INVN Invensense, Inc.

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K/A

(Amendment No. 1)

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of The Securities Exchange Act of 1934

October 28, 2014

Date of Report (date of earliest event reported)

 

 

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)		(I.R.S. Employer Identification Number)

1745 Technology Drive, Suite 200, San Jose, CA 95110

(Address of principal executive offices) (Zip Code)

(408) 988-7339

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

 

 

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:

 

¨	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))

 

 

 

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Item 2.02

Results of Operations and Financial Condition.

InvenSense Inc. (the “Company”) is filing this Amendment No. 1 to Form 8-K to amend the Company’s Current Report on Form 8-K filed on October 28, 2014 (the “Original Form 8-K”) solely to update the table titled “Reconciliation of GAAP to Non-GAAP financial results” contained in the press release issued by the Company on October 28, 2014 that was furnished as Exhibit 99.1 to the Original Form 8-K (the “Press Release”).

The Press Release stated that Non-GAAP operating income was $4.0 million for the quarter ended September 28, 2014 and has been corrected to $6.2 million and corresponding changes to all the periods presented in the table. In addition, the stock based compensation expense and amortization of acquisition-related intangibles line items have been corrected. There are no other changes to the information contained in the Original Form 8-K.

The information in this Form 8-K/A (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

 

Item 9.01

Financial Statements and Exhibits.

 

(d)

Exhibits.

The following exhibits are furnished herewith:

 

Exhibit Number		Description
99.1		Text of press release issued by InvenSense Inc. on October 28, 2014.

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SIGNATURE

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.
Date: October 28, 2014				By:		/s/ Mark P. Dentinger
						Mark P. Dentinger,
						Chief Financial Officer

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EXHIBIT INDEX

 

Exhibit Number		Description
99.1		Text of press release issued by InvenSense Inc. on October 28, 2014

Exhibit 99.1

INVENSENSE^® ANNOUNCES SECOND QUARTER FISCAL YEAR 2015 RESULTS

Company Generates Record Revenue of $90.2 Million

SAN JOSE, California, Oct. 28, 2014 – InvenSense, Inc. (NYSE: INVN) the leading provider of intelligent sensor solutions, today announced results for the second quarter of fiscal year 2015, ended Sept. 28, 2014.

Net revenue for the second quarter fiscal 2015 was $90.2 million, up 35 percent from $66.7 million for the first quarter fiscal 2015.

Gross margin determined in accordance with U.S. generally accepted accounting principles (GAAP) for the second quarter of fiscal 2015 was 35 percent, compared with 47 percent for the first quarter of fiscal 2015. GAAP gross margin for second quarter fiscal 2015 included stock-based compensation and related payroll taxes, and amortization of acquisition intangibles.

Excluding these items, non-GAAP gross margin for the second quarter fiscal 2015 was 37 percent, compared with 50 percent for the first quarter of fiscal 2015. The sequential decrease in gross margin was primarily attributable to two factors: a non-recurring inventory charge largely related to earlier generations of the company’s products that reduced the gross margin by approximately eight percentage points, and a shift in revenue mix towards lower margin, high volume customers that reduced the gross margin by approximately five percentage points.

GAAP net loss for the second quarter of fiscal 2015 was $6.9 million, or 8 cents per share. By comparison, GAAP net loss was $4.8 million, or 5 cents per share for the first quarter fiscal 2015. GAAP net loss for second quarter fiscal 2015 included stock-based compensation and related payroll taxes, accretion interest expense on convertible notes, amortization of acquisition intangibles, a write-off of in-process research and development costs in connection with the company’s acquisition of the microphone business line of Analog Devices, Inc. in fiscal 2014, business acquisition costs, litigation expenses, which were partially offset by a gain on the company’s equity investment in Trusted Positioning, Inc., and income tax effect of non-GAAP adjustments.

Excluding the items described above, non-GAAP net income for the second quarter of fiscal 2015 was $4.9 million or 5 cents per diluted share, compared with $7.0 million or 8 cents per diluted share for the first quarter of fiscal 2015.

The reconciliation between GAAP and non-GAAP financial results for all referenced periods is provided in a table immediately following the Unaudited GAAP Condensed Consolidated Statements of Operations below.

Management Qualitative Comments

“This is an exciting time for our company,” said Behrooz Abdi, president and CEO. “Q2 was a record revenue quarter, with the North America region leading our growth. During the quarter, we successfully ramped several key design wins, leveraging our strategic inventory of second-generation 6-axis products in order to meet demand for both our second and third generation devices. With strong market share gain in mobile, our team has executed on the first step in our growth strategy, while our investment in content increase has delivered a full portfolio of differentiated products that we believe will provide meaningful growth opportunity for years to come. As we move beyond the second quarter’s inventory adjustment, we believe that our solid business model will allow us to drive improved earnings leverage and shareholder return in the coming quarters.”

Second Quarter Fiscal Year 2015 Earnings Conference Call

A conference call will be held today at 1:30 p.m. Pacific Time to discuss the quarter’s results and management’s current business outlook. To listen to the conference call, please dial (800) 688-0836 ten minutes prior to the start of the call, using the passcode 63496403. International callers, please dial (617) 614-4072. A taped replay will be made available approximately two hours after the conclusion of the call and will remain available for two days. To access the replay, please dial (888) 286-8010 and enter passcode 41375040. International callers please dial (617) 801-6888. The conference call will be available via a live webcast on the investor relations section of InvenSense`s web site at www.invensense.com/ir. An archived webcast replay will be available on the web site for two months.

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Note Regarding Use of Non-GAAP Financial Measures

As discussed above, in addition to the company’s condensed consolidated financial statements, which are presented according to GAAP, the company provides certain non-GAAP financial information that excludes, stock-based compensation expense, litigation expense, business acquisition costs, amortization of fair value write-up of acquired inventory, amortization of acquisition-related intangible assets, accretion interest expense on convertible notes and other non-GAAP financial adjustments. The company uses these non-GAAP measures in its own financial and operational decision-making processes. Further, the company believes that these non-GAAP measures offer an important analytical tool to help investors understand the company’s core operating results and trends, and to facilitate comparability with the operating results of other companies that provide similar non-GAAP measures. These non-GAAP measures have certain limitations as analytical tools and are not meant to be considered in isolation or as a substitute for GAAP financial information. For example, stock-based compensation is an important component of the company’s compensation mix, and will continue to result in significant expenses in the company’s GAAP results for the foreseeable future, but is not reflected in the non-GAAP measures. Also, other companies, including companies in InvenSense’s industry, may calculate non-GAAP financial measures differently, limiting their usefulness as comparative measures.

Forward-Looking Statements

Statements in this press release that are not historical are “forward-looking statements” as the term is defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are generally written in the future tense and/or preceded by words such as “will,” “expects,” “anticipates,” or other words that imply or predict a future state. Forward-looking statements include any projection of revenue, gross margin, expense, earnings, stockholder return or other financial items discussed in this press release, including the strength of our competitive positioning, the strength of design activity across all of our multi-axis products , the differentiation of our products from those of our competitors, the emergence of new opportunities for our products, increased demand for our products, growth opportunities and our ability to capitalize on them. Investors are cautioned that all forward-looking statements in this release involve risks and uncertainty that can cause actual results to differ from those currently anticipated, due to a number of factors, including without limitation, intense competition in our industry; our achievement of design wins; our dependence on a limited number of customers for a substantial portion of our revenues; the continued adoption of motion tracking and motion sensing as an interface in consumer electronics products; decreases in average selling prices for our products; our lack of long-term supply contracts and dependence on limited sources of supply; consumer acceptance of our customers’ products that incorporate our solutions and our ability to continue to develop and introduce new and enhanced products on a timely basis; as well as changes in economic conditions in our markets and other risk factors discussed in documents filed by us with the Securities and Exchange Commission (SEC) from time to time. Copies of InvenSense’s SEC filings are posted on the company’s website and are available from the company without charge. Forward-looking statements are made as of the date of this release, and, except as required by law, the company does not undertake an obligation to update its forward-looking statements to reflect future events or circumstances.

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About InvenSense

InvenSense Inc. (NYSE: INVN) is the world’s leading provider of intelligent sensor solutions for consumer electronic devices. The company’s patented InvenSense Fabrication Platform and patent-pending MotionFusion™ technology address the emerging needs of many mass-market consumer applications via improved performance, accuracy, and intuitive motion-, gesture- and sound-based interfaces. InvenSense technology can be found in consumer electronic products including smartphones, tablets, wearables, gaming devices, optical image stabilization, and remote controls for Smart TVs. The company’s MotionTracking products are also being integrated into a number of industrial applications. InvenSense is headquartered in San Jose, California and has offices in China, Taiwan, Korea, Japan, France, Canada, Slovakia, and Boston, MA. More information can be found at www.invensense.com or follow us on Twitter at @InvenSense.

^©2014 InvenSense, Inc. All rights reserved. InvenSense, MotionTracking, MotionProcessing, MotionProcessor, MotionFusion, MotionApps, DMP, AAR, and the InvenSense logo are trademarks of InvenSense, Inc. Other company and product names may be trademarks of the respective companies with which they are associated.

For Investor Inquiries, Contact:

Leslie Green

Green Communications Consulting, LLC

650.312.9060

ir@invensense.com

For Press Inquiries, Contact:

David Almoslino

Senior Director

Marketing and Communications

InvenSense, Inc.

408.501.2278

pr@invensense.com

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INVENSENSE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

 

		Three Months Ended												Six Months Ended
		September 28,				June 29,				September 29,				September 28,				September 29,
		2014				2014				2013				2014				2013
Net revenue		$	90,195			$	66,681			$	70,941			$	156,876			$	126,851
Cost of revenue			58,854				35,505				34,364				94,359				60,955
Gross profit			31,341				31,176				36,577				62,517				65,896
Operating expenses:
Research and development			21,593				19,408				9,810				41,001				17,924
Selling, general and administrative			14,592				13,918				11,424				28,510				20,580
Total operating expenses			36,185				33,326				21,234				69,511				38,504
Income (loss) from operations			(4,844	)			(2,150	)			15,343				(6,994	)			27,392
Interest expense, net			(2,620	)			(2,584	)			—				(5,204	)			—
Other income, net			1,199				181				210				1,380				291
Income (loss) before income taxes			(6,265	)			(4,553	)			15,553				(10,818	)			27,683
Income tax provision			603				279				1,945				882				3,753
Net income (loss)		$	(6,868	)		$	(4,832	)		$	13,608			$	(11,700	)		$	23,930
Net income (loss) per share:
Basic		$	(0.08	)		$	(0.05	)		$	0.16			$	(0.13	)		$	0.28
Diluted		$	(0.08	)		$	(0.05	)		$	0.15			$	(0.13	)		$	0.27
Weighted average shares outstanding used in computing net income (loss) per share:
Basic			88,997				88,302				86,289				88,650				85,658
Diluted			88,997				88,302				89,778				88,650				88,841

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INVENSENSE, INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS

(In thousands, except per share amounts)

(Unaudited)

 

		Three Months Ended												Six Months Ended
		September 28,				June 29,				September 29,				September 28,				September 29,
		2014				2014				2013				2014				2013
GAAP Gross profit		$	31,341			$	31,176			$	36,577			$	62,517			$	65,896
Adjustments:
Stock based compensation expense			646				573				259				1,219				495
Amortization of acquisition-related intangible assets			1,572				1,188				—				2,760				—
Amortization of fair value write-up of acquired inventory			—				146				—				146				—
Non-GAAP Gross profit		$	33,559			$	33,083			$	36,836			$	66,642			$	66,391
GAAP operating income (loss)		$	(4,844	)		$	(2,150	)		$	15,343			$	(6,994	)		$	27,392
Adjustments:
Stock based compensation expense			7,136				7,741				3,360				14,877				6,177
Amortization of acquisition-related intangible assets			1,628				1,244				—				2,872				—
Business acquisition costs			1,060				1,049				—				2,109				—
Litigation expense			477				735				3,003				1,212				4,811
Write-off of in-process research and development			770				—				—				770				—
Amortization of fair value write-up of acquired inventory			—				146				—				146				—
Other			—				68				—				68				—
Non-GAAP operating income		$	6,227			$	8,833			$	21,706			$	15,060			$	38,380
GAAP net income (loss)		$	(6,868	)		$	(4,832	)		$	13,608			$	(11,700	)		$	23,930
Adjustments:
Stock based compensation expense			7,136				7,741				3,360				14,877				6,177
Convertible note accretion interest expense			1,856				1,816				—				3,672				—
Amortization of acquisition-related intangible assets			1,628				1,244				—				2,872				—
Amortization of fair value write-up of acquired inventory			—				146				—				146				—
Business acquisition costs			1,060				1,049								2,109
Litigation expense			477				735				3,003				1,212				4,811
Gain on equity investment			(890	)			—				—				(890	)			—
Write-off of in-process research and development			770				—				—				770				—
Other			—				68				—				68				—
Income tax – discrete cumulative benefit			—				—				(108	)			—				(147	)
Income tax effect of pretax non-GAAP adjustments			(267	)			(925	)			(1,079	)			(1,192	)			(1,863	)
Non-GAAP net income		$	4,902			$	7,042			$	18,784			$	11,944			$	32,908
GAAP net income (loss) per share of common stock, diluted		$	(0.08	)		$	(0.05	)		$	0.15			$	(0.13	)		$	0.27
Non-GAAP net income per share of common stock, diluted		$	0.05			$	0.08			$	0.21			$	0.13			$	0.37

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INVENSENSE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

(Unaudited)

 

		September 28,				March 30,
		2014				2014
Assets
Current assets:
Cash and cash equivalents		$	38,424			$	26,025
Short-term investments			86,629				91,307
Accounts receivable			67,045				39,009
Inventories			75,011				73,032
Prepaid expenses and other current assets			21,447				19,587
Total current assets			288,556				248,960
Property and equipment, net			42,397				25,239
Intangible assets, net			47,495				35,360
Goodwill			139,175				50,952
Long-term investments			34,963				128,755
Other assets			7,332				5,469
Total assets		$	559,918			$	494,735
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable		$	28,337			$	18,964
Accrued liabilities			36,086				14,985
Total current liabilities			64,423				33,949
Long-term debt			139,230				135,583
Long-term liabilities			28,046				11,375
Total liabilities			231,699				180,907
Common stock:
Common stock, $0.001 par value — 750,000 shares authorized, 89,756 shares issued and outstanding at September 28, 2014, 88,332 shares issued and outstanding at March 30, 2014			242,010				215,958
Accumulated other comprehensive income (loss)			1				(38	)
Retained earnings			86,208				97,908
Total stockholders’ equity			328,219				313,828
Total liabilities and stockholders’ equity		$	559,918			$	494,735

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INVENSENSE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

		Three Months Ended
		September 28,				June 29,				September 29,
		2014				2014				2013
Cash flows from operating activities:
Net income (loss)		$	(6,868	)		$	(4,832	)		$	13,608
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation			2,562				1,747				849
Amortization of intangible assets			1,627				1,268				—
Write-off of in-process research and development			770				—				—
Loss on disposal of property and equipment			326				—				(1	)
Gain on equity investment			(890	)			—				—
Stock-based compensation expense			7,003				7,635				3,359
Deferred income tax assets			27				(2	)			47
Tax effect of employee benefit plans			—				—				507
Excess tax benefit from stock-based compensation			—				—				(507	)
Non cash interest expense			1,856				1,816				—
Changes in operating assets and liabilities:
Accounts receivable			(29,949	)			2,651				(3,665	)
Inventories			2,502				(4,480	)			(4,754	)
Prepaid expenses and other current assets			(1,727	)			1,781				1,816
Other assets			(412	)			(688	)			437
Accounts payable			5,628				(230	)			(5,993	)
Accrued liabilities			8,110				20				4,361
Net cash provided by (used in) operating activities			(9,435	)			6,686				10,064
Cash flows from investing activities:
Purchase of property and equipment			(9,200	)			(8,424	)			(5,852	)
Sale and maturities of available-for-sale investments			88,141				10,387				17,671
Purchase of available-for-sale investments			—				—				(18,831	)
Acquisitions, net of cash acquired			(71,446	)			—				—
Net cash provided by (used in) investing activities			7,495				1,963				(7,012	)
Cash flows from financing activities:
Proceeds from exercise of common stock			3,939				1,755				4,403
Payments of long-term debt and capital lease obligations			(1	)			(3	)			(3	)
Excess tax benefit from stock-based compensation			—				—				507
Net cash provided by financing activities			3,938				1,752				4,907
Net increase in cash and cash equivalents			1,998				10,401				7,959
Cash and cash equivalents:
Beginning of period			36,426				26,025				110,224
End of period		$	38,424			$	36,426			$	118,183