8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K/A

Amendment No. 1

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): October 31, 2013

INVENSENSE, INC.

(Exact name of Registrant as specified in its charter)

Delaware	001-35269	01-0789977
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1745 Technology Drive

San Jose, California

(Address of principal executive offices)

(408) 988-7339

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Explanatory Note

On November 6, 2013, InvenSense, Inc. (the “Company”) filed a Current Report on Form 8-K (the “Original Form 8-K”) to report that the Company completed the acquisition of the assets of the micro-electro-mechanical systems (MEMS) microphone business line of Analog Devices, Inc. (“ADI”), including intellectual property, goodwill and certain tangible and intangible assets on October 31, 2013. This Current Report on Form 8-K/A amends the Original Form 8-K to provide the financial statements and pro forma financial information described under Item 9.01 below.

Item 9.01 Financial Statements and Exhibits.

(a) Financial Statements of Business Acquired

The Audited Financial Statements of the Microphone Product Line of ADI as of and for the nine months ended August 3, 2013, and accompanying notes are included as Exhibit 99.1 to this Current Report on Form 8-K/A.

(b) Pro Forma Financial Information

The following Unaudited Pro Forma Combined Condensed Financial Statements of InvenSense are included as Exhibit 99.2 to this Current Report on Form 8-K/A and incorporated herein by reference:

i. Unaudited Pro Forma Combined Condensed Balance Sheet as of September 29, 2013

ii. Unaudited Pro Forma Combined Condensed Statement of Income for the year ended March 31, 2013

iii. Notes to the Unaudited Pro Forma Combined Condensed Financial Statements

(d) Exhibits

The following exhibits are being filed with this Current Report on Form 8-K/A:

Exhibit No.	Description
10.1	Master Asset Purchase and Sale Agreement, dated as of October 14, 2013, by and between Analog Devices, Inc. and InvenSense, Inc.(1)
23.1	Consent of Independent Auditors
99.1	Abbreviated Audited Financial Statements of the Microphone Product Line of ADI as of and for the nine month period ended August 3, 2013
99.2	Pro Forma Financial Information as of September 29, 2013 and for the year ended March 31, 2013

(1) Filed as Exhibit 10.1 to the Original Form 8-K. The schedules to the Purchase Agreement have been omitted from this filing pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule will be furnished supplementally to the Securities and Exchange Commission on request.

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 hereunto duly authorized.

InvenSense, Inc.
By:	/s/ Alan Krock
	Name:	Alan Krock
	Title:	Chief Financial Officer

Dated: January 16, 2014

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in the following Registration Statements:

(1) Registration Statement (Form S-8 Nos. 333-192368) pertaining to the InvenSense, Inc. Employee Stock Purchase Plan, and

(2) Registration Statement (Form No. 333-1780360) pertaining to the InvenSense, Inc. 2011 Stock Incentive Plan and the InvenSense, Inc. 2004 Stock Incentive Plan, as amended;

of our report dated January 13, 2014, with respect to the statement of net assets to be sold as of August 3, 2013 and the related statement of revenues and direct expenses of the Microphone Product Line of Analog Devices, Inc., for the nine month period ended August 3, 2013 included in the InvenSense Inc. Current Report (Form 8-K) filed on January 16, 2014.

/s/ Ernst & Young LLP

Boston, Massachusetts

January 13, 2014

EX-99.1

Exhibit 99.1

MICROPHONE PRODUCT LINE

(A Product Line of Analog Devices, Inc.)

Financial Statements

(with Independent Auditors’ Report Thereon)

August 3, 2013

REPORT OF INDEPENDENT AUDITORS

To the Management of Analog Devices, Inc.

We have audited the accompanying financial statements of the Microphone Product Line of Analog Devices, Inc. which comprise the statement of net assets to be sold as of August 3, 2013 and the related statement of revenues and direct expenses for the nine month period ended August 3, 2013, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in conformity with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets to be sold of the Microphone Product Line of Analog Devices, Inc. at August 3, 2013, and its revenues and direct expenses for the nine month period ended August 3, 2013, in conformity with accounting principles generally accepted in the United States.

/s/ Ernst & Young

Boston, MA

January 13, 2014

MICROPHONE PRODUCT LINE

(A Product Line of Analog Devices, Inc.)

STATEMENT OF REVENUES AND DIRECT EXPENSES

NINE MONTHS ENDED AUGUST 3, 2013

	August 3, 2013
Product revenue	$	46,335,402
Royalty revenue		467,395
Revenue		46,802,797
Cost of sales		27,136,507
Gross margin		19,666,290
Direct expenses:
Research and development		8,078,056
Selling, marketing, general and administrative		9,491,101
Total direct expenses		17,569,157
Revenues in excess of direct expenses	$	2,097,133

See accompanying Notes.

MICROPHONE PRODUCT LINE

(A Product Line of Analog Devices, Inc.)

STATEMENT OF NET ASSETS TO BE SOLD

AUGUST 3, 2013

ASSETS
Current Assets to be Sold
Inventories	$	2,659,856
Machinery and Equipment
Machinery and equipment		9,870,680
Office equipment		20,880
Less accumulated depreciation		(4,743,515	)
Net machinery and equipment		5,148,045
Total Net Assets to be Sold	$	7,807,901

See accompanying Notes.

MICROPHONE PRODUCTS PRODUCT LINE

(A Product Line of Analog Devices, Inc.)

NOTES TO THE FINANCIAL STATEMENTS

August 3, 2013

1. Description of Business and Basis of Presentation

Overview

The Microphone Product Line of Analog Devices, Inc. (the Product Line) is a recognized world leader in micro-electro mechanical system (MEMS) technology microphones and high performance audio signal processing solutions. The Product Line builds and packages MEMS microphones in end-to-end solutions, including the electromechanical sensor element, the supporting analog and digital ASIC circuitry and the acoustic packaging required to deliver high quality audio performance. The Product Line’s products deliver high signal-to-noise ratio, sound pressure level, dynamic range and power efficiency, along with a strong patent portfolio and significant design and production know-how. Its product applications extend towards consumer electronics, portable mobile devices, automotive systems, security systems, as well as healthcare products.

On October 14, 2013, Analog Devices, Inc. (“the Company) announced that it had entered into a master asset purchase and sale agreement with InvenSense, Inc. (InvenSense) to sell the assets related to its analog and digital output microphones product line, as well as certain support operations. The sale was completed on October 31, 2013.

Assets included in the sale relate to inventory, machinery and equipment and certain intangible assets relating to the Company’s analog and digital output microphones. These microphones were primarily used in consumer applications. At closing, the assets and approximately 40 employees transitioned to InvenSense. The Company will continue to provide InvenSense with various transaction services on a transitional basis following the closing of the transaction.

Basis of Presentation

The Product Line has not been accounted for as a separate entity, subsidiary or division of the Company. In addition, stand-alone financial statements related to the Product Line have never been prepared previously as the Company’s financial system is not designed to provide complete financial information at the Product Line level, and the Company’s independent auditors have never audited or reported separately on the operations or net assets of the Product Line. Therefore, it is not practical to prepare full financial statements for the Product Line. As a result, a statement of revenues and direct expenses and a statement of net assets to be sold (the Financial Statements) were prepared. There were no liabilities assumed.

The Financial Statements have been derived from the accounting records of the Company using its historical results of operations and financial position. Management has included allocations, where necessary, that it believes are reasonable and appropriate, since certain support costs were not historically assigned to the Product Line. The Financial Statements do not necessarily represent the revenues and direct expenses or the net assets of the Product Line if the Product Line had been operating as a separate, stand-alone entity during the periods presented and are not intended to be a complete presentation of the financial position or results of operations for the Product Line. In addition, the Financial Statements are not indicative of the financial condition or results of operations of the Product Line going forward due to changes that may be made in the business by InvenSense and the omission of various operating expenses. In the opinion of management, the accompanying Financial Statements contain all adjustments considered necessary to fairly present the revenues and direct expenses and net assets to be sold related to the Product Line.

The Financial Statements include all or a portion of the Company’s subsidiaries involved in the Product Line, all of which are wholly owned by the Company. All significant intercompany balances and transactions have been eliminated. The functional currency of the operations comprising the Product Line are either the U.S. dollar or the

local currency of the country where the subsidiary is located. Amounts denominated in foreign currencies have been translated into U.S. dollars at exchange rates as follows (i) assets accounts at period end rates and (ii) revenue and direct expense accounts at average rates during the period. Foreign currency transaction gains or losses were included in the Statement of Revenue and Direct expenses but were not significant for the period ended August 3, 2013.

The revenue included in the Statement of Revenues and Direct Expenses represent revenues directly attributable to the Product Line. The costs and expenses included in the Statement of Revenues and Direct Expenses include direct and allocated costs and expenses related to the Product Line. Allocations include expenses such as selling, marketing, general and administration costs. These costs have been allocated to the Product Line based on various allocation methodologies including their relative percentage of the Product Line’s revenue to the Company’s total revenues, relative percentage of estimated resource usage, and headcount. The allocation approaches used are more fully described in Note 2, Summary of Significant Accounting Policies.

The Statement of Revenues and Direct Expenses does not include costs not directly associated with producing the revenue from the Product Line such as certain corporate, shared services and other indirect general & administrative costs as well as interest and income taxes. In the opinion of management, the methods for allocating all costs are reasonable.

All cash flow requirements for the Product Line were funded by the Company, and cash management functions were not performed at the Product Line level. Therefore, a statement of cash flows, including cash flows from operating, investment and financing activities, is not presented as the Product Line did not maintain a separate cash account and it is not possible to determine the cash flows directly attributable to the Product Line.

2. Summary of Significant Accounting Policies

a. Use of Estimates

The preparation of Financial Statements in accordance with United States Generally Accepted Accounting Principles requires management to make estimates and assumptions that may affect the reported amounts of assets to be sold, revenues, direct expenses and related disclosures during the reporting periods. Management bases its estimates on historical experiences and various other assumptions it believes to be reasonable. Actual results may differ from those estimates.

b. Inventories

Inventories are valued at the lower of cost (first-in, first-out method) or market. The valuation of inventory requires the Company to estimate obsolete or excess inventory as well as inventory that is not of saleable quality. The Company employs a variety of methodologies to determine the net realizable value of its inventory. While a portion of the calculation to record inventory at its net realizable value is based on the age of the inventory and lower of cost or market calculations, a key factor in estimating obsolete or excess inventory requires the Company to estimate the future demand for its products. If actual demand is less than the Company’s estimates, impairment charges, which are recorded to cost of sales, may need to be recorded in future periods. Inventory in excess of saleable amounts is not valued, and the remaining inventory is valued at the lower of cost or market.

Inventories as of August 3, 2013 were as follows:

	August 3, 2013
Raw material	$	—
Work in process		1,649,521
Finished goods		1,010,335
Total inventories	$	2,659,856

c. Machinery and Equipment

Machinery and equipment is recorded at cost less allowance for depreciation. The straight-line method of depreciation is used for all classes of assets for financial statement purposes. Leasehold improvements are amortized based upon the lesser of the term of the lease or the useful life of the asset. Repairs and maintenance charges are expensed as incurred. Depreciation is based on the following useful lives:

Machinery & Equipment	3-8 years
Office Equipment	3-8 years

The assets included in the Statement of Net Assets to be Sold are comprised of assets that were used by the Company primarily for the manufacturing of products across various product lines within the Company. Total depreciation expense of machinery and equipment, directly related to the Product Line was $115,729 for the nine months ended August 3, 2013. The Product Line did not capitalize interest during the nine months ended August 3, 2013.

The Product Line reviews machinery and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. Recoverability of these assets is evaluated by comparison of their carrying amount to the future undiscounted cash flows the assets are expected to generate over their remaining economic lives. If such assets are considered to be impaired, the impairment to be recognized in earnings equals the amount by which the carrying value of the assets exceeds their fair market value determined by either a quoted market price, if any, or a value determined by utilizing a discounted cash flow technique. If such assets are not impaired, but their useful lives have decreased, the remaining net book value is amortized over the revised useful life.

d. Revenue Recognition

Revenue from product sales to customers is generally recognized when title passes, which for shipments to certain foreign countries is subsequent to product shipment. Title for these shipments ordinarily passes within a week of shipment. A reserve for sales returns and allowances for customers is recorded based on historical experience or specific identification of an event necessitating a reserve.

In all regions of the world, the Product Line defers revenue and the related cost of sales on shipments to distributors until the distributors resell the products to their customers. As a result, the Product Line’s revenue fully reflects end customer purchases and is not impacted by distributor inventory levels. Sales to distributors are made under agreements that allow distributors to receive price-adjustment credits and to return qualifying products for credit, as determined by the Product Line, in order to reduce the amounts of slow-moving, discontinued or obsolete product from their inventory. These agreements limit such returns to a certain percentage of the value of the Product Line’s shipments to that distributor during the prior quarter. In addition, distributors are allowed to return unsold products if the Product Line terminates the relationship with the distributor. Given the uncertainties associated with the levels of price-adjustment credits to be granted to distributors, the sales price to the distributor is not fixed or determinable until the distributor resells the products to their customers. Therefore, the Product Line defers revenue recognition from sales to distributors until the distributors have sold the products to their customers. The amount of deferred revenue as of the nine months ended August 3, 2013 is not reflected in the Statement of Net Assets to be Sold as this amount was not assumed by InvenSense in connection with the sale transaction.

Shipping costs are charged to cost of sales as incurred.

The Product Line generally offers a 12-month warranty for its products. The Product Line’s warranty policy provides for replacement of the defective product. Specific accruals are recorded for known product warranty issues. Product warranty expense during the period presented was not material.

The Product line also derives revenue from licensing its intellectual property under a license agreement with a third party. Such revenue appears as royalty revenue in the Statement of Revenues and Direct Expenses, and is recognized in the period upon receipt of a confirmation of earned royalties and when collectability is reasonably assured from the applicable licensee.

e. Cost of Sales – Cost of sales include direct variable and fixed costs as well as an allocation of indirect costs associated with the Product Line’s manufacturing operations.

f. Research and Development Expenses – Research and development costs, which are expensed when incurred, represent estimated costs associated with specifically identified activities directly related to the Product Line. These estimates were made considering a variety of measures that management believes are reasonable, such as percent of revenue, specific project costs and headcount.

g. Selling, Marketing and General and Administrative (SMG&A) Expenses – SMG&A expenses were either specifically identified or allocated based upon a variety of measures that management believes are reasonable, such as percent of revenue, specific project costs and headcount. SMG&A expenses for the nine month period ended August 3, 2013 included $4.4 million of legal expenses related to patent litigation for a matter that settled in March of 2013.

h. Advertising Expense – Advertising costs are expensed as incurred. There was no advertising expense for the Product Line for the nine month period ended August 3, 2013.

3. Commitments and Contingencies

Legal Matters – From time to time as a normal incidence of the nature of the Company’s business, various claims, charges and litigation are asserted or commenced against the Product Line arising from, or related to, contractual matters, patents, trademarks, personal injury, environmental matters, product liability, insurance coverage and personnel and employment disputes. As to such claims and litigation, the Company can give no assurance that it will prevail. The Company does not believe that any current legal matters will have a material adverse effect on the Product Line’s financial condition or results of operations.

Leases – The Product Line leases one of its facilities under an operating lease that expires in 2015. Total rental expense under the operating lease was $28,747 for the nine months ended August 3, 2013. The lease obligation was not assumed by the buyer.

4. Concentration of Revenue

Due to the nature of the Product Line’s business, it is dependent on one key customer for a significant portion of its revenues. During the nine months ended August 3, 2013, one customer accounted for 99% of total Product Line sales. A cancellation of a significant order by this customer, the loss of this customer for any reason or the insolvency of this customer, or reduced sales of our principal product to this customer, could significantly reduce the Product Line’s ongoing revenue and/or profitability, and could materially and adversely affect the Product Line’s financial condition. To manage credit risk and exposure for this key customer, the Company performs continuing credit evaluations of this customers’ financial condition. During the nine-month period ended August 3, 2013, the Company was informed by this customer that the Product Line’s parts would not be included in the next generation of the customer’s product.

5. Concentration of Other Risks

The semiconductor industry is characterized by rapid technological change, competitive pricing pressures and cyclical market patterns. The Product Line’s financial results are affected by a wide variety of factors, including general economic conditions worldwide, economic conditions specific to the semiconductor industry, the timely implementation of new manufacturing technologies, the ability to safeguard patents and intellectual property in a rapidly evolving market and reliance on assembly and test subcontractors, third-party wafer fabricators and independent distributors. In addition, the semiconductor market has historically been cyclical and subject to significant economic downturns at various times. The Product Line is exposed to the risk of obsolescence of its inventory depending on the mix of future business. Additionally, a large portion of the Product Line’s purchases of external wafer and foundry services are from a limited number of suppliers, primarily Taiwan Semiconductor Manufacturing Company (TSMC). If TSMC or any of the Product Line’s other key suppliers are unable or unwilling to manufacture and deliver sufficient quantities of components, on the time schedule and of the quality that the

Product Line requires, the Product Line may be forced to engage additional or replacement suppliers, which could result in significant expenses and disruptions or delays in manufacturing, product development and shipment of product to the Company’s customers. Although the Product Line has experienced shortages of components, materials and external foundry services from time to time, these items have generally been available to the Product Line as needed.

5. Subsequent Events

Subsequent events have been evaluated though January 13, 2014, which is the date the financial statements were available to be issued. There are no significant subsequent events other than those reflected or disclosed in the financial statements.

EX-99.2

Exhibit 99.2

UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS

On October 31, 2013, InvenSense, Inc. (the “Company”) completed the acquisition of certain assets of the micro-electro-mechanical systems (MEMS) microphone product line (“MPL”) of Analog Devices, Inc. (“ADI”), including intellectual property, goodwill and certain tangible and intangible assets. The transaction included all MEMS microphone devices and complete turnkey reference designs for ADI’s MEMS microphone product line, approximately 37 of ADI’s core employees within the MEMS microphone product line and certain support operations, located primarily in Wilmington, Massachusetts, Bratislava, Slovakia and Shanghai, China. In addition, ADI will provide certain transition related services to the Company, which include supplying inventory for a limited period of time following the acquisition. In connection with the acquisition, the Company paid ADI $100.0 million in cash, with potential additional amounts up to $70.0 million payable upon achievement of certain revenue targets over the 12-month period following the closing. Due to a low probability of achieving the revenue targets, no fair value is assigned to the contingent consideration in the purchase price allocation described below.

For the purpose of the unaudited pro forma combined condensed financial statements, the acquisition was assumed to have occurred as of April 2, 2012, with respect to the unaudited pro forma combined condensed statements of income for the fiscal year ended March 31, 2013 and for the six months ended September 29, 2013 and as of September 29, 2013 with respect to the unaudited pro forma combined condensed balance sheet. The pro forma adjustments are based upon available information and assumptions that the Company believes are reasonable.

The acquisition has been accounted for using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) 805 - Business Combinations. Under the acquisition method of accounting, the total purchase consideration of the acquisition is allocated to the tangible assets and identifiable intangible assets and liabilities assumed based on their relative fair values. The excess of the purchase consideration over the net tangible and identifiable intangible assets is recorded as goodwill. The purchase price allocation is based on estimates, assumptions, third party valuations and other studies which have not progressed to a stage where there is sufficient information to make a definitive allocation. Accordingly, purchase price allocation and adjustments reported herein will remain preliminary until the Company has all of the information necessary to finalize the allocation of the purchase price, and the final acquisition accounting adjustments could differ materially from the pro-forma adjustments presented herein. Any increase or decrease in the fair value of the Microphone Product Line’s tangible and identifiable intangible assets and liabilities, as compared to the information shown herein, would also change the portion of purchase price allocable to goodwill and could impact the operating results of the Company due to differences in amortization related to these assets and liabilities. The Company intends to complete the purchase price allocation within twelve months of the closing of the acquisition.

The unaudited pro forma combined condensed financial information has been provided to comply with the presentation of certain financial information relating to MPL in satisfaction of the requirements of Rule 3-05 of Regulation S-X, as required to be filed pursuant to Items 9.01(a) and 9.01(b) of Form 8-K. Historically, ADI had not maintained certain distinct and separate accounts as it relates to MPL. Consequently, full separate financial statements did not exist.

The unaudited pro forma combined condensed financial information is for informational purposes only and does not purport to represent what the Company’s actual results would have been if the acquisition had been completed as of the date indicated above, or that may be achieved in the future. For example future results may be impacted by events similar to those described in Note 4 to the audited Microphone Product Line financial statements where the Microphone Product Line’s parts are not included in the next generation of a customer’s product. The unaudited pro forma combined condensed statement of income does not include the effects of any cost savings from operating efficiencies or synergies that may result from the acquisition.

The unaudited pro forma combined condensed financial statements, including the notes thereto, should be read in conjunction with the Company’s historical financial statements included in the Company’s annual report on Form 10-K for the year ended March 31, 2013, filed on June 14, 2013 with the SEC and quarterly report on Form 10-Q for the quarter ended September 29, 2013, filed on November 8, 2013 with the SEC, as well as audited abbreviated financial statements as of and for the nine month period ended August 3, 2013 and related notes of MPL that are attached as Exhibit 99.1 to this Current Report on Form 8-K/A.

INVENSENSE, INC.

UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET

(In thousands)

	September 29, 2013
	InvenSense			MBL		Pro forma adjustments					Pro Forma Combined
Assets
Current assets:
Cash and cash equivalents	$	118,183		$	—	$	(100,000	)	a	)	$	18,183
Short-term investments		43,342			—		—					43,342
Accounts receivable		35,566			—		—					35,566
Inventories		38,469			2,217		3,306		b	)		43,992
Prepaid expenses and other current assets		13,728			—		—					13,728
Total current assets		249,288			2,217		(96,694	)				154,811
Property and equipment, net		16,677			4,904		(586	)	b	)		20,995
Intangible assets, net		—			—		37,410		c	)		37,410
Goodwill		—			—		52,748		c	)		52,748
Long-term investments		56,236			—		—					56,236
Other assets		3,046			—		—					3,046
Total assets	$	325,247		$	7,121	$	(7,121	)			$	325,247
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	14,418		$	—	$	—				$	14,418
Accrued liabilities		12,387			—		—					12,387
Total current liabilities		26,805			—		—					26,805
Long-term liabilities		7,637			—		—					7,637
Total liabilities		34,442			—		—					34,442
Commitments and contingencies
Stockholders’ equity:
Preferred stock:
Preferred stock, $0.001 par value — 20,000 shares authorized, no shares issued and outstanding at September 29, 2013 and March 31, 2013		—			—		—					—
Common stock:
Common stock, $0.001 par value — 750,000 shares authorized, 87,046 shares issued and outstanding at September 29, 2013, 84,980 shares issued and outstanding at March 31, 2013		175,127			—		—					175,127
Accumulated other comprehensive (loss)		(41	)		—		—					(41	)
Retained earnings/Net investment		115,719			7,121		(7,121	)				115,719
Total stockholders’ equity		290,805			7,121		(7,121	)				290,805
Total liabilities and stockholders’ equity	$	325,247		$	7,121	$	(7,121	)			$	325,247

INVENSENSE, INC.

UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME

(In thousands, except per share amounts)

	For Year Ended March 31, 2013
	InvenSense		MPL		Pro forma adjustments					Pro Forma Combined
Net revenue	$	208,634	$	66,780	$	—				$	275,414
Cost of revenue		97,937		35,297		8,331		d	)		141,565
Gross profit		110,697		31,513		(8,331	)				133,849
Operating expenses:
Research and development		24,648		17,056		(27	)	d	)		41,677
Selling, general and administrative		29,391		10,905		223		d	)		40,519
Total operating expenses		54,039		27,961		196					82,196
Income from operations		56,658		3,522		(8,527	)				51,653
Other income, net		348		—		—					348
Income before income taxes		57,006		3,522		(8,527	)				52,001
Income tax provision		5,301		—		(277	)	e	)		5,024
Net income	$	51,705	$	3,522	$	(8,250	)			$	46,977
Net income per share:
Basic	$	0.62		—		—				$	0.57
Diluted	$	0.59		—		—				$	0.54
Weighted average shares outstanding used in computing net income per share:
Basic		82,738		—		—					82,738
Diluted		87,359		—		—					87,359

INVENSENSE, INC.

UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME

(In thousands, except per share amounts)

	For Six Months Ended September 29, 2013
	InvenSense		MPL		Pro forma adjustments					Pro Forma Combined
Net revenue	$	126,851	$	22,418	$	—				$	149,269
Cost of revenue		60,955		12,918		2,512		d	)		76,385
Gross profit		65,896		9,500		(2,512	)				72,884
Operating expenses:
Research and development		17,924		5,195		(14	)	d	)		23,105
Selling, general and administrative		20,580		2,990		111		d	)		23,681
Total operating expenses		38,504		8,185		98					46,787
Income from operations		27,392		1,315		(2,610	)				26,097
Other income, net		291		—		—					291
Income before income taxes		27,683		1,315		(2,610	)				26,388
Income tax provision		3,753		—		(106	)	e	)		3,647
Net income	$	23,930	$	1,315	$	(2,504	)			$	22,741
Net income per share:
Basic	$	0.28								$	0.27
Diluted	$	0.27								$	0.26
Weighted average shares outstanding used in computing net income per share:
Basic		85,658									85,658
Diluted		88,841									88,841

NOTE 1. BASIS OF PRO FORMA PRESENTATION

The unaudited pro forma combined condensed balance sheet as of September 29, 2013 is based on the historical financial statements of the Company and MPL after giving effect to the acquisition adjustments resulting from the acquisition of MPL. The unaudited pro forma combined balance sheet as of September 29, 2013 is presented as if the acquisition had occurred on September 29, 2013.

The unaudited pro forma combined condensed statements of income for the year ended March 31, 2013 and for the six month period ended September 29, 2013 are based on the historical financial statements of the Company and MPLs financial statements for the same periods after giving effect to the acquisition adjustments. The unaudited pro forma combined condensed statements of income for the year ended March 31, 2013 and six month period ended September 29, 2013 are presented as if the acquisition had occurred on April 2, 2012.

NOTE 2. PRELIMINARY ESTIMATED PURCHASE PRICE ALLOCATION

The acquisition has been accounted for using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) 805 - Business Combinations. Under the acquisition method of accounting, the total purchase consideration of the acquisition is allocated to the tangible assets and identifiable intangible assets and liabilities assumed based on their relative fair values. The excess of the purchase consideration over the net tangible and identifiable intangible assets is recorded as goodwill. The purchase price allocation is based on estimates, assumptions, third party valuations and other studies of the value of the acquired assets which have not progressed to a stage where there is sufficient information to make a definitive allocation. Accordingly, purchase price allocation and adjustments reported herein will remain preliminary until the Company has all of the information necessary to finalize the allocation of the purchase price, and the final acquisition accounting adjustments could differ materially from the pro-forma adjustments presented herein. Any increase or decrease in the fair value of the Microphone Product Line’s tangible and identifiable intangible assets and liabilities, as compared to the information shown herein, would also change the portion of purchase price allocable to goodwill and could impact the operating results of the Company due to differences in amortization related to these assets and liabilities. The Company intends to complete the purchase price allocation within twelve months of the closing of the acquisition.

Subject to these uncertainties and possibilities for future adjustment, the following table summarizes the cash paid and the current, tentative and preliminary estimated fair values of the assets acquired and the liabilities assumed as if the acquisition of MPL occurred on April 2, 2012.

	Total Amount
Assets Acquired	(in thousands)
Inventories	$	5,524
Property and equipment, net		4,318
Intangible assets:
Developed Technology		28,520
In-Process Research & Development		7,330
Customer Relationships		1,560
Goodwill		52,748
Total assets acquired		100.000
Total purchase price	$	100,000

The preliminary fair value of intangible assets of $37.4 million has been allocated on a preliminary, tentative basis to the following three asset categories: 1) developed technology, 2) in-process research & development and 3) customer relationships. Developed technology and customer relationships will be amortized on a straight line basis over the estimated useful life of the assets.

The following table represents the estimated useful lives of developed technology and customer relationships:

	Fair Value Amount		Estimated Useful Life
	(in thousands)		(in years)
Developed Technology	$	28,520		5 to 6
Customer Relationships	$	1,560		7 to 10

The preliminary fair value of the identifiable intangible assets: developed technology, in-process research & development and customer relationships were determined using the following methodologies:

Developed Technology: The value assigned to the acquired developed technology was determined using the Multi-period excess earnings method. The fair value of developed technology was capitalized as of the acquisition date and will be amortized using a straight-line method to cost of revenues over the estimated remaining life of 5 to 6 years.

In-Process Research & Development: The value assigned to the acquired in process research and development was determined using the Multi-period excess earnings method. The fair value of developed technology was capitalized as of the acquisition date. In-process research and development capitalized at acquisition is not amortized, and is assessed for impairment on a fair value basis each fiscal quarter until the point at which the project is completed or fails. If successfully completed, acquired in process research and development is amortized over their expected useful life.

Customer Relationships: An intangible customer relationship asset was recognized to the extent that the Company was expected to benefit from future revenues reasonably anticipated given the history and operating practices of MPL. The value assigned to customer relationships was determined using the Incremental cash flow method. The fair value of customer relationships was capitalized as of the acquisition date and will be amortized using a straight-line method to sales and marketing expenses over the estimated remaining life of 7 to 10 years.

The acquisition furthers the strategic aim to accelerate InvenSense’s audio roadmap and complement its current MEMS System on Chip (SoC) product offerings at existing mobile, gaming and wearable device customers, while gaining entry into new markets. The acquisition also is intended to expand InvenSense’s patent portfolio and existing tier one customer base, which includes major OEM brands worldwide.

NOTE 3. MPL FINANCIAL STATEMENTS

The historical financial statements of MPL as presented in the unaudited pro forma combined condensed financial statements were derived from unaudited abbreviated financial statements of MPL for the fiscal year ended March 31, 2013 and for the six months ended September 29, 2013.

The basis of presentation for the unaudited abbreviated financial statements of MPL is similar to the audited abbreviated financial statements of MPL basis of presentation described in Note 1 to the audited Microphone Product Line Financial Statements in Exhibit 99.1 of this Form 8-K/A. The Product Line has not been accounted for as a separate entity, subsidiary or division of ADI. In addition, stand-alone financial statements related to the Product Line have never been prepared previously as ADI’s financial system is not designed to provide complete financial information at the Product Line level, and ADI’s independent auditors have never audited or reported separately on the operations or net assets of the Product Line. Therefore, it is not practical to prepare full financial statements for the Product Line.

The unaudited abbreviated financial statements of MPL have been derived from the accounting records of ADI using its historical results of operations and financial position. ADI has included allocations, where necessary, that are reasonable and appropriate, since certain support costs were not historically assigned to the Product Line. The unaudited abbreviated financial statements of MPL do not necessarily represent the revenues and direct expenses or the net assets of the Product Line if the Product Line had been operating as a separate, stand-alone entity during the periods presented and are not intended to be a complete presentation for the financial position or results of operations for the Product Line. In addition, the unaudited abbreviated financial statements of MPL are not indicative of the financial condition or results of operations of the Product Line going forward due to changes that may be made in the business by InvenSense.

The unaudited abbreviated financial statements of MPL include all or a portion of ADI’s subsidiaries involved in the Product Line, all of which are wholly owned by ADI. All significant intercompany balances and transactions have been eliminated. The functional currency of the operations comprising the Product Line are either the U.S. dollar or the local currency of the country where the subsidiary is located. Amounts denominated in foreign currencies have been translated into U.S. dollars at exchange rates as follows (i) assets accounts at period end rates and (ii) revenue and direct expense accounts at average rates during the period.

The net sales included in the accompanying unaudited abbreviated financial statements of MPL represent net sales directly attributable to the Product Line. The costs and expenses included in the accompanying unaudited abbreviated financial statements of MPL include direct and allocated costs and expenses related to the Product Line. Allocations include expenses such as selling, administration and finance costs. These costs have been allocated to the Product Line based on various allocation methodologies including their relative percentage to ADI’s total revenues.

The unaudited abbreviated financial statements of MPL do not include costs not directly associated with producing the revenue from the Product Line (such as corporate, shared services and other indirect general & administrative costs). Certain expense items not directly associated with the Product Line, such as interest and income taxes were excluded. The allocation of such costs was not historically made and therefore, would not necessarily be indicative of what such costs actually would have been had the Product Line been operated as a stand-alone entity.

NOTE 4. PRO FORMA ADJUSTMENTS

The historical financial information has been adjusted to give the effect to pro forma events that are 1) directly attributable to the acquisition, 2) factually supportable, and 3) with respect to the statement of income, expect to have continued impact on the combined results of the companies. The following pro forma adjustments are included in the unaudited pro forma combined condensed financial statements.

a) To record the $100 million total cash used to fund the acquisition of MPL.

b) To reflect the estimated fair value of inventory and property plant and equipment acquired at September 29, 2013.

c) To record the estimated fair value of identifiable intangible assets and goodwill from the acquisition of MPL.

d) To record amortization of the fair value of identifiable intangible assets and additional cost of revenues related to the inventory markup from the acquisition of MPL.

e) To record the tax effect of the pro forma adjustments as if the acquisition had occurred on April 2, 2012.