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Exhibit 99.2

UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS

On July 22, 2014, InvenSense International, Inc., a company formed under the laws of the Cayman Islands and a wholly-owned subsidiary of InvenSense, Inc. (the “Company”), completed its previously announced acquisition of all the outstanding shares of Movea SA, a company formed under the laws of France (“Movea”), pursuant to a Share Purchase Agreement (“Purchase Agreement”) with Movea, certain members of management of Movea and Movea shareholders. The Company paid $60.9 million in cash as consideration for the acquisition. An additional $13.0 million in cash will be payable contingent upon the achievement of certain milestones prior to the one year anniversary of the closing of the acquisition.

In addition, pursuant to the Purchase Agreement, the Company granted restricted stock units for shares of its common stock (each a “Movea Equity Award”) to certain Movea employees, having an aggregate value of $6.6 million. The Movea Equity Awards were granted on August 15, 2014 under the Company’s 2011 Stock Incentive Plan.

For the purpose of the unaudited pro forma combined condensed financial statements, the acquisition was assumed to have occurred as of April 1, 2013, with respect to the unaudited pro forma combined condensed statement of operations for the fiscal year ended March 30, 2014 and as of March 30, 2014 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 preliminary allocation of the purchase price used in the unaudited pro forma condensed combined financial statements is based upon preliminary estimates. These preliminary estimates and assumptions are subject to change during the measurement period (up to one year from the acquisition date) as we finalize the valuations of the net tangible and intangible assets acquired and liabilities assumed in connection with our acquisition of Movea.

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 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 Movea’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 Movea 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. 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. The unaudited pro forma combined condensed statement of operations 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 30, 2014, filed on May 29, 2014 with the SEC, as well as audited financial statements as of and for the year ended December 31, 2013 and related notes of Movea 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)

 

     Historical                   
     InvenSense
March 30,
2014
    Movea
March 30,
2014
    Pro Forma
Adjustments
         Pro Forma
Combined
 

Assets

           

Current assets:

           

Cash and cash equivalents

   $ 26,025      $ 663      $ (5,897   a)    $ 20,791   

Short-term investments

     91,307        —          (36,043   a)      55,264   

Accounts receivable

     39,009        610        (59   b)      39,560   

Inventories

     73,032        33        (33   b)      73,032   

Prepaid expenses and other current assets

     19,587        3,575        —             23,162   
  

 

 

   

 

 

   

 

 

      

 

 

 

Total current assets

     248,960        4,881        (42,032        211,809   

Property and equipment, net

     25,239        233        —             25,472   

Intangible assets, net

     35,360        —          7,200      c)      42,560   

Goodwill

     50,952        —          63,763      d)      114,715   

Long-term investments

     128,755        —          (18,960   a)      109,795   

Other assets

     5,469        617        —        b)      6,086   
  

 

 

   

 

 

   

 

 

      

 

 

 

Total assets

   $ 494,735      $ 5,731      $ 9,971         $ 510,437   
  

 

 

   

 

 

   

 

 

      

 

 

 

Liabilities and Stockholders Equity

           

Current liabilities:

           

Accounts payable

   $ 18,964      $ 2,009      $ —           $ 20,973   

Accrued liabilities

     14,985        1,742        9,018      b), e)      25,745   
  

 

 

   

 

 

   

 

 

      

 

 

 

Total current liabilities

     33,949        3,751        9,018           46,718   

Long-term debt

     135,583        550        —             136,133   

Other long-term liabilities

     11,375        2,383        —             13,758   
  

 

 

   

 

 

   

 

 

      

 

 

 

Total liabilities

     180,907        6,684        9,018           196,609   

Commitments and contingencies

           

Stockholders equity:

           

Preferred stock

     —          —          —             —     

Common stock

     215,958        24,222        (24,222   b)      215,958   

Accumulated other comprehensive (loss)

     (38     (490     490      b)      (38

Retained earnings

     97,908        (24,685     24,685      b)      97,908   
  

 

 

   

 

 

   

 

 

      

 

 

 

Total stockholders equity

     313,828        (953     953      b)      313,828   
  

 

 

   

 

 

   

 

 

      

 

 

 

Total liabilities and stockholders equity

   $ 494,735      $ 5,731      $ 9,971         $ 510,437   
  

 

 

   

 

 

   

 

 

      

 

 

 

See accompanying notes to unaudited pro forma condensed consolidated financial statements.


INVENSENSE, INC.

UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS

(In thousands, except per share amounts)

 

     Historical                   
     InvenSense
March 30,
2014
    Movea
March 30,
2014
    Pro Forma
Adjustments
         Pro Forma
Combined
 

Net revenue

   $ 252,533      $ 3,176      $ —           $ 255,709   

Cost of revenue

     127,724        28        1,440      f)      129,192   
  

 

 

   

 

 

   

 

 

      

 

 

 

Gross profit

     124,809        3,148        (1,440        126,517   

Operating expenses:

           

Research and development

     48,431        3,523        1,021      g)      52,975   

Selling, general and administrative

     51,344        6,406        468      g)      58,218   

Litigation settlement

     15,000        —          —             15,000   
  

 

 

   

 

 

   

 

 

      

 

 

 

Total operating expenses

     114,775        9,929        1,489           126,193   
  

 

 

   

 

 

   

 

 

      

 

 

 

Income (loss) from operations

     10,034        (6,781     (2,929        324   

Other income (expense), net:

       —          —             —     

Interest (expense)

     (4,012     (78     —             (4,090

Other income, net

     167        (60     —             107   
  

 

 

   

 

 

   

 

 

      

 

 

 

Other income (expense), net

     (3,845     (138     —             (3,983
  

 

 

   

 

 

   

 

 

      

 

 

 

Income (loss) before income taxes

     6,189        (6,919     (2,929        (3,659

Income taxprovision

     70        —          —        h)      70   
  

 

 

   

 

 

   

 

 

      

 

 

 

Net income (loss)

   $ 6,119      $ (6,919   $ (2,929      $ (3,729
  

 

 

   

 

 

   

 

 

      

 

 

 

Net income (loss) per share allocable to common stockholders

           

Basic

   $ 0.07        —             $ (0.04

Diluted

   $ 0.07        —             $ (0.04

Weighted average shares outstanding used in computing net income(loss) per share allocable to common stockholders:

           

Basic

     86,520        —               86,520   

Diluted

     89,928        —               86,520   

See accompanying notes to unaudited pro forma condensed consolidated financial statements.


INVENSENSE, INC.

NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL

STATEMENTS

1. Description of Transaction

On July 22, 2014, InvenSense International, Inc., a company formed under the laws of the Cayman Islands and a wholly-owned subsidiary of InvenSense, Inc. (the “Company”), completed its previously announced acquisition of all the outstanding shares of Movea SA, a company formed under the laws of France (“Movea”), pursuant to a Share Purchase Agreement (“Purchase Agreement”) with Movea, certain members of management of Movea and Movea shareholders. The Company paid $60.9 million in cash as consideration for the acquisition. An additional $13.0 million in cash will be payable contingent upon the achievement of certain milestones prior to the one year anniversary of the closing of the acquisition.

In addition, pursuant to the Purchase Agreement, the Company granted restricted stock units for shares of its common stock (each a “Movea Equity Award”) to certain Movea employees, having an aggregate value of $6.6 million. The Movea Equity Awards were granted on August 15, 2014 under the Company’s 2011 Stock Incentive Plan.

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 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, the 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 Movea’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.

2. Basis of Pro Forma Presentation

The unaudited pro forma combined condensed balance sheet as of March 30, 2014 is based on the historical financial statements of the Company and Movea’s historical financial statements on U.S. generally accepted accounting principles, or GAAP and reflect adjustments resulting from the acquisition of Movea. The unaudited pro forma combined balance sheet as of March 30, 2014 is presented as if the acquisition had occurred on March 30, 2014.

The unaudited pro forma combined condensed statements of operations for the year ended March 30, 2014 are based on the historical financial statements of the Company and Movea’s historical financial statements on GAAP basis and reflect adjustments resulting from the acquisition of Movea. The unaudited pro forma combined condensed statements of operations for the year ended March 30, 2014 are presented as if the acquisition had occurred on April 1, 2013.

The unaudited pro forma condensed combined financial statements are not intended to represent or be indicative of our consolidated results of operations or financial position that would have been reported had the Movea acquisition been completed as of the dates presented, and should not be taken as a representation of our future consolidated results of operations or financial position. The unaudited pro forma condensed combined financial statements do not reflect any operating efficiencies and associated cost savings that we may achieve with respect to the combined companies.


3. Preliminary Purchase Price and Estimated Purchase Price Allocation

A summary of the estimated purchase price allocation to the fair value of assets acquired and liabilities assumed is as follows (in thousands):

 

Cash consideration

   $ 60,900   

Contingent consideration

     8,400   
  

 

 

 
     69,300   
  

 

 

 

Preliminary allocation of purchase price as of July 22, 2014:

  

Current assets

   $ 3,082   

Fixed assets

     209   

Other non-current assets

     592   

Developed technology

     7,200   

Goodwill

     65,776   

Current liabilities

     (4,862

Long-tern liabilities

     (2,697
  

 

 

 

Total preliminary purchase price

   $ 69,300   
  

 

 

 

The purchase price includes contingent consideration of $8 million payable in cash to Movea shareholders upon a design win with a major smartphone manufacturer within 1 year of closing date, and $5 million payable in cash to Movea shareholders upon a specific product development milestone by December 2014. The fair value of the contingent consideration ($8.4 million) was derived from a probability weighted earn-out model of future contingent payments. The valuation of the contingent consideration was based on a collaborative effort of the Company’s engineering and finance departments, and third party valuation experts.

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

 

     Estimated Fair
Value (in
thousands)
     Estimated Useful
Life
 

Developed technology

   $ 7,200         5.00   
  

 

 

    
   $ 7,200      
  

 

 

    

The fair value of developed technology was determined using a cost approach which includes an estimate of time and expenses required to recreate the intangible asset. 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 revenue over the estimated useful life of 5 years.

4. Movea Financial Statements

The historical financial statements of Movea, as presented in the unaudited condensed pro forma financial statements, were derived from financial statements prepared in accordance with the generally accepted accounting principles in France. As a result, certain adjustments were made to Movea’s unaudited balance sheet as of March 30, 2014 and unaudited statement of operations for the twelve months ended March 30, 2014 in order to conform to the generally accepted accounting principles in the United States. Such adjustments primarily affected revenue and stock-based compensation expense, resulting in a $0.4 million adjustment to revenue and approximately $1.0 million adjustment to operating expenses related to stock-based compensation expenses. In addition, $1.9 million of R&D subsidies (other operating income under French GAAP) and $1.4 million of R&D tax credit (Income tax under French GAAP) were reclassified as reductions to Movea’s operating expenses for the twelve months ended March 30, 2014.


5. 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 operations, expected 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 cash used in the acquisition of Movea. The Company sold approximately $36.0 million of short-term investments and approximately $19.0 million of long-term investments to raise part of the cash used in the acquisition of Movea.

 

b) To record adjustments to the carrying values of assets acquired and liabilities assumed from Movea to reflect their fair values.

 

c) To record fair value of acquired intangible assets (developed technology).

 

d) To record goodwill, which is measured as the excess of the purchase price over the fair value of net assets acquired from Movea.

 

e) To record fair value of the contingent consideration of $8.4 million.

 

f) To record amortization expense related to acquired intangible assets.

 

g) To record stock-based compensation expense related to restricted stock units awarded to employees of Movea. The RSUs have a fair value of approximately $6.6 million and the related expense is recognized on a straight-line basis over a 5 year requisite service period.

 

h) The tax effect of the pro forma adjustments is not material since Movea has net operating losses.