Chief Executive Officers, to allow timely decisions regarding required disclosures.

Inherent Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officers, does not expect that our procedures or our internal controls will prevent or detect all errors and all fraud. An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of our controls can provide absolute assurance that all control issues, errors and instances of fraud, if any, have been detected.

Changes in Internal Controls over Financial Reporting

During the quarter ended June 30, 2017, there were no changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings

On July 7, 2017, we entered into a license agreement with North Plate Semiconductor, LLC. The license agreement covered the patents that were the subject of an action for patent infringement filed in the U.S. District Court for the Eastern District of Michigan. Pursuant to the license agreement, the action was dismissed with prejudice.

We are involved in a variety of other legal matters that arise in the normal course of business. Based on information currently available, management does not believe that the ultimate resolution of these matters will have a material adverse effect on our financial condition, results of operations and cash flows. Were an unfavorable ruling to occur, there exists the possibility of a material adverse impact on the results of operations of the period in which the ruling occurs.

Item 1A. Risk Factors

In addition to the other information in this Quarterly Report on Form 10-Q, the following risk factors should be considered carefully in evaluating our business and us. Additional risks not presently known to us or that we currently believe are not serious may also impair our business and its financial condition.

Our operating results fluctuate significantly because of a number of factors, many of which are beyond our control.

Given the nature of the markets in which we participate, as well as macroeconomic uncertainties, we cannot reliably predict future revenues and profitability and unexpected changes may cause us to adjust our operations. Large portions of our costs are fixed, due in part to our significant sales, research and development and manufacturing costs. Thus, small declines in revenues could seriously negatively affect our operating results in any given quarter. Our operating results may fluctuate significantly from quarter-to-quarter and year-to-year. For example, from fiscal 2008 to fiscal 2009, net income in one year shifted to net loss in the next year. Some of the factors that may affect our quarterly and annual results are:

• changes in business and economic conditions, including a downturn in demand or decrease in the rate of growth in demand, whether in the global economy, a regional economy or the semiconductor industry;

• changes in market conditions, potentially including changes in the credit markets, currency exchange rates, expectations for inflation or energy prices;

• the reduction, rescheduling or cancellation of orders by customers;

• fluctuations in timing and amount of customer requests for product shipments;

• changes in the mix of products that our customers purchase;

• changes in the level of customers’ component inventories;

• loss of key customers or employees;

• the availability of production capacity, whether internally or from external suppliers;

• the cyclical nature of the semiconductor industry;

• competitive pressures on selling prices;

• strategic actions taken by our competitors;

• market acceptance of our products and the products of our customers;

• fluctuations in our manufacturing yields and significant yield losses;

• difficulties in forecasting demand for our products and the planning and managing of inventory levels;

• the availability of raw materials, supplies and manufacturing services from third parties;

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• the amount and timing of investments in research and development;

• damage awards or injunctions as the result of litigation;

• changes in our product distribution channels and the timeliness of receipt of distributor resale information;

• the impact of vacation schedules and holidays, largely during the second and third quarters of our fiscal year; and

• the amount and timing of costs associated with product returns.

As a result of these factors, many of which are difficult to control or predict, as well as the other risk factors discussed in this Quarterly Report on Form 10-Q, we may experience materially adverse fluctuations in our future operating results on a quarterly or annual basis. Changes in demand for our products and in our customers’ product needs could have a variety of negative effects on our competitive position and our financial results, and, in certain cases, may reduce our revenues, increase our costs, lower our gross margin percentage or require us to recognize impairments of our assets. If product demand declines, our manufacturing or assembly and test capacity could be underutilized and we may be required to record an impairment on our long-lived assets, including facilities and equipment as well as intangible assets and goodwill, which would increase our expenses. Factory planning decisions may also shorten the useful lives of long-lived assets, including facilities and equipment, and cause us to accelerate depreciation. In addition, if product demand declines or we fail to forecast demand accurately, we could be required to write off inventory or record underutilization charges, which would have a negative impact on our gross margin.

Our backlog may not result in future revenues.

Customer orders typically can be cancelled or rescheduled by the customer without penalty to the customer. Cancellations or reschedulings are common in periods of decreasing demand. Further, in periods of increasing demand, particularly when production is allocated or delivery delayed, customers of semiconductor companies have on occasion placed orders without expectation of accepting delivery to increase their share of allocated product or in an effort to improve the timeliness of delivery. While we are attuned to the potential for such behavior and attempt to identify such orders, we could accept orders of this nature and subsequently experience order cancellation unexpectedly.

Our backlog at any particular date is not necessarily indicative of actual revenues for any succeeding period. A reduction of backlog during any particular period, or the failure of our backlog to result in future revenues, could harm our results of operations.

Fluctuations in the mix of products sold may adversely affect our financial results.

Changes in the mix and types of products sold may have a substantial impact on our revenues and gross profit margins. In addition, more recently introduced products tend to have higher associated costs because of initial overall development costs and higher start-up costs. Fluctuations in the mix and types of our products may also affect the extent to which we are able to recover our fixed costs and investments that are associated with a particular product or wafer foundry, and, as a result, can negatively impact our financial results.

Our international operations expose us to material risks.

For the fiscal year ended March 31, 2017, our net revenues by region were approximately 25.3% in the United States, approximately 29.1% in Europe and the Middle East, approximately 42.9% in the Asia Pacific region and approximately 2.7% in India and the rest of the world. We expect net revenues from foreign markets to continue to represent a majority of total net revenues. We maintain significant business operations in Germany, the UK, the Philippines and South Korea and work with subcontractors, suppliers and manufacturers in South Korea, Japan, the Philippines and elsewhere in Europe and the Asia Pacific region. Some of the risks inherent in doing business internationally are:

• foreign currency fluctuations, particularly in the Euro and the British pound;

• longer payment cycles;

• challenges in collecting accounts receivable;

• changes in the laws, regulations or policies of the countries in which we manufacture or sell our products, including the present or future impact of the departure of the UK from the European Union;

• trade restrictions, tariffs, customs, sanctions, embargoes and other barriers to importing/exporting materials and products in a cost effective and timely manner, or changes in applicable tariffs or custom rules;

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• cultural and language differences;

• employment regulations;

• limited infrastructure in emerging markets;

• transportation delays;

• seasonal reduction in business activities;

• work stoppages;

• labor and union disputes;

• electrical outages;

• terrorist attack or war; and

• economic or political instability.

Our sales of products manufactured in our Lampertheim, Germany facility and our costs at that facility are primarily denominated in Euros, and sales of products manufactured in our Chippenham, UK facility and our costs at that facility are primarily denominated in British pounds. Fluctuations in the value of the Euro and the British pound against the U.S. dollar could have a significant adverse impact on our balance sheet and results of operations. “Brexit,” the expected exit by the UK from the European Union, has, and in the future may, affect the value of the British pound and the Euro relative to one another and to the U.S. dollar. We generally do not enter into foreign currency hedging transactions to control or minimize currency fluctuation risks. Reductions in the value of the Euro or British pound would reduce our revenues recognized in U.S. dollars, all other things being equal. Changes in the value of the Euro or the British pound could cause or increase losses associated with foreign currency transactions. Fluctuations in currency exchange rates could cause our products to become more expensive to customers in a particular country, leading to a reduction in sales or profitability in that country. Alternatively, fluctuations in currency exchange rates in the face of competitive pricing pressures could lead to lower gross profit margins, as customer prices in one currency fall relative to costs of production experienced in a different currency. If we expand our international operations or change our pricing practices to denominate prices in other foreign currencies, we could be exposed to even greater risks of currency fluctuations.

Our financial performance is dependent on economic stability and credit availability in international markets. Actions by governments to address deficits or sovereign or bank debt issues, particularly in Europe, could adversely affect gross domestic product or currency exchange rates in countries where we operate, which in turn could adversely affect our financial results. If our customers or suppliers are unable to obtain the credit necessary to fund their operations, we could experience increased bad debts, reduced product orders and interruptions in supplier deliveries leading to delays or stoppages in our production. Alternatively, governmental actions in China or other emerging markets to address economic problems, such as inflation, asset or other “bubbles” or the transfer of capital out of the country, could also adversely affect gross domestic product or the growth thereof and result in reduced product orders or increased bad debt expense for us. Brexit may result in additional tariffs on our products manufactured in the UK and sold elsewhere, resulting in competitive pricing pressures that may adversely affect our results of operations.

In addition, the laws and courts of certain foreign countries may not protect our products or intellectual property rights to the same extent as do U.S. laws and courts. Therefore, the risk of piracy of our technology and products may be greater when we manufacture or sell our products in certain foreign countries.

Our dependence on subcontractors to assemble and test our products subjects us to a number of risks, including an inadequate supply of products and higher materials costs.

We depend on subcontractors for the assembly and testing of our products. The substantial majority of our products are assembled by subcontractors located outside of the United States. Assembly subcontractors generally work on narrow margins and have limited capital. We have encountered assembly subcontractors who have ceased or reduced production because of financial problems. We engage assembly subcontractors who operate while in insolvency proceedings or whose financial stability is uncertain. The unexpected cessation of production or reduction in production by one or more of our assembly subcontractors could adversely affect our production, our customer relations, our revenues and our financial condition. Our reliance on these subcontractors also involves the following significant risks:

• reduced control over delivery schedules and quality;

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• the potential lack of adequate capacity during periods of excess demand;

• difficulties selecting and integrating new subcontractors;

• limited or no warranties by subcontractors or other vendors on products supplied to us;

• potential increases in prices due to capacity shortages and other factors;

• potential misappropriation of our intellectual property; and

• economic or political instability in foreign countries.

These risks may lead to delayed product delivery or increased costs, which would harm our profitability and customer relationships.

Further, we use only a limited number of subcontractors to assemble most of our products. If one or more of these key subcontractors experience financial, operational, production or quality assurance difficulties, we could experience a significant reduction or interruption in supply. Although we believe alternative subcontractors are available, our operating results could temporarily suffer until we engage one or more of those alternative subcontractors. Moreover, in engaging alternative subcontractors in exigent circumstances, our production costs could increase markedly.

We depend on external foundries to manufacture many of our products.

Of our net revenues for our fiscal year ended March 31, 2017, 47.4% came from wafers manufactured for us by a number of external foundries. In particular, the wafers for all of our microcontrollers are fabricated at external foundries. Our dependence on external foundries may grow.

Our relationships with our external foundries do not guarantee prices, delivery or lead times or wafer or product quantities sufficient to satisfy current or expected demand. Generally, these foundries manufacture our products on a purchase order basis. We provide these foundries with rolling forecasts of our production requirements. However, the ability of each foundry to provide wafers to us is limited by the foundry’s available capacity. At any given time, these foundries could choose to prioritize capacity for their own use or other customers or reduce or eliminate deliveries to us. If growth in demand for our products occurs, our external foundries may be unable or unwilling to allocate additional capacity to our needs, thereby limiting our revenue growth. Accordingly, we cannot be certain that these foundries will allocate sufficient capacity to satisfy our requirements. In addition, we cannot be certain that we will continue to do business with these or other foundries on terms as favorable as our current terms. If we are not able to obtain foundry capacity as required, our relationships with our customers could be harmed, we could be unable to fulfill contractual requirements and our revenues could be reduced or our growth limited. Moreover, even if we are able to secure foundry capacity, we may be required, either contractually or as a practical business matter, to utilize all of that capacity or incur penalties or an adverse effect to the business relationship. The costs related to maintaining foundry capacity could be expensive and could harm our operating results. Other risks associated with our reliance on external foundries include:

• the lack of control over delivery schedules;

• the unavailability of, or delays in obtaining access to, key process technologies;

• limited control over quality assurance, manufacturing yields and production costs; and

• potential misappropriation of our intellectual property.

Our requirements typically represent a small portion of the total production of the external foundries that manufacture our wafers and products. One or more of these external foundries may not continue to produce wafers for us or continue to advance the process design technologies on which the manufacturing of our products is based. If we are required to transition production from one foundry to another, we may make large last-time buys of product at the foundry that we are exiting, which could eventually result in substantial inventory write-offs if semiconductors are not sold or utilized. These circumstances could harm our ability to deliver our products or increase our costs.

Our gross margin is dependent on a number of factors, including our level of capacity utilization.

Semiconductor manufacturing requires significant capital investment, leading to high fixed costs, including depreciation expense. We are limited in our ability to reduce fixed costs quickly in response to any shortfall in revenues. If we are unable to utilize our manufacturing, assembly and testing facilities at a high level, the fixed costs associated with these facilities will not be fully absorbed, resulting in lower gross margins. Increased competition and other factors may lead to price erosion, lower revenues and lower gross margins for us in the future.

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We may not be successful in our acquisitions.

We have in the past made, and may in the future make, acquisitions of other technologies and companies. These acquisitions involve numerous risks, including:

• failure to retain key personnel of the acquired business;

• diversion of management’s attention during the acquisition process;

• disruption of our ongoing business;

• the potential strain on our financial and managerial controls and reporting systems and procedures;

• unanticipated expenses and potential delays related to integration of an acquired business;

• the risk that we will be unable to develop or exploit acquired technologies;

• the engineering risks inherent in transferring products from one wafer fabrication facility to another;

• failure to successfully integrate the operations of an acquired business with our own;

• the challenges in achieving strategic objectives, cost savings and other benefits from acquisitions;

• the risk that our markets do not evolve as anticipated and that the technologies acquired do not prove to be those needed to be successful in those markets;

• the risks of entering new markets in which we have limited experience;

• difficulties in expanding our information technology systems or integrating disparate information technology systems to accommodate the acquired businesses;

• the challenges inherent in managing an increased number of employees and facilities and the need to implement appropriate policies, benefits and compliance programs;

• customer dissatisfaction or performance problems with an acquired company’s products or personnel or with altered sales terms or a changed distribution channel;

• adverse effects on our relationships with suppliers;

• the reduction in financial stability associated with the incurrence of debt or the use of a substantial portion of our available cash;

• the costs associated with acquisitions, including amortization expenses related to intangible assets, and the integration of acquired operations;

• assumption of known or unknown liabilities or other unanticipated events or circumstances; and

• failure or fraud in pre-acquisition due diligence.

We cannot assure that we will be able to successfully acquire other businesses or product lines or integrate them into our operations without substantial expense, delay in implementation or other operational or financial problems.

As a result of an acquisition, our financial results may differ from the investment community’s expectations in a given quarter. Further, if one or more of the foregoing risks materialize or market conditions or other factors lead us to change our strategic direction, we may not realize the expected value from such transactions. If we do not realize the expected benefits or synergies of such transactions, our consolidated financial position, results of operations, cash flows or stock price could be negatively impacted.

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Our success depends on our ability to manufacture our products efficiently.

We manufacture our products in facilities that are owned and operated by us, as well as in external wafer foundries and subcontract assembly facilities. The fabrication of semiconductors is a highly complex and precise process, and a substantial percentage of wafers could be rejected or numerous dice on each wafer could be nonfunctional as a result of, among other factors:

• contaminants in the manufacturing environment;

• defects in the masks used to print circuits on a wafer;

• manufacturing equipment failure; or

• wafer breakage.

For these and other reasons, we could experience a decrease in manufacturing yields. Additionally, if we increase our manufacturing output, the additional demands placed on existing equipment and personnel or the addition of new equipment or personnel may lead to a decrease in manufacturing yields. As a result, we may not be able to cost-effectively expand our production capacity in a timely manner.

We order materials and commence production in advance of anticipated customer demand. Therefore, revenue shortfalls may also result in inventory write-downs.

We typically plan our production and inventory levels based on our own expectations for customer demand. Actual customer demand, however, can be highly unpredictable and can fluctuate significantly. In response to anticipated long lead times to obtain inventory and materials, we order materials and production in advance of customer demand. This advance ordering and production may result in excess inventory levels or unanticipated inventory write-downs if expected orders fail to materialize.

The semiconductor industry is cyclical, and an industry downturn could adversely affect our operating results.

Business conditions in the semiconductor industry may rapidly change from periods of strong demand and insufficient production to periods of weakened demand and overcapacity. The industry in general is characterized by:

• changes in product mix in response to changes in demand;

• alternating periods of overcapacity and production shortages, including shortages of raw materials supplies and manufacturing services;

• cyclical demand for semiconductors;

• significant price erosion;

• variations in manufacturing costs and yields;

• rapid technological change and the introduction of new products; and

• significant expenditures for capital equipment and product development.

These factors could harm our business and cause our operating results to suffer.

If our goodwill, acquired intangible assets or long-lived assets become impaired, we may be required to record a significant charge to earnings.

Under generally accepted accounting principles, goodwill is required to be tested for impairment at least annually and we review our acquired intangible assets and long-lived assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Factors that may be considered a change in circumstances indicating that the carrying value of our goodwill, acquired intangible assets or long-lived assets may not be recoverable include a decline in stock price and market capitalization, reduced future cash flows and slower growth rates in our industry. From time to time, we have recorded impairment charges and written down the value of goodwill or acquired intangible assets. For example, in the quarter ended December 31, 2016, we recorded a $1.4 million impairment charge relating to intangible assets acquired in the acquisition of RadioPulse.

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Costs related to product defects and errata may harm our results of operations and business.

Costs associated with unexpected product defects and errata (deviations from published specifications) due to, for example, unanticipated problems in our manufacturing processes, include the costs of:

• writing off the value of inventory of defective products;

• disposing of defective products;

• recalling defective products that have been shipped to customers;

• providing product replacements for, or modifications to, defective products; and/or

• defending against litigation related to defective products.

These costs could be substantial and may, therefore, increase our expenses and lower our gross margin. In addition, our reputation with our customers or users of our products could be damaged as a result of such product defects and errata, and the demand for our products could be reduced. These factors could harm our financial results and the prospects for our business.

Semiconductors for inclusion in consumer products have shorter product life cycles.

We believe that consumer products are subject to shorter product life cycles, because of technological change, consumer preferences, trendiness and other factors, than other types of products sold by our customers. Shorter product life cycles result in more frequent design competitions for the inclusion of semiconductors in next generation consumer products, which may not result in design wins for us. Shorter product life cycles may lead to more frequent circumstances where sales of existing products are reduced or ended.

Uncertain global macroeconomic conditions could adversely affect our results of operations and financial condition.

Uncertain global macroeconomic conditions that affect the economy and the economic outlook of the United States, Europe, China and other parts of the world could adversely affect our customers and vendors, which could adversely affect our results of operations and financial condition. These uncertainties, including, among other things, the impact of “Brexit” on the UK and the European Union, sovereign and foreign bank debt levels, the inability of national or international political institutions to effectively resolve economic or budgetary crises or issues, trade disputes or changes in trading rules and tariffs between nations, consumer confidence, unemployment levels, interest rates, availability of capital, fuel and energy costs, tax rates, and the threat or outbreak of terrorism or public unrest, could adversely impact our customers and vendors, which could adversely affect us. Recessionary conditions and depressed levels of consumer and commercial spending may cause customers to reduce, modify, delay or cancel plans to purchase our products and may cause vendors to reduce their output or change their terms of sales. We generally sell products to customers with credit payment terms. If customers’ cash flow or operating or financial performance deteriorates, or if they are unable to make scheduled payments or obtain credit, they may not be able to pay, or may delay payment to us. Likewise, for similar reasons vendors may restrict credit or impose different payment terms. Any inability of current or potential customers to pay us for our products or any demands by vendors for different payment terms may adversely affect our results of operations and financial condition.

Economic conditions and regulatory changes leading up to and following the United Kingdom’s expected exit from the European Union could have a material adverse effect on our business and results of operations.

The UK government has initiated a process to leave the European Union and to negotiate the terms of the UK’s future relationship with the European Union. We face uncertainty regarding the impact of the expected exit of the UK from the European Union. Adverse consequences such as deterioration in global economic conditions, stability in global financial markets, volatility in currency exchange rates, new or increased tariffs or adverse changes in regulation of the cross-border agreements could have a negative impact on our operations, financial condition and results of operations.

Our debt agreements contain certain restrictions that may limit our ability to operate our business.

The agreements governing our debt contain, and any other future debt agreement we enter into may contain, restrictive covenants that limit our ability to operate our business, including, in each case subject to certain exceptions, restrictions on our ability to:

• incur additional indebtedness;

• grant liens;

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• consolidate, merge or sell our assets, unless specified conditions are met;

• acquire other business organizations;

• make investments;

• redeem or repurchase our stock; and

• change the nature of our business.

In addition, our debt agreements contain financial covenants and additional affirmative and negative covenants. Our ability to comply with these covenants is dependent on our future performance, which will be subject to many factors, some of which are beyond our control, including prevailing economic conditions. If we are not able to comply with all of these covenants for any reason, some or all of our outstanding debt could become immediately due and payable and the incurrence of additional debt under the credit facilities provided by the debt agreements would not be allowed. If our cash is utilized to repay any outstanding debt, depending on the amount of debt outstanding, we could experience an immediate and significant reduction in working capital available to operate our business. Related to these risks, our lenders waived a default under our existing Revolving Credit Agreement caused by the leverage ratio, which compared total funded indebtedness as of March 31, 2016 to EBITDA for the four fiscal quarters ended March 31, 2016. The leverage ratio minimally exceeded the contractually agreed ratio that was effective at the time. As of June 30, 2017, we complied with all of the financial covenants.

As a result of these covenants, our ability to respond to changes in business and economic conditions and to obtain additional financing, if needed, may be significantly restricted, and we may be prevented from engaging in transactions that might otherwise be beneficial to us, such as strategic acquisitions or joint ventures.

If we default on our Revolving Credit Agreement, most of our assets may become subject to security interests, which could lead to our lenders taking possession, selling or otherwise disposing of such assets, or to bankruptcy to forestall such actions.

We estimate tax liabilities, the final determination of which is subject to review by domestic and international taxation authorities.

We are subject to income taxes and other taxes in both the United States and foreign jurisdictions in which we currently operate or have historically operated. We are also subject to review and audit by both domestic and foreign taxation authorities. The determination of our worldwide provision for income taxes and current and deferred tax assets and liabilities requires significant judgment and estimation. The provision for income taxes can be adversely affected by a variety of factors, including but not limited to changes in tax laws, regulations and accounting principles, including accounting for uncertain tax positions, or interpretation of those changes. Significant judgment is required to determine the recognition and measurement attributes prescribed in the authoritative guidance issued by FASB in connection with accounting for income taxes. Although we believe our tax estimates are reasonable, the ultimate tax outcome may materially differ from the tax amounts recorded in our consolidated financial statements and may materially affect our income tax provision, net income, goodwill or cash flows in the period or periods for which such determination is made.

Our intellectual property revenues are uncertain and unpredictable in timing and amount.

We are unable to discern a pattern in or otherwise predict the amount of any payments for the sale or licensing of intellectual property that we may receive. Consequently, we are unable to plan on the timing of intellectual property revenues and our results of operations may be adversely affected by a reduction in future estimated intellectual property revenues.

Our markets are subject to technological change and our success depends on our ability to develop and introduce new products.

The markets for our products are characterized by:

• changing technologies;

• changing customer needs;

• frequent new product introductions and enhancements;

• increased integration with other functions; and

• product obsolescence.

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To develop new products for our target markets, we must develop, gain access to and use leading technologies in a cost-effective and timely manner and continue to expand our technical and design expertise. Failure to do so could cause us to lose our competitive position and seriously impact our future revenues.

Products or technologies developed by others may render our products or technologies obsolete or non-competitive. A fundamental shift in technologies in our product markets would have a material adverse effect on our competitive position within the industry.

Our revenues are dependent upon our products being designed into our customers’ products.

Many of our products are incorporated into customers’ products or systems at the design stage. The value of any design win largely depends upon the customer’s decision to manufacture the designed product in production quantities, the commercial success of the customer’s product and the extent to which the design of the customer’s electronic system also accommodates incorporation of components manufactured by our competitors. In addition, our customers could subsequently redesign their products or systems so that they no longer require our products. The development of the next generation of products by our customers generally results in new design competitions for semiconductors, which may not result in design wins for us, potentially leading to reduced revenues and profitability. We may not achieve design wins or our design wins may not result in future revenues.

We could be harmed by intellectual property litigation.

As a general matter, the semiconductor industry is characterized by substantial litigation regarding patent and other intellectual property rights. We have been sued for purported patent infringement and have been accused of infringing the intellectual property rights of third parties. We also have certain indemnification obligations to customers and suppliers with respect to the infringement of third party intellectual property rights by our products. We could incur substantial costs defending ourselves and our customers and suppliers from any such claim. Infringement claims or claims for indemnification, whether or not proven to be true, may divert the efforts and attention of our management and technical personnel from our core business operations and could otherwise harm our business. For example, in June 2000, we were sued for patent infringement by International Rectifier Corporation. The case was ultimately resolved in our favor, but not until October 2008. In the interim, the U.S. District Court entered multimillion dollar judgments against us on two different occasions, each of which was subsequently vacated.

In the event of an adverse outcome in any intellectual property litigation, we could be required to pay substantial damages, cease the development, manufacturing, use and sale of infringing products, discontinue the use of certain processes or obtain a license from the third party claiming infringement with royalty payment obligations upon us. An adverse outcome in an infringement action could materially and adversely affect our financial condition, results of operations and cash flows.

We may not be able to protect our intellectual property rights adequately.

Our ability to compete is affected by our ability to protect our intellectual property rights. We rely on a combination of patents, trademarks, copyrights, trade secrets, confidentiality procedures and non-disclosure and licensing arrangements to protect our intellectual property rights. Despite these efforts, we cannot be certain that the steps we take to protect our proprietary information will be adequate to prevent misappropriation of our technology, or that our competitors will not independently develop technology that is substantially similar or superior to our technology. More specifically, we cannot assure that our pending patent applications or any future applications will be approved, or that any issued patents will provide us with competitive advantages or will not be challenged by third parties. Nor can we assure that, if challenged, our patents will be found to be valid or enforceable, or that the patents of others will not have an adverse effect on our ability to do business. We may also become subject to or initiate patentability or interference proceedings in the U.S. Patent and Trademark Office, which can demand significant financial and management resources and could harm our financial results. Also, others may independently develop similar products or processes, duplicate our products or processes or design their products around any patents that may be issued to us.

Because our products typically have lengthy sales cycles, we may experience substantial delays between incurring expenses related to research and development and the generation of revenues.

The time from initiation of design to volume production of new semiconductors often takes 18 months or longer. We first work with customers to achieve a design win, which may take nine months or longer. Our customers then complete the design, testing and evaluation process and begin to ramp up production, a period that may last an additional nine months or longer. As a result, a significant period of time may elapse between our research and development efforts and our realization of revenues, if any, from volume purchasing of our products by our customers.

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The markets in which we participate are intensely competitive.

Many of our target markets are intensely competitive. Our ability to compete successfully in our target markets depends on the following factors:

• proper new product definition;

• product quality, reliability and performance;

• product features;

• price;

• timely delivery of products;

• technical support and service;

• design and introduction of new products;

• market acceptance of our products and those of our customers; and

• breadth of product line.

In addition, our competitors or customers may offer new products based on new technologies, industry standards, end-user or customer requirements, including products that have the potential to replace our products or provide lower cost or higher performance alternatives to our products. The introduction of new products by our competitors or customers could render our existing and future products obsolete or unmarketable.

Our primary power semiconductor competitors include Fuji, Hitachi, Infineon, Microsemi, Mitsubishi, On Semiconductor, Powerex, Renesas Electronics, Semikron International, STMicroelectronics, Toshiba and Vishay Intertechnology. Our IC products compete principally with those of Cypress Semiconductor, NXP Semiconductors, Microchip Technology, NEC, Renesas Electronics and Silicon Labs. Our RF power semiconductor competitors include Microsemi and Qorvo. Many of our competitors have greater financial, technical, marketing and management resources than we have. Some of these competitors may be able to sell their products at prices at which it would be unprofitable for us to sell our products or benefit from established customer relationships that provide them with a competitive advantage. We cannot assure that we will be able to compete successfully in the future against existing or new competitors or that our operating results will not be adversely affected by increased price competition.

We rely on our distributors and sales representatives to sell many of our products.

Most of our products are sold to distributors or through sales representatives. Our distributors and sales representatives could reduce or discontinue sales of our products. They may not devote the resources necessary to sell our products in the volumes and within the time frames that we expect. In addition, we depend upon the continued viability and financial resources of these distributors and sales representatives, some of which are small organizations with limited working capital. These distributors and sales representatives, in turn, depend substantially on general economic conditions and conditions within the semiconductor industry. We believe that our success will continue to depend upon these distributors and sales representatives. Foreign distributors are typically granted longer payment terms, resulting in higher accounts receivable balances for a given level of sales than domestic distributors. Our risk of loss from the financial insolvency of distributors is, therefore, disproportionally weighted to foreign distributors. If any significant distributor or sales representative experiences financial difficulties, or otherwise becomes unable or unwilling to promote and sell our products, our business could be harmed. For example, All American Semiconductor, Inc., one of our former distributors, filed for bankruptcy in April 2007.

Our future success depends on the continued service of management and key engineering personnel and our ability to identify, hire and retain additional personnel.

Our success depends upon our ability to attract and retain highly skilled technical, managerial, marketing and finance personnel, and, to a significant extent, upon the efforts and abilities of Nathan Zommer, Ph.D. and Uzi Sasson, our Chief Executive Officers, and other members of senior management. The loss of the services of one or more of our senior management or other key employees could adversely affect our business. We do not maintain key person life insurance on any of our officers, employees or consultants. There is intense competition for qualified employees in the semiconductor industry, particularly for highly skilled design, application and test engineers. We may not be able to continue to attract and retain engineers or other qualified personnel necessary for the development of our business or to replace engineers or other qualified individuals who could leave us at any time in the future. If we grow, we expect

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increased demands on our resources, and growth would likely require the addition of new management and engineering staff as well as the development of additional expertise by existing management. If we lose the services of or fail to recruit key engineers or other technical and management personnel, our business could be harmed.

Acquisitions, expansion, technological and administrative changes and software conversions and updates place a significant strain on our information systems.

Presently, because of our acquisitions, we are operating a number of different information systems that are not integrated, some of which are no longer supported by software vendors. As a consequence, we use spreadsheets, which are prepared by individuals rather than automated systems, in our accounting. We perform many manual reconciliations and other manual steps, which result in a high risk of errors. Manual steps also increase the possibility of control deficiencies and material weaknesses.

If we do not adequately manage and evolve our financial reporting and managerial systems and processes, our ability to manage or grow our business may be harmed. Our ability to successfully implement our goals and comply with regulations requires an effective planning and management system and process. We will need to continue to improve existing, and implement new, operational and financial systems, procedures and controls to manage our business effectively in the future.

In improving, consolidating, changing or updating our operational and financial systems, procedures and controls, we would expect to periodically implement new or different software and other systems that will affect our internal operations regionally or globally. The conversion process from one system to another is complex and could require, among other things, that data from the existing system be made compatible with the upgraded or different system.

In connection with any of the foregoing, we could experience errors, interruptions, delays, cessations of service and other inefficiencies, which could adversely affect our business. Any error, delay, disruption, interruption or cessation, including with respect to any new or different systems, software programs, procedures or controls, could harm our ability to forecast sales demand, manage our supply chain, achieve accuracy in the conversion of electronic data and record and report financial and management information on a timely and accurate basis. In addition, as we add or change functionality, transition or convert to different systems or programs or integrate additional data in connection with an acquisition, problems could arise that we have not foreseen. Such problems could adversely impact our ability to do the following in a timely manner: provide quotes; take customer orders; ship products; provide services and support to our customers; bill and track our customers; fulfill contractual obligations; and otherwise run our business. Failure to properly or adequately address these issues could result in the diversion of management’s attention and resources, adversely affect our ability to manage our business, increase expenses, or adversely affect our results of operations, cash flows, stock price or reputation.

System security risks, data protection breaches and cyber-attacks could disrupt our operations and any such disruption could reduce our expected revenues, increase our expenses, damage our reputation or adversely affect our stock price.

Computer programmers and hackers may be able to penetrate our security controls and misappropriate or compromise our intellectual property or other confidential information or that of third parties, create system disruptions or cause shutdowns. Computer programmers and hackers also may be able to develop and deploy viruses, worms and other malicious software programs that attack our products or otherwise exploit any security vulnerabilities of our products. The costs to us to eliminate or alleviate cyber or other security problems, bugs, viruses, worms, malicious software programs and security vulnerabilities could be significant, and our efforts to address these problems may not be successful and could result in interruptions, delays, cessation of service and loss of existing or potential customers that may impede our sales, manufacturing, distribution or other critical functions.

We manage and store proprietary information and sensitive or confidential data relating to our business and the businesses of third parties. Breaches of our security measures or the accidental loss, inadvertent disclosure or unapproved dissemination of proprietary information or sensitive or confidential data about us or our partners or customers, including the potential loss or disclosure of such information or data as a result of fraud, trickery or other forms of deception, could expose us, our partners and customers to a risk of loss or misuse of this information; result in regulatory investigations, fines, litigation and potential liability for us; damage our brand and reputation; or otherwise harm our business. In addition, the cost and operational consequences of implementing further data protection measures could be significant. Delayed sales, lower margins or lost customers resulting from these disruptions could adversely affect our financial results, stock price and reputation.

Regulations related to conflict minerals create additional compliance risks and force us to incur additional expenses.

The Dodd-Frank Wall Street Reform and Consumer Protection Act contains provisions to improve transparency and accountability concerning the supply of minerals originating from the conflict zones of the Democratic Republic of Congo, or DRC, and adjoining countries. As a result, the SEC established annual disclosure and reporting requirements for those companies who use “conflict” minerals mined from the DRC and adjoining countries in their products. These requirements could affect the sourcing and availability of minerals used in the manufacture of our products. As a result, we cannot ensure that we will be able to obtain minerals at competitive prices. Moreover, there are additional costs associated with complying with the extensive due diligence and audit

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procedures required by the SEC. In addition, we may face reputational challenges with our customers and other stakeholders as we have in the past and may in the future be unable to sufficiently verify the origins of all minerals used in our products. Finally, these rules bring implementation challenges. We may not successfully implement effective procedures to timely or adequately comply with these rules.

We depend on a limited number of suppliers for our substrates, most of whom we do not have long term agreements with.

We purchase the bulk of our silicon substrates from a limited number of vendors, most of whom we do not have long term supply agreements with. Any of these suppliers could reduce or terminate our supply of silicon substrates at any time. Our reliance on a limited number of suppliers involves several risks, including potential inability to obtain an adequate supply of silicon substrates and reduced control over the price, timely delivery, reliability and quality of the silicon substrates. We cannot assure that problems will not occur in the future with suppliers.

Increasing raw material prices could impact our profitability.

Our products use large amounts of silicon, metals and other materials. From time to time, we have experienced price increases for many of these items. If we are unable to pass price increases for raw materials onto our customers, our gross margins and profitability could be adversely affected.

We may not be able to increase production capacity to meet the present and future demand for our products.

The semiconductor industry has been characterized by periodic limitations on production capacity. These limitations may result in longer lead times for product delivery than desired by many of our customers. If we are unable to increase our production capacity to meet future demand, some of our customers may seek other sources of supply, our future growth may be limited or our results of operations may be adversely affected.

We face the risk of financial exposure to product liability claims alleging that the use of products that incorporate our semiconductors resulted in adverse effects.

Approximately 10.2% of our net revenues for the fiscal year ended March 31, 2017 were derived from sales of products used in medical devices, such as defibrillators. Product liability risks may exist even for those medical devices that have received regulatory approval for commercial sale. We cannot be sure that the insurance that we maintain against product liability will be adequate to cover our losses. Any defects in our semiconductors used in these devices, or in any other product, could result in significant product liability costs to us.

Our results of operations could vary as a result of the methods, estimates, and judgments that we use in applying our accounting policies.

The methods, estimates and judgments that we use in applying our accounting policies have a significant impact on our results of operations (see “Critical Accounting Policies and Significant Management Estimates” in Part I, Item 2 of this Form 10-Q). Such methods, estimates and judgments are, by their nature, subject to substantial risks, uncertainties and assumptions, and factors may arise over time that lead us to change our methods, estimates and judgments. Changes in those methods, estimates and judgments could significantly affect our results of operations.

We are exposed to various risks related to the regulatory environment.

We are subject to various risks related to new, different, inconsistent or even conflicting laws, rules and regulations that may be enacted by legislative bodies and/or regulatory agencies in the countries in which we operate; disagreements or disputes between national or regional regulatory agencies; and the interpretation and application of laws, rules and regulations. If we are found by a court or regulatory agency not to be in compliance with applicable laws, rules or regulations, our business, financial condition and results of operations could be materially and adversely affected.

In addition, approximately 10.2% of our net revenues for the fiscal year ended March 31, 2017 were derived from the sale of products included in medical devices that are subject to extensive regulation by numerous governmental authorities in the United States and internationally, including the U.S. Food and Drug Administration, or FDA. The FDA and certain foreign regulatory authorities impose numerous requirements for medical device manufacturers to meet, including adherence to Good Manufacturing Practices, or GMP, regulations and similar regulations in other countries, which include testing, control and documentation requirements. Ongoing compliance with GMP and other applicable regulatory requirements is monitored through periodic inspections by federal and state agencies, including the FDA, and by comparable agencies in other countries. Our failure to comply with applicable regulatory requirements could prevent our products from being included in approved medical devices or result in damages or other compensation payable to medical device manufacturers.

39

Our business could also be harmed by delays in receiving or the failure to receive required approvals or clearances, the loss of obtained approvals or clearances or the failure to comply with existing or future regulatory requirements.

We invest in companies for strategic reasons and may need to record impairments in the value of the investments.

We make investments in companies to further our strategic objectives and support our key business initiatives. Such investments include investments in equity securities of public companies and investments in non-marketable equity securities of private companies, which range from early-stage companies that are often still defining their strategic direction to more mature companies whose products or technologies may directly support a product or initiative. The success of these companies is dependent on product development, market acceptance, operational efficiency and other key business success factors. The private companies in which we invest may fail for operational reasons or because they may not be able to secure additional funding, obtain favorable investment terms for future financings or take advantage of liquidity events such as initial public offerings, mergers and private sales. If any of these private companies fail, we could lose all or part of our investment in that company. If we determine that an other-than-temporary decline in the fair value exists for the equity securities of the public and private companies in which we invest, we write down the investment to its fair value and recognize the related write-down as an investment loss. Furthermore, when the strategic objectives of an investment have been achieved, or if the investment or business diverges from our strategic objectives, we may decide to dispose of the investment, even at a loss. Our investments in non-marketable equity securities of private companies are not liquid, and we may not be able to dispose of these investments on favorable terms or at all. The occurrence of any of these events could negatively affect our results of operations.

Our ability to access capital markets could be limited.

From time to time, we may need to access the capital markets to obtain long-term financing. Although we believe that we can continue to access the capital markets on acceptable terms and conditions, our flexibility with regard to long-term financing activity could be limited by our existing capital structure, our credit ratings and the health of the semiconductor industry. In addition, many of the factors that affect our ability to access the capital markets, such as the liquidity of the overall capital markets and the current state of the economy, are outside of our control. There can be no assurance that we will continue to have access to the capital markets on favorable terms.

Geopolitical instability, war, terrorist attacks and terrorist threats, and government responses thereto, may negatively affect many aspects of our operations, revenues, costs and stock price.

Any such event may disrupt our operations or those of our customers or suppliers. Our markets currently include South Korea, Taiwan, Russia and Israel, which are currently experiencing political instability. Additionally, we have accounting and administrative operations in the Philippines, an external foundry and some of our design and sales operations are located in South Korea and assembly subcontractors are located in Indonesia, the Philippines and South Korea.

Business interruptions may damage our facilities or those of our suppliers.

Our operations and those of our suppliers are vulnerable to interruption by fire, earthquake, flood and other natural disasters, as well as power loss, telecommunications failure and other events beyond our control. We do not have a detailed disaster recovery plan and our backup power sources have only a limited amount of time for the support of critical systems. Our facilities in California are located near major earthquake fault lines and have experienced earthquakes in the past. Globally, for example, the March 2011 earthquake in Japan adversely affected the operations of some of our Japanese suppliers, which limited the availability of certain production inputs to us for a period of time. If a natural disaster occurs, our ability to conduct our operations could be seriously impaired, which could harm our business, financial condition and results of operations and cash flows. We cannot be sure that the insurance we maintain against general business interruptions will be adequate to cover all our losses.

We may be affected by environmental laws and regulations.

We are subject to a variety of laws, rules and regulations related to the use, storage, handling, discharge and disposal of certain chemicals and gases used in our manufacturing process. Any of those regulations could require us to acquire expensive equipment or to incur substantial other expenses to comply with them. If we incur substantial additional expenses, product costs could significantly increase. Failure to comply with present or future environmental laws, rules and regulations could result in fines, suspension of production or cessation of operations.

Nathan Zommer, Ph.D. owns a significant interest in our common stock.

Nathan Zommer, Ph.D., our Chief Executive Officer, beneficially owned, as of July 27, 2017, approximately 20.7% of the outstanding shares of our common stock. As a result, Dr. Zommer can exercise significant control over all matters requiring stockholder approval, including the election of the Board of Directors. His holdings could result in a delay of, or serve as a deterrent to, any change in control of our company, which may reduce the market price of our common stock.

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Our stock price is volatile.

The market price of our common stock has fluctuated significantly to date. The future market price of our common stock may also fluctuate significantly in the event of:

• variations in our actual or expected quarterly operating results;

• announcements or introductions of new products;

• technological innovations by our competitors or development setbacks by us;

• conditions in semiconductor markets;

• the commencement or adverse outcome of litigation;

• changes in analysts’ estimates of our performance or changes in analysts’ forecasts regarding our industry, competitors or customers;

• announcements of merger or acquisition transactions or a failure to achieve the expected benefits of an acquisition as rapidly or to the extent anticipated by participants in the stock market;

• terrorist attack or war;

• sales of our common stock by one or more members of management, including Nathan Zommer, Ph.D., Chief Executive Officer; or

• general economic and market conditions.

In addition, the stock market in recent years has experienced extreme price and volume fluctuations that have affected the market prices of many high technology companies, including semiconductor companies. These fluctuations have often been unrelated or disproportionate to the operating performance of companies in our industry, and could harm the market price of our common stock.

The anti-takeover provisions of our certificate of incorporation and of the Delaware General Corporation Law may delay, defer or prevent a change of control.

Our Board of Directors has the authority to issue up to 5,000,000 shares of preferred stock and to determine the price, rights, preferences, privileges and restrictions, including voting rights, of those shares without any further vote or action by our stockholders. The rights of the holders of common stock will be subject to, and may be harmed by, the rights of the holders of any shares of preferred stock that may be issued in the future. The issuance of preferred stock may delay, defer or prevent a change in control because the terms of any issued preferred stock could potentially prohibit our consummation of any merger, reorganization, sale of substantially all of our assets, liquidation or other extraordinary corporate transaction, without the approval of the holders of the outstanding shares of preferred stock. In addition, the issuance of preferred stock could have a dilutive effect on our stockholders.

Our stockholders must give substantial advance notice prior to the relevant meeting to nominate a candidate for director or present a proposal to our stockholders at a meeting. These notice requirements could inhibit a takeover by delaying stockholder action. The Delaware anti-takeover law restricts business combinations with some stockholders once the stockholder acquires 15% or more of our common stock. The Delaware statute makes it more difficult for us to be acquired without the consent of our Board of Directors and management.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Item 3. Defaults upon Senior Securities

Not applicable.

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Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

Item 6. Exhibits

See the Index to Exhibits, which is incorporated by reference herein.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

IXYS CORPORATION
By:	/s/ Uzi Sasson
Uzi Sasson, President, Chief Executive Officer and
Chief Financial Officer (Principal Executive Officer and Principal Financial Officer)

Date: August 4, 2017

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EXHIBIT INDEX

Exhibit No.	Description
10.1	IXYS Corporation Amended and Restated 1999 Employee Stock Purchase Plan. (1)
31.1	Certificate of Chief Executive Officer required under Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certificate of Chief Financial Officer required under Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification required under Section 906 of the Sarbanes-Oxley Act of 2002. (2)
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.

(1) Management contract or compensatory plan or arrangement.

(2) This exhibit is furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1933, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities and Exchange Act of 1993, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

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EX-10.1

Exhibit 10.1

IXYS CORPORATION

AMENDED AND RESTATED 1999 EMPLOYEE STOCK PURCHASE PLAN

Adopted May 7, 1999

Approved by the Stockholders on November 19, 1999

Effective Date: December 1, 1999

Amended and Restated September 7, 2007

Amended and Restated August 27, 2010

Amended and Restated August 28, 2014

Amended and Restated August 31, 2017

1. PURPOSE.

(a) The purpose of this 1999 Employee Stock Purchase Plan (the “Plan”) is to provide a means by which employees of IXYS Corporation, a Delaware corporation (the “Company”), and its Affiliates, as defined in subparagraph 1(b), which are designated as provided in subparagraph 2(b), may be given an opportunity to purchase stock of the Company.

(b) The word “Affiliate” as used in the Plan means any parent corporation or subsidiary corporation of the Company, as those terms are defined in Sections 424(e) and (f), respectively, of the Internal Revenue Code of 1986, as amended (the “Code”).

(c) The Company, by means of the Plan, seeks to retain the services of its employees, to secure and retain the services of new employees, and to provide incentives for such persons to exert maximum efforts for the success of the Company.

(d) The Company intends that the rights to purchase stock of the Company granted under the Plan be considered options issued under an “employee stock purchase plan” as that term is defined in Section 423(b) of the Code.

2. ADMINISTRATION.

(a) The Plan shall be administered by the Board of Directors (the “Board”) of the Company unless and until the Board delegates administration to a committee as provided in subparagraph 2(c). Whether or not the Board has delegated administration the Board shall have the final power to determine all questions of policy and expediency that may arise in the administration of the Plan.

(b) The Board shall have the power, subject to, and within the limitations of, the express provisions of the Plan:

(i) To determine when and how rights to purchase stock of the Company shall be granted and the provisions of each offering of such rights (which need not be identical).

(ii) To designate from time to time which Affiliates of the Company shall be eligible to participate in the Plan.

(iii) To construe and interpret the Plan and rights granted under it, and to establish, amend and revoke rules and regulations for its administration. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan, in a manner and to the extent it shall deem necessary or expedient to make the Plan fully effective.

(iv) To amend the Plan as provided in paragraph 13.

(v) Generally, to exercise such powers and to perform such acts as the Board or the Committee deems necessary or expedient to promote the best interests of the Company and its Affiliates and to carry out the intent that the Plan be treated as an “employee stock purchase plan” within the meaning of Section 423 of the Code.

(c) The Board may delegate administration of the Plan to a committee composed of not fewer than two (2) members of the Board (the “Committee”). If administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the board, subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish the Committee at any time and revest in the Board the administration of the Plan.

3. SHARES SUBJECT TO THE PLAN.

(a) Subject to the provisions of paragraph 12 relating to adjustments upon changes in stock, the stock that may be sold pursuant to rights granted under the Plan shall not exceed in the aggregate one million nine hundred and fifty thousand (1,950,000) shares of the Company’s common stock (the “Common Stock”). If any right granted under the Plan shall for any reason terminate without having been exercised, the Common Stock not purchased under such right shall again become available for the Plan.

(b) The stock subject to the Plan may be unissued shares or reacquired shares, bought on the market or otherwise.

4. GRANT OF RIGHTS; OFFERING.

(a) The Board or the Committee may from time to time grant or provide for the grant of rights to purchase Common Stock of the Company under the Plan to eligible employees (an “Offering”) on a date or dates (the “Offering Date(s)”) selected by the Board or the Committee. Each Offering shall be in such form and shall contain such terms and conditions as the Board or the Committee shall deem appropriate, which shall comply with the requirements of Section 423(b)(5) of the Code that all employees granted rights to purchase stock under the Plan shall have the same rights and privileges. The terms and conditions of an Offering shall be incorporated by reference into the Plan and treated as part of the Plan. The provisions of separate Offerings need not be identical, but each Offering shall include (through incorporation of the provisions of this Plan by reference in the document comprising the Offering or otherwise)

the period during which the Offering shall be effective, which period shall not exceed twenty-seven (27) months beginning with the Offering Date, and the substance of the provisions contained in paragraphs 5 through 8, inclusive.

(b) If an employee has more than one right outstanding under the Plan, unless he or she otherwise indicates in agreements or notices delivered hereunder: (1) each agreement or notice delivered by that employee will be deemed to apply to all of his or her rights under the Plan, and (2) a right with a lower exercise price (or an earlier-granted right, if two rights have identical exercise prices), will be exercised to the fullest possible extent before a right with a higher exercise price (or a later-granted right, if two rights have identical exercise prices) will be exercised.

5. ELIGIBILITY.

(a) Rights may be granted only to employees of the Company or, as the Board or the Committee may designate as provided in subparagraph 2(b), to employees of any Affiliate of the Company. Except as provided in subparagraph 5(b), an employee of the Company or any Affiliate shall not be eligible to be granted rights under the Plan unless, on the Offering Date, such employee has been in the employ of the Company or any Affiliate for such continuous period preceding such grant as the Board or the Committee may require, but in no event shall the required period of continuous employment be equal to or greater than two (2) years. In addition, unless otherwise determined by the Board or the Committee and set forth in the terms of the applicable Offering, no employee of the Company or any Affiliate shall be eligible to be granted rights under the Plan unless, on the Offering Date, such employee’s customary employment with the Company or such Affiliate is for at least twenty (20) hours per week and at least five (5) months per calendar year.

(b) The Board or the Committee may provide that each person who, during the course of an Offering, first becomes an eligible employee of the Company or designated Affiliate will, on a date or dates specified in the Offering which coincides with the day on which such person becomes an eligible employee or occurs thereafter, receive a right under that Offering, which right shall thereafter be deemed to be a part of that Offering. Such right shall have the same characteristics as any rights originally granted under that Offering, as described herein, except that:

(i) the date on which such right is granted shall be the “Offering Date” of such right for all purposes, including determination of the exercise price of such right;

(ii) the period of the Offering with respect to such right shall begin on its Offering Date and end coincident with the end of such Offering; and

(iii) the Board or the Committee may provide that if such person first becomes an eligible employee within a specified period of time before the end of the Offering, he or she will not receive any right under that Offering.

(c) No employee shall be eligible for the grant of any rights under the Plan if, immediately after any such rights are granted, such employee owns stock possessing five percent

(5%) or more of the total combined voting power or value of all classes of stock of the Company or of any Affiliate. For purposes of this subparagraph 5(c), the rules of Section 424(d) of the Code shall apply in determining the stock ownership of any employee, and stock which such employee may purchase under all outstanding rights and options shall be treated as stock owned by such employee.

(d) An eligible employee may be granted rights under the Plan only if such rights, together with any other rights granted under “employee stock purchase plans” of the Company and any Affiliates, as specified by Section 423(b)(8) of the Code, do not permit such employee’s rights to purchase stock of the Company or any Affiliate to accrue at a rate which exceeds twenty-five thousand dollars ($25,000) of fair market value of such stock (determined at the time such rights are granted) for each calendar year in which such rights are outstanding at any time.

(e) Officers of the Company and any designated Affiliate shall be eligible to participate in Offerings under the Plan, provided, however, that the Board or the Committee may provide in an Offering that certain employees who are highly compensated employees within the meaning of Section 423(b)(4)(D) of the Code shall not be eligible to participate.

6. RIGHTS; PURCHASE PRICE.

(a) On each Offering Date, each eligible employee, pursuant to an Offering made under the Plan, shall be granted the right to purchase up to the number of shares of Common Stock of the Company purchasable with a percentage designated by the Board or the Committee not exceeding fifteen percent (15%) of such employee’s Earnings (as defined by the Board for each Offering) during the period which begins on the Offering Date (or such later date as the Board or the Committee determines for a particular Offering) and ends on the date stated in the Offering, which date shall be no later than the end of the Offering. The Board or the Committee shall establish one or more dates during an Offering (the “Purchase Date(s)”) on which rights granted under the Plan shall be exercised and purchases of Common Stock carried out in accordance with such Offering.

(b) In connection with each Offering made under the Plan, the Board or the Committee may specify a maximum number of shares that may be purchased by any employee as well as a maximum aggregate number of shares that may be purchased by all eligible employees pursuant to such Offering. In addition, in connection with each Offering that contains more than one Purchase Date, the Board or the Committee may specify a maximum aggregate number of shares which may be purchased by all eligible employees on any given Purchase Date under the Offering. If the aggregate purchase of shares upon exercise of rights granted under the Offering would exceed any such maximum aggregate number, the Board or the Committee shall make a pro rata allocation of the shares available in as nearly a uniform manner as shall be practicable and as it shall deem to be equitable.

(c) The purchase price of stock acquired pursuant to rights granted under the Plan shall be not less than the lesser of:

(i) an amount equal to eighty-five percent (85%) of the fair market value of the stock on the Offering Date; or

(ii) an amount equal to eighty-five percent (85%) of the fair market value of the stock on the Purchase Date.

7. PARTICIPATION; WITHDRAWAL; TERMINATION.

(a) An eligible employee may become a participant in the Plan pursuant to an Offering by delivering a participation agreement to the Company within the time specified in the Offering, in such form as the Company provides. Each such agreement shall authorize payroll deductions of up to the maximum percentage specified by the Board or the Committee of such employee’s Earnings (as defined by the Board for each Offering) during the Offering. The payroll deductions made for each participant shall be credited to an account for such participant under the Plan and shall be deposited with the general funds of the Company. A participant may reduce (including to zero) or increase such payroll deductions, and an eligible employee may begin such payroll deductions, after the beginning of any Offering only as provided for in the Offering. A participant may make additional payments into his or her account only if specifically provided for in the Offering and only if the participant has not had the maximum amount withheld during the Offering.

(b) At any time during an Offering, a participant may terminate his or her payroll deductions under the Plan and withdraw from the Offering by delivering to the Company a notice of withdrawal in such form as the Company provides. Such withdrawal may be elected at any time prior to the end of the Offering except as provided by the Board or the Committee in the Offering. Upon such withdrawal from the Offering by a participant, the Company shall distribute to such participant all of his or her accumulated payroll deductions (reduced to the extent, if any, such deductions have been used to acquire stock for the participant) under the Offering, without interest, and such participant’s right to acquire Common Stock under that Offering shall be automatically terminated. A participant’s withdrawal from an Offering will have no effect upon such participant’s eligibility to participate in any other Offerings under the Plan but such participant will be required to deliver a new participation agreement in order to participate in subsequent Offerings under the Plan.

(c) Rights granted pursuant to any Offering under the Plan shall terminate immediately upon cessation of a participant’s employment with the Company and any designated Affiliate, for any reason, and the Company shall distribute to such terminated employee all of his or her accumulated payroll deductions (reduced to the extent, if any, such deductions have been used to acquire stock for the terminated employee), under the Offering, without interest.

(d) Rights granted under the Plan shall not be transferable by a participant other than by will or the laws of descent and distribution, or by a beneficiary designation as provided in paragraph 14, and during a participant’s lifetime, shall be exercisable only by such participant.

8. EXERCISE.

(a) On each date specified therefor in the relevant Offering (“Purchase Date”), each participant’s accumulated payroll deductions and other additional payments specifically provided for in the Offering (without any increase for interest) will be applied to the purchase of whole shares of stock of the Company, up to the maximum number of shares permitted pursuant to the terms of the Plan and the applicable Offering, at the purchase price specified in the Offering. Unless otherwise provided for in the applicable Offering, no fractional shares shall be issued upon the exercise of rights granted under the Plan. The amount, if any, of accumulated payroll deductions remaining in each participant’s account after the purchase of shares which is less than the amount required to purchase one share of stock on the final Purchase Date of an Offering shall be held in each such participant’s account for the purchase of shares under the next Offering under the Plan, unless such participant withdraws from such next Offering, as provided in subparagraph 7(b), or is no longer eligible to be granted rights under the Plan, as provided in paragraph 5, in which case such amount shall be distributed to the participant after such final Purchase Date, without interest. The amount, if any, of accumulated payroll deductions remaining in any participant’s account after the purchase of shares which is equal to the amount required to purchase whole shares of stock on the final Purchase Date of an Offering shall be distributed in full to the participant after such Purchase Date, without interest.

(b) No rights granted under the Plan may be exercised to any extent unless the shares to be issued upon such exercise under the Plan (including rights granted thereunder) are covered by an effective registration statement pursuant to the Securities Act of 1933, as amended (the “Securities Act”) and the Plan is in material compliance with all applicable state, foreign and other securities and other laws applicable to the Plan. If on a Purchase Date in any Offering hereunder the Plan is not so registered or in such compliance, no rights granted under the Plan or any Offering shall be exercised on such Purchase Date, and the Purchase Date shall be delayed until the Plan is subject to such an effective registration statement and such compliance, except that the Purchase Date shall not be delayed more than twelve (12) months and the Purchase Date shall in no event be more than twenty-seven (27) months from the Offering Date. If on the Purchase Date of any Offering hereunder, as delayed to the maximum extent permissible, the Plan is not registered and in such compliance, no rights granted under the Plan or any Offering shall be exercised then all payroll deductions accumulated during the Offering (reduced to the extent, if any, such deductions have been used to acquire stock) shall be distributed to the participants, without interest.

9. COVENANTS OF THE COMPANY.

(a) During the terms of the rights granted under the Plan, the Company shall at all times keep available the number of shares of stock required to satisfy such rights.

(b) The Company shall seek to obtain from each federal, state, foreign or other regulatory commission or agency having jurisdiction over the Plan such authority as may be required to issue and sell shares of stock upon exercise of the rights granted under the Plan. If, after reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency the authority which counsel for the Company deems necessary for the lawful issuance and sale of stock under the Plan, the Company shall be relieved from any liability for failure to issue and sell stock upon exercise of such rights unless and until such authority is obtained.

10. USE OF PROCEEDS FROM STOCK.

Proceeds from the sale of stock to participants pursuant to rights granted under the Plan shall constitute general funds of the Company.

11. RIGHTS AS A STOCKHOLDER.

A participant shall not be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares subject to rights granted under the Plan unless and until the participant’s shares acquired upon exercise of rights hereunder are recorded in the books of the Company (or its transfer agent).

12. ADJUSTMENTS UPON CHANGES IN STOCK.

(a) If any change is made in the stock subject to the Plan, or subject to any rights granted under the Plan (through merger, consolidation, reorganization, recapitalization, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or other transaction not involving the receipt of consideration by the Company), the Plan and outstanding rights will be appropriately adjusted in the class(es) and maximum number of shares subject to the Plan and the class(es) and number of shares and price per share of stock subject to outstanding rights. Such adjustments shall be made by the Board or the Committee, the determination of which shall be final, binding and conclusive. (The conversion of any convertible securities of the Company shall not be treated as a “transaction not involving the receipt of consideration by the Company.”)

(b) In the event of: (1) a dissolution or liquidation of the Company; (2) a merger or consolidation in which the Company is not the surviving corporation; (3) a reverse merger in which the Company is the surviving corporation but the shares of Common Stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise; or (4) the acquisition by any person, entity or group within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or any comparable successor provisions (excluding any employee benefit plan, or related trust, sponsored or maintained by the Company or any Affiliate of the Company) of the beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act, or comparable successor rule) of securities of the Company representing at least fifty percent (50%) of the combined voting power entitled to vote in the election of directors, then, as determined by the Board in its sole discretion (i) any surviving or acquiring corporation may assume outstanding rights or substitute similar rights for those under the Plan, (ii) such rights may continue in full force and effect, or (iii) participants’ accumulated payroll deductions may be used to purchase Common Stock immediately prior to the transaction described above and the participants’ rights under the ongoing Offering terminated.

13. AMENDMENT OF THE PLAN.

(a) The Board or the Committee at any time, and from time to time, may amend the Plan. However, except as provided in paragraph 12 relating to adjustments upon changes in stock, no amendment shall be effective unless approved by the stockholders of the Company

within twelve (12) months before or after the adoption of the amendment if such amendment requires stockholder approval in order for the Plan to obtain employee stock purchase plan treatment under Section 423 of the Code or to comply with the requirements of Rule 16b-3 promulgated under the Exchange Act.

(b) The Board or the Committee may amend the Plan in any respect the Board or the Committee deems necessary or advisable to provide eligible employees with the maximum benefits provided or to be provided under the provisions of the Code and the regulations promulgated thereunder relating to employee stock purchase plans and/or to bring the Plan and/or rights granted under it into compliance therewith.

(c) Rights and obligations under any rights granted before amendment of the Plan shall not be altered or impaired by any amendment of the Plan, except with the consent of the person to whom such rights were granted, or except as necessary to comply with any laws or governmental regulations, or except as necessary to ensure that the Plan and/or rights granted under the Plan comply with the requirements of Section 423 of the Code.

14. DESIGNATION OF BENEFICIARY.

(a) A participant may file a written designation of a beneficiary who is to receive any shares and cash, if any, from the participant’s account under the Plan in the event of such participant’s death subsequent to the end of an Offering but prior to delivery to the participant of such shares and cash. In addition, a participant may file a written designation of a beneficiary who is to receive any cash from the participant’s account under the Plan in the event of such participant’s death during an Offering.

(b) Such designation of beneficiary may be changed by the participant at any time by written notice in the form prescribed by the Company. In the event of the death of a participant and in the absence of a beneficiary validly designated under the Plan who is living at the time of such participant’s death, the Company shall deliver such shares and/or cash to the executor or administrator of the estate of the participant, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its sole discretion, may deliver such shares and/or cash to the spouse or to any one or more dependents or relatives of the participant, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate.

15. TERMINATION OR SUSPENSION OF THE PLAN.

(a) The Board or the Committee, in its discretion, may suspend or terminate the Plan at any time. No rights may be granted under the Plan while the Plan is suspended or after it is terminated.

(b) Rights and obligations under any rights granted while the Plan is in effect shall not be altered or impaired by suspension or termination of the Plan, except as expressly provided in the Plan or with the consent of the person to whom such rights were granted, or except as necessary to comply with any laws or governmental regulation, or except as necessary to ensure

that the Plan and/or rights granted under the Plan comply with the requirements of Section 423 of the Code.

16. EFFECTIVE DATE OF PLAN.

The Plan shall become effective on December 1, 1999 (the “Effective Date”), provided that the Plan has been approved by the stockholders of the Company prior to the Effective Date.

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Nathan Zommer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of IXYS Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 4, 2017

/s/ Nathan Zommer

Nathan Zommer

Chairman of the Board and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Uzi Sasson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of IXYS Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 4, 2017

/s/ Uzi Sasson

Uzi Sasson

President, Chief Executive Officer and

Chief Financial Officer (Principal Executive Officer

and Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION

Pursuant to 18 U.S.C. 1350, Nathan Zommer, the Chief Executive Officer of IXYS Corporation (the “Company”), and Uzi Sasson, the Chief Financial Officer of the Company, each hereby certifies that, to his knowledge:

1. The Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2017, to which this Certification is attached as Exhibit 32.1 (the “Periodic Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Periodic Report fairly presents, in all material respects, the financial condition of the Company at the end of the periods covered by the Periodic Report and the results of operations of the Company for the periods covered by the Periodic Report.

Dated: August 4, 2017

/s/ Nathan Zommer

Nathan Zommer

Chief Executive Officer

/s/ Uzi Sasson

Uzi Sasson

Chief Executive Officer and Chief Financial Officer

XML

Document And Entity Information - shares	3 Months Ended
	Jun. 30, 2017	Jul. 27, 2017
Document Information [Line Items]
Entity Registrant Name	IXYS CORP /DE/
Entity Central Index Key	0000945699
Trading Symbol	ixys
Current Fiscal Year End Date	--03-31
Entity Filer Category	Accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		32,603,143
Document Type	10-Q
Document Period End Date	Jun. 30, 2017
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

Unaudited Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2017	Mar. 31, 2017
Current assets:
Cash and cash equivalents	$ 171,010	$ 167,904
Restricted cash	1,422	1,330
Accounts receivable, net	42,138	41,167
Inventories	92,369	89,436
Prepaid expenses and other current assets	6,488	3,977
Total current assets	313,427	303,814
Property, plant and equipment, net	44,065	42,240
Intangible assets, net	2,398	2,984
Goodwill	42,378	42,227
Deferred income taxes	24,917	24,739
Other assets	22,202	17,975
Total assets	449,387	433,979
Current liabilities:
Current portion of loans payable	1,107	1,058
Accounts payable	10,523	11,409
Accrued expenses and other current liabilities	23,539	25,347
Total current liabilities	35,169	37,814
Long term loans, net of current portion	76,853	76,791
Pension liabilities	15,558	14,901
Other long term liabilities	6,591	6,618
Total liabilities	134,171	136,124
Commitments and contingencies (Note 15)
Stockholders' equity:
Preferred stock, $0.01 par value:Authorized: 5,000,000 shares; none issued and outstanding
Common stock, $0.01 par value: Authorized: 80,000,000 shares; 38,383,751 issued and 32,595,143 outstanding at June 30, 2017 and 38,326,329 issued and 31,912,021 outstanding at March 31, 2017	384	383
Additional paid-in capital	217,840	217,355
Treasury stock, at cost: 5,788,608 common shares at June 30, 2017 and 6,414,308 common shares at March 31, 2017	(52,653)	(58,347)
Retained earnings	171,321	167,009
Accumulated other comprehensive loss	(21,676)	(28,545)
Total stockholders' equity	315,216	297,855
Total liabilities and stockholders' equity	$ 449,387	$ 433,979

XML

Unaudited Condensed Consolidated Balance Sheets (Parentheticals) - $ / shares	Jun. 30, 2017	Mar. 31, 2017
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	5,000,000	5,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	80,000,000	80,000,000
Common stock, shares issued (in shares)	38,383,751	38,326,329
Common stock, shares outstanding (in shares)	32,595,143	31,912,021
Treasury stock, shares (in shares)	5,788,608	6,414,308

XML

Unaudited Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Net revenues	$ 83,542	$ 80,638
Cost of goods sold	56,996	56,644
Gross profit	26,546	23,994
Operating expenses:
Research, development and engineering	7,573	7,910
Selling, general and administrative	10,006	10,038
Amortization of acquisition-related intangible assets	596	1,017
Total operating expenses	18,175	18,965
Operating income	8,371	5,029
Other income (expense):
Interest income	79	62
Interest expense	(694)	(635)
Other income (expense), net	(515)	815
Income before income tax provision	7,241	5,271
Provision for income tax	(1,747)	(2,252)
Net income	$ 5,494	$ 3,019
Net income per share:
Basic (in dollars per share)	$ 0.17	$ 0.10
Diluted (in dollars per share)	0.17	0.09
Cash dividends per common share (in dollars per share)		$ 0.04
Weighted average shares used in per share calculation:
Basic (in shares)	32,086	31,401
Diluted (in shares)	33,044	32,001

XML

Unaudited Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Net income	$ 5,494	$ 3,019
Foreign currency translation adjustments	6,882	(2,825)
Changes in market value of investments:
Changes in unrealized gains (losses), net of income taxes of $(8) for the three months ended June 30, 2017, and net of income taxes of $45 for the three months ended June 30, 2016	(13)	85
Reclassification adjustment for net losses realized in net income, net of income taxes of $61 for the three months ended June 30, 2016		90
Net change in market value of investments	(13)	175
Total comprehensive income	$ 12,363	$ 369

XML

Unaudited Condensed Consolidated Statements of Comprehensive Income (Parentheticals) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Taxes (benefits) on changes in unrealized gain (loss)	$ (8)	$ 45
Taxes on reclassification adjustment for sales of securities included in net income		$ 61

XML

Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Cash flows from operating activities:
Net income	$ 5,494	$ 3,019
Adjustments to reconcile net income to net cash provided by (used in) operating activities, net of assets acquired and liabilities assumed:
Depreciation and amortization	2,411	2,832
Provision for receivable allowances	2,428	1,610
Net change in inventory provision	383	425
Stock-based compensation	907	855
Gain on investments	(431)	(169)
Foreign currency adjustments on intercompany amounts and other non-cash items	69	(111)
Changes in operating assets and liabilities, net of business acquired:
Accounts receivable	(2,553)	(4,652)
Inventories	(636)	2,083
Prepaid expenses and other assets	(2,282)	130
Accounts payable	(1,468)	559
Accrued expenses and other liabilities	(4,533)	1,113
Pension liabilities	(206)	(198)
Net cash provided by (used in) operating activities	(417)	7,496
Cash flows from investing activities:
Purchases of investments	(2,203)
Purchases of plant and equipment	(2,144)	(3,477)
Net cash used in investing activities	(4,347)	(3,477)
Cash flows from financing activities:
Repayments of loans and notes payable	(278)	(7,970)
Proceeds from employee equity plans	5,212	694
Net cash provided by (used in) financing activities	4,934	(7,276)
Effect of exchange rate fluctuations on cash and cash equivalents	3,028	(1,161)
Net increase (decrease) in cash and cash equivalents	3,198	(4,418)
Cash and cash equivalents and restricted cash at beginning of period (1)	169,234	156,083
Cash and cash equivalents and restricted cash at end of period (2)	$ 172,432	$ 151,665

XML

Unaudited Condensed Consolidated Statements of Cash Flows (Parentheticals) - USD ($) $ in Thousands	Jun. 30, 2017	Mar. 31, 2017	Jun. 30, 2016	Mar. 31, 2016
Restricted cash	$ 1,400	$ 1,300	$ 272	$ 277

XML

Note 1 - Unaudited Condensed Consolidated Financial Statements

3 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Basis of Accounting [Text Block]

1.

Unaudited Condensed Consolidated Financial Statements

The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form

10

-Q and do

not

include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. The unaudited condensed consolidated financial statements include the accounts of IXYS Corporation and its wholly-owned subsidiaries. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and judgments that affect the amounts reported in the financial statements and accompanying notes. Some of the accounting estimates that require significant judgements by management include, but are

not

limited to, revenue reserves, inventory valuation, accounting for income taxes, and allocation of purchase price in business combinations. All significant intercompany transactions have been eliminated in consolidation. All adjustments of a normal recurring nature that, in the opinion of management, are necessary for a fair statement of the results for the interim periods have been made. The condensed consolidated balance sheet as of

March 31, 2017

has been derived from our audited consolidated balance sheet as of that date. It is recommended that the interim financial statements be read in conjunction with our audited consolidated financial statements and notes thereto for the fiscal year ended

March 31, 2017,

or fiscal

2017,

contained in our Annual Report on Form

10

-K. Interim results are

not

necessarily indicative of the operating results expected for later quarters or the full fiscal year. Our fiscal year end is

March 31.

References to any numerically identified year preceded by the word “fiscal” are references to the year ending on

March 31

of such numerically identified year.

XML

Note 2 - Recent Accounting Pronouncements and Accounting Changes

3 Months Ended

Jun. 30, 2017

Notes to Financial Statements

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

2.

Recent Accounting Pronouncements and Accounting Changes

In

May 2014,

Financial Accounting Standards Board, or FASB, issued a new standard on the recognition of revenue from contracts with customers, which includes a single set of rules and criteria for revenue recognition to be used across all industries. The revenue standard’s core principle is built on the contract between a vendor and a customer for the provision of goods and services. It attempts to depict the exchange of rights and obligations between the parties in the pattern of revenue recognition based on the consideration to which the vendor is entitled. To accomplish this objective, the standard requires

five

basic steps: identify the contract with the customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract and recognize revenue when or as the entity satisfies a performance obligation. For public companies, this standard is effective for annual reporting periods beginning after

December 15, 2017,

including interim periods during the annual period. Early adoption is permitted for annual periods commencing after

December 15, 2016.

Two different transition methods are available: full retrospective method and a modified retrospective approach.

We are currently evaluating the potential impact of this standard on our financial position and results of operations, as well as our selected transition method.

Based on our preliminary assessment, we believe the new standard will

not

have a material impact on our financial position and results of operations, as our revenue is primarily generated from the sale of finished, tangible products to customers. Sales predominantly contain a single delivery element and revenue is recognized at a single point in time when ownership, risks, and rewards transfer. We do

not

expect to change the manner or timing of recognizing revenue on a majority of our revenue transactions.

In

July 2015,

FASB issued an amendment to modify the inventory measurement guidance in Topic

330,

Inventory

, for inventory that is measured using the methods other than last-in,

first

-out, or LIFO, and the retail inventory method. It requires that an entity measure inventory within the scope of this update at the lower of cost and net realizable value. It eliminated the guidance in Topic

330

that required a reporting entity measuring inventory at the lower of cost or market to consider the replacement cost of inventory and the net realizable value of inventory less an approximately normal profit margin along with net realizable value in determining the market value. We have adopted this standard on a prospective basis in the

first

quarter of fiscal

2018.

The effect on our consolidated financial statements was

not

material.

In

January 2016,

FASB issued authoritative guidance that modifies how entities measure equity investments and present changes in the fair value of financial liabilities. Under the new guidance, entities will have to measure equity investments that do

not

result in consolidation and are

not

accounted for under the equity method at fair value and recognize any changes in fair value in net income unless the investments qualify for the new practicality exception. A practicality exception will apply to those equity investments that do

not

have a readily determinable fair value and do

not

qualify for the practical expedient to estimate fair value under Accounting Standards Codification,

Fair Value Measurements

, or ASC

820,

and as such these investments

may

be measured at cost. This guidance is effective for financial statements issued for fiscal years beginning after

December 15, 2017,

and interim periods within those fiscal years. We are currently evaluating the impact of this standard on our consolidated financial statements.

In

February 2016,

FASB issued amended guidance for lease arrangements, which requires lessees to recognize the following for all leases with terms longer than

12

months: a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, or ROU asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The amendment is effective for financial statements issued for fiscal years beginning after

December 15, 2018,

and interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact of this amended guidance on our consolidated financial statements.

In

March 2016,

FASB issued amended guidance which simplifies several aspects of the accounting for employee share-based payment awards, including forfeitures, excess tax benefits or deficiencies and classification on the statement of cash flows. The guidance is effective for financial statements issued for fiscal years beginning after

December 15, 2016,

and interim periods within those fiscal years. Under this guidance, entities are permitted to make an accounting policy election to either estimate forfeitures on shared-based payment awards or to recognize forfeitures as they occur. We have adopted this guidance during the

three

months ended

June 30, 2017

and have elected to recognize forfeitures as they occur. The effect of the adoption related to forfeitures was an increase to additional paid-in capital of

$60,000,

an increase to deferred tax assets of

$21,000

and a decrease to retained earnings of

$39,000.

In addition, the new guidance requires us to record all of the tax effects related to share-based payments through our consolidated statement of operations. Accordingly, on a prospective basis, we recorded excess tax benefits of

$545,000

in the

three

months ended

June 30, 2017.

Further, the guidance requires all tax-related cash flows resulting from share-based payments be reported as operating activities on the statement of cash flows. We have elected to apply the change in cash flow classification on a prospective basis. The presentation requirement related to employee taxes paid through withholding shares did

not

impact the statements of cash flows because such cash flows had historically been presented as financing activities

. Taxes withheld on net exercises of stock options during

June 30, 2017

and

2016

were

$490,000

and

$0,

respectively, and were included in cash flows from financing activities in our consolidated statements of cash flows for the

three

months ended

June 30, 2017

and

2016.

The adoption had

no

other material impact on our consolidated financial statements.

In

August 2016,

FASB issued amended guidance that provides clarification on cash flow classification related to

eight

specific issues, including debt prepayment or debt extinguishment costs, contingent consideration payments made after a business combination, distributions received from equity method investees and proceeds from the settlement of insurance claims. The guidance will be effective for fiscal years beginning after

December 15, 2017,

including interim reporting periods within those fiscal years. Early adoption is permitted. The amended guidance should be applied retrospectively to all periods presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. We do

not

expect this change to have a significant impact on our consolidated financial statements.

In

October 2016,

FASB issued amended guidance which requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. This eliminates the current exception for all intra-entity transfers of an asset other than inventory that requires deferral of the tax effects until the asset is sold to a

third

party or otherwise recovered through use. The guidance will be effective for fiscal years beginning after

December 15, 2017,

including interim reporting periods within those annual reporting periods. Early adoption is permitted in the

first

interim period only. The amendments should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. As early adoption is permitted, we elected to early adopt this standard in the

first

quarter of fiscal

2018.

In accordance with the guidance that required adjustments to reflect the cumulative effect, we recorded a reduction in retained earnings and an increase in income tax payable of

$1.1

million during the

three

months ended

June 30, 2017.

In

January 2017,

FASB issued amended guidance which narrows the existing definition of a business and provides a framework for evaluating whether a transaction should be accounted for as an acquisition (or disposal) of assets or a business. The definition of a business affects areas of accounting such as acquisitions, disposals and goodwill. The revised definition of a business under this guidance is expected to reduce the number of transactions that are accounted for as business combinations. The guidance is effective on a prospective basis for fiscal years beginning after

December 15, 2017,

and interim periods within those fiscal years, with early adoption permitted. The impact on our consolidated financial statements will depend on the facts and circumstances of any specific future transactions.

XML

Note 3 - Fair Value

3 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Fair Value Disclosures [Text Block]

3.

Fair Value

We account for certain assets and liabilities at fair value. In determining fair value, we consider its principal or most advantageous market and the assumptions that market participants would use when pricing, such as inherent risk, restrictions on sale and risk of non-performance. The fair value hierarchy is based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. The fair value measurements are classified under the following hierarchy:

Level 

1

 — Quoted prices for identical instruments in active markets.

Level 

2

 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are

not

active; and model-derived valuations in which all significant inputs or significant value-drivers are observable in active markets.

Level 

3

 — Model-derived valuations in which

one

or more significant inputs or significant value drivers are unobservable.

Fair Value Measurements on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis, excluding accrued interest components, consisted of the following types of instruments as of

June 30, 2017

and

March 31, 2017 (

in thousands):

	June 30, 2017 (1)						March 31, 2017 (1)
			Fair Value Measured at						Fair Value Measured at
			Reporting Date Using						Reporting Date Using
Description	Total		Level 1		Level 2		Total		Level 1		Level 2
	(unaudited)						(unaudited)
Money market funds (2)	$	98,303	$	98,303	$	-	$	90,752	$	90,752	$	-
Marketable equity securities (3)		1,821		1,821		-		1,771		1,771		-
Auction rate preferred securities (3)		350		-		350		350		-		350
Total assets measured at fair value	$	100,474	$	100,124	$	350	$	92,873	$	92,523	$	350

( 1 ) We did not have any recurring fair value measurements of assets or liabilities whose fair value was measured using significant unobservable inputs.

( 2 ) Included in "Cash and cash equivalents" on our unaudited condensed consolidated balance sheets.

( 3 ) Included in "Other assets" on our unaudited condensed consolidated balance sheets.

We measure our marketable equity securities and derivative contracts at fair value. Marketable equity securities are valued using the quoted market prices and are therefore classified as Level

1

estimates. All of the marketable equity securities are subject to a periodic impairment review. We review any impairment to determine whether it is other than temporarily impaired. This review is based on factors such as length of time of impairment, extent to which

the fair value is below the cost basis, financial conditions of the issuer of the security, our expectations of futur

e recoveries and our ability and intent to hold or sell the securities. Based on our review, we recognized other than temporary impairment losses of $

0

and

$151,000

in marketable equity securities during the

three

months ended

June 30, 2017

and

June 30, 2016

respectively.

From time to time, we use derivative instruments to manage exposure to changes in interest rates and currency exchange rates and the fair values of these instruments are recorded on the balance sheets. We have elected

not

to designate these instruments as accounting hedges. The changes in the fair value of these instruments are recorded in the current period’s statement of operations and are included in other income (expense), net. All of our derivative instruments are traded on over-the-counter markets where quoted market prices are

not

readily available. For those derivatives, we measure fair value using prices obtained from the counterparties with whom we have traded. The counterparties price the derivatives based on models that use primarily market observable inputs, such as yield curves and option volatilities. Accordingly, we classify these derivatives as Level

2.

We held

no

derivative instruments at

June 30, 2017

and

March 31, 2017.

Auction rate preferred securities, or ARPS, are stated at par value based upon observable inputs, including historical redemptions received from the ARPS issuers, and are therefore categorized as Level

2

estimates.

Cash and cash equivalents are recognized and measured at fair value in our consolidated financial statements. Accounts receivable and prepaid expenses and other current assets are financial assets with carrying values that approximate fair value. Accounts payable and accrued expenses and other current liabilities are financial liabilities with carrying values that approximate fair value.

Our indebtedness for borrowed money and our installment payment obligations approximated fair value, as the interest rates either adjusted according to the market rates or the interest rates approximated the market rates. The estimated fair value of these items was approximately

$78.0

million and

$77.8

million as of

June 30, 2017

and

March 31, 2017,

respectively.

Our equity method investments, cost method investments and non-financial assets, such as acquired intangible assets and property, plant and equipment, are recorded at fair value only if impairment is recognized.

No

impairment losses on the investments accounted for under the equity method or the cost method were recognized as of

June 30, 2017

and

June 30, 2016

, as there have

not

been any events or changes in circumstances that we believe would have had a significant adverse effect on the fair value of those investments.

Our acquisition-related intangible assets were initially recorded at fair value. The valuation of the acquisition-related intangible assets was classified as a Level

3

measurement because the valuation was based on significant unobservable inputs and involved management judgement and assumptions about market participants and pricing. We review our intangible assets for impairment whenever events and circumstances indicate that the carrying value of an asset might

not

be recoverable, based upon estimated undiscounted future cash flows. When we are required to determine the fair value of intangible assets other than goodwill, we use the income approach. We start with a forecast of all the expected net cash flows associated with the asset and then we apply an asset-specific discount rate to arrive at a net present value amount. Some of the more significant estimates and assumptions inherent in this approach include: the amount and timing of the projected net cash flows on the projections and the selection of a long-term growth rate and the discount rate. Based on our review, the intangible assets resulting from the RadioPulse acquisition were determined to be fully impaired and an impairment charge of

$1.4

 million was recognized during the quarter ended

December 

31,

2016.

XML

Note 4 - Accounts Receivable

3 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

4.

Accounts Receivable

Accounts receivable consisted of the following (in thousands):

	June 30,			March 31,
	2017			2017
	(unaudited)
Accounts receivable, gross	$	46,253		$	45,856
Allowances		(4,115	)		(4,689	)
Accounts receivable, net	$	42,138		$	41,167

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Note 5 - Other Assets

3 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Other Assets Disclosure [Text Block]

5.

Other Assets

Other assets consist of the following (in thousands):

	June 30,		March 31,
	2017		2017
	(unaudited)
Marketable equity securities	$	1,821	$	1,771
Long-term equity method investments		12,145		11,589
Other items, including cost method investments		8,236		4,615
Total	$	22,202	$	17,975

Available-for-Sale Investments

Marketable equity securities and auction rate preferred securities are designated as available-for-sale and are reported at fair value with unrealized gains and losses, net of income taxes, recorded in other comprehensive income (loss). Realized gains and losses (calculated as proceeds less specifically identified costs) and declines in value of these investments judged by management to be other than temporary, if any, are included in other income (expense), net.

Equity Method Investments

We have equity interests in Powersem GmbH, or Powersem, a semiconductor manufacturer based in Germany, EB Tech Ltd., or EB Tech, a radiation services provider based in South Korea and Automated Technology, Inc., or ATEC, an assembly and test services provider in the Philippines. These investments are accounted for using the equity method. For the

three

months ended

June 30, 2017

and

2016,

we recorded an immaterial amount of our proportionate share of the affiliates’ gains and losses under the equity method of accounting. The carrying values of our investments in Powersem, EB Tech and ATEC at

June 30, 2017

were

$2.7

 million,

$2.6

 million and

$6.8

 million, respectively. The carrying values of our investments in Powersem, EB Tech and ATEC at

March 

31,

2017

were

$2.5

 million,

$2.6

 million and

$6.5

 million, respectively.

Cost Method Investments

During the

three

months ended

June 30, 2017

and during fiscal

2017,

we made investments in privately-held companies. Those investments are accounted for under the cost method as they do

not

qualify for the fair value method or for another accounting method. As of

June 30, 2017

and

March 31, 2017,

the carrying values of those investments were

$4.1

million and

$3.1

 million, respectively. We do

not

estimate the fair value of those cost method investments because determining the fair value is

not

practicable.

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Note 6 - Inventories

3 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Inventory Disclosure [Text Block]

6.

Inventories

Inventories consist of the following (in thousands):

	June 30,		March 31,
	2017		2017
	(unaudited)
Raw materials	$	18,831	$	17,920
Work in process		46,392		45,634
Finished goods		27,146		25,882
Total	$	92,369	$	89,436

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Note 7 - Accrued Expenses and Other Current Liabilities

3 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Accrued Expenses and Other Current Liabilities Disclosure [Text Block]

7.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (in thousands):

	June 30,		March 31,
	2017		2017
	(unaudited)
Uninvoiced goods and services	$	14,638	$	12,703
Compensation and benefits		7,118		6,707
Income taxes (1)		-		3,521
Commissions, royalties and other		1,783		2,416
Total	$	23,539	$	25,347

(

1

) Prepaid income taxes of

$1.1

million at

June 30, 2017

were included in "Prepaid expenses and other current assets" on our

unaudited condensed consolidated balance sheet as of

June 30, 2017.

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Note 8 - Borrowing Arrangements

3 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Debt Disclosure [Text Block]

8.

Borrowing Arrangements

Revolving Credit Agreement

On

November 20, 2015

,

we entered into a Revolving Credit Agreement with a syndicate of banks for a line of credit of

$125.0

million. The agent for the banks is Bank of the West. The obligations are guaranteed by

four

of our subsidiaries. The loan is collateralized pursuant to a Contingent Collateral Agreement, under which the assets of the parent company and the

four

subsidiaries could be subject to security interests for the benefit of the banks in the event of a loan default.

The credit agreement provides different interest rate alternatives under which we

may

borrow funds. We

may

elect to borrow based on LIBOR plus a margin or an alternative base rate plus a margin. The margin can range from

0.75%

to

2.5%,

depending on interest rate alternatives and on our leverage of liabilities to effective tangible net worth. The applicable interest rate as of

June 30, 2017

was

3.18%.

An unused commitment fee is also payable. It ranges from

0.25%

to

0.625%

annually, depending on leverage.

The terms of the facility impose restrictions on our ability to undertake certain transactions, to create liens on assets and to incur subsidiary indebtedness. In addition, the credit agreement is subject to a set of financial covenants, including minimum effective tangible net worth, the ratio of cash, cash equivalents and accounts receivable to current liabilities, profitability, a leverage ratio and a minimum amount of U.S. domestic cash on hand.

In

December 2016,

we entered into an amendment to the Revolving Credit Agreement with the lenders under which the contractual term of the revolving loan was extended to

November 20, 2019

.

The leverage ratio was increased to

2.50

to

1.00

from

2.00

to

1.00.

No

other terms of the Revolving Credit Agreement were affected by the amendment. At

June 30, 2017,

we complied with all of the financial covenants, including the leverage ratio.

In relation to the Revolving Credit Agreement and the amendment to the Revolving Credit Agreement, we incurred loan costs that were deferred and reduced our “Long term loans, net of current portion” on our unaudited consolidated balance sheets. Those costs are being amortized over the new life of the credit agreement. The unamortized balance at

June 30, 2017

and

March 31, 2017

was

$362

,000

and

$399,000,

respectively.

At

June 30, 2017

and

March 31, 2017,

the outstanding balance under the credit agreement was

$72.6

million.

The Revolving Credit Agreement also includes a

$10.0

million letter of credit subfacility. Borrowing under this subfacility is limited to the extent of availability under the

$125.0

million revolving line of credit. See Note

15,

“Commitments and Contingencies” for further information regarding the terms of the subfacility.

IKB Deutsche Industriebank

In

April 2015,

we entered into a loan with IKB Deutsche Industriebank, or IKB. Under the agreement, we borrowed

€6.5

million, or about

$7.2

million at the time. The loan has a term ending

March 31, 2022

and bears a fixed annual interest rate of

1.75%.

Each fiscal quarter a principal payment of

€232,000,

or about

$265,000,

and a payment of accrued interest are required. Financial covenants for a ratio of indebtedness to cash flow, a ratio of equity to total assets and a minimum stockholders’ equity for the German subsidiary must be satisfied for the loan to remain in good standing. Compliance with these covenants is required annually at

March 31.

We complied with all of these financial covenants at

March 31, 2017.

The loan

may

be prepaid in whole or in part with a modest penalty. The loan is also collateralized by a security interest in the facility in Lampertheim, Germany, and a security deposit of

€1.0

million. The security deposit will mature on

December 29, 2017

,

so long as compliance occurs through that date. At

June 30, 2017,

the outstanding principal balance was

€4.4

million, or about

$5.0

million at that time. At

March 31, 2017,

the outstanding principal balance was

€4.6

 million, or

$5.0

 million.

Loans Assumed from Business Acquisitions

Our outstanding balances relating to loans assumed upon business acquisitions at

June 30, 2017

and

March 31, 2017

were

$284,000

and

$288

,000,

respectively. These loans consisted of certain short-term facilities from financial institutions and loans from government agencies to support research and development activities.

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Note 9 - Pension Plans

3 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Pension and Other Postretirement Benefits Disclosure [Text Block]

9.

Pension Plans

We maintain

three

defined benefit pension plans:

one

for United Kingdom, or UK, employees,

one

for German employees and

one

for Philippine employees. We deposit funds for the UK and Philippine plans with financial institutions and make payments to former German employees directly. We accrue for the unfunded portion of the obligations. The measurement date for projected benefit obligations and plan assets is

March 31.

As of

June 30, 2017,

the German defined benefit plan was completely unfunded and we accrued for its obligations. The UK and German plans have been curtailed. As such, the plans are closed to new entrants and

no

credit is provided for additional periods of service. 

We expect to contribute approximately

$948,000

to the UK and the Philippines plans in the fiscal year ending

March 31, 2018.

This contribution is primary contractual.

Net Period Pension Cost

The net periodic pension expense includes the following components (in thousands):

	Three Months Ended
	June 30,
	2017			2016
	(unaudited)
Service cost	$	24		$	28
Interest cost on projected benefit obligation		279			352
Expected return on plan assets		(280	)		(323	)
Recognized actuarial loss		98			48
Net periodic pension expense	$	121		$	105

Information on Plan Assets

We report and measure the plan assets of our defined benefit pension plans at fair value. The table below sets forth the fair value of our plan assets as of

June 30, 2017

and

March 31, 2017,

using the same

three

-level hierarchy of fair-value inputs described in Note

3,

“Fair Value” (in thousands):

	June 30, 2017						March 31, 2017
Description	Level 1		Level 2		Total		Level 1		Level 2		Total
	(unaudited)						(unaudited)
Cash and cash funds	$	616	$	-	$	616	$	136	$	-	$	136
Equity		-		-		-		314		-		314
Fixed interest		964		57		1,021		1,203		58		1,261
Mutual funds		13,639		13,584		27,223		13,181		13,390		26,571
Total	$	15,219	$	13,641	$	28,860	$	14,834	$	13,448	$	28,282

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Note 10 - Employee Equity Incentive Plans

3 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

10.

Employee Equity Incentive Plans

Stock Purchase and Stock Option Plans

Equity Incentive Plans

On

September 10, 2009,

our stockholders approved the

2009

Equity Incentive Plan, or the

2009

Plan, under which

900,000

shares of our common stock were reserved for the grant of stock options and other equity incentives. On

September 16, 2011,

our stockholders approved the

2011

Equity Incentive Plan, or the

2011

Plan, under which

600,000

shares of our common stock were reserved for the grant of stock options and other equity incentives. On

August 30, 2013,

our stockholders approved the

2013

Equity Incentive Plan, or the

2013

Plan, under which

2,000,000

shares of our common stock were reserved for the grant of stock options and other equity incentives. On

August 26, 2016,

our stockholders approved the

2016

Equity Incentive Plan, or the

2016

Plan, under which

2,000,000

shares of the common stock were reserved for the grant of stock options and other equity incentives. The

2009

Plan, the

2011

Plan, the

2013

Plan and the

2016

Plan are referred to as the Plans.

Stock Options

Under the Plans, nonqualified and incentive stock options

may

be granted to employees, consultants and non-employee directors. Generally, the per share exercise price shall

not

be less than

100%

of the fair market value of a share on the grant date. The Board of Directors has the full power to determine the provisions of each option issued under the Plans. While we

may

grant options that become exercisable at different times or within different periods, we have primarily granted options that vest over

four

years. The options, once granted, expire

ten

years from the date of grant.

Stock Awards

Stock awards, denominated restricted stock under the

2009

Plan and the

2011

Plan,

may

be granted to any employee, director or consultant under the Plans. Pursuant to a stock award, we will issue shares of common stock. Shares that are subject to the restriction will be released from restriction if certain requirements, including continued performance of services, are met.

Stock Appreciation Rights

Awards of stock appreciation rights, or SARs,

may

be granted to employees, consultants and non-employee directors pursuant to the Plans. A SAR is payable on the difference between the market price at the time of exercise and the exercise price at the date of grant. In any event, the exercise price of a SAR shall

not

be less than

100%

of the fair market value of a share on the grant date and shall expire

no

later than

ten

years from the grant date. Upon exercise, the holder of a SAR shall be entitled to receive payment either in cash or a number of shares by dividing such cash amount by the fair market value of a share on the exercise date.

Restricted Stock Units

Restricted stock units, denominated performance units in the

2009

Plan,

may

be granted to employees, consultants and non-employee directors under the Plan. Each restricted stock unit shall have a value equal to the fair market value of

one

share. After the applicable performance period has ended, the holder will be entitled to receive a payment, either in cash or in the form of shares, based on the number of restricted stock units earned over the performance period, to be determined as a function of the extent to which the corresponding performance goals or other vesting provisions have been achieved.

Employee Stock Purchase Plan

The Board of Directors has approved the Amended and Restated

1999

Employee Stock Purchase Plan, or the Purchase Plan, and reserved a total of

1,950,000

shares of common stock for issuance under the Purchase Plan. Under the Purchase Plan, all eligible employees

may

purchase our common stock at a price equal to

85%

of the lower of the fair market value at the beginning of the offer period or the semi-annual purchase date. Stock purchases are limited to

15%

of an employee’s eligible compensation. During the

three

months ended

June 30, 2017,

there were

57,422

shares purchased under the Purchase Plan, leaving approximately

70,648

shares available for purchase under the Purchase Plan in the future, pending a stockholder vote on an additional

400,000

shares at the upcoming annual meeting.

Stock-Based Compensation

The following table summarizes the effects of stock-based compensation charges (in thousands):

	Three Months Ended June 30,
Statement of Operations Classifications	2017		2016
	(unaudited)
Cost of goods sold	$	93	$	100
Research, development and engineering		325		303
Selling, general and administrative		489		452
Stock-based compensation effect in income before income tax provision		907		855
Provision for income tax (1)		363		342
Net stock-based compensation effects in net income	$	544	$	513

 

(

1

) Calculated at the U.S. statutory income tax rate of

40%

in fiscal

2018

and

2017.

During the

three

months ended

June 30, 2017,

the unaudited condensed consolidated statements of operations and cash flows do

not

reflect any tax benefit for the tax deduction from option exercises and other awards. As of

June 30, 2017,

approximately

$9.2

million in stock-based compensation is to be recognized for unvested stock options granted under our equity incentive plans. The unrecognized compensation cost is expected to be recognized over a weighted average period of

2.9

years.

The Black-Scholes option pricing model is used to estimate the fair value of options granted under our equity incentive plans and rights to acquire stock granted under our stock purchase plan. The weighted average estimated fair values of employee stock option grants and rights granted under the Purchase Plan, as well as the weighted average assumptions that were used in calculating such values during the

three

months ended

June 30, 2017

and

2016,

were based on estimates at the date of grant as follows:

	Stock Options						Purchase Plan
	Three Months Ended June 30,						Three Months Ended June 30,
	2017			2016			2017			2016
	(unaudited)						(unaudited)
Weighted average estimated fair value of grant per share	$	6.49		$	3.96		$	2.92		$	3.94
Risk-free interest rate		1.9	%		1.4	%		0.7	%		0.3	%
Expected term in years		6.63			6.41			0.75			1.00
Volatility		36.8	%		41.0	%		29.9	%		42.9	%
Dividend yield (1)		0.0	%		1.4	%		0.0	%		1.4	%

(

1

)

No

dividends were declared for the quarter ended

June 30, 2017.

Activity with respect to outstanding stock options for the

three

months ended

June 30, 2017

was as follows:

				Weighted Average
	Number of			Exercise Price		Intrinsic
	Shares			Per Share		Value (1)
				(unaudited)		(000)
Balance at March 31, 2017		5,097,545		$	10.71
Options granted		549,000		$	16.05
Options exercised		(812,045	)	$	9.40	$	5,187
Options cancelled		(89,750	)	$	11.42
Options expired		(19,000	)	$	9.35
Balance at June 30, 2017		4,725,750		$	11.54
Exercisable at June 30, 2017		2,607,500		$	10.75
Exercisable at March 31, 2017		3,300,295		$	10.34

(

1

) Represents the difference between the exercise price and the value of our common stock at the time of exercise.

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Note 11 - Accumulated Other Comprehensive Income (Loss)

3 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Comprehensive Income (Loss) Note [Text Block]

11.

Accumulated Other

Comprehensive Income (Loss)

The components and the changes in accumulated other comprehensive income (loss), net of tax, for the

three

months ended

June 30, 2017

and

2016

were as follows (in thousands):

	Foreign Currency			Unrealized Losses on Securities			Defined Benefit Pension Plans			Accumulated Other Comprehensive Income (Loss)
				(unaudited)
Balance as of March 31, 2017	$	(19,233	)	$	(219	)	$	(9,093	)	$	(28,545	)
Other comprehensive income (loss) before reclassifications		6,882			(13	)		-			6,869
Net current period other comprehensive income (loss)		6,882			(13	)		-			6,869
Balance as of June 30, 2017	$	(12,351	)	$	(232	)	$	(9,093	)	$	(21,676	)

	Foreign Currency			Unrealized Gains (Losses) on Securities			Defined Benefit Pension Plans			Accumulated Other Comprehensive Income (Loss)
				(unaudited)
Balance as of March 31, 2016	$	(10,639	)	$	(82	)	$	(9,545	)	$	(20,266	)
Other comprehensive income (loss) before reclassifications		(2,825	)		85			-			(2,740	)
Net loss reclassified from accumulated other comprehensive income (loss)		-			90			-			90
Net current period other comprehensive income (loss)		(2,825	)		175			-			(2,650	)
Balance as of June 30, 2016	$	(13,464	)	$	93		$	(9,545	)	$	(22,916	)

The amounts reclassified out of accumulated other comprehensive income (loss) for the

three

months ended

June 30, 2017

and

2016

are as follows (in thousands):

Accumulated Other Comprehensive Income (Loss) Components	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)					Impacted Line Item on Unaudited Condensed Consolidated Income Statements
	Three Months Ended June 30,
	2017		2016
	(unaudited)
Impairment of marketable securities		-		(151	)	Other income (expense), net
Subtotal		-		(151	)	Income before income tax provision
Tax impact		-		61		Provision for income tax
Total reclassifications for the period	$	-	$	(90	)	Net income

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Note 12 - Computation of Earnings Per Share

3 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Earnings Per Share [Text Block]

12.

Computation of Earnings per Share

Basic and diluted earnings per share are calculated as follows (in thousands, except per share amounts):

	Three Months Ended
	June 30,
	2017		2016
	(unaudited)
Net income	$	5,494	$	3,019
Weighted average shares - basic		32,086		31,401
Weighted average shares - diluted		33,044		32,001
Net income per share - basic	$	0.17	$	0.10
Net income per share - diluted	$	0.17	$	0.09

Diluted weighted average shares included approximately

958,000

and

600,000

common equivalent shares from stock options for the

three

months ended

June 30, 2017

and

2016.

Basic net income available per common share is computed using net income and the weighted average number of common shares outstanding

during the period. Diluted net income per common share is computed using net income and the weighted average number of common shares outstanding, assuming dilution, which includes potentially dilutive common shares outstanding during the period. Potentially dilutive common shares include the assumed exercise of stock options using the treasury stock method. During the

three

months ended

June 30, 2017

and

2016,

there were outstanding options to purchase

579,033

and

2,889,670

shares, respectively, that were

not

included in the computation of diluted net income per share since the exercise prices of the options exceeded the market price of the common stock and thus their inclusion would be anti-dilutive. These options could dilute earnings per share in future periods if the market price of the common stock increases.

XML

Note 13 - Segment and Geographic Information

3 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

13.

Segment and Geographic Information

We have a single operating segment and reportable segment. We design develop, manufacture and market high performance semiconductor products. Our

two

Chief Executive Officers,

one

of whom is also the Chief Financial Officer, have been identified as the chief operating decision makers. Our chief operating decision makers review financial information presented as

one

operating segment for the purpose of making decisions, allocating resources and assessing financial performance.

Our net revenues by major geographic area (based on destination) were as follows (in thousands):

	Three Months Ended
	June 30,
	2017		2016
	(unaudited)
United States	$	19,613	$	19,501
Europe and the Middle East:
France		1,935		3,450
Germany		10,058		8,599
Italy		978		1,076
Netherlands		1,396		1,140
United Kingdom		3,803		3,627
Other		5,854		5,953
Asia Pacific:
China		23,819		22,640
Japan		2,119		1,718
Singapore		3,019		3,007
South Korea		5,813		4,695
Other		2,823		3,362
Rest of the World:
India		1,040		900
Other		1,272		970
Total	$	83,542	$	80,638

The following table sets forth net revenues for each of our product groups for the

three

months ended

June 30, 2017

and

2016

(in thousands):

	Three Months Ended June 30,
	2017		2016
	(unaudited)
Power semiconductors	$	57,628	$	56,479
Integrated circuits		21,172		20,382
Systems and radio frequency power semiconductors		4,742		3,777
Total	$	83,542	$	80,638

Revenue from significant customers, those representing

10%

or more of total revenue for the respective periods, is summarized as follows:

	Three Months Ended June 30,
	2017			2016
	(unaudited)
Revenues:
Distributor A		15.2	%		13.8	%
Distributor B		10.7	%		10.6	%

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Note 14 - Income Taxes

3 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Income Tax Disclosure [Text Block]

14.

Income Taxes

For the

three

months ended

June 30, 2017

and

2016,

we recorded income tax provisions of

$1.7

million and

$2.3

million, reflecting effective tax rates of

24.1%

and

42.7%,

respectively. The

June 2017

quarter was impacted by the adoption of Accounting Standards Update, or ASU,

No.

2016

-

09

during the quarter ended

June 30, 2017,

which required the recognition of all excess tax benefits and tax deficiencies in our statement of operations when the awards vested or were settled, the adoption of ASU

2016

-

16,

that eliminated the deferral of recognition of deferred tax attributes on certain intercompany transactions and the estimates of annual income in domestic and foreign jurisdictions. Our effective tax rate for the quarter ended

June 30, 2016

was affected by non-benefitted losses incurred in certain tax jurisdictions and estimates of annual income in domestic and foreign jurisdictions.

XML

Note 15 - Commitments and Contingencies

3 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

15.

Commitments and Contingencies

Revolving Credit Agreement

See Note

8,

“Borrowing Arrangements” for information regarding the terms of the credit agreement.

Other Commitments and Contingencies

On occasion, we provide limited indemnification to customers against intellectual property infringement claims related to our products. To date, we have

not

experienced significant activity or claims related to such indemnifications. We also provide in the normal course of business indemnification to our officers, directors and selected parties. We are unable to estimate any potential future liability, if any. Therefore,

no

liability for these indemnification agreements has been recorded as of

June 30, 2017

and

March 

31,

2017.

We make strategic investments in other companies from time to time. These investments include commitments in certain instances to provide additional financing up to the contracted amount. These commitments are insignificant individually or in aggregate.

We have ongoing income tax audits of our subsidiary in the Philippines for the fiscal years ended

March 31, 2010

and

2011.

The Philippine Bureau of Internal Revenue, or BIR, has made an assessment for a deficiency of income taxes, inclusive of interest and penalties, of approximately

$2.5

million and

$156,000,

respectively, for the fiscal years

2010

and

2011.

We are vigorously contesting the assessments of both years. While there are

no

assurances that we will prevail, we believe that we have valid legal reasons to challenge the BIR’s decision and that our appeals will merit a favorable resolution. Accordingly, we have

not

accrued any amount for this matter.

XML

Note 16 - Subsequent Events

3 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Subsequent Events [Text Block]

16.

Subsequent Events

On

July 21, 2017,

we acquired Componentes Semiconductores de Portugal, LDA, an assembly service provider in Portugal. Upon the close of the acquisition transaction, we assumed liabilities of approximately

€2.7

million.

In

July 2017,

we advanced

$1.5

million pursuant to a convertible bridge financing agreement with a privately-held UK company.

XML

Significant Accounting Policies (Policies)

3 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form

10

-Q and do

not

include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. The unaudited condensed consolidated financial statements include the accounts of IXYS Corporation and its wholly-owned subsidiaries. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and judgments that affect the amounts reported in the financial statements and accompanying notes. Some of the accounting estimates that require significant judgements by management include, but are

not

limited to, revenue reserves, inventory valuation, accounting for income taxes, and allocation of purchase price in business combinations. All significant intercompany transactions have been eliminated in consolidation. All adjustments of a normal recurring nature that, in the opinion of management, are necessary for a fair statement of the results for the interim periods have been made. The condensed consolidated balance sheet as of

March 31, 2017

has been derived from our audited consolidated balance sheet as of that date. It is recommended that the interim financial statements be read in conjunction with our audited consolidated financial statements and notes thereto for the fiscal year ended

March 31, 2017,

or fiscal

2017,

contained in our Annual Report on Form

10

-K. Interim results are

not

necessarily indicative of the operating results expected for later quarters or the full fiscal year. Our fiscal year end is

March 31.

References to any numerically identified year preceded by the word “fiscal” are references to the year ending on

March 31

of such numerically identified year.

New Accounting Pronouncements, Policy [Policy Text Block]

In

May 2014,

Financial Accounting Standards Board, or FASB, issued a new standard on the recognition of revenue from contracts with customers, which includes a single set of rules and criteria for revenue recognition to be used across all industries. The revenue standard’s core principle is built on the contract between a vendor and a customer for the provision of goods and services. It attempts to depict the exchange of rights and obligations between the parties in the pattern of revenue recognition based on the consideration to which the vendor is entitled. To accomplish this objective, the standard requires

five

basic steps: identify the contract with the customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract and recognize revenue when or as the entity satisfies a performance obligation. For public companies, this standard is effective for annual reporting periods beginning after

December 15, 2017,

including interim periods during the annual period. Early adoption is permitted for annual periods commencing after

December 15, 2016.

Two different transition methods are available: full retrospective method and a modified retrospective approach.

We are currently evaluating the potential impact of this standard on our financial position and results of operations, as well as our selected transition method.

Based on our preliminary assessment, we believe the new standard will

not

have a material impact on our financial position and results of operations, as our revenue is primarily generated from the sale of finished, tangible products to customers. Sales predominantly contain a single delivery element and revenue is recognized at a single point in time when ownership, risks, and rewards transfer. We do

not

expect to change the manner or timing of recognizing revenue on a majority of our revenue transactions.

In

July 2015,

FASB issued an amendment to modify the inventory measurement guidance in Topic

330,

Inventory

, for inventory that is measured using the methods other than last-in,

first

-out, or LIFO, and the retail inventory method. It requires that an entity measure inventory within the scope of this update at the lower of cost and net realizable value. It eliminated the guidance in Topic

330

that required a reporting entity measuring inventory at the lower of cost or market to consider the replacement cost of inventory and the net realizable value of inventory less an approximately normal profit margin along with net realizable value in determining the market value. We have adopted this standard on a prospective basis in the

first

quarter of fiscal

2018.

The effect on our consolidated financial statements was

not

material.

In

January 2016,

FASB issued authoritative guidance that modifies how entities measure equity investments and present changes in the fair value of financial liabilities. Under the new guidance, entities will have to measure equity investments that do

not

result in consolidation and are

not

accounted for under the equity method at fair value and recognize any changes in fair value in net income unless the investments qualify for the new practicality exception. A practicality exception will apply to those equity investments that do

not

have a readily determinable fair value and do

not

qualify for the practical expedient to estimate fair value under Accounting Standards Codification,

Fair Value Measurements

, or ASC

820,

and as such these investments

may

be measured at cost. This guidance is effective for financial statements issued for fiscal years beginning after

December 15, 2017,

and interim periods within those fiscal years. We are currently evaluating the impact of this standard on our consolidated financial statements.

In

February 2016,

FASB issued amended guidance for lease arrangements, which requires lessees to recognize the following for all leases with terms longer than

12

months: a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, or ROU asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The amendment is effective for financial statements issued for fiscal years beginning after

December 15, 2018,

and interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact of this amended guidance on our consolidated financial statements.

In

March 2016,

FASB issued amended guidance which simplifies several aspects of the accounting for employee share-based payment awards, including forfeitures, excess tax benefits or deficiencies and classification on the statement of cash flows. The guidance is effective for financial statements issued for fiscal years beginning after

December 15, 2016,

and interim periods within those fiscal years. Under this guidance, entities are permitted to make an accounting policy election to either estimate forfeitures on shared-based payment awards or to recognize forfeitures as they occur. We have adopted this guidance during the

three

months ended

June 30, 2017

and have elected to recognize forfeitures as they occur. The effect of the adoption related to forfeitures was an increase to additional paid-in capital of

$60,000,

an increase to deferred tax assets of

$21,000

and a decrease to retained earnings of

$39,000.

In addition, the new guidance requires us to record all of the tax effects related to share-based payments through our consolidated statement of operations. Accordingly, on a prospective basis, we recorded excess tax benefits of

$545,000

in the

three

months ended

June 30, 2017.

Further, the guidance requires all tax-related cash flows resulting from share-based payments be reported as operating activities on the statement of cash flows. We have elected to apply the change in cash flow classification on a prospective basis. The presentation requirement related to employee taxes paid through withholding shares did

not

impact the statements of cash flows because such cash flows had historically been presented as financing activities

. Taxes withheld on net exercises of stock options during

June 30, 2017

and

2016

were

$490,000

and

$0,

respectively, and were included in cash flows from financing activities in our consolidated statements of cash flows for the

three

months ended

June 30, 2017

and

2016.

The adoption had

no

other material impact on our consolidated financial statements.

In

August 2016,

FASB issued amended guidance that provides clarification on cash flow classification related to

eight

specific issues, including debt prepayment or debt extinguishment costs, contingent consideration payments made after a business combination, distributions received from equity method investees and proceeds from the settlement of insurance claims. The guidance will be effective for fiscal years beginning after

December 15, 2017,

including interim reporting periods within those fiscal years. Early adoption is permitted. The amended guidance should be applied retrospectively to all periods presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. We do

not

expect this change to have a significant impact on our consolidated financial statements.

In

October 2016,

FASB issued amended guidance which requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. This eliminates the current exception for all intra-entity transfers of an asset other than inventory that requires deferral of the tax effects until the asset is sold to a

third

party or otherwise recovered through use. The guidance will be effective for fiscal years beginning after

December 15, 2017,

including interim reporting periods within those annual reporting periods. Early adoption is permitted in the

first

interim period only. The amendments should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. As early adoption is permitted, we elected to early adopt this standard in the

first

quarter of fiscal

2018.

In accordance with the guidance that required adjustments to reflect the cumulative effect, we recorded a reduction in retained earnings and an increase in income tax payable of

$1.1

million during the

three

months ended

June 30, 2017.

In

January 2017,

FASB issued amended guidance which narrows the existing definition of a business and provides a framework for evaluating whether a transaction should be accounted for as an acquisition (or disposal) of assets or a business. The definition of a business affects areas of accounting such as acquisitions, disposals and goodwill. The revised definition of a business under this guidance is expected to reduce the number of transactions that are accounted for as business combinations. The guidance is effective on a prospective basis for fiscal years beginning after

December 15, 2017,

and interim periods within those fiscal years, with early adoption permitted. The impact on our consolidated financial statements will depend on the facts and circumstances of any specific future transactions.

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Note 3 - Fair Value (Tables)

3 Months Ended

Jun. 30, 2017

Notes Tables

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

	June 30, 2017 (1)						March 31, 2017 (1)
			Fair Value Measured at						Fair Value Measured at
			Reporting Date Using						Reporting Date Using
Description	Total		Level 1		Level 2		Total		Level 1		Level 2
	(unaudited)						(unaudited)
Money market funds (2)	$	98,303	$	98,303	$	-	$	90,752	$	90,752	$	-
Marketable equity securities (3)		1,821		1,821		-		1,771		1,771		-
Auction rate preferred securities (3)		350		-		350		350		-		350
Total assets measured at fair value	$	100,474	$	100,124	$	350	$	92,873	$	92,523	$	350

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Note 4 - Accounts Receivable (Tables)

3 Months Ended

Jun. 30, 2017

Notes Tables

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

	June 30,			March 31,
	2017			2017
	(unaudited)
Accounts receivable, gross	$	46,253		$	45,856
Allowances		(4,115	)		(4,689	)
Accounts receivable, net	$	42,138		$	41,167

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Note 5 - Other Assets (Tables)

3 Months Ended

Jun. 30, 2017

Notes Tables

Schedule of Other Assets, Noncurrent [Table Text Block]

	June 30,		March 31,
	2017		2017
	(unaudited)
Marketable equity securities	$	1,821	$	1,771
Long-term equity method investments		12,145		11,589
Other items, including cost method investments		8,236		4,615
Total	$	22,202	$	17,975

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Note 6 - Inventories (Tables)

3 Months Ended

Jun. 30, 2017

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	June 30,		March 31,
	2017		2017
	(unaudited)
Raw materials	$	18,831	$	17,920
Work in process		46,392		45,634
Finished goods		27,146		25,882
Total	$	92,369	$	89,436

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Note 7 - Accrued Expenses and Other Current Liabilities (Tables)

3 Months Ended

Jun. 30, 2017

Notes Tables

Schedule of Accrued Expenses and Other Current Liabilities [Table Text Block]

	June 30,		March 31,
	2017		2017
	(unaudited)
Uninvoiced goods and services	$	14,638	$	12,703
Compensation and benefits		7,118		6,707
Income taxes (1)		-		3,521
Commissions, royalties and other		1,783		2,416
Total	$	23,539	$	25,347

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Note 9 - Pension Plans (Tables)

3 Months Ended

Jun. 30, 2017

Notes Tables

Schedule of Net Benefit Costs [Table Text Block]

	Three Months Ended
	June 30,
	2017			2016
	(unaudited)
Service cost	$	24		$	28
Interest cost on projected benefit obligation		279			352
Expected return on plan assets		(280	)		(323	)
Recognized actuarial loss		98			48
Net periodic pension expense	$	121		$	105

Defined Benefit Plan Plan Assets Fair Value [Table Text Block]

	June 30, 2017						March 31, 2017
Description	Level 1		Level 2		Total		Level 1		Level 2		Total
	(unaudited)						(unaudited)
Cash and cash funds	$	616	$	-	$	616	$	136	$	-	$	136
Equity		-		-		-		314		-		314
Fixed interest		964		57		1,021		1,203		58		1,261
Mutual funds		13,639		13,584		27,223		13,181		13,390		26,571
Total	$	15,219	$	13,641	$	28,860	$	14,834	$	13,448	$	28,282

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Note 10 - Employee Equity Incentive Plans (Tables)

3 Months Ended

Jun. 30, 2017

Notes Tables

Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Table Text Block]

	Three Months Ended June 30,
Statement of Operations Classifications	2017		2016
	(unaudited)
Cost of goods sold	$	93	$	100
Research, development and engineering		325		303
Selling, general and administrative		489		452
Stock-based compensation effect in income before income tax provision		907		855
Provision for income tax (1)		363		342
Net stock-based compensation effects in net income	$	544	$	513

Schedule of Employee Service Share Based Compensation Fair Value Assumptions and Methodology [Table Text Block]

	Stock Options						Purchase Plan
	Three Months Ended June 30,						Three Months Ended June 30,
	2017			2016			2017			2016
	(unaudited)						(unaudited)
Weighted average estimated fair value of grant per share	$	6.49		$	3.96		$	2.92		$	3.94
Risk-free interest rate		1.9	%		1.4	%		0.7	%		0.3	%
Expected term in years		6.63			6.41			0.75			1.00
Volatility		36.8	%		41.0	%		29.9	%		42.9	%
Dividend yield (1)		0.0	%		1.4	%		0.0	%		1.4	%

Share-based Compensation, Stock Options, Activity [Table Text Block]

				Weighted Average
	Number of			Exercise Price		Intrinsic
	Shares			Per Share		Value (1)
				(unaudited)		(000)
Balance at March 31, 2017		5,097,545		$	10.71
Options granted		549,000		$	16.05
Options exercised		(812,045	)	$	9.40	$	5,187
Options cancelled		(89,750	)	$	11.42
Options expired		(19,000	)	$	9.35
Balance at June 30, 2017		4,725,750		$	11.54
Exercisable at June 30, 2017		2,607,500		$	10.75
Exercisable at March 31, 2017		3,300,295		$	10.34

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Note 11 - Accumulated Other Comprehensive Income (Loss) (Tables)

3 Months Ended

Jun. 30, 2017

Notes Tables

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

	Foreign Currency			Unrealized Losses on Securities			Defined Benefit Pension Plans			Accumulated Other Comprehensive Income (Loss)
				(unaudited)
Balance as of March 31, 2017	$	(19,233	)	$	(219	)	$	(9,093	)	$	(28,545	)
Other comprehensive income (loss) before reclassifications		6,882			(13	)		-			6,869
Net current period other comprehensive income (loss)		6,882			(13	)		-			6,869
Balance as of June 30, 2017	$	(12,351	)	$	(232	)	$	(9,093	)	$	(21,676	)

	Foreign Currency			Unrealized Gains (Losses) on Securities			Defined Benefit Pension Plans			Accumulated Other Comprehensive Income (Loss)
				(unaudited)
Balance as of March 31, 2016	$	(10,639	)	$	(82	)	$	(9,545	)	$	(20,266	)
Other comprehensive income (loss) before reclassifications		(2,825	)		85			-			(2,740	)
Net loss reclassified from accumulated other comprehensive income (loss)		-			90			-			90
Net current period other comprehensive income (loss)		(2,825	)		175			-			(2,650	)
Balance as of June 30, 2016	$	(13,464	)	$	93		$	(9,545	)	$	(22,916	)

Reclassification out of Accumulated Other Comprehensive Income [Table Text Block]

Accumulated Other Comprehensive Income (Loss) Components	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)					Impacted Line Item on Unaudited Condensed Consolidated Income Statements
	Three Months Ended June 30,
	2017		2016
	(unaudited)
Impairment of marketable securities		-		(151	)	Other income (expense), net
Subtotal		-		(151	)	Income before income tax provision
Tax impact		-		61		Provision for income tax
Total reclassifications for the period	$	-	$	(90	)	Net income

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Note 12 - Computation of Earnings Per Share (Tables)

3 Months Ended

Jun. 30, 2017

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended
	June 30,
	2017		2016
	(unaudited)
Net income	$	5,494	$	3,019
Weighted average shares - basic		32,086		31,401
Weighted average shares - diluted		33,044		32,001
Net income per share - basic	$	0.17	$	0.10
Net income per share - diluted	$	0.17	$	0.09

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Note 13 - Segment and Geographic Information (Tables)

3 Months Ended

Jun. 30, 2017

Notes Tables

Revenue from External Customers by Geographic Areas [Table Text Block]

	Three Months Ended
	June 30,
	2017		2016
	(unaudited)
United States	$	19,613	$	19,501
Europe and the Middle East:
France		1,935		3,450
Germany		10,058		8,599
Italy		978		1,076
Netherlands		1,396		1,140
United Kingdom		3,803		3,627
Other		5,854		5,953
Asia Pacific:
China		23,819		22,640
Japan		2,119		1,718
Singapore		3,019		3,007
South Korea		5,813		4,695
Other		2,823		3,362
Rest of the World:
India		1,040		900
Other		1,272		970
Total	$	83,542	$	80,638

Revenue from External Customers by Products and Services [Table Text Block]

	Three Months Ended June 30,
	2017		2016
	(unaudited)
Power semiconductors	$	57,628	$	56,479
Integrated circuits		21,172		20,382
Systems and radio frequency power semiconductors		4,742		3,777
Total	$	83,542	$	80,638

Schedules of Concentration of Risk, by Risk Factor [Table Text Block]

	Three Months Ended June 30,
	2017			2016
	(unaudited)
Revenues:
Distributor A		15.2	%		13.8	%
Distributor B		10.7	%		10.6	%

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Note 2 - Recent Accounting Pronouncements and Accounting Changes (Details Textual) - USD ($)	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Payments Related to Tax Withholding for Share-based Compensation	$ 490,000	$ 0
Income Tax Expense (Benefit)	1,747,000	$ 2,252,000
Accounting Standards Update 2016-09 [Member]
Income Tax Expense (Benefit)	(545,000)
Accounting Standards Update 2016-09 [Member] | Deferred Tax Assets [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	21,000
Accounting Standards Update 2016-09 [Member] | Additional Paid-in Capital [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	60,000
Accounting Standards Update 2016-09 [Member] | Retained Earnings [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	(39,000)
Accounting Standards Update 2016-16 [Member] | Income Tax Payable [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	1,100,000
Accounting Standards Update 2016-16 [Member] | Retained Earnings [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	$ (1,100,000)

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Note 3 - Fair Value (Details Textual) xbrli-pure in Thousands	3 Months Ended
	Jun. 30, 2017 USD ($)	Dec. 31, 2016 USD ($)	Jun. 30, 2016 USD ($)	Mar. 31, 2017 USD ($)
Other than Temporary Impairment Losses, Investments	$ 0		$ 151,000
Derivative, Number of Instruments Held	0			0
Debt, Long-term and Short-term, Combined Amount	$ 78,000,000			$ 77,800,000
Impairment of Intangible Assets, Finite-lived		$ 1,400,000
Fair Value, Inputs, Level 3 [Member]
Assets, Fair Value Disclosure, Recurring	0			0
Liabilities, Fair Value Disclosure, Recurring	$ 0			$ 0

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Note 3 - Fair Value - Assets and Liabilities Measured at Fair Value (Details) - USD ($) $ in Thousands		Jun. 30, 2017	Mar. 31, 2017
Marketable equity securities		$ 1,821	$ 1,771
Fair Value, Measurements, Recurring [Member]
Money market funds	[1],[2]	98,303	90,752
Marketable equity securities	[2],[3]	1,821	1,771
Auction rate preferred securities	[2],[3]	350	350
Total assets measured at fair value	[2]	100,474	92,873
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Money market funds	[1],[2]	98,303	90,752
Marketable equity securities	[2],[3]	1,821	1,771
Auction rate preferred securities	[2],[3]
Total assets measured at fair value	[2]	100,124	92,523
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Money market funds	[1],[2]
Marketable equity securities	[2],[3]
Auction rate preferred securities	[2],[3]	350	350
Total assets measured at fair value	[2]	$ 350	$ 350

[1] Included in "Cash and cash equivalents" on our unaudited condensed consolidated balance sheets.

[2] We did not have any recurring fair value measurements of assets or liabilities whose fair value was measured using significant unobservable inputs.

[3] Included in "Other assets" on our unaudited condensed consolidated balance sheets.

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Note 4 - Accounts Receivable - Accounts Receivable, Net (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Mar. 31, 2017
Accounts receivable, gross	$ 46,253	$ 45,856
Allowances	(4,115)	(4,689)
Accounts receivable, net	$ 42,138	$ 41,167

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Note 5 - Other Assets (Details Textual) - USD ($) $ in Thousands	Jun. 30, 2017	Mar. 31, 2017
Equity Method Investments	$ 12,145	$ 11,589
Cost Method Investments	4,100	3,100
Powersem GmbH [Member]
Equity Method Investments	2,700	2,500
EB Tech Ltd [Member]
Equity Method Investments	2,600	2,600
ATEC [Member]
Equity Method Investments	$ 6,800	$ 6,500

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Note 5 - Other Assets - Other Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Mar. 31, 2017
Marketable equity securities	$ 1,821	$ 1,771
Long-term equity method investments	12,145	11,589
Other items, including cost method investments	8,236	4,615
Total	$ 22,202	$ 17,975

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Note 6 - Inventories - Inventories (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Mar. 31, 2017
Raw materials	$ 18,831	$ 17,920
Work in process	46,392	45,634
Finished goods	27,146	25,882
Total	$ 92,369	$ 89,436

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Note 7 - Accrued Expenses and Other Current Liabilities (Details Textual) $ in Millions	Jun. 30, 2017 USD ($)
Prepaid Expenses and Other Current Assets [Member]
Prepaid Taxes	$ 1.1

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Note 7 - Accrued Expenses and Other Current Liabilities - Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2017		Mar. 31, 2017
Uninvoiced goods and services	$ 14,638		$ 12,703
Compensation and benefits	7,118		6,707
Income taxes (1)		[1]	3,521
Commissions, royalties and other	1,783		2,416
Total	$ 23,539		$ 25,347

[1] Prepaid Income taxes of $1.1 million at June 30, 2017 were included in "Prepaid expenses and other current assets" on our unaudited condensed consolidated balance sheet as of June 30, 2017.

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Note 8 - Borrowing Arrangements (Details Textual)		1 Months Ended		3 Months Ended	8 Months Ended	15 Months Ended
	Nov. 20, 2015 USD ($)	Dec. 31, 2016	Apr. 30, 2015 USD ($)	Jun. 30, 2017 USD ($)	Nov. 30, 2016	Jun. 30, 2017 USD ($)	Jun. 30, 2017 EUR (€)	Jun. 30, 2017 EUR (€)	Mar. 31, 2017 USD ($)	Mar. 31, 2017 EUR (€)	Apr. 30, 2015 EUR (€)
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current and Noncurrent Liabilities, Long-term Debt				$ 284,000		$ 284,000			$ 288,000
April 2015 IKB Deutsche Industriebank Loan Payable [Member]
Debt Instrument, Face Amount			$ 7,200,000								€ 6,500,000
Debt Instrument, Interest Rate, Stated Percentage			1.75%								1.75%
Debt Instrument, Periodic Payment, Principal						265,000	€ 232,000
Security Deposit | €										€ 1,000,000
Long-term Debt, Gross				5,000,000		5,000,000		€ 4,400,000	5,000,000	€ 4,600,000
Debt Instrument, Maturity Date			Mar. 31, 2022
Security Deposit, Maturity Date			Dec. 29, 2017
Bank of West Amended and Restated Credit Agreement November 20, 2015 [Member]
Line of Credit Facility, Initiation Date	Nov. 20, 2015
Line of Credit, Leverage Ratio					2
Debt Issuance Costs, Net				362,000		362,000			399,000
Long-term Line of Credit				72,600,000		72,600,000			$ 72,600,000
Available Credit Line for Letter of Credit				$ 10,000,000		$ 10,000,000
Line of Credit Facility, Maximum Borrowing Capacity	$ 125,000,000
Bank of West Amended and Restated Credit Agreement December, 2016 [Member]
Line of Credit Facility, Expiration Date		Nov. 20, 2019
Line of Credit, Leverage Ratio		2.5
Line of Credit Facility, Interest Rate at Period End				3.18%		3.18%		3.18%
Bank of West Amended and Restated Credit Agreement December, 2016 [Member] | Minimum [Member]
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage				0.25%
Line of Credit Facility Basis Spread on Variable Rate				0.75%		0.75%		0.75%
Bank of West Amended and Restated Credit Agreement December, 2016 [Member] | Maximum [Member]
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage				0.625%
Line of Credit Facility Basis Spread on Variable Rate				2.50%		2.50%		2.50%

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Note 9 - Pension Plans (Details Textual)	Jun. 30, 2017 USD ($)
Number of Defined Benefit Plans	3
Defined Benefit Plan, Expected Future Employer Contributions, Next Fiscal Year	$ 948,000

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Note 9 - Pension Plans - Net Periodic Pension Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Service cost	$ 24	$ 28
Interest cost on projected benefit obligation	279	352
Expected return on plan assets	(280)	(323)
Recognized actuarial loss	98	48
Net periodic pension expense	$ 121	$ 105

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Note 9 - Pension Plans - Information on Plan Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Mar. 31, 2017
Defined Benefit Plan, Fair Value of Plan Assets	$ 28,860	$ 28,282
Cash and Cash Equivalents [Member]
Defined Benefit Plan, Fair Value of Plan Assets	616	136
Equity Securities [Member]
Defined Benefit Plan, Fair Value of Plan Assets		314
Fixed Income Funds [Member]
Defined Benefit Plan, Fair Value of Plan Assets	1,021	1,261
Mutual Fund [Member]
Defined Benefit Plan, Fair Value of Plan Assets	27,223	26,571
Fair Value, Inputs, Level 1 [Member]
Defined Benefit Plan, Fair Value of Plan Assets	15,219	14,834
Fair Value, Inputs, Level 1 [Member] | Cash and Cash Equivalents [Member]
Defined Benefit Plan, Fair Value of Plan Assets	616	136
Fair Value, Inputs, Level 1 [Member] | Equity Securities [Member]
Defined Benefit Plan, Fair Value of Plan Assets		314
Fair Value, Inputs, Level 1 [Member] | Fixed Income Funds [Member]
Defined Benefit Plan, Fair Value of Plan Assets	964	1,203
Fair Value, Inputs, Level 1 [Member] | Mutual Fund [Member]
Defined Benefit Plan, Fair Value of Plan Assets	13,639	13,181
Fair Value, Inputs, Level 2 [Member]
Defined Benefit Plan, Fair Value of Plan Assets	13,641	13,448
Fair Value, Inputs, Level 2 [Member] | Cash and Cash Equivalents [Member]
Defined Benefit Plan, Fair Value of Plan Assets
Fair Value, Inputs, Level 2 [Member] | Equity Securities [Member]
Defined Benefit Plan, Fair Value of Plan Assets
Fair Value, Inputs, Level 2 [Member] | Fixed Income Funds [Member]
Defined Benefit Plan, Fair Value of Plan Assets	57	58
Fair Value, Inputs, Level 2 [Member] | Mutual Fund [Member]
Defined Benefit Plan, Fair Value of Plan Assets	$ 13,584	$ 13,390

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Note 10 - Employee Equity Incentive Plans (Details Textual) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Jun. 30, 2017	Mar. 31, 2017	Aug. 26, 2016	Aug. 30, 2013	Sep. 16, 2011	Sep. 10, 2009
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized	$ 9,200
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition	2 years 328 days
Dividends Payable	$ 0
Estimated Statutory Income Tax Rate	40.00%	40.00%
Plan 2009 [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized						900,000
Plan 2011 [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized					600,000
Plan 2013 [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized				2,000,000
Plan 2016 [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized			2,000,000
Stock Options of Plans Two Thousand and Nine Two Thousand and Eleven Two Thousand and Thirteen and Two Thousand and Sixteen [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	4 years
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period	10 years
Stock Options of Plans Two Thousand and Nine Two Thousand and Eleven Two Thousand and Thirteen and Two Thousand and Sixteen [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Purchase Price of Common Stock, Percent	100.00%
Stock Appreciation Rights of Plans Two Thousand and Nine Two Thousand and Eleven Two Thousand and Thirteen and Two Thousand and Sixteen [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Purchase Price of Common Stock, Percent	100.00%
Stock Appreciation Rights of Plans Two Thousand and Nine Two Thousand and Eleven Two Thousand and Thirteen and Two Thousand and Sixteen [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period	10 years
Employee Stock Purchase Plan 1999 [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	1,950,000
Share-based Compensation Arrangement by Share-based Payment Award, Purchase Price of Common Stock, Percent	85.00%
Share-based Compensation Arrangement by Share-based Payment Award, Maximum Employee Subscription Rate	15.00%
Stock Issued During Period, Shares, Employee Stock Purchase Plans	57,422
Common Stock, Capital Shares Reserved for Future Issuance	70,648
Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Pending Authorization	400,000

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Note 10 - Employee Equity Incentive Plans - Stock-based Compensation in Income Tax Provision (Details) - USD ($) $ in Thousands		3 Months Ended
		Jun. 30, 2017	Jun. 30, 2016
Stock-based Compensation Effect in Income before Taxes		$ 907	$ 855
Provision for income tax	[1]	363	342
Net stock-based compensation effects in net income		544	513
Cost of Sales [Member]
Stock-based Compensation Effect in Income before Taxes		93	100
Research and Development Expense [Member]
Stock-based Compensation Effect in Income before Taxes		325	303
Selling, General and Administrative Expenses [Member]
Stock-based Compensation Effect in Income before Taxes		$ 489	$ 452

[1] Calculated at the U.S. statutory income tax rate of 40% in fiscal 2018 and 2017.

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Note 10 - Employee Equity Incentive Plans - Fair Value and Assumptions (Details) - $ / shares		3 Months Ended
		Jun. 30, 2017	Jun. 30, 2016
Employee Stock Option [Member]
Weighted average estimated fair value of grant per share (in dollars per share)		$ 6.49	$ 3.96
Risk-free interest rate		1.90%	1.40%
Expected term in years (Year)		6 years 229 days	6 years 149 days
Volatility		36.80%	41.00%
Dividend yield	[1]	0.00%	1.40%
Employee Stock Purchase Plan 1999 [Member]
Weighted average estimated fair value of grant per share (in dollars per share)		$ 2.92	$ 3.94
Risk-free interest rate		0.70%	0.30%
Expected term in years (Year)		273 days	1 year
Volatility		29.90%	42.90%
Dividend yield	[1]	0.00%	1.40%

[1] No dividends were declared for the quarter ended June 30, 2017.

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Note 10 - Employee Equity Incentive Plans - Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended
		Jun. 30, 2017	Mar. 31, 2017
Options outstanding, beginning of period (in shares)		5,097,545
Weighted average exercise price per share, beginning balance (in dollars per share)		$ 10.71
Options oustanding, Options granted (in shares)		549,000
Weighted average exercise price per share, Options granted (in dollars per share)		$ 16.05
Options oustanding, Options exercised (in shares)		(812,045)
Weighted average exercise price per share, Options exercised (in dollars per share)		$ 9.40
Options exercised, Intrinsic Value	[1]	$ 5,187
Options oustanding, Options cancelled (in shares)		(89,750)
Weighted average exercise price per share, Options cancelled (in dollars per share)		$ 11.42
Options oustanding, Options expired (in shares)		(19,000)
Weighted average exercise price per share, Options expired (in dollars per share)		$ 9.35
Options oustanding, ending balance (in shares)		4,725,750
Weighted average exercise price per share, ending balance (in dollars per share)		$ 11.54
Options exercisable (in shares)		2,607,500	3,300,295
Weighted average exercise price per share, exercisable (in dollars per share)		$ 10.75	$ 10.34

[1] Represents the difference between the exercise price and the value of our common stock at the time of exercise.

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Note 11 - Accumulated Other Comprehensive Income (Loss) - AOCI Change (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Balance, Beginning of Period	$ 297,855
Balance, End of Period	315,216
Accumulated Foreign Currency Adjustment Attributable to Parent [Member]
Balance, Beginning of Period	(19,233)	$ (10,639)
Other comprehensive income (loss) before reclassifications	6,882	(2,825)
Net loss reclassified from accumulated other comprehensive income (loss)
Other Comprehensive Income (Loss)	6,882	(2,825)
Balance, End of Period	(12,351)	(13,464)
Accumulated Net Investment Gain (Loss) Attributable to Parent [Member]
Balance, Beginning of Period	(219)	(82)
Other comprehensive income (loss) before reclassifications	(13)	85
Net loss reclassified from accumulated other comprehensive income (loss)		90
Other Comprehensive Income (Loss)	(13)	175
Balance, End of Period	(232)	93
Accumulated Defined Benefit Plans Adjustment Attributable to Parent [Member]
Balance, Beginning of Period	(9,093)	(9,545)
Other comprehensive income (loss) before reclassifications
Net loss reclassified from accumulated other comprehensive income (loss)
Other Comprehensive Income (Loss)
Balance, End of Period	(9,093)	(9,545)
AOCI Attributable to Parent [Member]
Balance, Beginning of Period	(28,545)	(20,266)
Other comprehensive income (loss) before reclassifications	6,869	(2,740)
Net loss reclassified from accumulated other comprehensive income (loss)		90
Other Comprehensive Income (Loss)	6,869	(2,650)
Balance, End of Period	$ (21,676)	$ (22,916)

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Note 11 - Accumulated Other Comprehensive (Loss) - AOCI Reclass (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Other income (expense), net	$ (515)	$ 815
Income before Income Tax Provision	7,241	5,271
Tax impact	(1,747)	(2,252)
Total reclassifications for the period	5,494	3,019
Reclassification out of Accumulated Other Comprehensive Income [Member]
Income before Income Tax Provision		(151)
Tax impact		61
Total reclassifications for the period		(90)
Reclassification out of Accumulated Other Comprehensive Income [Member] | Accumulated Other-than-Temporary Impairment Attributable to Parent [Member]
Other income (expense), net		$ (151)

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Note 12 - Computation of Earnings Per Share (Details Textual) - shares	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Weighted Average Number Diluted Shares Outstanding Adjustment	958,000	600,000
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	579,033	2,889,670

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Note 12 - Computation of Earnings Per Share - Computation of Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Net income	$ 5,494	$ 3,019
Weighted average shares - basic (in shares)	32,086	31,401
Weighted average shares - diluted (in shares)	33,044	32,001
Basic (in dollars per share)	$ 0.17	$ 0.10
Diluted (in dollars per share)	$ 0.17	$ 0.09

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Note 13 - Segment and Geographic Information (Details Textual)	3 Months Ended
	Jun. 30, 2017
Number of Operating Segments	1
Number of Reportable Segments	1

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Note 13 - Segment and Geographic Information - Segment and Geographic Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Net Revenues	$ 83,542	$ 80,638
UNITED STATES
Net Revenues	19,613	19,501
FRANCE
Net Revenues	1,935	3,450
GERMANY
Net Revenues	10,058	8,599
ITALY
Net Revenues	978	1,076
NETHERLANDS
Net Revenues	1,396	1,140
UNITED KINGDOM
Net Revenues	3,803	3,627
Other Europe and the Middle East Regions [Member]
Net Revenues	5,854	5,953
CHINA
Net Revenues	23,819	22,640
JAPAN
Net Revenues	2,119	1,718
SINGAPORE
Net Revenues	3,019	3,007
KOREA, REPUBLIC OF
Net Revenues	5,813	4,695
Other Asia Pacific Regions [Member]
Net Revenues	2,823	3,362
INDIA
Net Revenues	1,040	900
Other Rest of the World [Member]
Net Revenues	$ 1,272	$ 970

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Note 13 - Segment and Geographic Information - Revenue by Product Line (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Net Revenues	$ 83,542	$ 80,638
Power Semiconductors [Member]
Net Revenues	57,628	56,479
Integrated Circuits [Member]
Net Revenues	21,172	20,382
Systems and RF Power Semiconductors [Member]
Net Revenues	$ 4,742	$ 3,777

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Note 13 - Segment and Geographic Information - Customer Concentration Risk (Details) - Sales Revenue, Net [Member] - Customer Concentration Risk [Member]	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Distributor 1 [Member]
Concentration risk, percentage	15.20%	13.80%
Distributor 2 [Member]
Concentration risk, percentage	10.70%	10.60%

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Note 14 - Income Taxes (Details Textual) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Income Tax Expense (Benefit)	$ 1,747	$ 2,252
Effective Income Tax Rate Reconciliation, Percent	24.10%	42.70%

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Note 15 - Commitments and Contingencies (Details Textual) - Foreign Tax Authority [Member] - Bureau of Internal Revenue [Member]	Jun. 30, 2017 USD ($)
Tax Year 2010 [Member]
Loss Contingency, Estimate of Possible Loss	$ 2,500,000
Tax Year 2011 [Member]
Loss Contingency, Estimate of Possible Loss	$ 156,000

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Note 16 - Subsequent Events (Details Textual) $ in Thousands, € in Millions		1 Months Ended	3 Months Ended
	Jul. 21, 2017 EUR (€)	Jul. 31, 2017 USD ($)	Jun. 30, 2017 USD ($)	Jun. 30, 2016 USD ($)
Payments to Acquire Investments			$ 2,203
Subsequent Event [Member]
Payments to Acquire Investments		$ 1,500
Subsequent Event [Member] | Componentes Semiconductores de Portugal, Lda [Member]
Business Combination, Consideration Transferred | €	€ 2.7